The Issue The issue in this case is whether, in making an award of a lease for office space, the Respondent acted according to the requirements of law.
Findings Of Fact In February, 1993, the Department of Labor and Employment Security ("Department") issued a Request for Proposal and Bid Submittal No. 540:0969 ("RFP") seeking to lease approximately 18,684 square feet of office space in Jacksonville, Florida, for a period of six years. The space was to house the Office of Disability Determinations ("ODD"), which processes disability claims and determines whether claimants are eligible for Social Security and Supplemental Income benefits. The office has minimal contact with the general public. The RFP provided that all bids were subject to conditions stated within the RFP. Bids not in compliance with RFP conditions were subject to rejection. RFP Article D, General Provisions, Paragraph 8 provides as follows: The Department reserves the right to reject any and all bid proposals for reasons which shall include but not be limited to the agency's budgetary constraints; waive any minor informality or technicality in bids' to accept that bid deemed to be the lowest and in the best interest of the state, and if necessary, to reinstate procedures for soliciting competitive proposals. A pre-bid conference was conducted by the Department on February 16, 1993. Representatives from the vendors involved in this proceeding attended the conference. Bids were opened on March 5, 1993. The Department received five responses, three of which were deemed to be responsive and which were evaluated. The remaining two responses were determined to be nonresponsive and were not evaluated. On or about March 10, 1993, based on the evaluations, the Department proposed to award the bid to Koger Properties, Inc. On or about March 17, 1993, the Department notified the vendors of the intended award. The Petitioners filed timely notices protesting the intended award. TOWNCENTRE PROPOSAL Paragraph 13 sets forth conditions to which a bidder must agree in order to be awarded a bid. Subsection "a" of the paragraph states, "[i]f successful, bidder agrees to enter into a lease agreement on the Department of General Services Standard Lease Agreement Form BCM 4054 (Attachment F - Do not complete)." The copy of the Department of General Services Standard Lease Agreement Form which was included in the RFP was a poorly reproduced copy. Article III of the Lease Agreement Form provides as follows: III HEATING, AIR CONDITIONING AND JANITOR SERVICES 1.a. The Lessor agrees to furnish to the Lessee heating and air conditioning equipment and maint(illegible) in satisfactory operating condition at all times for the leased premises during the term of the lease at the (illegible) of the Lessor. b. The Lessor agrees to maintain thermostats in the demised premises at 68 degrees Fahrenhe(illegible) the heating season and 78 degrees Fahrenheit during the cooling season; and certifies that boilers the(illegible) been calibrated to permit the most efficient operation. The Lessor agrees to furnish janitorial services and all necessary janitorial supplies for the leased (illegible) during the term of the lease at the expense of the Lessor. All services required above shall be provided during the Lessee's normal working hours, whic(illegible)marily from 7:30 a.m. to 5:30 p.m., Monday through Friday excluding state holidays. Also attached to the RFP was a copy of an addendum to the lease, also poorly reproduced. The addendum provides as follows: Article III, Paragraph III Addendum for Full Service Lease The lessor and lessee mutually agree that the described prem(illegible) leased in this lease agreement shall be available to the department (lessee) for its exclusive use twenty four (24) (illegible) per day, seven (7) days per week during the lease term. T(illegible) space to be leased by the department will be fully occupied during normal working hours from 7:30 a.m. to 5:30 p.m., Mo(illegible) through Friday, excluding holidays, Saturdays and Sundays, (illegible) may be fully or partially occupied during all other periods (illegible) time as necessary and required at the full discretion of th(illegible) department. Accordingly, services to be provided by the le(illegible) under the terms of the lease agreement, including electrici(illegible) other utilities, will be provided during all hours of occup(illegible) at no additional cost to the department (lessee). Although the copy of the lease agreement and addendum included in the RFP were poorly reproduced, it is clear that the addendum modifies the paragraph of the lease agreement related to provision of heating, air conditioning and janitorial services to require that HVAC services be provided throughout the premises during all hours of occupancy at no additional cost to the Department. The proposal submitted by Towncentre included an "Attachment Z" which states as follows: The following represent exceptions and/or clarifications to the terms of the Request for Proposal and Bid Submittal Form ("RFP") for the referenced Lease. Except as noted herein, Bidder shall comply fully with the terms of the RFP..." Item #7 of Attachment Z states as follows: The Building in which the space is offered is serviced by central heating, ventilating and air conditioning; therefore, no separate thermostats will be provided in the space other than in the computer room. However, the required temperature standards will be maintained and satisfied. The computer room HVAC shall be available 24 hours a day. Otherwise, after-hours HVAC is billed at $80 per hour. Attachment Z also included additional exceptions to the provisions of the RFP. Contrary to the requirements set forth in the addendum attached to the lease form included in the RFP, the Towncentre proposal included additional charges for after hours uses. The Department determined that the Towncentre proposal was nonresponsive and disqualified the proposal from further consideration. Because the Towncentre proposal includes HVAC charges which are specifically prohibited under the terms of the RFP, the Towncentre proposal is nonresponsive to the RFP. Towncentre asserts that other sections of the RFP indicate that, within the leased premises, only the computer room is required to be heated or cooled on a continuous basis. Vendors had an adequate opportunity to direct questions regarding the RFP to Department officials. There is no evidence that Towncentre sought clarification from the Department related to this matter prior to submitting the bid proposal. In the notification to Towncentre that the bid had been determined to be nonresponsive to the RFP, the Department identified the other exceptions as additional reasons for the determination of nonresponsiveness. At hearing Towncentre introduced no evidence related to the remaining items included within Attachment Z. BRYAN SIMPSON JR. FOR P.V. ASSOCIATES The Simpson bid was deemed to be responsive and was evaluated. The evaluations were performed by three Department employees, Dorea Sowinski, Albert Cherry, and Tom Mahar. On March 9, 1993, the evaluators