The Issue The issue presented is whether the Department acted fraudulently, arbitrarily, illegally, or dishonestly in proposing to award to Intervenor, The Weitz Company, Inc., a contract for Project No. DGS-88114000.
Findings Of Fact On February 18, 1992, Respondent Department of General Services issued its Invitation to Bid on Project No. DGS-88114000, the construction of the Fort Pierce Regional Service Center. The bid package contained a copy of the Department's Advertisement for Bids, together with the bid specifications, evaluation criteria, and criteria for award of the contract. The Department's Advertisement for Bids identified the project, advised that sealed bids would be received and opened at 2:00 p.m. on March 12, 1992, stated that the Bid Tabulation and Notice of Award Recommendation would be posted at 4:00 p.m. on that same date, and contained the following language: MINORITY PROGRAM: In accordance with Florida Statute 287.057(6), at least 21 percent of the project contracted amount will be expended with DGS certified minority business enterprises. If 21 percent is not attainable, the Division of Building Construction will recognize Good Faith Efforts by the Bidder. The Bidder is advised to review these requirements in the Section B-13B "Employment of and Reporting of DGS Certified Minority Business Enterprises Participation" immediately, in order to schedule the necessary tasks to accomplish Good Faith Efforts. Page 2 of the bid package was the Invitation to Bid form letter which contained the identical language as that quoted above. Section B-13B found on page 14 of the bid package under Instructions to Bidders provides as follows: B-13B EMPLOYMENT OF AND REPORTING OF DGS CERTIFIED MINORITY BUSINESS ENTERPRISE PARTICIPATION Florida Statute 287.042 and the Department of General Services Rules 13-8 and 13-9, encourages the employment of and requires the reporting of DGS Certified Minority Business Enterprise (MBE) participation in state contracting. The Department has as its goal to spend twenty-one percent (21 percent) of construction contracts with DGS certified minority business enterprises. The overall goal for construction contracts are as follows: 4 percent Black Americans 6 percent Hispanic Americans and 11 percent American Women The Division Director of the Division of Building Construction recognizes the need to take affirmative actions to insure that Minority and Women business enterprises and minority and women employees are given the opportunity to participate in the performance of the Division of Building Constructions' construction programs. This opportunity for full participation in our free enterprise system by traditionally, socially and economically disadvantaged persons is essential to obtain social nd [sic] economic equality and improve the functioning of the State economy. Accordingly, it is the policy of the Division of Building Construction to foster and promote the full participation of such individuals and business firms in the State's building construction program. The Contractor, by bidding on this Contract, acknowledges his understanding and support for the social policy herein stated and pledges to fully cooperate with the State in the implementation of this policy, and further to exert a good faith effort to solicit and obtain the participation of such individuals and firms as subcontractors, suppliers and employees on this Contract. Prior to the execution of a contract, the bidder shall provide the following information on his contract or subcontracts for all DGS certified minority business firms to be utilized on the project: * * * Contractor's Schedules of Values and Requests for Partial Payments shall also reflect the payments made to each MBE subcontractor, using the name, minority vendor code, type of business and amounts. The contractor shall make a good faith effort to use services or commodities of minority business enterprises by: Attending any presolicitation or prebid meetings that were scheduled by the division to inform minority business enterprises of contracting and subcontracting opportunities; Advertising in general circulation, trade association, and/or minority-focus media concerning the subcontracting opportunities; Providing written notice to a reasonable number of specific minority business enterprises that their interest in the contract was being solicited in sufficient time to allow the minority business enterprises to participate effectively; Following up initial solicitations of interest by contacting minority business enterprises or minority persons to determine with certainty whether the minority business enterprises or minority persons were interested; Selecting portions of the work to be performed by minority business enterprises in order to increase the likelihood of meeting the minority business enterprise goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate minority business enterprise participation; Providing interested minority business enterprises or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs; Negotiating in good faith with interested minority business enterprises or minority persons, not rejecting minority business enterprises or minority persons as unqualified without sound reasons based on a through [sic] investigation of their capabilities; and Effectively using services of available minority community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Prior to the issuance of the Invitation to Bid, the St. Lucie County Democratic Executive Committee directed a letter to Governor Lawton Chiles concerning the high rate of unemployment in the construction industry in the Fort Pierce and St. Lucie County area. That letter requested that language be included in the invitation for bids for the Fort Pierce Regional Service Center specifying that priority be given to the available resident work force, first, from within the city of Fort Pierce and, second, from within St. Lucie County. That correspondence reached the Department of General Services, with the result that the following language was included within the bid specifications on page 14a: B-13C EMPLOYMENT OF LOCAL LABOR, SUBCONTRACTORS AND MATERIAL SUPPLIERS The procurement by General Contractors and Sub- contractors of persons for skilled and unskilled worker positions, the sub-contracting by General Contractors for Sub-contractor services and the purchase by General Contractors and Sub-contractors of materials, equipment, supplies and services is highly encouraged to the maximum extent possible, to be from persons residing within or businesses located within Ft. Pierce and St. Lucie County. A Pre-bid Conference was conducted on February 28, 1992. The Minutes from the Pre-bid Conference reflect that Addendum No. 1 to the bid specifications provided to potential bidders a copy of the Department's Minority Business Enterprise Construction Directory listing DGS-certified minority business enterprises as of December 1991. Those Minutes also contain the following entry: Highlights of front-end of Project Manual * * * Page 14, Paragraph B-13B for reporting minority participation stipulates 21 percent goal: 4 percent Black 6 percent Hispanic 11 percent American Women Contractors must thoroughly document their good effort. Procedure for documenting good effort can be obtained from Susan Hodge. * * * K. Page 89 - Post Bid Qualifications: Form is to be completed and submitted within 7 days after Bid Opening. A few of the lowest Bidders will probably be required to submit this form. At 2:00 p.m. on March 12, 1992, the Department received and opened eleven bids for the construction of the Fort Pierce Regional Service Center. Two of those bids were from Petitioner D. I. C. Commercial Construction Corp. (hereinafter "D.I.C.") and from Intervenor The Weitz Company, Inc., (hereinafter "Weitz"). At 3:00 p.m. on March 12 the Department posted its Bid Tabulation and Notice of Award Recommendation. That Bid Tabulation reflected that The Weitz Company of West Palm Beach submitted the lowest bid, in the amount of $5,545,800, and that D.I.C. Commercial Construction of Fort Pierce submitted the second lowest bid, in the amount of $5,553,600. The Bid Tabulation and Notice of Award Recommendation further provided as follows: This is to advise you that the Division of Building Construction, Department of General Services, State of Florida, Has recommended that the contract for the referenced project be awarded to the firm of: THE WEITZ COMPANY, INC. in the amount of $5,545,800.00, accepting the BASE BID AND ALTERNATE #1 AND #2, determined to be the lowest acceptable qualified bid. Any bidder disputing the contract award recommendation must file . . . . Written notice of protest within seventy-two (72) hours after posting of this notice. A formal written protest by petition in compliance with Rule 13-4.12, Florida Administrative Code, and Section 120.53(5), Florida Statutes, within ten (10) days after the date on which he filed the notice of protest. * * * The Executive Director of the Department of General Services, State of Florida plans to act on the above recommendation after expiration of the seventy-two (72) hour notice period. That proposed bid award took into consideration only the amount bid by each of the eleven bidders. In making its proposed bid award, the Department gave no consideration to its bid specifications that required the inclusion of at least 21 percent participation by subcontractors who were DGS-certified minority business enterprises (hereinafter "MBEs"), and which "highly encouraged to the maximum extent possible" the use of "persons residing within or businesses located within Ft. Pierce and St. Lucie County." On March 16, 1992, D.I.C. timely filed its Notice of Protest to the proposed award of the contract to Weitz. On March 26, 1992, D.I.C. timely filed its Formal Notice of Protest to that proposed bid award. Since the Weitz bid did not achieve the required 21 percent MBE participation, Weitz was required to submit documentation of its "good faith effort" to the Department along with other post-award qualification documentation. Weitz submitted its "good faith effort" documentation on March 16, 1992. Although the Department was aware that a Notice of Protest had been filed on March 16, the Department commenced its "good faith effort" review on March 17, 1992. Weitz's good faith submittal recited that it had achieved a total DGS- certified MBE participation of 13.6 percent in its attempt to reach the goal of at least 21 percent. Of the required classes of 4 percent Black Americans, 6 percent Hispanic Americans, and 11 percent American Women, Weitz reported it had achieved 3.2 percent, 8.9 percent, and 1.5 percent respectively. One of the MBEs included within the percentage of Hispanic Americans was improperly included since that minority subcontractor is an Asian subcontractor, which is a different certification classification and not one of the types of minorities specifically required to be included in this project. That Asian subcontractor represented almost one-half of the Hispanic participation claimed by Weitz. Accordingly, Weitz failed to achieve the required overall percentage and failed to achieve the required percentage in any of the three categories. Weitz's submittal also showed that it had included within its achieved percentages of participation subcontractors who were not yet DGS-certified, by listing three of those subcontractors under the heading of "pending minority certification." Although one of those did become certified by the time of the formal hearing in this cause, the other two have never applied for certification. Although the bid specifications use the language DGS-certified MBE subcontractors for inclusion in the 21 percent participation requirement, it is clear that D.I.C., Weitz, and the Department believed that the bid specifications meant certified or certifiable. The Department's policy is that the MBE must be certified by DGS, not on the date of bid submittal, but by the time that the Department enters into the construction contract with the prime contractor. It is also clear that the Department began tracking the efforts of Weitz's subcontractors to become certified by DGS and became involved in the certification process for Weitz's subcontractors who were not yet DGS-certified. Although Weitz had received 21 bids from DGS-certified MBEs, it chose to use the bids of only five. The bids of the others were rejected because Weitz had made the prior determination that it would use the bid of a DGS- certified MBE only if that subcontractor submitted the low bid for that particular portion of the work. In other words, Weitz's focus was on submitting the lowest possible bid rather than on submitting a bid which included the required MBE participation goal. On the other hand, when D.I.C. received and reviewed its bid package, it made the determination that the Department's requirement of at least 21 percent minority participation was easily achievable. Accordingly, D.I.C. did not prepare any "good faith effort" documentation since the bid specifications clearly stated that the Department would consider good faith efforts only if the 21 percent goal were not attainable. D.I.C. made the decision that it would include the required percentage, both overall and in each individual category, in its bid submittal and that, if it could not, it would simply not submit a bid on this construction project. D.I.C. included in its bid the bids of MBE subcontractors who it believed were either DGS-certified or certifiable for a total participation of 26.5 percent. Included within that overall participation D.I.C. exceeded the required percentage for Black Americans, exceeded the required participation for Hispanic Americans, and fell barely short of meeting the required participation for American Women. After D.I.C. filed its Notice of Protest, although the Department freely communicated with Weitz and Weitz's subcontractors in the Department's efforts to certify those subcontractors to be used by Weitz who were not certified, the Department ceased communication with D.I.C. and D.I.C.'s subcontractors. Further, the Division of Building Construction of the Department commenced and continued in its efforts to review Weitz's "good faith" submittal. The Department further rejected communication from the supervisor in its own Minority Business Enterprise Assistance Office regarding the Department's good faith efforts review. When conducting its good faith review, the Department looked only at the documentation submitted by Weitz. It made no effort to ascertain if there were things that Weitz could have done that Weitz chose not to do. Further, in conducting its good faith effort review, the Department reviewed Weitz's documentation under the belief that there was no specific MBE goal for this project. The Department's belief that there was no required MBE participation for this project, contrary to the bid specifications, was based upon the fact that the Legislature had given the Department a goal of at least 21 percent minority participation with the breakdown for the three categories of MBEs listed in the bid specifications as an overall Department goal. Although not disclosed in the bid specifications, the Department looked to meet its goal through the totality of its construction contracts and not pursuant to any individual contract. By March of 1992, the Department had already exceeded its statutorily-imposed goal by 140 percent for that fiscal year. Further, it was the Department's policy and practice to include in its reports to the Legislature concerning whether the Department had met its own statutorily- imposed MBE participation goal the participation of all minority subcontractors in all of the Department's construction contracts without regard to whether those subcontractors were DGS-certified by the time that the Department entered into those construction contracts with the prime contractors. In reviewing Weitz's good faith efforts, the Department utilized the criteria set forth in the bid specifications. It looked at each of the eight criteria listed in the bid specifications and then looked at the documentation submitted by Weitz to ascertain if there had been an effort to comply. The first criterion considers whether the contractor attended presolicitation meetings scheduled by the agency to inform minority business enterprises of the subcontracting opportunity. Since the Department held no such meeting regarding this construction project, none of the bidders could have met this criterion. The second criterion relates to advertising in general circulation, trade association, and/or minority-focus media. Weitz ran an ad one time only on Sunday, March 1, in the Palm Beach Post and in the Fort Lauderdale News/Sun- Sentinel. Weitz placed no other ads. The third criterion requires providing written notice to a reasonable number of specific minority business enterprises that their interest is being solicited in sufficient time to allow them to participate effectively. Weitz sent 98 letters throughout the state of Florida to MBEs listed in the Department's December 1991 directory. That letter was dated February 25, 1992. The fourth criterion requires following up initial solicitations by contacting MBEs or minority persons to determine with certainty whether they are interested. Weitz sent a follow-up letter dated March 4 to the same 98 addressees as its prior letter. The fifth criterion requires selecting portions of the work to be performed by MBEs to increase the likelihood of meeting the MBE goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate MBE participation. Weitz's documentation reflected that the work of several trades had been broken down into smaller units. The sixth criterion requires providing interested MBEs or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs. The advertisement placed by Weitz gave no information other than that it was seeking bids from certified MBEs for construction of the Regional Service Center in Fort Pierce, that the bid deadline was March 12, and that plans were available for review at Weitz's office in West Palm Beach. The first letter sent by Weitz advised the recipient of the square footage of the project, that Weitz might assist subcontractors on their bonding requirement, and that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, or full sets of plans and specifications could be purchased from Weitz at a price of $300 a set. The letter further gave the names of two persons at Weitz's office who could be contacted. The follow-up letter sent by Weitz contained the same information. The seventh criterion requires negotiating in good faith with interested minority business enterprises or minority persons and not rejecting them as unqualified without sound reasons based upon a thorough investigation of their capabilities. The Weitz documentation contained a statement saying that it had not rejected any minorities as being unqualified. The eighth criterion requires effectively using services of available community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Weitz sent letters to six organizations in the state of Florida stating that it was seeking proposals for the Fort Pierce Regional Service Center, that it had contacted those companies listed in the December 1991 directory, that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, and that the recipients should refer any known interested persons to Weitz. It is clear that Weitz made an effort to obtain minority participation. It did not, however, use its "best ability and effort" to obtain minority participation. Weitz's efforts did result in the receipt of a substantial number of bids from DGS-certified MBEs. It does not, however, appear that Weitz used its best effort to assist interested MBEs to participate in the