visited the physical locations of the three responsive bids. (Although the bid had been declared nonresponsive, they also visited the Towncentre site, apparently as a courtesy.) The Simpson space is located in downtown Jacksonville. After completion of the site visits, the evaluators separately and independently completed their evaluation sheets. The evaluators awarded a total of 262 points to Koger Properties and 248 points to Simpson. Page 7 of the RFP sets forth the evaluation criteria which were considered in awarding evaluation points. The RFP stated as follows: The successful bid will be the one determined to be the lowest and best. All bids will be evaluated based on the award factors enumerated below: Rental, using Present Value methodology for basic term of lease (See D, General Provisions Items 3 and 4) applying the present value discount rate of 5.6 per cent. (Weighing: 35) Conformance of and susceptibility of the design of the space offered to efficient layout and good utilization and to the specific requirements contained in the Invitation to Bid. (Weighing: 20) The effect of environmental factors, including the physical characteristics of the building and the area surrounding it on the efficient and economical conduct of the Departmental operations planned for the requested space. (Weighing: 20) Offers providing contiguous space within preferred boundaries. (Weighing 5) Frequency and availability of satisfactory public transportation within one block of the offered space. (Weighing 15) Availability of adequate dining facilities within one mile of the offered space. (Weighing: 2) Proximity of offered space to the clients served by the Department at this facility. (Weighing: 3) Proximity of offered space to other Department activities as well as other public services. (Weighing: 0) TOTAL POINTS: 100 Simpson asserts that the evaluators acted improperly in awarding points in categories 3, 5, 6 and 7. Category 3 relates to the effect of environmental factors, including the physical characteristics of the building and the area surrounding it on the efficient and economical conduct of the Departmental operations planned for the requested space. Although Simpson asserts that category 3 is vague and ambiguous, there was no objection to the category prior to the submission of the bid responses and the announcement of the proposed lease award. Each evaluator could award up to 20 points in this category for a total of 60 available points. Koger was awarded 55 points. Simpson received 27 points. As to individual evaluators awards, Tom Mahar awarded Simpson five points, Albert Cherry awarded Simpson ten points, and Dorea Sowinski awarded Simpson 12 points. Based on the written memo dated March 10, 1993, identifying the reasons for the recommended bid award, two of the three evaluators considered the Koger space to be located in a safer area than the Simpson facility, and, at least in part, based their point awards on this factor. The two evaluators cite minimal anecdotal information in support of their opinions. The evaluators undertook no investigation related to safety issues and there are no facts to support their opinions. Their award of points for "environmental factors" is arbitrary. Category 5 relates to the frequency and availability of public transportation within one block of the offered space. Each evaluator could award up to 15 points in this category for a total of 45 available points. Both Koger and Simpson received the maximum 45 points. RFP Page Two, question 8 provides as follows: Public Transportation availability: BIDDER RESPONSE: (Check appropriate box) Taxi , Bus , Frequency of service closest bus stop . Both Koger and Simpson indicate service by taxi and bus. The Koger proposal indicates a frequency of service as "8 BUSES" and the closest bus stop as "IN FRONT OF BUILDING ON WOODCOCK DRIVE." Simpson indicates a frequency of service as "15 minutes" and the closest bus stop as "front of building." The Department asserts that the Koger level of transportation access, albeit less than that serving the Simpson site, is satisfactory and therefore entitled to an award of all points available. Simpson asserts that the greater availability of public transportation to the Simpson site should result, under the terms of the evaluation criteria, in Simpson receiving more points than the Koger site for this category. The evaluation criteria clearly requires consideration of both the frequency and availability of satisfactory public transportation. Simpson asserts that in considering the transportation category, the evaluators should have reviewed local public transportation schedules. Review of such schedules establishes that the Simpson site is served more frequently by public bus transportation than is the Koger site, and further establishes that the number of bus routes directly serving the Simpson property far exceeds the routes serving the Koger site. Simpson did not include the schedules in the RFP response. The Simpson site is also located nearby the downtown public transportation transfer station at which point many, perhaps all, local bus routes connect. Simpson did not denote the location of the transfer station in the RFP response While the evaluation committee is not required to consider the bus schedules in reviewing bid proposals, the evaluation committee failed to consider the substantially greater frequency and availability of public transportation to the Simpson site relative to the Koger site, as set forth in the respective RFPs. The Department's position is contrary to the specific criteria identified in the RFP. The award of equivalent points for transportation access to both Simpson and Koger is unsupported by fact or logic and is arbitrary. Category 6 relates to the availability of adequate dining facilities within one mile of the offered space. Each evaluator could award up to two points in this category for a total of six available. Koger was awarded six points. Simpson received one point. When the evaluators rated the adequacy of dining facilities, they considered only those dining facilities which were located within two blocks of the offered space. Such is contrary to the clear terms of the RFP. The Department offered no rationale for the decision to amend the RFP criteria after submission of the proposals. The Simpson RFP response states only that there are adequate dining facilities within walking distance of the offered facility. The Koger response states that there are "three (3) sandwich shops within walking distance in the Koger center and other numerous restaurants within one (1) mile." As to individual evaluators awards, Tom Mahar awarded Simpson one point, while both Albert Cherry and Dorea Sowinski awarded Simpson zero points. Mahar's award was based on his opinion, again based on alleged safety concerns, that employees would be hesitant to walk to nearby restaurants and that driving and parking presented a problem in the downtown location. Cherry voiced a similar opinion. As to alleged safety concerns, Mahar and Cherry again based their opinions on minimal anecdotal information, supported by neither fact nor logic. Neither evaluator undertook any factual analysis of the safety issues relative to the proposed site. Their award of points for this category is arbitrary. On the other hand, Sowinski did not see any restaurants close to the Simpson site during the site visit. In excess of 40 restaurants are located within one mile of the Simpson site. The restaurants provide a variety of dining options both as to expense and fare. Sowinski's failure to observe restaurants located across the street from the Simpson site is, although difficult to understand, apparently a simple mistake on her part. Category 7 relates to the proximity of offered space to the clients served by the Department at this facility. Each evaluator could award up to three points in this category for a total of nine available. Simpson offered no evidence that the determination of points awarded for category 7 was inappropriate.