construction project since it did not use any subcontractor's bid unless it was the low bid. Weitz's documentation contains a copy of each of the letters sent to the 98 businesses in the state of Florida and also contains some notations of telephone contact between Weitz and some MBEs. The documentation does not support the proposition, however, that Weitz used its best efforts to work with individual MBEs to solicit their interest; to ascertain with certainty their level of interest; to make the plans and bid specifications available to them; to organize the scope of work into smaller units, if necessary, to enable MBEs to effectively participate in the bidding process; and, most importantly, to utilize bids received by those MBEs. Although the bid specifications specifically stated that the minority participation was to be at least 21 percent and, if that 21 percent was not attainable, the Department would consider good faith efforts, the Department made no independent determination of whether 21 percent DGS-certified MBE participation on this project was attainable. Contrary to the language of the bid specifications, the Department interpreted the criteria to be a requirement that the bidder either attain 21 percent or submit good faith efforts. Since Weitz was the apparent low bidder by price, and since Weitz did not achieve the 21 percent participation, the Department assumed that such level of participation could not be attained and that Weitz could instead submit its "good faith effort." Although a provision was specifically written into the bid specifications for this project that the bidders were encouraged to use local labor from the Fort Pierce and St. Lucie County areas, the Department developed no criteria by which to judge whether the bidders attempted to comply with that bid specification. Additionally, the Department failed to review the bids received for this construction project to see if efforts had been made to include local labor. In essence, this bid specification was ignored by the Department. Although Weitz included in its "good faith effort" submittal a statement that it would utilize local labor by using its own employees, Weitz is located in West Palm Beach, not in St. Lucie County or in Fort Pierce. Although Weitz further included a statement that it might utilize up to twelve companies located in that area, the Department made no determination as to the number of qualified companies located there. The Department was not aware of the fact that Weitz had solicited only by letter two DGS-certified subcontractors in St. Lucie County and only three DGS-certified subcontractors in surrounding counties. On the other hand, D.I.C. had expended extensive efforts to involve businesses in the Fort Pierce and St. Lucie County area. Although Weitz attached to its Petition to Intervene in this proceeding a list of St. Lucie County firms which were encouraged to submit bids and a list of other firms who employ a majority of St. Lucie County employees on projects located in Fort Pierce which were encouraged to submit bids, those documents were never presented to, or considered by, the Department when it evaluated Weitz's bid. Section B-21 of the bid specifications provides, in essence, that the contract would be awarded to the bidder submitting the lowest bid. Weitz's bid was slightly lower than that of D.I.C.--a difference of $7,800 on bids of over five and a half million dollars. D.I.C.'s bid could have been $60,000 lower if it had not sought to comply with the 21 percent MBE requirement set forth in the bid specifications. Its bid would have been lower if it had, like Weitz, rejected all bids from DGS-certified MBE subcontractors who were not also the lowest bidder in that particular trade. D.I.C.'s belief that the Department would require compliance with all provisions in the bid specifications caused D.I.C.'s bid to be higher than that of Weitz, which placed emphasis on the lowest price rather than the lowest price plus effective effort at meeting the MBE participation specification. By focusing on one bid specification and not on all of the bid specifications, the Department gave Weitz an unfair advantage over other bidders. By allowing Weitz to submit "good faith effort" rather than comply with the 21 percent minimum participation requirement, the Department, in essence, allowed Weitz to make a subjective determination that the 21 percent requirement was not attainable. It was the Department's duty under the bid specifications to make its own objective determination that the 21 percent bid specification was not attainable before the alternative consideration of "good faith effort" became relevant to the bid award recommendation. The Department could have, for example, looked at the other bids submitted to see if the other bidders had attained the 21 percent participation requirement. Under the Department's approach, i.e., relying solely on Weitz's representation and considering only Weitz's bid, it is possible that the other bidders attained the 21 percent requirement and that only Weitz did not comply with that bid specification. The Department's procedure rendered the 21 percent bid specification meaningless, which fact was not known in advance by all of the bidders. By failing to determine whether the goal for MBE participation set forth as a bid specification was attainable, the Department failed to determine whether Weitz had complied with all bid specification requirements. Accordingly, the Department did not in fact make a determination that Weitz was a responsive bidder by meeting all bid specifications. Further, the Department made no determination in fact as to whether any of the other bidders, including D.I.C., were responsive to the Department's own bid specifications. Accordingly, there has been no determination that Weitz, or any other bidder, is the lowest responsive bidder. Similarly, the Department made no determination as to whether Weitz had complied with Section B-13C of the bid specifications which provided that bidders were "highly encouraged to the maximum extent possible" to utilize persons residing within or businesses located within Fort Pierce and St. Lucie County. D.I.C., with offices in Fort Pierce, submitted a bid which included 67 percent local participation. Weitz, with offices in West Palm Beach, submitted a bid representing that it would utilize its own employees for 15 percent of the contract (a different bid specification) and represented that it would probably utilize up to a dozen local companies. Since it is clear that Weitz solicited subcontractors from all over the state of Florida, Weitz made no showing that it had attempted "to the maximum extent possible" to utilize persons and businesses from Fort Pierce and St. Lucie County. Additionally, Weitz's single advertisement in the two newspapers chosen by it does not show an intent to obtain local participation since the Fort Lauderdale News/Sun-Sentinel is not sold in either Fort Pierce or St. Lucie County and the Palm Beach Post is obtainable in Fort Pierce only at 7-11 convenience stores and in newspaper vending machines. The Department made no determination as to whether Weitz, or any other bidder, was responsive to this bid specification. Further, the Department did not advise bidders that it might not enforce this bid specification in the same manner that the Department did not advise all bidders that it might not enforce the 21 percent bid specification. In short, the procedures utilized by the Department in evaluating the bids submitted for this project did not afford fair and equal review of all bids submitted. Further, Weitz was given a competitive advantage by the Department's determination that Weitz should be given the bid award based solely on the Weitz bid being the lowest submitted.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered rejecting all bids on Project No. DGS- 88114000 for the Fort Pierce Regional Service Center. RECOMMENDED this 25th day of June, 1992, at Tallahassee, Florida. LINDA M. RIGOT 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 25th day of June, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2370BID Petitioner's proposed findings of fact numbered 1-4, 7-14, 17, 20, 29, 30, 33, 35, 36, 39, 43, 45-48, and 55 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 5, 6, 15, and 18 have been rejected as not being supported by the weight of the competent evidence in this cause. Petitioner's proposed findings of fact numbered 16, 21-28, 34, 37, 38, 40, 42, 49-52, and 54 have been rejected as being unnecessary to the issues involved herein. Petitioner's proposed findings of fact numbered 19 and 53 have been rejected as being irrelevant to the issues under consideration in this cause. Petitioner's proposed findings of fact numbered 31, 32, 41, and 44 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondent's proposed findings of fact numbered 1, 2, 4, 7, 8, 11, 17, 19, 21, 22, 24-28, and 37 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 3, 5, 6, 20, 29, 31, 33, 35, 36, and 38-41 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed findings of fact numbered 9, 10, 12-14, and 34 have been rejected as being unnecessary to the issues involved herein. Respondent's proposed findings of fact numbered 15, 16, 18, 30, and 32 have been rejected as being irrelevant to the issues under consideration in this cause. Respondent's proposed finding of fact numbered 23 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Intervenor's proposed findings of fact numbered 1 and 10 have been adopted either verbatim or in substance in this Recommended Order. Intervenor's proposed findings of fact numbered 2, 3, 7, 12, 15, and 16 have been rejected as not being supported by the weight of the competent evidence in this cause. Intervenor's proposed findings of fact numbered 4-6, 8, 9, 11, 13, and 14 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. COPIES FURNISHED: Melinda S. Gentile, Esquire Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A. 200 East Broward Boulevard Post Office Box 1900 Fort Lauderdale, Florida 33302 Stephen S. Mathues, Esquire Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950 Bruce G. Alexander, Esquire Boose Casey Ciklin Lubitz Martens McBane & O'Connell Suite 1900 515 North Flagler Drive Post Office Box 024626 West Palm Beach, Florida 33402 Neil H. Butler, Esquire Butler & Long, P.A. Post Office Box 839 Tallahassee, Florida 32302 Ronald W. Thomas Executive Director Department of General Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950 Susan Kirkland, General Counsel Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact J.D. Bligh Construction, Inc. (Petitioner), was incorporated and began doing business on or about February 18, 1974. Petitioner engaged in the construction business; erecting, repairing and remodeling buildings and structures; and performing public works. The majority of Petitioner's work is subcontracted out. At Petitioner's inception, Jack D. Bligh and his wife, Carol E. Bligh, were co-owners with each possessing 50 percent of the stock in the business. Jack Bligh was the President and the only Director. Petitioner was started as a family business. At all times material hereto, Jack Bligh was licensed as a certified Management contractor by the State of Florida, Department of Professional Regulation, Construction Industry Licensing Board. Petitioner is authorized by the State of Florida to engage in the construction business under his license. Petitioner had no employees other than Jack and Carol Bligh and subcontracted out work for which contracts were awarded or agreements entered into. All proposals for work and contract agreements on behalf of Petitioner were accepted and executed by Jack Bligh. Jack Bligh was the guarantor on behalf of Petitioner. For example, he was the guarantor for Petitioner's lease agreement for the site location of its business, dated June 15, 1988. Carol Bligh's duties with Petitioner were clerical and administrative, such as determining draw requests, ordering supplies and banking. She had no experience in the construction industry whether it was Management contracting or actual field experience. Jack Bligh, her husband, was responsible for the actual running of the business and handling the day-to-day operations of the business, such as contracting, estimating, bidding and hiring and firing subcontractors. On or about August 22, 1985, Jack and Carol Bligh formed J. D. Bligh Airport Construction, Inc., with Jack Bligh as the sole director and President, owning 49 percent of the stock, and Carol Bligh as Secretary, owning 51 percent of the stock. It was a wholly owned subsidiary and formed on the advice of their insurance agent and accountant for liability insurance purposes regarding a contract for work at the Fort Lauderdale International Airport, which at that time was a big project for Jack and Carol Bligh. In September 1988, Petitioner, as contractor, contracted with the Boca Raton Airport, Inc., d/b/a Boca Aviation to perform work at the airport at a cost of approximately $533,000. The subsidiary corporation, J. D. Bligh Airport Construction, Inc., was not used for this job. In July 1990, Petitioner entered into a contract as subcontractor to perform work at the Opa-Locka Airport at a cost of approximately $65,000. The subsidiary, J. D. Bligh Airport Construction, Inc., was also not used for this job. On or about August 8, 1990, J. D. Bligh Airport Construction, Inc., was changed to J. D. Bligh Caribbean Construction, Inc. The purpose of the name change was again for liability insurance purposes in order to perform work in St. Thomas, U.S. Virgin Islands. The Blighs were rebuilding apartments damaged by Hurricane Hugo. Also, in September 1992, Petitioner again contracted with Boca Raton Airport to perform work at a cost of approximately $272,000. Carol Bligh executed the contract and the performance bond. For 17 years, Jack Bligh remained Petitioner's President until on or about January 15, 1991, at which time Carol Bligh became President. She was gratuitously given additional stock in the business by her husband for her long years of service and dedication to Petitioner. With this additional stock, Carol Bligh also became the minority/majority stockholder. When Carol Bligh became President of Petitioner and minority/majority owner with 51 percent in January 1991, her main duties and responsibilities did not change. She continued with the clerical and administrative aspect of Petitioner's Management contracting business. However, her duties and responsibilities also expanded to include dealing with bonding, securing lines of credit and insurance, setting-up workers compensation, assisting in policy- making, financial planning and operational procedures, and contract negotiations. On or about October 3, 1991, Carol Bligh's duties and responsibilities relating to hiring and firing were officially increased by Petitioner's directors to include hiring and firing of all personnel, including office and field personnel. In 1990, Carol and Jack Bligh's daughter, Janice Bligh, joined the business. Using his more than 17 years experience in the construction business, Jack Bligh began training her in Petitioner's contracting business, which included taking her to job sites for observation of the work being performed. Around mid-1991, Janice Bligh was placed in control of field supervision, estimating and bidding. For the past year and a half, Jack Bligh performed these functions only when she was unable to do so. Janice Bligh received her training as a field supervisor from her father, Jack Bligh, through observing him and the subcontractors. His supervision extends over the subcontractors since the majority of Petitioner's work is subcontracted out. Janice Bligh is taking courses in contracting and has completed three; one in estimating, one in plan reading and one in the South Florida Building Code. She is not currently licensed in the construction industry but eventually wants to take the State licensing examination to become a Management contractor but that is 2 1/2 to 3 years away. She has limited knowledge of the statutory requirements placed upon a Management contractor in terms of authorized scope of work and required liability coverage. Since Carol Bligh became Petitioner's President, proposals and agreements or contracts have been signed by either Janice Bligh or Carol Bligh. Also, bonding documents have been signed by Carol Bligh. Authorized signers and users on Petitioner's bank account are Carol, Jack and Janice Bligh, individually, with either one of them being authorized to execute bank documents on behalf of Petitioner. When Petitioner needed funds for operating expenses, they came from Carol and Jack Bligh. A promissory note dated April 15, 1992, from Petitioner to Carol Bligh was signed by Carol Bligh, as President, and came from funds in Carol and Jack Bligh's joint account. However, another promissory note dated June 30, 1992, involved funds loaned to the businesses from a business owned by Jack Bligh's father. Additionally, a promissory note dated April 15, 1993, was from Petitioner to Carol and Jack Bligh, equally. On or about December 1, 1992, Janice Bligh became a shareholder and officer of Petitioner's business, acquiring 2 percent of the stock from Jack Bligh, thereby leaving him with 47 percent of the stock. Carol Bligh retained 51 percent of the stock. Even though Janice Bligh was a shareholder and part owner of Petitioner, an indemnity agreement with a bonding surety dated February 23, 1993, was signed by Carol and Jack Bligh only. Also, the agreement reflected no differentiation of liability. As to wages, Petitioner's quarterly wage report dated April 17, 1991, reflects Jack Bligh's salary as $3,650, Carol Bligh's salary as $7,250, Janice Bligh's salary as $5,200, Jill Bligh's salary as $1,209 and Lawrence Massey's salary as $4,093.76. Jill Bligh is another daughter of Carol and Jack Bligh. She performs office work, run errands and answers the telephone. She is neither an officer nor a director. Petitioner's quarterly wage report dated July 12, 1991, reflects Jack Bligh's salary as $650, Carol Bligh's salary as $650, Janice Bligh's salary as $5,200, Jill Bligh's salary as $1,698 and Lawrence Massey's salary as $1,593.77. Petitioner's quarterly wage report dated October 15, 1991, reflects Jack Bligh's salary as $440, Carol Bligh's salary as $600, Janice Bligh's salary as $5,200 and Jill Bligh's salary as $1,804.50. Petitioner's quarterly wage report dated January 27, 1992, reflects Jack Bligh's salary as $390, Carol Bligh's salary as $300, Janice Bligh's salary as $2,400 and Jill Bligh's salary as $1,522.50. Carol Bligh testified that she and Jack Bligh reduced their salary to aid the business economically in the bad economic times of the construction industry. However, her testimony is not credible in light of the salary paid their daughter Jill Bligh in relationship to the work she performed. Petitioner applied for certification by Respondent as a minority business enterprise (MBE) on March 24, 1992. An initial review of the documentation provided by Petitioner indicated that Petitioner did not meet the criteria for MBE status; however, questions remained so a telephone interview with Carol Bligh was held in July 1992. Based on the documentation provided and the telephone interview, Petitioner was denied MBE status and notified by certified letter, dated July 14, 1992. Petitioner has been certified as a MBE by local governments.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services issue a Final Order denying J. D. Bligh Construction, Inc., certification as a Minority Business Enterprise. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of February 1994. ERROL H. POWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of February 1994.