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Labor and Employment Security enter a Final Order DISMISSING the protest filed by Towncentre Venture, and WITHDRAWING the proposed award of lease contract based on the Request for Proposal and Bid Submittal No. 540:0969. DONE and RECOMMENDED this 28th day of June, 1993, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 28th day of June, 1993. APPENDIX TO CASES NO. 93-2015BID and 93-2106BID The following constitute rulings on proposed findings of facts submitted by the parties. Petitioner Towncentre Venture Towncentre Venture's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 4. Rejected, second sentence is irrelevant. 5-7. Rejected, irrelevant. Taken as a whole, the RFP indicates that HVAC services are to be provided throughout the leased premises during all hours of occupancy at no additional cost to the Department. The evidence fails to establish that the vendors were confused about the terms of the RFP. There were apparently no related questions addressed to Department personnel during the pre-bid conference or at any time subsequent to the conference and prior to the bid opening. 10. Rejected. Not supported by the document cited which does not identify the attachment by letter. 13. Rejected, irrelevant. The standard form lease included in the RFP was a sample document. None of the blank spaces were completed. 16. Rejected, irrelevant. The attendees at the conference were provided an opportunity to inquire as to all matters. There were apparently no questions asked related to the RFP's requirement that HVAC services be provided throughout the facility during all hours of occupancy at no additional cost to the Department. 17-18, 20-21. Rejected, irrelevant. The terms of the RFP are clear. 19. Rejected, irrelevant. The terms of the addendum for full service lease clearly indicate that such HVAC services were to be provided at no additional charge, not just in the computer room, but throughout the entire leased facility. 22. Rejected. The Towncentre bid was nonresponsive to the terms of the RFP. Petitioner Bryan Simpson, Jr., for P. V. Associates P. V. Associates' proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 3. Rejected, not supported by the greater weight of the evidence which establishes that the RFP was issued seeking space for the Jacksonville Office of Disability Determinations. 4, 23, 24. Rejected, unnecessary. Respondent Department of Labor and Employment Security The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 17. Rejected. The decision to award equivalent points for public transportation access fails to reflect the substantially greater access provided to the Simpson site and is arbitrary. 20-21. Rejected, not supported by greater weight of evidence which establishes no evidence that safety concerns were based on a reasonable evaluation of facts. There are no facts to support the conclusion that the Simpson location if less safe than the Koger site. COPIES FURNISHED: Shirley Gooding, Acting Secretary Suite 303, Hartman Building 2012 Capital Circle S.E. Tallahassee, Florida 32399-2152 Cecilia Renn Chief Legal Counsel Suite 307, Hartman Building 2012 Capital Circle, S.E. Tallahassee, Florida 32399-2152 Thomas M. Jenks, Esquire Pappas and Metcalf, P.A. 1 Independent Drive, Suite 3301 Jacksonville, Florida 32202 Nathan D. Goldman, Esquire Marcia Maria Morales, Esquire 200 Laura Street Post Office Box 240 Jacksonville, Florida 33202 Edward Dion, Esquire Assistant General Counsel Suite 307, Hartman Building 2012 Capital Circle S.E. Tallahassee, Florida 32399-2189
The Issue The issue in this cause is whether costs and attorney's fees are due Petitioner, hereinafter PROCTOR, from Respondent, hereinafter HRS, pursuant to Section 57.111, Florida Statutes, as a result of Division of Administrative Hearings Case Number 91-5963-BID, and, if so, the amount of costs and fees.
Findings Of Fact The petition for fees and costs herein is brought exclusively under Section 57.111, Florida Statutes, and relates back to a bid protest wherein PROCTOR and TCC #3 LTD., INC., hereafter TCC, were the only bidders on HRS lease 590.236. PROCTOR was the protestant/Petitioner and TCC was the apparent successful bidder/Intervenor in Derick Proctor v. Department of Health and Rehabilitative Services, DOAH Case No. 91-5963BID. HRS' Invitation to Bid (ITB) for lease 590:236 required bidders to submit evidence of control of the property being offered, including the parking areas. Evidence of control could take the form of a deed for the property, an option to purchase the property, or a lease or option to lease showing a right to sublease. TCC did not submit a document labelled "deed," "option to purchase," "lease," or "option to lease" with its bid. TCC submitted as its evidence of control a contract for sale and purchase of the property with Hernando Plaza, Ltd., executed by Edward M. Strawgate and Harold Brown representing themselves to be general partners of the limited partnership. At all times material, the actual record title of the property submitted by TCC for the bid was in the Victor and Lillian Brown Foundation. At the times of the bid opening, evaluation, and August 27, 1991 notice of intended award, HRS had no reliable information as to what entity actually owned the property offered by TCC, and TCC had not disclosed to HRS that its contract to purchase the property was with an entity other than the record owner. Up to then, at least, Hernando Plaza, Ltd. had represented itself to TCC as being the owner of the property. The ITB did not require an abstract of title to be submitted with the bid. HRS normally does not require an abstract from successful bidders, although the ITB contained provisions for future disclosures from successful bidders. Absent some reason to "go behind" facial evidence of control, HRS' ITB attempted at the time to protect HRS by requiring successful bidders to post an irrevocable letter of credit to be forfeited in the event a successful bidder could not perform and for future disclosures concerning the chain of title. (See the recommended order in the underlying case). HRS accepted the contract to purchase the property from Hernando Plaza, Ltd. as TCC's required evidence of control, believing it to constitute an option to purchase. (See Findings of Fact 15-17 infra, this final order). On August 27, 1991, PROCTOR received from HRS a notice of intent to award the bid to TCC. This notice constituted the "window" for protests, if any, to be filed. PROCTOR then timely filed a notice of intent to protest and a formal written protest of the award to TCC. The filing of this protest resulted in an automatic suspension of the bid solicitation and contract award process and referral of the matter to the Division of Administrative Hearings, pursuant to Section 120.53(5)(c), Florida Statutes. This protest formed the basis of the underlying bid case, DOAH Case No. 91-5963BID. No later than the time of the Prehearing Order of September 23, 1991 in Case No. 91-5963BID, the law firm of Gibbs and Rudzik had made known to the hearing officer and counsel for both PROCTOR and HRS its retention as counsel for TCC. TCC moved for leave to intervene in a motion filed September 30, 1991, which was granted in an order of October 4, 1991. In a letter of October 10, 1991, counsel for PROCTOR made counsel for HRS aware of a question of whether TCC could obtain good title to the property. Counsel for PROCTOR proposed in a letter of October 14, 1991 to counsel for HRS that HRS reject both PROCTOR's and TCC's bids and rebid the lease, but this letter was primarily devoted to determining if HRS wished to interpose a new defense that PROCTOR's bid was unresponsive. In the instant fees and costs case, PROCTOR relies on its October 14, 1991 letter as the point from which HRS should have acted to avoid incurring attorney's fees and costs. After the receipt of the two letters, HRS did not reject both bids and rebid the contract but proceeded to formal hearing on October 30, 1991. PROCTOR and HRS share the mutual impression that had HRS accepted PROCTOR's proposal to reject both bids, HRS would have to have allowed TCC an opportunity to protest that decision. At the final hearing in Case No. 91-5963BID, evidence was offered that Hernando Plaza, Ltd. had a conditional option to purchase the property from the record title owner, the Brown Foundation. However, it was not established at the hearing that the conditions of the option had been fulfilled or that TCC or Hernando Plaza, Ltd. could otherwise gain good title to the property through a valid option. It was concluded as a matter of law in Case No. 91-5963BID, that on its face, the ITB stated that control could be evidenced merely by attachment of an "option to purchase," that the ITB stated no further requirements concerning the internal provisions of the option to purchase, and that TCC's conditional contract for purchase constituted a conditional option to purchase. The conditions of the option to purchase and the chain of title, among myriad other matters were subjects of proof at the formal hearing. The conditions of the option to purchase and various complicated real property concepts arising from recorded and unrecorded parts of the chain of title constituted the thrust of the recommended order's assessment that TCC's "control" was speculative only. It is here noted that the totality of the "chain" of title might have been unavailable even by "abstract" due to the lack of recordation of some documents. The lengthy formal hearing adduced evidence concerning the factual issue of whether or not the conditional option to purchase was between TCC and an entity which had such a sufficiently unequivocal interest in the proposed property that it could convey title to TCC in time for TCC to fulfill its obligations under its proposed lease to HRS. There is no evidence that HRS knew of these problems on August 27, 1991, when it gave notice of its intent to award the bid to TCC. Hernando Plaza, Ltd. was the entity with which TCC had contracted. At formal hearing, TCC relied on the legal concept that all interests in the property had merged in the non-title holder, Hernando Plaza, Ltd. This concept, together with recorded and unrecorded elements in the chain of title which were presented at formal hearing, were determined in the recommended order to be too "speculative" on the issue of TCC's control. However, it was also found, upon evidence submitted at formal hearing, that TCC's bid contained no other material deviations from the requirements of the ITB, that the signator of TCC's bid had sufficient status to submit the bid for the TCC corporation, and that TCC's signator could not submit the bid as an agent of the owners of the real property. TCC and its bid signator had never purported to have submitted the bid on behalf of the owners of the real property. (See the recommended order of the underlying bid case.) These issues were raised by PROCTOR and they addressed more than just the facial compliance of TCC's original bid documents which was all HRS had to consider when it made its initial decision in favor of TCC and against PROCTOR. However, the recommended order found HRS to have materially deviated in a number of ways from the bid process in its initial evaluation of PROCTOR's bid, not the least of which was determining that PROCTOR had complied with the ITB requirements for demonstrating control. All such evaluation flaws had been committed by HRS in favor of PROCTOR. Both TCC's and PROCTOR's bids were ultimately found to be unresponsive in the recommended order entered on December 20, 1991. The recommended order also found both had standing to be involved in the bid protest and formal hearing. The recommended order recommended rejecting both bids and readvertising the ITB. The Final Order of HRS entered on January 20, 1992 dismissed PROCTOR's protest on the basis that he lacked standing to protest, as his bid was unresponsive, and awarded the bid to TCC. HRS did not give PROCTOR notice that his bid was not responsive until it issued its Final Order. The Final Order of HRS was appealed to the First District Court of Appeals by PROCTOR. The First District Court of Appeals entered an order on June 22, 1992 finding PROCTOR had standing and remanding the case back to HRS for the purpose of a decision of the issue of whether TCC's bid was also unresponsive. On July 27, 1992, HRS entered its Amended Final Order determining both bids to be unresponsive and that the lease should be relet for bids. The First District Court of Appeals affirmed the Amended Final Order of HRS in a per curiam opinion without discussion on October 13, 1992. HRS did not reject both bids and rebid the contract until after this per curiam opinion. No motion for rehearing was filed with respect to either of the First District Court of Appeals' orders entered June 22 or October 13, 1992, nor was any notice to invoke the discretionary jurisdiction of the Supreme Court filed. PROCTOR did file a motion for rehearing solely on the court's denial of PROCTOR's motion for appellate fees. Mandate was issued by the Clerk of the First District Court of Appeals on December 3, 1992. HRS entered an Order Directing Release of Bid Protest Cost Bond on December 18, 1992, in which HRS stated: Petitioner, Derick Proctor, has prevailed in the above styled bid protest. Petitioner's domicile and principal place of business is Vero Beach, Florida. Petitioner has one employee. Petitioner is a sole proprietorship. Petitioner's net worth does not exceed $2,000,000.00. HRS was not a nominal party in the underlying bid case. HRS did not initially challenge PROCTOR's "small business party" status in this instant fees and costs proceeding. Therefore, that allegation of the fees and costs petition is not at issue. Also, Petitioner's "small business party" status is now stipulated to exist. The parties have stipulated that the maximum statutory fee is $15,000.00 and that $15,000.00 is a reasonable fee if an award of attorney's fees is due. HRS has not protested or objected to the amount of costs claimed, $411.25, if costs are due.