Findings Of Fact Tholy Construction, Inc., applied for minority business enterprise status with the State of Florida in three basic areas, minority consulting, grassing and trucking. Tholy Construction, Inc., was founded in May, 1983, by Thomas L. Hawthorne and his wife, Lynette Hawthorne. Mr. & Mrs. Hawthorne own 100 percent of the capital stock of Tholy Construction, Inc. Mr. Hawthorne serves as the President and Chief Operating Officer, and Mrs. Hawthorne serves as Vice- President and Office Manager. Both Mr. & Mrs. Hawthorne are Black. Thomas L. Hawthorne is a graduate of Florida A & M University with a major in Business Administration and Accounting After graduation in 1972, Mr. Hawthorne went to work for the Department of Transportation as a Right-of-Way Agent. At the Department of Transportation, Mr. Hawthorne's basic assignment was the acquisition of property for road building projects. In 1973, Mr. Hawthorne moved to Dothan, Alabama, and became an employee of Pike Building Company. This was not an administrative position, but was a construction worker position. Mr. Hawthorne worked there for ten months and then took a position at Couch Construction Company in Dothan as a personal trainee in the area of equal employment opportunity. Couch Construction is a large construction company engaged in road building and airport construction. Mr. Hawthorne was employed at Couch Construction Company from 1974 to 1983, having responsibility for compliance with minority requirements of the Federal Government, setting up programs to attract and secure minorities, assisting minorities in proposing bids for subcontracts, and decision making relative to the cost of bidding projects. Lynette Hawthorne has worked full time at Tholy Construction Company since December, 1983. Her major areas of responsibility are the financial and bookkeeping procedures of the company. Previously, she worked in banking for six years, and her education consists of two and a half years of business administration at Florida A & M University. Mrs. Hawthorne is being trained by her husband to prepare bids and bid proposals, and is in training to inspect job sites of projects to make sure that they are completed in accordance with specifications. Tholy Construction, Inc., is incorporated under the laws of the State of Alabama. The offices are located at 1701 Reed Street, Suite 105, in Dothan. There are presently two full time persons working in the office. Thomas Hawthorne and his wife, Lynette Hawthorne. Tholy Construction, Inc., is certified as a minority business enterprise in both the States of Alabama and Georgia. Mr. & Mrs. Hawthorne give all the orders as far as work is concerned, they prepare their own income tax returns, file their quarterly statements with the Federal Government, and make out the payroll. They are the only ones authorized to sign checks and entered into lease agreements, and the business pays 100 percent of their salary. In the states where the company is certified under the minority enterprise program, bids are regularly submitted on behalf of the Tholy Construction, Inc. Through December, 1983, Tholy Construction, Inc. grossed $200,320.39. Mr. Hawthorne has been successful in gaining several contracts for minority consulting work, one with his former employer which includes monitoring of the ? ? programs. In addition, Tholy Construction ? ? ? ? contracts with at least one other small construction company to provides technical business assistance and payroll services. This is with Salter Construction Company which is a 100 percent minority-owned corporation, employing about 20 persons. In the area of grassing, there are several projects that Tholy Construction Company has completed or is involved in, including Lowe Field in Alabama and the grassing project on Interstate 10. Mr. Hawthorne is familiar with grassing projects, including the need for flat bed trucks to pick up and haul the grass, mulching machines, the 888 fertilizers, and the different types of grass, Osora, Bermuda and Bahia. In each case, according to specifications of the grassing projects, Tholy Construction leases the area where the grass comes from, supplies the necessary fertilizer, and puts the grass in place on the particular project. In the area of trucking services, Tholy Construction, Inc., regularly bids on trucking and hauling projects in the states where it is certified as a minority business enterprise. However, the company has not purchased any equipment, and its basic method of operation is to subcontract with companies in the area to do the work. The company has two full time employees, Thomas Hawthorne and Lynette Hawthorne. On work at the Army's Lowe Airfield, there was a contract requirement that a certified payroll be maintained so the Army could monitor the wages paid individuals doing the work. In leasing the earthmoving equipment for site preparation on this project, Tholy Construction agreed to carry the equipment operators on its payroll to satisfy the contract requirement for a certified payroll. The company has subcontracted with other companies to perform different items of work on this project, and basically all other construction type work has been subcontracted by Tholy Construction. During 1983, 70 percent of the contract income of $181,310.39 shown by Tholy Construction was with Couch Construction Company, and 90 percent of the consulting income of $19,200 was with Couch. Also, Tholy rents equipment and purchases material from Couch, which is the largest construction company in the Dothan area. The MBE Rule requires firms to have adequate resources such as equipment and personnel to do the work, and does not allow brokers to become part of the MBE program. A broker does not own equipment or have its own personnel, but subcontracts the work to another company. If a firm subcontracts, it must perform at least 51 percent of the work with its own personnel and equipment to meet the requirements for certification. The firm must have in-house resources, necessary personnel, expertise and experience to do the work.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Tholy Construction, Inc., be DENIED certification as a Minority Business Enterprise in the area of trucking, and GRANTED certification as a Minority Business Enterprise in the area of minority consulting and grassing. THIS RECOMMENDED ORDER entered this 9th day of August, 1984, in Tallahassee, Florida. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of August 1984. COPIES FURNISHED: Luther C. Smith, Esquire 219 E. Virginia Street Tallahassee, Florida 32301 Vernon L. Whittier, Jr. Esquire Haydon Burns Building, MS 58 Tallahassee, FL 32301
Findings Of Fact Respondent is the governmental agency responsible for certifying persons as minority business enterprises. Petitioner applied for certification as a minority business enterprise. Petitioner is a minority business enterprise within the meaning of Section 288.703(2), Florida Statutes. 1/ Petitioner is a small business concern, domiciled in Florida, and organized to engage in commercial transactions. Petitioner is a Florida corporation wholly owned by Ms. Sandra A. Pichney, vice president, and by Mr. D.B. Young, president. Petitioner engages in the roof consulting business. Ms. Pichney owns 51 percent of Petitioner's outstanding stock. Ms. Pichney is a member of a minority group for purposes of Chapter 288. The remaining 49 percent of Petitioner's outstanding stock is owned by Mr. Young. Mr. Young is a licensed architect. No professional license is required for Petitioner to engage in the business of roof consulting. Petitioner has all of the occupational licenses required to engage in the commercial transactions required to conduct its business. Ms. Pichney has 16 years experience in the roof consulting business. Ms. Pichney controls the daily management and operations of Petitioner's business. Ms. Pichney: manages and operates the office; and is responsible for payroll, accounts receivable, and general financial matters. Ms. Pichney conducts field visits, estimates jobs, reviews projects, and rewrites specifications. Ms. Pichney is the person who signs checks for Petitioner in the ordinary course of Petitioner's trade or business. Mr. Young is authorized to sign checks but only signs checks in emergencies. Ms. Pichney hires and fires personnel. Ms. Pichney consults with Mr. Young, but the ultimate responsibility is born by Ms. Pichney. Ms. Pichney reviews specifications and design work for specific projects and makes amendments where appropriate. Original specifications and design work are prepared by Mr. Young and other personnel. Mr. Young, and other personnel, can be terminated by Ms. Pichney without cause. Mr. Young can be terminated as an employee at any time by Ms. Pichney, without cause. Mr. Young has no employment agreement or shareholder agreement with the company. The board of directors are comprised of Ms. Pichney and Mr. Young. Any director may be dismissed by a majority of the shareholders. As the majority shareholder, Ms. Pichney can terminate Mr. Young, as a director, without cause. Ms. Pichney and Mr. Young receive salaries and monthly draws. Although salaries are equal, monthly draws and dividends are distributed in proportion to the stock ownership of each shareholder. Ms. Pichney has exclusive use of the company car. Ms. Pichney's stock ownership has increased over the last two years because Mr. Young has been unable to attend to the demands of Petitioner's business due to Mr. Young's divorce. Ms. Pichney has properly reported the increase in stock ownership, for purposes of the federal income tax, and has, and will, pay the requisite income tax on her increased stock ownership. Ms. Pichney and Mr. Young consult with each other in making significant decisions in the ordinary course of Petitioner's business. However, the ultimate responsibility for those decisions is born by Ms. Pichney.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order granting Petitioner's application for certification as a minority business enterprise. RECOMMENDED this 22nd day of July, 1995, in Tallahassee, Florida. DANIEL MANRY 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 22nd day of July, 1995.
Findings Of Fact On or about March 17, 1994, Petitioner, T-B Services, Inc., filed an application for certification as a minority business enterprise with the Florida Department of Management Services. The Respondent, the State of Florida Commission on Minority Economic and Business Development, has subsequently been assigned responsibility for this matter. On May 3, 1994, Petitioner's application was denied. Petitioner's application was denied based upon Respondent's conclusion that Petitioner did not satisfy Sections 288.703(2) and 287.0942(1), Florida Statues, and rules governing minority business enterprises of the Department of Management Services. Mr. Anthony D. Nelson is the minority, 100 percent, owner of Petitioner. Mr. Nelson is an African-American. The business of Petitioner, fire protection consulting, and fabrication and installation services, requires the association of an individual holding a professional license to perform those services. There are two professional license holders associated with Petitioner. Neither of the professional license holders are members of any minority. Mr. Nelson does not hold a professional license necessary for the Petitioner to provide fire protection consulting, or fabrication and installation services.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Respondent dismissing the Petition for Formal Hearing filed by T-B Services Group, Inc., and denying Petitioner's application for minority business enterprise certification. DONE AND ENTERED this 26th day of May, 1995, in Tallahassee Florida. LARRY J. SARTIN, 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 26th day of May, 1995. COPIES FURNISHED: Cindy A. Laquidara, Esquire Suite 1629, Riverplace Tower 1301 Riverplace Boulevard Jacksonville, Florida 32207 Kenneth W. Williams Assistant Attorney General Office of the Attorney General PL-01, The Capitol Tallahassee, Florida 32399-1050 Crandall Jones Commission on Minority Economic and Business Development Executive Administrator Knight Building 272 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact Petitioner Haul-It, Inc., is a trucking company in the business of hauling road building materials. It owns 19 trucks and 13 trailers worth about $106,000; and owes between $75,000 and $79,000 to a bank. Occasionally petitioner engages additional trucks and drivers. All but eight of its 15 or 16 employees are truck drivers. Haul-It, Inc., was organized in 1973. Jack Taylor and his father started the business but later sold out to Hubert E. Real, the president, half- owner and operator of Columbia Paving, and Wiley Jinwright, a 24-year employee of Columbia Paving. Mr. Jinwright became president of Haul-It, Inc., and Jack Taylor stayed on as truck foreman. Messrs. Real and Jinwright each owned 20 shares of stock, representing half interest in petitioner. Columbia Paving itself has never held any of the 40 shares of stock that petitioner has issued. In November of 1980, Mr. Real conveyed all 20 of his shares to his wife, Helen Real; and Mr. Jinwright conveyed one share to Mrs. Real. Both transfers of stock to Mrs. Real were gratuitous. She knew at the time that her ownership might help Haul-It, Inc., qualify as a minority business enterprise. In addition, Mr. Real "had had a couple of heart attacks" (T. 14) and Mrs. Real "thought it would be nice to have a related [to Columbia Paving] business." (T. 14.) The evidence did not reveal whether Mr. Real has spent more, less, or the same amount of time with petitioner's affairs since his divestiture as before. Mr. Real remains active as president of Columbia Paving. From November of 1980 to the time of hearing, Mrs. Real has owned 52.5 percent of petitioner's stock and Mr. Jinwright has owned 47.5 percent. Petitioner's only offices are housed in a trailer located on land owned by Columbia Paving. Haul-It, Inc., pays Columbia Paving rent for the land on which its office trailer, trucks, and other equipment are parked. At the time of the hearing, between 70 and 80 percent of Haul-It, Inc.'s work was being performed under contract to Columbia Paving. As far as the evidence showed, petitioner has always performed most of its services under contract to Columbia Paving. Although it has had other customers, Columbia Paving is petitioner's only regular customer. (T. 27.) Petitioner uses Columbia Paving's computer to keep its books and shares a bookkeeper with Columbia Paving. Each company pays the bookkeeper a separate salary. Mrs. Real sits on Columbia Paving's board of directors. Neither Columbia Paving nor any other entity uses petitioner's hauling equipment unless it has contracted to do so. When Haul-It, Inc., "bid[s] through Columbia Paving" (T. 39) in response to invitations by the Department of Transportation, Columbia Paving personnel check the bid over to make sure that it "fits whatever plan or whatever estimates they feel are in order." (T. 40.) Soon after she became owner of a majority of petitioner's Stock, Mrs. Real became petitioner's vice-president, secretary, and treasurer, even though she had had no prior experience in the trucking business. Mr. Jinwright remains president of Haul-It, Inc. It was also in November of 1980 that Haul-It, Inc., applied for certification as a minority business enterprise. At that time and for some months afterward, Mrs. Real was not working for Haul-It, Inc., on any regular schedule. On the basis of the information petitioner furnished with its application, respondent, in November of 1980, "certified them for 12 months, on the condition that an on-site review would be conducted and at that time the decision would be made as to the ownership and control and whether this minority business enterprise should be continued as certified." (T. 61.) In April of 1981, respondent's Mr. Nath conducted an on-site review. At that time, Mr. Nath requested additional documents which petitioner eventually mailed to respondent. In September of 1981, respondent for the first time communicated to Haul-It, Inc., its intention to disqualify petitioner as a minority business enterprise. After receiving this news, Mrs. Real began going to work for petitioner daily. She has an office in the trailer that she shares with Mr. Jinwright, whose role in Haul-It, Inc., was reduced to cosigning checks when Mrs. Real began working full time. Most of Mr. Jinwright's time is now spent as Superintendent of Columbia Paving's four asphalt plants. Even so, he still draws a salary from Haul-It, Inc., equal to Mrs. Real's salary. Despite their respective titles, both Mr. Jinwright and Mrs. Real act on the assumption that she, rather than he, has ultimate authority in the conduct of Haul-It, Inc.'s business. Mrs. Real has full authority to hire and fire, authority which she has delegated, in the case of the truck drivers, to Jack Taylor. She has the final say on all questions of policy and operations that arise in the business. Haul-It, Inc., cannot borrow money or make expenditures without her permission. Jack Taylor and two other employees buy for Haul-It, Inc., but she cosigns all checks with Mr. Jinwright. She has not learned how to prepare a written bid for the Department of Transportation, although she is involved with bidding. Mrs. Real relies heavily on Jack Taylor's bidding expertise, as have petitioner's other owners. Petitioner's proposed findings of fact and conclusions of law and respondent's proposed findings of fact, conclusions of law, and recommendation reflect the good work done in this case by counsel on both sides. To the limited extent proposed findings have not been adopted, they have been deemed immaterial or unsupported by the evidence.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny Haul-It, Inc., certification as a minority business enterprise. DONE AND ENTERED this 3rd day of March, 1982, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1982. COPIES FURNISHED: Patrick E. Hurley, Esquire Post Office Drawer 1049 Tallahassee, Florida 32302 Vernon L. Whittier, Jr., Esquire Ella Jane P. Davis, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301 Paul A. Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301
The Issue Whether Petitioner should be certified by Respondent as a minority business enterprise.
Findings Of Fact Petitioner, Jupiter Environmental Laboratories, Inc. (Jupiter), is an environmental testing laboratory established in October 1995. The services performed by Jupiter include testing samples of water, oil, soil, and waste water in accordance with the Environmental Protection Agency standards. Jupiter also tests for inorganic and organic compounds by mass spectrography and gas chromatography. Jupiter is owned 70 percent by Glynda Russell, a female, and 30 percent by her husband, Edward Dabrea, who is a non- minority. Prior to forming Jupiter, Ms. Russell had not worked in a laboratory such as Jupiter. Her work experience had been in real estate and selling women's apparel. According to Ms. Russell she did gain some knowledge and experience in environmental testing because she was a customer of testing laboratories while she was in the real estate business. She became familiar with the Environmental Protection Agency's requirements while she was investigating environmental impacts when she was a realtor. Mr. Dubrea has a degree in earth science (geology) and has done post graduate studies in geoscience (organic geochemistry). He has extensive work experience in environmental testing laboratories. Both Ms. Russell and Mr. Dabrea are jointly liable for a $50,000 loan from the Small Business Administration and a $15,000 line of credit. Ms. Russell has also incurred debt of over $100,000 on her personal credit card for Jupiter's expenses. The company has three equipment leases which Ms. Russell signed and indicated she was personally liable. Ms. Russell also signed the lease for the space occupied by the business. Ms. Russell is the president of the corporation. Her duties include directing all marketing, sales, and financial operations. She is responsible for recruiting and hiring personnel, maintaining state certifications, prioritization of work flow (sample pick-up, sample log-in and report generation), bid pricing, selection of subcontracting laboratories, customer service and purchasing of supplies. Mr. Dabrea is the Technical Director for the company. In addition to working for Jupiter, he does freelance research. His resume states that his work at Jupiter includes the following: Planned and organized all technical details for new laboratory, including equipment requirements and analytical supplies. Received and setup instrumentation, performs necessary calibrations. Coordinates information with Laboratory Director and QA/QC Officer. Develops new methods and provides research assistance to clients with unusual assessments. Coordinates between laboratory and governmental agency to ensure compliance. Submits performance evaluation studies to E. P. A. for certification on quarterly basis. Responsible for ensuring adequate instrument capacity for continued growth of the company. Cliff Ross, a non-minority, is the Laboratory Director and works part-time for Jupiter. Start-up funds for Jupiter were contributed by Ms. Russell and Mr. Dabrea. Ms. Russell contributed $25,000 in cash, and computer equipment worth approximately $8,000. Mr. Dabrea contributed an $11,000 truck and $5,000 in computer equipment. Ms. Russell contributed 67 percent and Mr. Dabrea contributed 32 percent. Jupiter is certified in certain categories of environmental water testing by the State of Florida, Department of Health, pursuant to Chapter 403, Florida Statutes. In order to acquire such certification, tests must be performed in the laboratory by qualified technical personnel with the proper educational credentials. In order to acquire the certification for Jupiter, the tests were performed by Mr. Dabrea and Mr. Ross. Ms. Russell is not technically or educationally qualified to perform the tests required for certification. It is not necessary to have the certification to operate an environmental laboratory, but many companies acquire the certification as a marketing tool. Ms. Russell indicated in her response to the denial of her certification that "current market conditions make it all but impossible to get work without it." (Petitioner's Exhibit No. 1.) Ms. Russell can perform the extractions. Once the extractions are done for certain types of testing, the testing is automated. She cannot do chromatography. The Quality Assurance Director for Jupiter is Pamela Shore-Loeb. Her duties include responsibilities for all quality assurance and quality control requirements to ensure continued State of Florida laboratory certifications and project management to a growing client list. She, along with Ms. Russell, developed the quality assurance manual used by the business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Petitioner, Jupiter Environmental Laboratories, Inc., meets the requirements of Rule 38A-20.005(2)(c), Florida Administrative Code, but does not meet the requirements of Rules 38A- 20.005(3)(c), (d)1, 4 and (6) and (4)(a), Florida Administrative Code. Consequently, the final order should deny Jupiter Environmental Laboratories, Inc.'s application for certification as a minority business enterprise. DONE AND ENTERED this 1st day of December, 1997, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND 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 1st day of December, 1997. COPIES FURNISHED: Joseph L. Shields, Esquire Department of Labor and Employment Security Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Glynda E. Russell, President Jupiter Environmental Laboratories, Inc. 220 Venus Street, Suite 16 Jupiter, Florida 33458 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
The Issue The central issue in this case is whether the Petitioner is entitled to certification as a minority business enterprise.
Findings Of Fact Iris Reed and her husband, Mark Reed, own and operate a business known as Reed Landscaping, Inc., the Petitioner in this cause. Mrs. Reed is an American woman and owns 60 percent of the subject business. Her husband owns the remaining 40 percent. The Reeds previously owned a lawn maintenance business in New York but moved to Florida several years ago and started doing business as "Landscaping and Lawn Maintenance by Mark." Eventually, approximately 1992, "Landscaping and Lawn Maintenance by Mark" changed its name to Reed Landscaping, Inc. As to Petitioner and all former entities, Mrs. Reed has held an office position with the company while Mr. Reed has operated the field crew or crews. Mr. Reed has the experience and expertise necessary to handle the work at each site for the business. On the other hand, Mrs. Reed has the office and management skills to direct the "paperwork" side of the business. This includes insurance matters and personnel for the office. Mrs. Reed is particularly active in this business since she put up the capital that largely funded the business enterprise. Although her personal financial investment is primarily at risk, creditors and bonding companies require both Reeds to sign for the company and to be individually obligated as well. Mrs. Reed serves as President/Treasurer of the Petitioner and Mr. Reed is Vice-President/Secretary. Both are authorized to sign bank checks for the company. Mr. Reed has formal training and education in landscape architecture and horticulture as well as extensive experience in this field. Mrs. Reed is responsible for many decisions for the company but relies on the opinions of others and delegates, where appropriate, duties to others as well. Among the delegated duties are: all field work for the company (delegated to Mr. Reed, another foreman, or to crews working a job); estimating or preparing bids (an estimator helps with bids); bookkeeping; contract review; and purchasing (some of which she does herself with input from others). As to each delegated area, however, the Reeds stress teamwork; that they are all working together for the common good of the company.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Petitioner's application for certification as a minority business enterprise be denied. DONE AND ENTERED this 16th day of May, 1996, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH, 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 16th day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5684 Rulings on the proposed findings of fact submitted by Petitioner: None submitted. Iris Reed on behalf of Petitioner submitted a letter summary of her position concerning the hearing which, if intended to be a presentation of fact, is rejected as argument or comment not in a form readily reviewable for either acceptance or rejection as required by rule. Rulings on the proposed findings of fact submitted by Respondent: Paragraphs 1 and 2 are accepted. Paragraph 3 is rejected as contrary to the weight of the credible evidence. Paragraphs 4 and 5 are accepted. COPIES FURNISHED: Joseph L. Shields Senior Attorney Commission on Minority Economic & Business Development 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2005 Iris F. Reed, Pro se 951 Southwest 121st Avenue Fort Lauderdale, Florida 33325 Veronica Anderson Executive Administrator Commission on Minority Economic & Business Development 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2005
The Issue The issues for determination in this case are whether Respondent, The School Board of Broward County, Florida’s (“SBBC” or “Respondent”), determination not to award a contract to Petitioner, Life Insurance Company of the Southwest, d/b/a National Life Group (“LSW” or “Petitioner”), is clearly erroneous, contrary to competition, or arbitrary and capricious, and whether LSW should be awarded a contract under the request for proposals (“RFP”). Intervenor, AXA Equitable Life Insurance Company (“AXA” or “Intervenor”), has intervened in these proceedings to support its substantial interests in SBBC’s intended award to AXA under the RFP.
Findings Of Fact SBBC is the district school board for the school district for Broward County, Florida, operating pursuant to Article IX, section 4, of the Florida Constitution and section 1001.30, Florida Statutes. SBBC is the sixth largest school district in the United States and employs approximately 26,000 active full-time employees. SBBC is an “educational unit” and meets the definition of an agency under the Administrative Procedures Act. LSW, a member of National Life Group, is a Texas corporation authorized to do business in Florida. LSW is a national company that does business in 49 states. As of SBBC’s release of RFP 20, LSW had policies with approximately 2,768 SBBC employees actively contributing funds to LSW through payroll deduction through SBBC’s existing 403(b)/457(b) program AXA is a New York stock life insurance company authorized to do business in Florida and to provide insurance coverage in Florida. AXA is a national company that does business in all 50 states, Puerto Rico and the U.S. Virgin Islands. As of SBBC’s release of RFP 20, AXA had the following approximate number of policies with SBBC employees: 10,263 in 403(b) plans, and 648 in 457(b) plans. 2015 RFP Since 1991, LSW has provided annuities to SBBC employees. In 2015, SBBC awarded TSA contracts to AXA, LSW, VALIC, Voya, and MetLife through RFP 15-010P, 403(b)/457(b) Programs for School Board Employees (“RFP 15”). The contract was for a three-year period with two one- year renewals. SBBC has a Superintendent’s Insurance and Wellness Advisory Committee (“Insurance Committee”), a ten-member standing committee that meets and addresses all issues that arise concerning the procurement of or changes in employee benefits. The ten members are representatives from various SBBC constituent groups and unions including Broward Teachers Union, Federation of Public Employees, Educational Support and Management Association, accounting and financial reporting unit, benefits and employment services, principals, and administrative and food service personnel. The members do not have expertise in insurance matters. The Insurance Committee voted to renew the TSA services contracts for AXA, LSW, Voya, VALIC, and MetLife for the year 2018. Gallagher Benefit Services, Inc. (“Gallagher”), provides consultant services to SBBC for health and welfare benefits, retirement, and actuarial services, including retirement services. Gerald Desmond (“Desmond”), Barbara Lyn Crowe (“Crowe”), and Sharon Leach are the Gallagher consultants who work on the SBBC account. Gallagher served as an insurance consultant utilizing its expertise to advise the Insurance Committee about insurance matters during RFP processes and related matters. During 2018, the Insurance Committee decided it was important to ensure that the fees TSA vendors charged SBBC employees were comparable to the industry and instructed Gallagher to produce a fee benchmarking report. Gallagher contracted with Fiduciary Benchmarks (“Fiduciary”), a company that holds a patent in the fee benchmarking industry, to collect the data of SBBC’s then-five TSA providers, benchmark their fees, and create a report. Rebecca Lavallee (“Lavallee”) and Haley Oliver (“Oliver”) were the Fiduciary representatives assigned to work on SBBC’s fee benchmarking report. On March 29, 2018, Fiduciary sent the initial information request to LSW. LSW first provided data to Fiduciary on April 13, 2018. On May 9, 2018, Fiduciary followed up with LSW and requested additional data by asking three questions. On May 14, 2018, Lavallee let Desmond know that all five TSA providers needed to provide data so that the fee benchmarking reports could be completed. As it related to LSW, the additional data identified by Lavallee to Desmond were the identical three questions requested of LSW on May 9, 2018. On May 16, 2018, the Insurance Committee met and voted to renew all five RFP 15 TSA providers for 2019, including LSW, contingent on each providing the requested data for the fee benchmarking report within ten days. That same day, Desmond informed LSW that the three questions were the only outstanding data requests needed. On May 25, 2018, a day before the deadline of May 26, 2018, LSW provided timely answers to Fiduciary regarding the three fee benchmarking questions. LSW believed that it was in compliance with the Insurance Committee’s renewal vote of May 16, 2018. On June 5, 2018, Oliver requested additional data from LSW, to which LSW responded to Oliver and complied the same day even though the request was after the May 26, 2018, deadline the Insurance Committee set. On July 27, 2018, Lavallee emailed Desmond that Fiduciary was not able to benchmark LSW, “because the only investments are fixed indexed annuity products that do not have explicit expenses (all expenses are embedded within the products) and there are no explicit recordkeeping costs. Attached are the materials we received.” On August 2, 2018, LSW and Gallagher had a follow-up conference call during which LSW reviewed and clarified its responses with Desmond. Desmond reported to Dildra Martin-Ogburn (“Martin-Ogburn”), SBBC director of benefits and employment services and a non-voting member of the Insurance Committee, that LSW did not timely submit the required materials by the deadline. On August 21, 2018, Desmond emailed his colleague Crowe and informed her “looks like LSW will be a no renewal.” Desmond asked Crowe to report LSW’s status on his behalf to the Insurance Committee because he would not be able to attend the next meeting. On August 29, 2018, at the next Insurance Committee meeting, Crowe followed Desmond’s instructions and reported that LSW had not provided any data and that Desmond had made numerous calls and emailed them. Crowe stated it is important to know that Gallagher sent out a huge questionnaire to all the vendors, and LSW has not responded. She explained to the Insurance Committee that, “We want to know how LSW is performing compared to their peers. At this time, I don’t have the information.” Crowe’s LSW report led to a discussion among the Insurance Committee members. Craig Nichols (“Nichols”) commented, “if [LSW is] going to be flagrantly nonresponsive we don’t need to bother.” Jack Vesey (“Vesey”) agreed and stated, “Right I get that.” Harold Osborn (“Osborn”) indicated his organization’s concerns were “[LSW’s] employees were fly by night, worked off commission where others had full time W-2 employees.” He also indicated his second concern was that the contracts were long and included surrender charges. During the meeting, the Insurance Committee did not change LSW’s non-renewed status. The minutes from the August 29, 2018, Insurance Committee meeting summarizes Crowe’s report as “Crowe informed the Committee that all the TSA vendors submitted the requested information with the exception of LSW.” The minutes also reflect that “all of the vendor’s representatives were present during the renewal meeting and were aware of the Committee’s comments and vote.” On September 24, 2018, during a telephone conference call, Martin- Ogburn mentioned that LSW did not respond by May 26, 2018, to all the data requests for the fee benchmarks and were not renewed for 2019. LSW was participating on the call. LSW attempted to address the non-renewal announcement without success. After the call, since LSW had answered the questions timely, LSW made every effort to demonstrate compliance and be placed in a renewal status by contacting Fiduciary and Gallagher. On September 26, 2018, Lavallee responded to an LSW inquiry by emailing Desmond “LSW was responsive and provided us with the materials we were seeking.” She further outlined the timeline of LSW’s communications with Fiduciary. Lavallee also explained in her email that Fiduciary reviewed the materials and determined LSW did not have comparable benchmarks because of LSW’s unique recordkeeping fee structure. She summarized that Fiduciary did not have similar plans like LSW to compare the investments to in its database. By letter dated November 29, 2018, SBBC informed LSW that the “[Insurance] Committee’s recommendation to not renew LSW’s contract for 2019” was being upheld. On December 12, 2018, the Insurance Committee had its next meeting. The members in attendance were Joseph Zeppetella (“Zeppetella”), Vesey, Erum Motiwala (“Motiwala”), Osborn, Peter S. Tingom (“Tingom”), Donna Sacco (“Sacco”), Jennifer LaMont (“LaMont”), and Glynda Linton (“Linton”). The agenda for the meeting included a review of the draft RFP for TSA services starting in 2020. The Insurance Committee discussed requirements and items they would like to see in the new RFP. Gallagher was at the meeting providing advice and answering questions. Martin-Ogburn served as the technical advisor at the meeting. She was the first to bring up LSW during the meeting. While explaining the inactive list, Martin-Ogburn clarified that LSW is “not listed here as active but they are active today. Their contract will expire December 31st of [2018].” Tingom responded by asking “What are the numbers on people with LSW and the amount of money?” Martin-Ogburn provided the numbers and further explained that currently there were five TSA providers, but because LSW was not renewed, they will not have a current contract but will have the opportunity to bid. The Insurance Committee continued to discuss LSW’s accounts and its monthly cash flow as well as its nonrenewal. While deciding what content would go in the RFP, the Insurance Committee discussed including two questions to deal with whether employees are 1099 or not, so that the evaluators could look at that information on the front end when the proposals came in. During that portion of the Insurance Committee’s discussion, Desmond explained, “And there’s always questions in the RFP on how the representatives are compensated, whether its commission versus salary, whether they’re paid bonuses on production, et cetera.” Next, the Insurance Committee reviewed the 15 inactive TSA providers SBBC had partnered with and when they would drop off the list. The Insurance Committee conferred on the percentage of fees employees were paying on a monthly basis. As an inactive TSA provider, LSW was included in the fee discussion regarding the need to know LSW’s fees but the inability to determine its fees. The Insurance Committee was collectively concerned that SBBC employees with LSW contracts could be stuck with fees for up to ten years or until they turned a certain age as well as acquire penalties to move into another TSA account. Vesey specifically expressed his concern and suggested that