The Issue The issue in this case is whether Respondent, the Department of Children and Families, properly rejected all bids received on an Invitation to Bid on Proposed Lease No. 590:2622.
Findings Of Fact The Existing Lease and the Decision to Look for New Space. District 7 of the Respondent, the Department of Children and Families (at all times relevant to this proceeding, the Department of Children and Families was known as the Department of Health and Rehabilitative Services)(hereinafter referred to as the “District”), leases approximately 26,955 spare feet of office space located in Palm Bay, Brevard County, Florida. The space is used as a client service center. Pursuant to the District’s current lease, the lease will expire on April 30, 1997. The current lease (hereinafter referred to as the “Existing Lease”) was still in effect at the time of the formal hearing of this matter. The Existing Lease also provides for a five-year renewal. For the first two years of the renewal period, the Existing Lease provides for a rental rate of $11.50 per square foot. For the third and fourth years of the renewal the rate is $11.75 and for the last year, $12.00. In June of 1995, the District submitted a Letter of Agency Staffing (hereinafter referred to as a “LAS”) and a Request for Prior Approval of Space Need (hereinafter referred to as a “RSN”), to the Department of Management Services. Pursuant to the LAS and RSN, the District sought approval from the Department of Management Services to seek a new lease of 26,872 square feet of office space in Palm Bay. The reasons given for seeking approval of a new lease set out in the RSN were as follows: New Service Center in Brevard County(Palm Bay Area). The existing lease is up! 4/30/97. The current space does not adequately provide for : (1) Secured storage, visitation areas, and case file storage. The June of 1995, RSN was approved. The District, however, did not immediately seek the approved space. The evidence failed to prove why. In July of 1996 the District submitted another Request for Space Need (hereinafter referred to as the “Second RSN”). The same amount of space was sought and the same justification for seeking new space was described in the Second RSN. The Second RSN was approved by the Department of Management Services on or about July 8, 1996. The RSN and the Second RSN were prepared by Jim Birch. Mr. Birch is the District’s Facilities Services Manager. The reason for seeking a new lease set out in the RSN and the Second RSN was provided to Mr. Birch by Bill Rawlings and Philip Penley. Mr. Penley is the District’s Sub-District Administrator for Brevard County. Mr. Rawlings is the Program Administrator for Brevard County. The Existing Lease was first entered into in 1977. The amount of space leased has increased over the years and is located in more than one building. Mr. Penley decided to request approval to seek new space in the hopes that the client service center in Palm Bay could be moved under one roof and in the hopes that more ideal space could be obtained. The representation in the RSN and the Second RSN that the existing space “does not adequately provide for: (1) Secured storage, visitation areas, and case file storage” is misleading and incorrect. The programs located in the existing space in Palm Bay can, in fact, be carried out without relocating. The Invitation to Bid. The District released an Invitation to Bid (hereinafter referred to as the “ITB”), between July 16 and July 19, 1996. The ITB provided that the “Project Contact Person” was Mr. Birch. The ITB sought bids on proposed lease number 590:2622, for approximately 26,872 square feet of office space in an existing building. The ITB sought office space in Palm Bay. The building was to be used as the District’s client service center. The term of the lease was to be ten years with five one-year optional renewal periods. The ITB scheduled a pre-bid meeting for August 8, 1996. Attendance at the meeting was not mandatory. The ITB specified, however, that “information and explanations provided at this meeting must be complied with by the bidder ” A representative of Petitioner, Executive Ventures (hereinafter referred to as “Executive”), attended the pre-bid meeting on August 8, 1996. During that meeting, the lessor under the Existing Lease asked questions about the renewal terms of the Existing Lease. Executive’s representative informed Executive of the discussions soon after the meeting. Executive was, therefore, aware of the existence of the Existing Lease and the fact that it could be renewed prior to submitting a bid in response to the ITB. The ITB provided that bids could be submitted at any time up to 10:00 a.m., September 12, 1996. Bids were to be opened at the close of the bidding period. The ITB provided that all bids received were to be evaluated first for technical responsiveness. Nonresponsive bids were to be withdrawn from further consideration. Responsive bids were to be presented to a bid evaluation committee “for comparison and formulation of a recommendation for award.” The ITB informed potential bidders that the District reserved the right to reject all bids received in response to the ITB. The first page of the ITB provides that “[t]he Florida Department of [Children and Families] reserves the right to reject any and all bids and award to the bid judged to be in the best interest of the state.” At page A1-5-8 of the ITB the following is provided concerning the rejection of bids: ITB. REJECTION OF BIDS 1. The department reserves the right to reject any and all bids when such rejection is in the interest of the State of Florida. Such rejection shall not be arbitrary, but be based on strong justification which shall be communicated to each rejected bidder by certified mail. [Emphasis in original]. . . . . Bids Submitted in Response to the ITB. A total of four bids were submitted in response to the The bids were opened on September 12, 1996. A bid tabulation sheet was prepared by Mr. Birch. The annual rental rates per square foot for the ten years of the lease were included on the tabulation as required by the ITB. Pursuant to the ITB, no other information was provided at the time the bids were opened and tabulated Executive submitted