the committee look at LSW and “evaluate what has happened there as far as what [employees] are getting returns on, how much they’re being charged.” Martin-Ogburn reminded the members that LSW was part of the fee benchmarking. Desmond followed up, summarized LSW’s response to the benchmarking information request, and told the Insurance Committee, “Yeah they didn’t provide any data after multiple requests, conversations. They basically said that the product is the product and they don’t supply data to consultants or to the District to give any analysis on the workings of the indexed annuities that they have.” The Insurance Committee continued discussing its inability to have LSW independently evaluated, which prevented assistance for SBBC’s employees, because without the data, a benchmarking analysis could not be performed. Tingom also told the Insurance Committee: My only comment to that is, if they are not providing us with the data, why do we want to go forward with them? Because they’re not giving us what we’ve asked for, whereas these other companies have provided it for us, and I’m sure we’ll have a lot of bidders on this, because if you look down, every month they’re taking out close to three million dollars, almost four million a month is going to somebody. They have failed in their responsibility, in my opinion and I don’t think they deserve any special credit. Lamont reported to the Insurance Committee that “I have heard the stories about LSW” and described LSW as “noncooperative with providing data.” Afterwards, Zeppetella reminded the Insurance Committee that they were not going forward with LSW, because LSW was no longer active since they would not be getting new business as of January 2019, and he pointed out that LSW was not able to become a vendor again unless they get the next bid for 2020. After listening to committee members express their concerns about LSW being allowed to bid on the new RFP, Martin-Ogburn followed up and clarified for the Insurance Committee that LSW was not getting business as of January 1, 2019. She also instructed the Insurance Committee in no uncertain terms that “any company that qualifies can [bid].” She further emphasized her directions and said, “Yeah, we can’t say you can’t bid.” 2020 RFP On February 1, 2019, the SBBC issued RFP 20. RFP 20 sought TSA services for a contract period commencing January 1, 2020, and concluding December 31, 2022, with two one-year renewal options. Section 2.1 of RFP 20 notified proposers that SBBC was attempting to limit its TSA vendors, trying to improve retirement awareness, and looking for competitive fees, minimal surrender charges, guaranteed returns, and returns that exceed benchmarks. Section 2.1 provides as follows: SBBC would like to streamline its 403(b) and 457(b) offerings to a limited number of vendors in an effort to generally improve retirement awareness of all eligible employees and improve retirement savings of participating employees. SBBC is requesting Proposals with competitive fee and expense structures; minimal to no surrender charges and/or sales charges; performance and/or guaranteed returns that exceed objective benchmarks and peer groups; and education resources and tools that will help SBBC employees understand the importance of retirement savings and plan for the future. Proposers should propose an investment lineup that is in line with current trends in the 403(b) and 457(b) market. For example, group versus individual annuity products, open architecture mutual funds, and institutional share-classes. SBBC encourages the proposal of features that may or may not be offered today, such as designated Roth accounts, investment advice, managed portfolios, etc. In its sole option, SBBC reserves the right to annually review each Awardee and its product offerings for such things including, but not limited to: enrollment; fees and expenses; performance; and benchmarks. Once RFP 20 was advertised, Gallagher provided assistance to SBBC by answering incoming questions from proposers regarding the RFP. Charles High (“High”), SBBC’s purchasing agent, subsequently posted three addenda with the answers Gallagher drafted to the proposers’ questions. SBBC did not receive any bid specification protests with regard to RFP 20 or any of the three addenda. AXA, LSW, VALIC, and Voya timely submitted proposals by the submission deadline, March 21, 2019. EVALUATION PROCESS Gallagher assisted the Insurance Committee with the evaluation process. After the four vendors responded to RFP 20, Gallagher took all four proposals and evenhandedly put together an analysis of the responses to RFP 20. The format was a side-by-side columned document divided in sections corresponding to the four areas of criteria in RFP 20. The format allowed the Insurance Committee to review each proposer’s answers for each specific question next to each other. Gallagher’s compiled analysis was placed in an executive black binder for use by the evaluation committee when evaluating the responses to RFP 20. Gallagher did not include everything from each proposal in the black binder. There were missing materials from each of the four proposers. Crowe and Desmond decided, when compiling the black binder, to leave out some items, including the section on minority business participation, the prospectuses, marketing materials, charts, the actual investment line up, and any submissions that were massive, e.g., audited financial statements. Gallagher put at the bottom of each page in the black binder the statement: “IMPORTANT: This proposal analysis is a summary outline of the proposed vendor(s), based on information provided by each vendor. It does not include all of the details in the RFPs. The RFPs themselves must be read for those details.” Several weeks before the meeting, the four proposals and a black binder were sent to each of the Insurance Committee members, who also served as the evaluators for RFP 20. On May 8, 2019, the Insurance Committee met as the evaluation committee to evaluate and score the four proposals. Present were members Oleg Gorokhovsky (“Gorokhovsky”), designee for Judith Marte (“Marte”); Zeppetella; Vesey; Gerri Arlotta, designee for Motiwala; Osborn; Tingom; Dan Reynolds (“Reynolds”); Linton; Anna Fusco (“Fusco”); and LaMont. The evaluation committee members were instructed, if they had any questions, to please ask for clarification. They were also told to score independently. Gallagher representatives started the process, leading the evaluation committee through a detailed review of the black binder section by section reviewing the proposer’s answers to RFP 20 questions. Different Gallagher representatives were assigned sections of the proposal. Crowe led the presentation, and Desmond followed. The evaluation committee was very involved in the presentation and asked numerous questions. Gallagher provided its expertise and advised the evaluation committee during the presentation. Often times, when a member had a specific question not in the proposal, Desmond would suggest that the member ask the proposer during negotiations to flush out the information. While reviewing the proposals for the members, Desmond discussed question 29 and explained that the proposers were asked if they were utilizing subcontractors. He summarized the answers and pointed out the lists of subcontractors for some proposers that went on for several pages. Osborn interjected and commented that, Voya had subcontractors. Then, he asked about the level of Voya’s subcontractors, because previously one of the concerns had been the amount of LSW subcontractors.1 Desmond replied some vendors do the majority of work in house and other vendors use subcontractors for their services because they believe it is more efficient. Osborn followed up that he was addressing the sales force. Crowe informed the members that the Scope of Services portion of the proposal addresses whether an insurance company has W-2 or 1099 employees coming in the schools. Osborn also addressed question 53 and asked, “is there a positive or a negative across the companies about how they’re compensated and would that—would that motivate—would that motivate the salesperson to do what’s best for them versus what’s best for our employees?” Desmond utilized his expertise and answered the question based on previous feedback he had received. He responded, “Yeah. We firmly believe 1 Unlike other proposers, SBBC union groups had received complaints in the past regarding LSW’s agents under the prior contract. There were no complaints about the other TSA vendors during the prior contract award. that the optimum compensation structure would be salary plus bonus based upon participant feedback so that there’s really nothing to incentivize them for certain investments.” He also told Osborn when he asked whether everyone was following the best, straight salary plus bonus model, “I would say that would be something to clarify in negotiations.” As Desmond continued his portion of the Gallagher presentation, he explained to the evaluation committee that the proposers were asked to discuss due diligence, selection, and monitoring of outside parties. He went on to page 156, which addressed subcontractors but did not get far. Osborn interrupted and asked whether this would be the right time to ask about the 1099 and W-2 employees for question 86 on page 149. Desmond explained that portion is for entities, but some earlier questions are more specific. He also told the members that the question would apply if a vendor was bringing in an unrelated third party and asked each vendor to identify its process for maintaining that. Desmond continued reviewing the proposals for the members following the outline in the black binder. He examined question 105, the bidders proposed products. He also introduced LSW’s new platform during his presentation. He pointed out the differences between the proposers on question 109 and explained that three vendors agreed to direct brokerage but LSW’s proposal indicated it would not be offering direct brokerage. Osborn asked, as the consultant, whether there is an advantage or disadvantage over a target, and Desmond objectively told the members that they would have to look at the underlying performance for each offering and evaluate the criteria to help make a decision as to whether it is good or bad. Osborn also initiated the surrender charge discussion among the members and commented that his concern was some employees received certain advice but, once they were in it, the product seemed out of proportion to some other products. Desmond pointed to question 179, and Osborn responded that SBBC would not want its employees to have fewer restrictions, to which Desmond agreed. Desmond also went on to explain that the responses are more beneficial to the participants from all the vendors than responses from five years ago. While reviewing the sections, Martin-Ogburn reported that none of LSW’s three listed references that had been contacted replied. Therefore, the evaluation committee had no references to check LSW’s background. However, the evaluation committee had input from at least one reference from the other three proposers, which allowed the evaluation committee to weigh qualifications about each proposer in areas such as: description of services; amounts; length of service; responsiveness; accessibility; staff; consistency of services; knowledge; expertise; experience; commitment; consistency of services; length of contract; strength(s); weaknesses; and reselection preferences. Desmond summarized what the committee was looking for in a vendor by asking them to look for the lowest expenses, best quality funds, and, on the expense side, the lowest expenses possible. Section 5.1 of RFP 20 states, in part, as follows: 5.1 The Evaluation Committee (hereinafter referred to as “Committee’), shall evaluate all Proposals received, which meet or exceed Section 4.2, Minimum Eligibility Requirements and Section 7.1 Indemnification, according to the following criteria: CATEGORY MAXIMUMPOINTS Experience and Qualifications 10 Scope of Services 40 Cost of Services 40 Supplier Diversity & Outreach Program 10 TOTAL 100 * * * Failure to respond, provide detailed information or to provide requested Proposal elements may result in the reduction of points in the evaluation process. The Committee may recommend the rejection of any proposal containing material deviations from the RFP. The Committee may recommend waiving any irregularities and technicalities. If only one responsive proposal is received, the Committee will proceed without scoring the one responsive proposal and may negotiate the best terms and conditions with that sole proposer or may recommend the rejection of all proposals as permitted by Section 6A- 1.012(12)(c), F.A.C. The evaluation committee determined that AXA, LSW, Voya and VALIC were each responsive and responsible vendors and eligible for evaluation. The average scores for all four proposers were: AXA 87.3, Voya 84.8, VALIC 83.9, and LSW 67.7. The evaluation committee also voted at the May 8, 2019, meeting to negotiate with the three highest ranked proposers. The members did not include LSW, the lowest ranked proposer, among the proposers with which it would engage in negotiations. Section 5.4 of RFP 20 detailed the award and provides as follows: Award: SBBC intends to make award(s) to the Proposer(s) that has complied with the terms, conditions and requirements of the overall RFP. After the conclusion of negotiations, the recommended award would be made for the goods and services sought in the RFP in accordance with the terms of negotiations. The award(s) shall not be a guarantee of business or a guarantee of specified quantities of products or volume of service. An Agreement (in the form of SBBC’s Sample Agreement attached hereto as Attachment “M”) shall be prepared for execution by the Awardee and The School Board, and shall be governed by the laws of the State of Florida, and must have venue established in the 17th Judicial Circuit Court of Broward County, Florida or the United States Court for the Southern District of Florida. The agreement approved by the SBBC General Counsel will be submitted to SBBC for final approval. Approval shall not be a guarantee of business, a guarantee of specified volume of service or minimum dollar revenue to be received on this contract. After conducting negotiations, the evaluation committee subsequently voted to recommend the award of the TSA contracts to AXA, Voya, and VALIC. On May 13, 2019, SBBC posted its intended award of RFP 20 to AXA, Voya, and VALIC. On May 14, 2019, LSW timely filed a notice of intent to protest and a Formal Written Protest of the intended award and bond in accordance with section 120.57(3). The score sheets used by the evaluation committee on May 8, 2019, were defective. Gallagher failed to correctly apply the points that were in RFP 20 to the score sheets, and the maximum amount of allowable points on the score sheets did not correspond to RFP 20 for the scoring criteria. SBBC acknowledged the use of erroneous scoring criteria by the evaluation committee on May 8, 2019. The error was corrected, and any protests to the error were waived when the parties agreed to lift the stay imposed by section 120.57(3), to allow the evaluation committee to reconvene and rescore in order to apply the correct scoring criteria and maximum points per category as had been published within RFP 20. REEVALUATION AND RESCORING MEETING On June 24, 2019, the evaluation committee met to reevaluate and rescore the proposals for RFP 20. Four of the original Insurance Committee members who scored proposals on May 8, 2019, were unavailable to attend the June 24, 2019, meeting. The unavailable committee members designated replacements to reevaluate the proposals on June 24, 2019. Not all of the replacement members read each proposal. At the meeting, Gallagher consultants repeated their entire presentation for the four proposals since the composition of the evaluation committee had changed and over a month had passed. Gallagher successfully guided the evaluation committee through the RFP questions by going through the sections in the black binder to review the proposals and pointing out proposal differences. Gallagher fairly and professionally answered numerous questions from the evaluation committee about all the proposals during the presentation. After reevaluating and rescoring the four proposals using the correct scoring criteria and maximum point allocations published in Section 5.1 of RFP 20, the scores at the June 24, 2019, meeting were: AXA 86.7, Voya 85.1, VALIC 84.1, and LSW 78.1. NEGOTIATION STAGE The evaluation committee properly implemented RFP Sections 5.2 and 5.3 of RFP 20 for the next stage of the process, negotiations. Section 5.2 notified proposers that the Insurance Committee might question them on their proposal or request a presentation and provides as follows: The Committee reserves the right to ask questions of a clarifying nature once Proposals have been opened, require presentations from all Proposers, interview any or all Proposers that respond to the RFP, or make their recommendations based solely on the information contained in the Proposals submitted. Presentations, if required, will be part of the evaluation process. Section 5.3 notified proposers of the negotiation process and provides as follows: Based upon Section 5.1, the Committee, at its sole discretion, may commence negotiations with selected Proposer(s). The Committee reserves the right to negotiate any term, condition, specification, or price (other than Section 4.2 and Section 7.1) with a selected Proposer(s). In the event that mutually agreeable negotiations cannot be reached with a Proposer, the Committee may negotiate with the next ranked Proposer(s), and so forth. An impasse may be declared by the Committee at any time. The Committee will make a recommendation to the Superintendent. The Superintendent may choose to post the recommendation as its intended action of the District in accordance with Section 120.57(3) Florida Statutes or the Superintendent may choose to return the recommendation to the Committee for further deliberations consistent with the RFP. Martin-Ogburn and Gallagher led the negotiations. The same evaluation committee members asked proposers questions and determined whether to recommend an award to a proposer after negotiations. AXA The evaluation committee first voted to negotiate with AXA as the highest ranked proposer. In its proposal, AXA proposed the use of a mix of W-2 and 1099 agents to service the contract. During the negotiations, AXA changed its proposal from offering a mix to using only W-2 agents. After conducting closed-door negotiations with AXA, the evaluation committee subsequently voted to recommend the award of a contract to AXA upon the terms negotiated with that proposer. VOYA The evaluation committee voted next to negotiate with Voya as the second highest ranked proposer. Voya’s proposal provided 60 percent of its sales force was commission based. During negotiations, Crowe asked for compensation details on both the 1099 and W-2 agents. Voya’s representative responded, “So the compensation can be structured, I mean, either way. It’s either a traditional commission schedule or it can be done as a salary and bonus. We’re happy to do it either way.” Desmond responded that the preference of the evaluation committee, and he did not want to speak for the committee, “was salary and some type of bonus based upon some … .” Tingom did not allow Desmond to finish and explained the members’ preference, “Salary and incentives is what we prefer, to have a W-2 for everyone and then an incentive type program of your design.” Voya agreed to that condition. After finishing the negotiations with Voya, the evaluation committee subsequently voted to recommend the award of a contract to Voya upon the terms negotiated with that proposer. VALIC The evaluation committee next voted to negotiate with VALIC as the third highest ranked proposer. After voting to negotiate with VALIC, one member of the evaluation committee, Tingom, left the proceedings. Thereafter, the evaluation committee was comprised of only nine voting members. VALIC proposed using only W-2 agents and never changed that proposal during negotiations. After conducting negotiations with VALIC, the evaluation committee