one of the four bids. Executive’s bid consisted of 90 to 100 pages. Executive expended a good deal of effort and incurred expenses in the amount of approximately $17,000.00 in preparing its bid. The suggestion that Executive incurred unnecessary expenses is not supported by the weight of the evidence. The rental rates per square foot bid by Executive for the term of the proposed leased are as follows: Year Rate 1 $14.56 2 15.00 3 15.53 4 16.08 5 16.73 6 17.40 7 18.10 8 19.01 9 19.96 10 20.96 The District’s Decision to Reject All Bids. Mr. Birch had expected to receive rental rate bids in the range of $12.00 to $13.00. Mr. Birch’s expectation was based upon what he had been told to expect by John Stewart and Mr. Penley. Mr. Stewart is the District’s General Service Manager. Upon tabulating the bids, Mr. Birch discovered that the bids were higher than expected. He realized that the bids were $3.00 per square foot higher than the Existing Lease. Mr. Birch contacted Mr. Stewart and informed him of the difference in rates. Mr. Stewart informed Mr. Penley of the rates that had been bid. Mr. Penley informed Mr. Stewart that the bid rates were too high. Mr. Stewart then informed Sid McAlister, the Deputy District Administrator, and Paul Sneed. Mr. McAlister and Mr. Sneed told Mr. Stewart that the rates bid were excessive. Mr. Stewart subsequently directed Mr. Birch to notify the bidders that all bids were being rejected. Had the bids received in response to the ITB been accepted, the District would have been required to pay an additional approximately $80,000.00 in rent during the first year of the lease. The amount of rent required in the second year would be in excess of $80,000.00. The decision to reject all bids was based upon a realization of the impact the rates contained in the bids would have on the District’s budget if the lowest bid were accepted in relation to the impact on the District’s budget of the rates of the Existing Lease. The District realized that the increase in rent would have a substantial negative impact on its budget. It was also suggested that the impact on the District’s budget as a result of the newly enacted Federal “Welfare Reform Act” was also considered. In particular, the impact of the Welfare Reform Act’s “Work and Gaining Economic Self Sufficiency” or “WAGES” program was considered. The Welfare Reform Act and, consequently WAGES, was signed into law in August of 1996. WAGES was effective October 1, 1996. Among other things, WAGES establishes time limits for the District’s clients' receipt of cash benefits. It also results in the integration of programs of the District and the Department of Labor. This integration of programs will have impacts on the District’s space needs, staffing levels and the ability to pay rental rates in the future. Mr. Penley was aware of WAGES. It was suggested that at the time the ITB was issued little was known about the impact on the District that WAGES would have and that it was not until the bids were received that Mr. Penley had sufficient information concerning WAGES to be concerned about the impact of WAGES on the District’s budget. The weight of the evidence in this case failed to prove that when the decision of the District to reject all bids was made that the decision was based upon WAGES. While the impact of WAGES was of greater concern at the time of the formal hearing, the evidence failed to prove that the District’s concern about WAGES as explained at the formal hearing was taken into account at the time the bids were rejected. Notice of the District’s Decision to Reject All Bids. On September 13, 1996, the day after the bids were opened, the District sent a letter to Executive and the other bidders informing them of the decision to reject all bids: This is to give notice that in the best interest of the State of Florida and the Department of [Children and Families], that any and all bids are hereby rejected. The letter was signed by Mr. Birch. The letter informing Executive of the decision was sent by certified mail. “Strong justification” for the rejection was not “communicated to each rejected bidder by certified mail.” After receiving the September 13, 1996 rejection letter, Executive was informed during a telephone call with Mr. Birch that all bids had been rejected due to excessive rental rates and budgetary constraints. The District failed to comply with the requirement of the ITB that it inform bidders by certified mail of the reason why it rejected all bids. The appropriate remedy for this error, however, would not be to require that the District now evaluate the bids. The appropriate remedy for the error would be to require that the District send out a corrected notice by certified mail containing the explanation of the reasons for rejecting the bids required by the ITB. This remedy would only be appropriate, however, if Executive had sought such a remedy AND the evidence had proved that Executive had been prejudiced by the failure to provide the explanation of the District’s justification for rejecting all bids contemplated by the ITB. Evidence to support such a finding was not presented. In fact, the evidence proved that Executive was not prejudiced by the District’s error. Executive was given additional information concerning the bid rejection during a telephone conversation and it had an opportunity to explore the reasons for the rejection through discovery prior to the formal hearing of this case. Executive, therefore, had the opportunity to determine the specific justification for the rejection in preparation for the hearing on this matter. Zone Rates. The Department of Management Services establishes maximum rental rates which agencies can agree to pay without obtaining approval of the Department of Management Services. The rates are established for geographic zones on what is referred to as a “Zone Rate Schedule”. Zone Rate Schedules may be obtained from the Department of Management Services or other agencies by potential bidders. At all times relevant to this proceeding Executive was aware of the Zone Rate Schedule applicable to Palm Bay. Rental rates which do not exceed the zone rate by more than 10% may be accepted by an agency without further approval from the Department of Management Services. Any rate in excess of 10% over the zone rate must be approved by the Department of Management Services before an agency may accept it. The rental rates submitted by Executive in response to the ITB exceeded the zone rate but not by more than 10%. Individuals involved with the District’s decision in this matter either were not aware of the Zone Rate Schedule or gave it no consideration in deciding to reject all bids. The evidence also failed to prove that agreeing to pay a rate included on a Zone Rate Schedule for which approval from the Department of Management Services need not be obtained is necessarily in the “best interest of the state”. Additionally, the evidence failed to prove that the District did not have a reasonable basis for rejecting all bids despite the fact that the rates bid by Executive were within the Zone Rate Schedule