subsequently voted to recommend the award of a contract to VALIC upon the terms negotiated with that proposer. LSW The evaluation committee voted, five to four, to negotiate with LSW. Matthew Frazee (“Frazee”) represented LSW and had binding authority to negotiate on the company’s behalf. The negotiation discussion began with Crowe asking LSW about a buyout. During negotiations, as the evaluation committee had done with AXA and Voya, LSW was questioned about its proposal to use a mix of 1099 consultants and W-2 employees. Under its proposal, LSW products would be offered to SBBC employees by agents who were compensated on a 1099 basis as opposed to a W-2 basis. Some of LSW’s 1099 agents also worked for other entities. Crowe addressed question 17 and discussed the structure used, and the people used, to sell LSW’s products. Frazee responded that “the folks selling directly to school employees are 1099.” Marte commented that, by IRS definition, employees must be paid on W-2, so 1099 agents are consultants. She next asked whether the agents were to be employees of LSW. Frazee responded and confirmed, “They are not an employee of the company.” The evaluation committee’s discussion next clarified with Frazee that the 1099s were commission based and not eligible for a bonus. After Martin-Ogburn explained the procedures for representatives being allowed on a SBBC school campus, Frazee explained LSW’s process for keeping up with LSW affiliated representatives when the District is not aware of the affiliation. He detailed that LSW quarterly has a call to facilitate “who is and who is not allowed in the District.” Frazee further explained the discipline LSW provides if LSW finds out a company that might be LSW affiliated comes into the schools to provide other types of information and is doing something outside of what it is supposed to be doing. He said that LSW has conversations with the consultant and explains why the agent cannot be on campus, and that the agent can be reprimanded up to termination. Marte responded to Frazee’s explanation that it in and of “itself concerns me.” Frazee next addressed Martin-Ogburn’s concern of subcontractors providing information outside of the approved products and he explained that LSW controlled such actions by holding training to obtain 403(b) certification to teach the consultants the parameters of what they can and cannot do in the school. Martin-Ogburn told Frazee that the explanation did not answer her question, and she rephrased her question and asked Frazee whether subcontractors are utilized to provide educational type sessions at the school. Frazee responded that LSW is mainly using ValuTeachers to provide educational sessions for its products. Marte followed up and asked Frazee, “if one of your consultants were to come on our school property and sell and get someone to contract for a product that is not within the scope of what we signed with you, how would you intend to remedy that for our employee?” Frazee explained that LSW would not accept the business. During the negotiations, the evaluation committee continued, at length, to discuss its concerns with LSW regarding subcontractors working for someone else, selling something that is not in LSW’s portfolio under LSW’s name, and harming the employees. Frazee was unable to ever satisfactorily explain to the evaluation committee how SBBC’s employees would be protected or remedied for such actions. Instead, Frazee repeatedly presented termination sanctions and training as a solution, which failed to adequately alleviate the evaluation committee’s concerns. After being asked, Frazee also reported that LSW’s 1099 consultants were not certified financial planners but were registered. Vesey expressed being uncomfortable with LSW’s 1099 consultants’ lack of certification when the consultants are able to make lifelong decisions for SBBC employees. He questioned what would happen if a retirement plan did not work out and whether LSW could correct mistakes. Vesey asked, “will our employees be made whole on a decision that has significantly impacted their retirement?” Emery continued the discussion Vesey had started and asked, “Has it happened?” Vesey replied, “It has happened in our District. Do I know it’s specific to LSW? I don’t. But it has happened in our District.” Frazee also explained to the members during the negotiations that LSW had a significant 1099 consultant base and that LSW’s registered consultants were the number one provider of fixed index annuity products in K-12 nationwide. He noted 1,300 consultant agents had gone through LSW certification trainings in the last year, and LSW believes training is the right way to prevent the issues the members were suggesting. Frazee re- emphasized that there is an extensive amount of training LSW does to look out for SBBC’s best interest. During the negotiations, Marte asked LSW directly whether, if it was discovered that a consultant sold an unauthorized product, LSW would be willing to make the employee whole as far as fees it cost to undo the mistake. Frazee responded that LSW would have to look at it on a case by case basis. Frazee also explained that that if LSW determined an employee was harmed by buying a product that was not within the scope of the contract, LSW would move for termination and check with the Department of Insurance to find out if the agent had done something illegal. Frazee then explained to the negotiation committee that, “The reason I hesitate a little bit is, when it’s outside of –if that were to happen with a product outside of ours, sometimes it’s hard to understand what those things are and where the damages are. It just—it gets a little fuzzy when we have no visibility into it.” In response, the evaluation committee told LSW that it was still concerning that LSW could bring unsupervised consultants into a school that LSW had no control over, and the negotiation point became even more lengthy while the members tried to get LSW to clarify the issue to their satisfaction. Collado pointed out that LSW had said during its presentation that it does not necessarily go through every item that is sold by the consultants, and Frazee nodded in agreement. Collado then asked Frazee to appease his concern as to how SBBC will assess the damage to an employee during a private conversation without oversight. Frazee expounded that LSW only brought in 1099 consultants that had the values of LSW, and their motto was “helping teachers retire with dignity.” Frazee also reiterated that termination was the tool for any agent’s unauthorized action, and he explained the second line of defense, subcontractors keeping in constant contact with LSW, which helps to monitor the subcontractors. Desmond suggested a fiduciary pledge, which LSW agreed to produce for its 1099 consultants. Among the other items negotiated, LSW agreed to modify additional portions of its proposal when asked to do so. LSW agreed to provide a semi- annual report showing net required revenue; to waive its loan fees and hardship fees; to extend its supplier diversity commitment of $50,000 per year through contract renewal; to fund school specific projects for the base period and renewal of $10,000 per year; to allow SBBC to change the mutual fund offerings due to poor fund performance; and to reduce basis points for certain expenses by five basis points. Within its proposal in response to question 15, LSW also provided a bond as security, which provides: 15. Does your company provide a bond or guarantee to protect the program, the employer, and participants from any loss resulting from fraud or dishonesty by your employees or representatives? Yes X No If yes, what amount? Our National Life Group affiliated broker-dealer carries an errors and omissions liability policy with coverage of up to $1,000,000. Additionally, a fidelity bond provides up to $25,000,000 in liability coverage for other losses. Within its proposal, LSW also provided the following indemnification clause: By AWARDEE: AWARDEE agrees to indemnify, hold harmless and defend SBBC, its agents, servants and employees from any and all claims, judgments, costs, and expenses including, but not limited to, reasonable attorney’s fees, reasonable investigative and discovery costs, court costs and all other sums which SBBC, its agents, servants and employees may pay or become obligated to pay on account of any, all and every claim or demand, or assertion of liability, or any claim or action founded thereon, arising or alleged to have arisen out of the product, goods or services furnished by AWARDEE, its agents, servants or employees; the equipment of AWARDEE, its agents, servants or employees while such equipment is on premises owned or controlled by SBBC; or the negligence of AWARDEE or the negligence of AWARDEE’s agents when acting within the scope of their employment, whether such claims, judgments, costs and expenses be for damages, damage to property including SBBC’s property, and injury or death of any person whether employed by AWARDEE, SBBC or otherwise. After the evaluation committee reviewed the negotiated terms, Fusco commented that termination of a 1099 consultant who mistakenly guided one of SBBC’s employees cannot truly rectify the employee because “that doesn’t rectify it for us.” Vesey and Marte chimed in, agreed, and indicated they had addressed the same issue of not providing a remedy for the employees earlier in the negotiations. Frazee attempted to remediate the evaluation committee’s major concerns again and explained once more that only vetted and properly trained LSW 1099 consultants are placed in the schools. He further stated that LSW agents act in the best interest of employees, and Frazee reminded the evaluation committee that transactions are monitored by a secondary review. Fusco then requested that LSW make the employees whole for possible misguidance or mistakes regarding products except for the FRS component, and Frazee finally agreed. Ultimately, LSW’s negotiations did not alleviate the members’ major concerns. The evaluation committee was neither convinced that LSW had control over its 1099 consultants nor that it would be able to provide a remedy for the SBBC employees harmed by unauthorized actions. LSW’s responses to the questions in an attempt to satisfy the members’ concerns failed to ever clarify the issues for the members. After no further questions from the members, at the conclusion of the negotiating session with LSW, the evaluation committee decided not to move forward. Vesey made a motion for the evaluation committee to decline to recommend the award of a contract to LSW as a TSA vendor for RFP 20. Fusco seconded the motion. The evaluation committee did not accept LSW’s final proposal, and all nine members voted unanimously to approve the motion. On June 26, 2019, SBBC posted a revised recommendation notifying the proposers of the revised intended award to AXA, Voya, and VALIC under RFP 20. On June 27, 2019, LSW filed a timely Notice of Protest and filed a timely Amended Formal Written Protest (“Protest”). BID PROTEST COMMITTEE When a vendor files a protest under the RFP process, School Board Policy 3320, Part VIII, Sections (J) and (L), provide the following: (J) The School Board shall provide an opportunity to resolve the protest by mutual agreement between the parties within seven days, excluding Saturdays, Sundays, and days during which the school district administration is closed, after receipt of a formal written protest. * * * (L) If the subject of the protest is not resolved by mutual agreement within seven days, excluding Saturdays, Sundays, and days during which the school district administration is closed, after receipt of the formal written protest, and if there is a disputed issue of material fact, The Board shall refer the protest to the Division of Administrative Hearings for proceedings under Chapter 120.57(1), Florida Statutes, upon the written request of the protestant. This written request by the protestant shall be filed at the same place at which the formal written protest was filed within three days, excluding Saturday, Sunday, and days during which the school district administration is closed, after the attempt to resolve the protest by mutual agreement. On September 13, 2019, the bid protest committee convened an opportunity to resolve the protest meeting with LSW to consider the protest of the posted award under RFP 20. Martin-Ogburn, Strauss, and Gorokhovsky served on the bid protest committee. Robert Vignola (“Vignola”) served as the committee’s attorney and advisor. Brandice Dickson (“Dickson”), Susan Jennings, Frazee, and Lisa Muller appeared on behalf of LSW. Crowe and High also attended as technical advisors. The meeting started by Vignola introducing himself and identifying the purpose of the bid protest meeting. He informed the attendees that the “agency shall provide an opportunity for the parties to meet and attempt to resolve the matter.” Vignola explained Section (L) of School Board Policy 3320. He then stated that the meeting was an opportunity for the parties to address the current, dispute on this bid protest. Vignola also advised the committee to view the protest and discussions with the same sort of eyes as an administrative law judge. The burden rests with the challenger to consider whether the agency’s proposed action is contrary to the agency’s governing statutes, rules or policies, or the bid proposal specifications. Next, Mary Coker (“Coker”) went through the procedural history of RFP 20. She ended it with, “[s]o here we are, September 13th, in an attempt to resolve the process, the formal protest, as defined by Policy 3320.” LSW attempted to resolve the dispute and started its presentation by having its attorney, Dickson, provide background about LSW. She also explained how LSW would like to keep its relationship with SBBC. Dickson further explained to the committee that LSW did not believe it had been treated equitably and summarized that the dispute could be resolved. She pointed out modifications LSW offered to make during the negotiations that were provided to the members, and she outlined how most of the negotiation discussions focused on the 1099 consultants, specifically pointing out that “some of the committee members believe that potential agent misconduct would be better regulated if the agent is compensated on a W-2, as opposed to a 1099 basis.” She maintained that LSW’s Fidelity bond and indemnification provision were not even raised during negotiations. She emphasized LSW’s willingness to terminate any agent that sold unauthorized products and LSW’s agreement to sign a fiduciary pledge, which demonstrated commitment. After addressing some other portions of the negotiations with the bid protest committee, Dickson concluded the presentation by informing the bid protest committee that LSW was committed to use W-2 employees for all new business with SBBC, and she offered W-2 use only. Coker responded on behalf of the bid protest committee. Among other items, she addressed the committee’s sole discretion to determine how to negotiate with the proposer on any terms or conditions. Vignola assisted Coker and directed the committee to a number of policies, including Section 5.4 of RFP 20, which provides “SBBC to make awards to proposers that have complied with the terms and conditions and requirements of the RFP, and after the conclusion of negotiations, the recommendation of award will be made … with the terms of negotiations.” Coker also referenced Attachment A of LSW’s proposal and commented that SBBC was not listed as a reference in question five. She next went to question six and pointed out to the bid protest committee that when asked who had terminated LSW’s plans, SBBC was listed there. She then went on to show the committee that under the reason for SBBC’s termination, LSW’s proposal listed competitive bid process, and she stated, “which I don’t think is factually accurate.” Coker explained further that the evaluation committee had the sole discretion to negotiate with vendors as it wished and to award contracts. She pointed out that since LSW was the only proposer that had a performance problem, a previous termination of a contract, when other vendors did not, those actions impacted LSW’s scoring and played a role in the committee choosing not to award LSW. Afterwards, Vignola walked through the transcript of the negotiation meeting of June 24, 2019, with the bid protest committee and reminded them that the evaluation committee raised a number of issues after engaging in negotiations with LSW. However, the evaluation committee’s major concern was neither about compensation of agents nor about the types of agents proposed, 1099 agents versus W-2 agents. Vignola reminded the bid protest committee that the members’ main concern had been if consultant agents engaged in unauthorized matters with SBBC employees, how LSW would prevent unauthorized activities from happening, and if LSW could remedy the problems that occurred with SBBC employees. Vignola summarized that the committee was collectively very concerned about the 1099 consultant control issues, and LSW was neither able to satisfy the evaluation committee with its responses nor clear up their concerns, and, therefore, the bid protest committee unanimously voted not to award LSW a contract. When it was time to vote, Vignola advised the bid protest committee to determine if the protest lacked merit, or to take any other action from a revised recommendation that the committee believed to be appropriate. The bid protest committee did not respond to LSW’s offer to have only W-2 agents, found no reason to find the protest valid, and voted unanimously to reject LSW’s Protest. FORMAL HEARING At hearing, negotiation committee members explained the LSW 1099 consultant control issue in detail and why it was a major concern that needed to be resolved during the negotiation meeting before LSW could obtain an award. Zeppetella credibly testified he voted against making an award to LSW because “there was a lack of confidence moving forward after the negotiations based on the lack of controls of possible 1099 contractors.” Carol Nicome-Brady admitted that she was against awarding LSW the contract because, among other things, LSW had received the lowest score during evaluations; she was concerned about LSW’s consultants selling unauthorized products; and LSW’s offer to make employees whole if they were sold unauthorized products failed to adequately address her concerns. Collado also testified that he declined to vote to award the contract to LSW because of the company’s lack of accountability for its consultants and that LSW’s explanations regarding the committee’s concerns during negotiations were a concern because of LSW’s inability to explain things to satisfy his concerns.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that The School Board of Broward County, Florida, enter a final order dismissing the formal written protest of Life Insurance Company of the Southwest, d/b/a National Life Group. DONE AND ENTERED this 24th day of March, 2020, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of March, 2020. COPIES FURNISHED: Robert P. Vignola, Esquire Eric W. Abend, Esquire Office of the General Counsel The School Board of Broward County, Florida 600 Southeast Third Avenue, Eleventh Floor Fort Lauderdale, Florida 33301-3125 (eServed) Cynthia S. Tunnicliff, Esquire Brandice D. Dickson, Esquire Kathryn L. Hood, Esquire Pennington, P.A. 215 South Monroe Street, Second Floor Post Office Box 10095 Tallahassee, Florida 32302 (eServed) Karen Asher-Cohen, Esquire Brittany A. Long, Esquire Radey Law Firm 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) Laura M. Dennis, Esquire Radey Law Firm 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) Robert Runcie, Superintendent The School Board of Broward County, Florida 600 Southeast Third Avenue, Tenth Floor Fort Lauderdale, Florida 33301-3125 Matthew Mears, General Counsel Department of Education Turlington Building, Suite 1244 325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed)
The Issue The issue is whether the University of Central Florida's (UCF or University's) Notice of Tentative Award of Invitation to Negotiate (ITN) Number 1317ZCSA to KUD International, LLC (KUD), was contrary to UCF's governing statutes, regulations, or policies or to the ITN's specifications.