plus 10%. Executive’s Challenge. Executive filed a Protest dated September 25, 1996, challenging as arbitrary the Department’s decision to reject all bids. In its Protest Executive alleged the following “facts” in support of its argument that the District’s rejection of all bids was arbitrary: The District failed to “communicate to each rejected bidder any justification whatsoever for rejecting any and all bids.” The District had decided to “reject any and all bids if the bid rental per square foot exceeded the rental they were paying under their present Lease, since such Lease had an option to renew for an additional five years. The present Lease renewal failed to comply with the requirements and specifications set forth in the Invitation to Bid.” The District, “at all times, knew that if such bids exceeded the square foot rental of the present Lease, that they intended to reject all bids and renew the existing Lease, although the existing Lease failed to meet the bid specifications.” The District “violated the competitive bidding procedure by failing to include in their Invitation to Bid a provision that any bid exceeding a specific dollar amount per square foot would be rejected in favor of the existing Lease. ” Although the evidence proved the first fact cited in finding of fact 51, that fact does not support a conclusion that the District’s decision was arbitrary. As to the other facts alleged by Executive in its Protest cited in finding of fact 53, the evidence simply failed to prove those alleged facts. At hearing, Executive presented the testimony of Mary Goodman, a consultant and former Chief of the Bureau of Property Management, Department of Management Services. Ms. Goodman was accepted as an expert witness. Ms. Goodman opined that the District’s actions in this matter were arbitrary. Ms. Goodman’s opinion was based in part on her conclusion that the submittal of the RSN and the Second RSN constituted a “determination by the Department to not renew the existing lease.” The evidence failed to support this contention. Executive has failed to cite any provision of Florida law which supports this contention. Ms. Goodman also based her opinion on the assumption that the District had established a rental rate cap which it failed to inform prospective bidders of. The evidence failed to support this assumption. Ms. Goodman also based her opinion on the fact that the bid submitted by Executive was within the Zone Rate Schedule for the area. The evidence in this case failed to prove that the fact that the bids were within 10% of the Zone Rate Schedule rates means that the decision to reject bids that would have cost the District approximately $80,000.00 the first year in additional rent was arbitrary because the rental bids did not require approval of the Department of Management Services. Executive has cited no provision of Florida law that requires agencies to accept bids simple because they do not require approval from the Department of Management Services. Ms. Goodman also based her opinion on her conclusion that the District should have known of its budgetary constraints before issuance of the ITB. Ms. Goodman, however, acknowledged that she knew nothing specifically about the District’s budget. Finally, Ms. Goodman based her opinion on the District’s failure to provide the notice of the District’s reason for rejecting the bids required by the ITB. As discussed, supra, the evidence failed to support this conclusion. The evidence failed to prove that Executive filed the action for an improper purpose.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Department of Children and Families dismissing the Protest filed by Executive Ventures. DONE and ORDERED this 30th day of April, 1997, in Tallahassee, Florida. LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 1997. COPIES FURNISHED: Walter Smith, Esquire SMITH, GRIMSLEY, BAUMAN, PINKERTON, PETERMANN, SAXER, WELLS Post Office Box 2379 Fort Walton Beach, Florida 32549 Eric D. Dunlap Assistant District Legal Counsel Department of Children and Families 400 West Robinson Street Suite S-1106 Orlando, Florida 32801 Richard A. Doran General Counsel Department of Children & Families Building 2 Room 204 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory D. Venz, Agency Clerk Department of Children & Families Building 2, Room 204 1317 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact At some time prior to August 2, 1984, DOT issued bid blanks for a mini- contract for State Project No: 76020-3515, for work consisting of cleaning and guniting a concrete box culvert located on State Road 19, in Putnam County, Florida, approximately one mile south of the Cross Florida Barge Canal. The bid package, signed by C. A. Benedict, District Engineer, for the DOT, specifically reserved the right to reject any and all bids. The bid package broke the work down into three item numbers. The first was mobilization and called for one pricing unit. The second item called for maintenance of traffic at the work site and called for one pricing unit as well. The third area called for restoration of spalled areas (gunite) and called for approximately 437 cubic feet to be priced. In this regard, the plans furnished with the bid package and the bid package itself, in at least three separate locations, called for the bid as to the last item to be priced and paid for on a unit price basis. Petitioner submitted the lowest bid of seven bidders. It was determined to be faulty, however, in that though it properly priced the first two items, it failed to submit a unit price for the third item per unit, submitting instead a total price for the third item based on the entire cubic footage. Petitioner's bid indicated 437 cubic feet priced at a total of $17,832.00. Simple arithmetic permits a division which results in a unit price for each of the 437 cubic feet of $40,805. This last unit price, however, is not reflected on the bid submitted by Petitioner. Petitioner's bid is the only bid of the seven submitted which did not contain a unit price for each of the units in the third item. EDS has been in business since 1980. It performed one previous contract for DOT and is familiar with DOT's rules regarding bidding. It had ample opportunity to examine the plans and the bid blank before submitting its bid and admits that the unit price, though required, was omitted. Petitioner contends, however, that the omission is not a material variance and can be waived by Respondent. Respondent contends, on the other hand, that the failure to list the unit price in the third item is material. This determination is based on the fact that since the bid package calls for payment on a unit basis, the odd one- half cent per unit does not permit even money payment and requires rounding off. Even with this being true, the maximum difference would be one- half cent to be rounded off either upwards or downwards. At some point after opening, at least one of the unsuccessful bidders found out that Petitioner's bid failed to technically conform to the terms of the bid blank and at this point the second lowest bidder, Vann's Sandblasting, whose bid was $4,000.00 higher than that of Petitioner, and who had done several contracts for Respondent in the past, indicated that if petitioner's bid were not rejected, he would file a protest. The one-half cent variance, itself, is not material. Considering all factors, however, the failure to state the unit price may, under certain circumstances, be.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is, therefore: RECOMMENDED THAT Petitioner, EXPLOSIVE AND DIVING SERVICES, INC., be awarded the contract for State project No 76020-3515. RECOMMENDED this 27th day of February, 1985, at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 27th day of February, 1985. COPIES FURNISHED: Gail S. Wood, President Explosive and Diving Services, Inc. Post Office Box 200 Clarksville, Florida 32430 Larry D. Scott, Esquire Department of Transportation Haydon Burns Building, MS-58 Tallahassee, Florida 32301 Paul Pappas, Secretary Department of Transportation Haydon Burns Building, MS-58 Tallahassee, Florida 32301