Findings Of Fact The Parties UHLC is a Florida limited liability company formed by W.A. "Chip" Headley. He obtained an undergraduate and master's degree from UCF, is a very loyal alumnus, and is a long-time booster of the University. Mr. Headley explained that if KUD's proposal had been "in the ballpark of what the other three proposers had proposed," and was not such a "bad financial deal" for the University, he would have walked away without filing a protest. Mr. Headley formed UHLC in connection with the ITN. UHLC is owned by SRP Hotel Partners, LLC, and J.P. Turner & Company, LLC. SRP Hotel Partners, LLC, in turn is owned by Thomas Lee Group and Simonson Road Partners, LLC. Mr. Headley leads Simonson Road Partners, LLC, a hospitality-focused boutique real estate investment company. UCF is a public research university located in Orlando, Florida. It has a current enrollment of over 60,000 students, making it the second largest university in the United States in terms of student enrollment. Its annual budget is around $1.4 billion. Events Prior to the Submission of Responses The ITN was released on April 4, 2014. Its objective was to enable UCF to enter into an agreement with a vendor "to provide a boutique hotel and conference center situated on 11.8 acres immediately adjacent to the UCF academic core." As further explained in section 1.1 of the ITN: The boutique hotel and conference center will serve as an enhancement to existing academic facilities and will add a desirable service component to the campus. The facility will reflect a design and ambiance congruent with the campus educational and aesthetic objectives. While the term boutique usually refers to hotels of fewer than 150 rooms, the number of rooms in this facility should be determined by the overall program developed for the site. It will aim to achieve the feel and ambience of a boutique hotel through its design architecture and interiors. The ITN "emphasizes that the Respondent concentrate on accuracy, completeness, and clarity of content." § 3.1. UCF expressly reserved the right not to award based on the highest proposed revenue to UCF. In fact, the ITN makes clear that "UCF is not obligated to make an award under or as a result of this ITN or to award such contract, if any, on the basis of the lowest cost or highest commission offered." § 2.8.C. It also reserved the right, at its sole discretion, to "determine whether a deviation [from an ITN requirement] is material." § 2.18.A. Mr. William Merck serves as UCF's Vice President for Administration and Finance. Together with Mr. Greg Robinson, the University's Purchasing Director, Mr. Merck helped develop the ITN's specifications and wrote the provision that the term boutique usually refers to hotels of fewer than 150 rooms. Mr. Merck was the final decision maker for the ITN. While he could give deference to the initial evaluation committee's scores, he was not bound by them. In fact, the ITN vested him with sole discretion to determine what "is in the best interest of UCF, [and to] then make the final decision whether or not to recommend the award of a contract to a Respondent to this ITN, negotiate with the highest ranked respondent(s), or cancel the ITN." § 2.8.C. After publishing the ITN, on April 29, 2014, Mr. Merck and Mr. Robinson held a mandatory pre-proposal conference for potential respondents to seek clarification on the ITN. UHLC was represented by Mr. Headley at the pre-proposal conference. He sought no clarification on the ITN. At the conference, UCF officials were asked whether there was any desired size for the hotel. Mr. Merck told the attendees that UCF did not want a hotel that was the size of the Marriott World Center, a resort hotel near Disney Land with around 2,000 rooms and several hundred thousand square feet of meeting space. To the contrary, Mr. Merck indicated that he was "looking for something relatively small" in terms of facility size. Given this response, and a reference in the ITN to a "boutique hotel" with "fewer than 150 rooms," the undersigned has rejected a contention by UHLC that a lack of clarity on the size of the hotel gave KUD a competitive advantage. After the pre-proposal conference, the potential respondents had several weeks to submit written requests for clarification or alteration of any ITN provisions they perceived as unclear or restricting competition. Again, UHLC submitted no clarification requests. ITN Responses On June 24, 2014, UCF received six ITN responses. Mr. Robinson checked to see if the proper boxes were checked on a list of non-negotiable items, but he did not review every section of each proposal for compliance with other provisions. He left all other determinations regarding compliance or non- compliance with the ITN specifications to the evaluators. Two responses were rejected by Mr. Robinson for missing or unacceptable mandatory response forms. The ITN responses by UHLC, KUD, and two others proceeded through the ITN process. UHLC's Response Before preparing its response, UHLC assembled a team capable of developing the project. The proposed hotel will cost several million dollars. UHLC has a placement agreement with J.P. Turner & Company, LLC, committing it to provide the capital for the project. Other than that agreement, UHLC does not have any other agreements in place for the proposed project. However, this is true of all other respondents, including KUD. Mr. Headley signed and submitted UHLC's response in his capacity as manager of Simonson Road Partners, LLC, which co-owns SRP Hotel Partners, LLC, which in turn co-owns UHLC. The other co-owner of UHLC is J.P. Turner & Company, LLC, whose 90 percent ownership interest in UHLC "includes an undetermined amount of equity that will be syndicated to retail and/or institutional investors." UHLC's response included its certificate of registration with the Florida Department of State, but not for any other entity. UHLC omitted a conceptual site plan or facility design from its proposal. Instead, it intentionally chose to describe its concept for the proposed hotel in broad terms to promote collaboration with the University. Because the site is located at the main entrance, UHLC wanted the University to be actively involved in its design. In researching the UCF market, UHLC also looked at 11 colleges with on-campus hotels, including the University of Florida, Georgia Tech, and Auburn University. The average size of those hotels was 238 rooms and 27,000 square feet of meeting space. Based on that research, UHLC proposed to develop a hotel at UCF with 225 to 300 rooms and approximately 25,000 to 40,000 square feet of meeting space. The development would use the entire 11.8-acre tract. Although UHLC prepared a financial pro forma to develop its proposed lease terms, it was designed to be an internal document and included information targeted at potential investors. The ITN did not require a pro forma. UHLC assumed that the hotel would have 225 rooms, an average daily rate of $149.00 in 2017, a stabilized occupancy of 72 percent, and an average growth rate of three percent. Based on this pro forma, UHLC proposed two lease term options in its response. Under option 1, UHLC would make total payments to the University over 50 years of $26,175,000.00, including a lump sum payment of $7.5 million in year one. Under option 2, UHLC would make annual payments in increasing amounts to the University over the course of the lease term totaling $36,185,000.00 over 50 years. Under both options, UHLC proposed to charge a "UCF Fee" equal to three percent of the daily rate on each occupied room. Over a 40-year period, this would generate an additional $19,850,000.00 to UCF. Thus, under either option, UHLC proposed a financial return to the University in excess of $50 million over a 50-year period. This was comparable to the return proposed by two other respondents, but was much higher than the return proposed by KUD. KUD's Response KUD has 40 years' experience developing projects in the hospitality, convention, education, museum, performing arts, commercial, broadcast, and sports industries. In 2007, KUD managed a large development project for UCF, and a section of KUD's webpage lists a quote attributed to Mr. Merck complimenting KUD's work on that project. However, since that time, KUD has done no other work for UCF. KUD's response was signed and submitted by its executive vice president and includes its certificate of registration with the Florida Department of State, but not for any other entity. A section of KUD's response makes reference to an entity not yet formed, NewCo, LLC, as a potential special purpose entity to be part of the project's future ownership structure, which would be approved or not at UCF's sole discretion. KUD proposes to develop a hotel with 100 to 130 rooms, 15,000 square feet of conference space, a 200-space parking lot, a conceptual site plan and facility elevation, and a market feasibility study to help determine appropriate facility sizing. Notably, it proposes using just 7.4 of the available 11.8-acre site for the project. The remaining acreage would be retained by the University for another purpose. KUD proposed lease payments of $150,000.00 per year for 50 years, no upfront payment, and no increase in rent over the lease term. In its response, however, it states that: The value for the land being provided by UCF is a complex issue that revolves around the number of rooms that can be supported by the anticipated market demand. Therefore, a boutique hotel of 100 rooms cannot possibly make the same investment in land than that of a 200 room hotel . . . . We understand, however, that UCF must be able to justify the use of this land against other long term potential uses. Therefore, we have established land payments that have a minimum current value of $7.5 million dollars over the proposed initial term of the land lease. This value is established as a land lease payment of $150,000 per year or 1% of the gross operating revenues, whichever is greater. Based on approximately 7.4 acres, this equates to approximately $1.0 million per acre. Jt. Ex. 2 at 11. KUD's response included a projected financial pro forma based on 100 hotel rooms, including anticipated revenues, expenses, and net operating income. The response identifies its proposed hotel operator as The Olympia Companies (Olympia), which also operates a boutique hotel called the Alfond Inn for Rollins College in Winter Park. Another vendor also identified Olympia as its potential hotel operator. The Evaluation Process To evaluate and score the proposals, Mr. Merck formed an initial evaluation committee composed of a diverse group of University constituents. All seven members met the ITN's qualifications requirements. Section 2.8.C. of the ITN provided that "each evaluation committee member shall function independently of all other persons including, without limitation, the other committee members, and, throughout the entire evaluation process, each evaluation committee member is strictly prohibited from meeting with or otherwise discussing this ITN and any aspect thereof including, without limitation, the offers and their content with any other individual whatsoever." However, evaluators were not told to refrain from conducting internet research on the respondents or their team members. On June 26, 2014, or two days after the filing of the responses, Mr. Merck and Mr. Robinson met with the evaluation committee and provided them with instructions, the ITN, and the four responses to be evaluated. Mr. Robinson briefed the members on how to conduct their evaluations. During the meeting, they reviewed the description of a hotel with a typical size of 150 rooms or less and noted the instruction that the size of the hotel might vary depending on each proposer's project scope. The next day, June 27, 2014, Mr. Robinson emailed the committee members additional related documents, and his cover email included some financial information attributed to the Alfond Inn "because boutique hotels are something new for the university. Nobody was really familiar with it." He did not provide this information to any proposer, and there is no evidence that any proposer knew the committee had received this information prior to responding to the ITN. The ITN specified the following weighted criteria for the evaluation committee's scoring: Experience and qualifications in designing and managing hotel/conference center facilities; Proposed financial return to the university through ground rent or other financial benefit; Experience of personnel assigned to the project; Financial viability of the respondent; Overall viability of the concept; Compatibility of the proposed concept with the UCF Campus area; and Conformance with the ITN's preferred conditions and requirements. § 2.8.C. As to the proposed financial return, Mr. Merck pointed out that "financial return from a project like this, when it's on the university, is important, it's meaningful, but that's not the primary driver in the decision or in the goal we were seeking with the hotel." The University's current annual budget of $1.4 billion puts this statement in perspective. Mr. Merck's main desire was to get a "quality product," which outweighed everything else, including financial return, in the solicitation. Therefore, the financial return only accounted for 20 percent of the total awardable points, while the other six criteria combine for a total of 80 percent. After the evaluation committee completed its review, scored the proposals, and ranked KUD as number one, Mr. Merck concluded that KUD's response "looked very good" based on its partial use of the available land; the conceptual site plan and facility elevation; a "very conservative base case" financial pro forma based on 100 hotel rooms; a clear project team identification, including a "very important" hotel operator; and a suggested market feasibility study, which he found impressive. In contrast, he considered UHLC's response oversized as to the facility, vague as to its proposed conceptual idea and hotel operator, and lacking substance as to some of its numbers. Thus, he decided that KUD should be selected for pre-award negotiations, which eventually led to UCF's decision to award the contract to KUD. Grounds Raised by Petitioner In the parties' Joint Pre-Hearing Stipulation, UHLC contends that the proposed award to KUD should be rescinded and the contract awarded to UHLC, or alternatively, the ITN reissued and the process started anew. It alleges generally that the financial return to UCF is not in the University's best interests and that UHLC submitted a superior financial return; that KUD's response materially deviated from the state corporate registration requirement in section 2.15 of the ITN; that KUD received an unfair competitive advantage due to the evaluation committee's receipt of information about the Alfond Inn; that three of the seven evaluators improperly scored the proposals of KUD and UHLC; that Mr. Merck improperly conferred with the evaluation committee members after receiving their scores; that UCF improperly communicated with KUD in pre-award communications; that KUD was allowed to amend its proposal after it was opened; and that UHLC was not given a point of entry to challenge the pre-award meeting between the negotiating team and KUD. Incorporated into these broad allegations are several other contentions. These allegations are discussed below. Financial Return to the University UHLC contends that even though financial return made up 20 percent of the total evaluation points, the ITN specifications were never changed to reflect the decreased importance given to financial return by Mr. Merck. As noted in Finding of Fact 33, financial return was never the driving force for UCF on this project. This was consistent with section 2.8.C. of the ITN, which specifically provided that "UCF is not obligated to make an award under or as a result of this ITN or to award such contract, if any, on the basis of lowest cost or highest commission offered." Also, section 2.3 of the ITN allowed UHLC to request clarification on "any conditions or requirements which [it believed] remain unclear or which restrict competition." No clarification regarding financial return was ever sought. UHLC's suggestion that financial return should be the overarching dispositive factor in awarding the contract is rejected. Violation of Section 2.15 UHLC contends that by listing a not-yet-formed entity, NewCo, LLC, to be a part of the project's future ownership structure, but not attaching that entity's state corporate registration certificate, KUD violated a material requirement of the ITN, section 2.15. This section of the ITN was highlighted by Mr. Merck at the pre-proposal conference. It provides as follows: 2.15 State Licensing Requirements All corporations seeking to do business with the State of Florida shall, at the time of submitting an offer in response to this ITN, either be on file or have applied for registration with the Florida Department of State in accordance with the provisions of Chapter 607, Florida Statutes. A copy of the registration/application must be furnished to UCF when submitting the offer. Notably, this provision is not included as a part of the "nonnegotiable conditions and requirements" pursuant to ITN section 2.50 and Appendix II. Therefore, while the requirement is important, a failure to strictly comply with that provision did not mean that a proposal would be deemed non-responsive, as UHLC argues. KUD's response was signed and submitted by KUD's executive vice president under the name KUD International, and it includes the Florida corporate registration certificate for that entity. Thus, KUD was the respondent to the ITN, not NewCo, LLC. UHLC's response was signed by Mr. Headley in his capacity as manager of Simonson Road Partners, LLC, which is a second level parent/owner of UHLC. Its response did not include the corporate registration certification of Simonson Road Partners, LLC, and provided no documentation indicating Simonson Road Partners, LLC's authority to submit the response on behalf of SRP Hotels Partners, LLC, or UHLC. Mr. Robinson reviewed both responses and determined they sufficiently conformed to the ITN. Even if there was arguably a deviation from the specification, he considered the deviation to be immaterial and one that could be waived. See § 2.18.A. ("UCF will, at UCF's sole discretion, determine whether a deviation is material."). No advantage or benefit accrued to either respondent by UCF waiving strict adherence to this requirement. Information Regarding the Alfond Inn UHLC asserts that UCF materially deviated from the ITN's specifications by providing the evaluation committee with information concerning the Alfond Inn shortly after the evaluation process began, and abused its discretion in permitting the committee to receive such information. As noted earlier, the Alfond Inn is located on the Rollins College campus and is managed by Olympia, which KUD intends to use to manage its hotel if awarded the contract. On June 26, 2014, or two days after the opening of the proposals, Mr. Merck organized a group and individual meeting with the evaluators. At that meeting, the specifications were reviewed, and a description of a "typical" hotel of around 150 rooms or less was given. However, the evaluators were told that the size of the hotel might vary depending on each proposer's project scope. The next day, Mr. Robinson sent an email to all evaluators that included Addendum 1 and 2 to the ITN. The email also included information concerning the Alfond Inn. Because a boutique hotel is a new concept in hotels, Mr. Robinson believed the information would be helpful to the evaluators. The email pointed out that the Alfond Inn had achieved an occupancy rate as high as 94 percent and that it had exceeded its revenue projections. The email did not identify the Alfond Inn's developer, architect, operator, number of rooms, or conference space. Mr. Robinson interpreted the ITN as permitting the committee to receive this type of information in its review process. This was a reasonable interpretation of the ITN and did not constitute an abuse of discretion. There is no evidence that any evaluator materially relied on Mr. Robinson's email in scoring his/her proposal. The evidence does not support a finding that any respondent received a competitive advantage by this action. Evaluation Committee Members' Scores Petitioner contends that three members of the committee acted arbitrarily and capriciously in the manner in which they scored the financial return criteria for both UHLC and KUD. It also contends that one of those members erroneously scored UHLC's response on the criteria of financial viability and the experience and qualifications in designing and managing hotel/conference center facilities. As relief, UHLC asks that KUD's total score be reduced from 596.5 to 537.5, and that UHLC's total score be raised from 567.0 to 597.0. On this issue, the record shows that the challenged committee members gave reasonable explanations for their scoring based on facts and logic. Petitioner also contends that the scoring process was flawed because the evaluators improperly used external sources to obtain information about the respondents. Section 2.25 allows UCF to "make investigations to determine the ability of the Respondent to perform under the ITN." UCF's interpretation of this section to mean that evaluators could use the internet and company websites in their evaluation process was not unreasonable. Many of the evaluators testified that they relied on the internet and company websites to assist them in their evaluation. One evaluator noticed on KUD's website an endorsement by Mr. Merck of KUD based on its work on a project that ended in 2007. However, he was not influenced by that information when he scored the proposals. There is no evidence that any evaluator relied on opinions of friends or others in scoring the proposals. Notably, under the terms of section 2.8.C. of the ITN, Mr. Merck was not bound by the scores of the evaluation committee. The ITN vested in him the discretion to choose KUD even if the evaluators had ranked it below UHLC. In Mr. Merck's judgment, UHLC's proposal was too oversized as to the facility, vague as to its proposed conceptual idea and hotel operator, and unsubstantiated as to some of its numbers. He was also concerned that an excessive number of hotel rooms might suffer from lower occupancy rates, leading to decreased maintenance and service in order to maintain profit margins. In sum, he concluded it was in the best interest of the University to begin pre-award negotiations with KUD, which he believed submitted the best proposal. UHLC further contends that KUD was given a competitive advantage because the initial scoring summary sent to Mr. Merck was incorrect and ranked UHLC as number four, rather than number two. After the evaluation team completed its assignment, the score sheets were sent to Mr. Robinson. He then cut and pasted those scores onto an Excel spreadsheet. Though he correctly transposed individual scores for each evaluator, the Excel spreadsheet that he used contained formulas that incorrectly tallied total scores. When first computed, Mr. Robinson's summary identified KUD in first place, but listed UHLC as number four. Although UHLC should have been ranked second, the summary listed Avista Management (Avista) as the second ranked proposal. The incorrect scores were forwarded to Mr. Merck on July 26, 2014, and were not corrected until Mr. Robinson returned from vacation on August 11, 2014. Using the incorrect score sheets, Mr. Merck prepared a summary of the four proposals, as well as an outline reviewing the total scores to the evaluators. Based upon his review, Mr. Merck intended to begin pre-award negotiations with KUD, the top ranked vendor, but if they were unsuccessful, negotiations would begin with the second ranked respondent, who he believed at that time was Avista. When the incorrect summary was given to Mr. Merck, he concluded that "KUD should be the one that we pick," and the incorrect ranking of UHLC as number four instead of number two had no bearing on his decision. At that point in the process, Mr. Merck decided that there was no reason to discuss the merits of the other three proposals, and he wanted to confirm that the evaluators were comfortable with KUD as the highest ranked respondent. KUD did not receive an unfair competitive advantage by the incorrect summary. Improper Collaboration Among Evaluators and Mr. Merck UHLC contends that by meeting with the evaluators after the proposals were opened, but before an award was made, Mr. Merck violated the terms of the ITN in a material respect. In support of this contention, UHLC points out that the ITN instructed the evaluators to "[w]ork independently" and to "not discuss the Offers or your evaluation with anyone." App. I, ITN. It also cites to another provision in the ITN that allowed evaluators to meet with Mr. Merck while the ITN specifications were being formed, but not after offers were opened on June 24. See § 2.8.C. Notwithstanding these provisions, section 2.8.C. also included the following important language: At the time of such delivery [of score sheets] to the Purchasing Person, the evaluation committee members shall cease to participate further in this ITN process unless expressly requested by Decision Maker. The Decision Maker shall review, in the manner and to the extent he/she deems reasonable under the circumstances, the ITN, the offers, and the committee members' scoring forms . . . . The Decision Maker may, at any time during this ITN process, assign one (1) or more UCF staff members to assist the Decision Maker's review prior to his/her decision-making in this process. (Emphasis added.) This language clearly allowed Mr. Merck to request a meeting with the evaluators at any time during the ITN process when expressly requested by Mr. Merck. Relying on that authority, both Mr. Merck and Mr. Robinson concluded that conferrals by Mr. Merck with the committee after receiving their scores were permitted. Here, Mr. Merck deemed it appropriate to confer with the evaluation committee members as a group to assess their overall level of comfort with KUD and their feelings on opening negotiations with both KUD and UHLC, or just KUD. The conferrals were not clearly erroneous, contrary to competition, arbitrary, or capricious, as alleged by UHLC. Pre-Award Communications With KUD Section 2.6 of the ITN prohibited respondents from making offers or amendments to their proposals once they were opened. UHLC contends that section 2.6 was materially violated when a member of the evaluation team requested clarification on an item in KUD's proposal, and KUD was allowed to correct a typographical error in its proposal. Dr. Young was a member of the evaluation team. During her review of KUD's response, she raised a question regarding how much land KUD proposed to use. She did so because KUD's proposal indicated on page 1 that 7.4 acres would be used, but in another place indicated that 4.4 acres would be used. As it turned out, the latter figure (4.4) was a typographical error. To clarify this issue, Dr. Young sent an email to Mr. Merck, who forwarded it to Mr. Robinson. Mr. Robinson sought clarification from KUD, who provided an email response that 7.4 acres (shown on page 1) was the correct figure. In response to a second question from Dr. Young, KUD also provided information regarding Olympia, one of its team members. All evaluators were given a copy of Dr. Young's original question, along with KUD's response. However, these were permissible communications under section 2.25 of the ITN, which allows UCF to "make investigations to determine the ability of the Respondent to perform under the ITN." Moreover, by simply allowing KUD to correct a typographical error when the correct acreage was listed elsewhere in its proposal, KUD was not given a competitive advantage. UHLC also contends that UFC was prohibited from communicating with KUD prior to issuing the tentative award. By August 11, 2014, Mr. Merck had decided that KUD submitted the best proposal. Accordingly, that same day, he advised Mr. Robinson that a negotiation committee would be formed to proceed with pre-award negotiations with KUD, and except for one individual, the evaluation committee members would comprise that group. The group met with KUD on September 9, 2014. Notice of the meeting was not given to other respondents. Three days later, Mr. Merck advised Mr. Robinson to publish a notice of intended award to KUD. Mr. Merck explained that the point of the meeting with KUD was "not so much to drill down on exactly the specifics of what they would deliver, but more to -- for use to develop a comfort level that the team they were putting forth was a -- was a fit for the university and that generally what they orally suggested to us was consistent with what they had put in writing in their proposal. It was more an additional kick the tires exercise." This type of meeting is authorized in numerous places throughout the ITN. See § 2.25 ("As part of its evaluation process, UCF may make investigations to determine the ability of the Respondent to perform under this ITN."); § 1.2.E. ("UCF reserves the right to conduct negotiations with the highest ranked offerer(s)."); § 2.8.A. ("UCF reserves the right to conduct negotiations if [Mr. Merck] . . . determines negotiations to be in the best interest of the university."); § 2.8.C. (Mr. Merck retains the right to negotiate with the highest ranked respondent). The University's interpretation of these provisions was not clearly erroneous, contrary to competition, arbitrary, or capricious, as alleged by UHLC. Failure to Offer Point of Entry Before Entering Pre- Award Negotiations with KUD UHLC contends that it was entitled to a point of entry to challenge Mr. Merck's decision on August 11 to begin pre- award negotiations with KUD. However, at that time, UHLC was not yet eliminated from consideration, and Mr. Merck had not made a final decision to reject the other proposals. See Fla. Bd. Gov's Reg. 18.002(3)(c)(an intended or final decision occurs only after all responses have been rejected). Moreover, section 2.8.C. allows UCF the discretion to communicate with both KUD and UHLC, or any other respondent. If negotiations with KUD were unsuccessful, UCF intended to engage with UHLC as the second ranked proposer. Pursuant to section 2.9, UHLC's meaningful point of entry was provided when a notice of intent to award a contract was posted on September 15, 2014.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the University of Central Florida enter a final order denying UHLC's Formal Protest of the Intended Award and sustaining its intention to award the contract to KUD. DONE AND ENTERED this 18th day of March, 2015, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of March, 2015. COPIES FURNISHED: W. Scott Cole, General Counsel Office of the General Counsel University of Central Florida Post Office Box 160015 Orlando, Florida 32816-0015 Seann M. Frazier, Esquire Parker Hudson Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301-1804 (eServed) Richard E. Mitchell, Esquire GrayRobinson, P.A. Post Office Box 3068 Orlando, Florida 32802-3068 (eServed) Jordan P. Clark, Esquire Office of the General Counsel University of Central Florida Post Office Box 160015 Orlando, Florida 32816-0015 (eServed) RIGHT OF REVIEW Pursuant to Regulation 18.002(13)(j), within fourteen days after rendition of this Recommended Order, the President of University of Central Florida shall issue a Preliminary Order and serve the parties with a notice of such order. If the Protestor takes exception to the Preliminary Order, the Protestor must timely file its written exceptions with the President within fourteen days after the date of this Recommended Order is issued. The Preliminary Order shall provide that, "This Preliminary Order is the Final Order unless the Protestor files written exceptions to the Preliminary Order with the President no later than 14 days after the date this Preliminary Order is issued."