The Issue Whether Respondent was justified in cancelling the award of bid of HRS Lease No. 590:2054 to Petitioner, BOOZER, on the basis that it was nonresponsive. Whether Respondent acted fraudulently, arbitrarily, illegally or dishonestly in issuing an award of HRS Lease No. 590:2054 to Intervenor rather than to Petitioners or some other bidder.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: HRS caused an invitation to bid to be advertised regarding Lease No. 590:2054 on January 3, 1989 and January 10, 1989. The Invitation to Bid required that all bids be received on or before 2:30 p.m. February 1, 1989, for 9,168 net rentable square feet, plus or minus 3%, of existing office space. A pre- bid meeting was scheduled for January 11, 1989. The advertisement also advise that the bid specifications could be obtained from the Orlando Regional Office of HRS, and that the State of Florida reserved the right to reject any and all bids. The material provisions of the bid specifications at issue in this proceeding are: The space be made available on September 1, 1989 or within 175 days after bid is finalized. The proposed space must be in an "existing building", which was: defined to mean "dry and capable of being physically measured to determine net rentable square footage at the time of bid submittal". The bidder provide 2 clear photographs of the exterior front of the proposed facility and 2 scaled (1/8 inch or 1/4 inch 1 foot preferred) floor plan showing present configurations with measurements that equate to the net rentable square footage (HRS Exh. 1, General Specifications Requirement No. 10(a)) Emphasis in original). Building(s) in not more than 2 locations provided the facilities are immediately adjacent to or within 100 yards of each other. Prior to the pre-bid conference, but after the initial publication of the bid invitation, representatives of NOTTUS contacted Ernie Wilson, the facilities services manager for District 7, HRS, to inquire regarding the propriety of submitting a bid for space in two buildings in which HRS presently had facilities, together with a facility that was greater than 100 yards from the existing facilities. At the time of the inquiry, NOTTUS was leasing facilities to HRS at its Lipscomb facility in Palm Bay, Florida. A portion of the square footage that NOTTUS inquired about leasing to HRS was the remaining square footage in two buildings that HRS partially occupied at that time. All of the premises submitted by NOTTUS under its bid package were located in the Woodlake PUD, which is all under single ownership. A representative from HRS advised the representative from NOTTUS that: the issue regarding the proximity of the locations would not be addressed as a bid specification, but rather, that would be a matter to be weighed by the evaluation committee in analyzing the bids. the bid proposal to be submitted would actually be for two locations as a portion of the space offered by NOTTUS was to be located in buildings in which HRS presently maintained facilities. The submittal of the bid package regarding the premises subject to occupancy by HRS, as ultimately submitted by NOTTUS, would definitely not disqualify the bid submittal. Mr. Wilson also received telephone calls from BOOZER and a third bidder making inquires regarding the bid package. The Pre-bid conference was held on January 11, 1989. No objections or questions regarding the bid specifications as to be utilization or definition of the terms "existing building" and "present configuration" were raised at that time. At no time prior to the submission of the bids were any objections or questions raised by BOOZER regarding the utilization of the term "existing building" or the term "present configuration" as those terms were defined within the bid specification. Each of the Petitioners in this action, the Intervenor, as well as two other parties, submitted bids to HRS within the time requirement set forth in the bid documents. The bids were opened at the time and place reflected in the aid documents and Invitation to Bid. Subsequent to the opening of the bids, John Stewart, who is Ernie Wilson's supervisor, and Ernie Wilson reviewed the bid packages submitted for Lease No. 590:2054 and made a determination as to which bids were responsive. As a result of that evaluation, a determination was made that all five bidders were responsive. These bidders were the Petitioner, Fred D. BOOZER, the Intervenor, Nottus, Inc. the Petitioner, Trust NB-1 Micah G. Savell and Professional Center V. Inc. These bid proposals were then submitted to the evaluation committee who viewed the property of each of the bidders on February 13, 1989. The bid documents of BOOZER contained an additional document, i.e., a site plan, which reflected that the premises subject to his bid proposal were an "existing building". The area submitted for the bid was shaded reflecting the entire square footage submitted for bid as being "in existence." The drawing further reflected the "existing building" as being the "proposed HRS building". The premises subject to the Petitioner's, BOOZER, bid were not in existence, as that term was defined in the bid specifications, in that approximately 2500 square feet had not yet been constructed. Two walls, a floor slab and a roof were not in existence. The only improvements located therein were palm trees, grass and a sidewalk. Petitioner stipulated that the area occupied by the palm trees, grass and sidewalk was in fact "not dry". The existing building at 2225 South Babcock Street that was dry at the time of the bid opening constituted approximately 6,900 square feet of premises subject to Petitioner's bid. At the time of the inspection, the Petitioner, BOOZER, was present. At no time did BOOZER indicate that the total facility bid was not in existence. The members of the evaluating committee who viewed the property for purposes of evaluating the bid were not aware of the fact that the entire premises subject to BOOZER's bid proposal was not in "Existence" and "dry". The floor plan showing the present configuration of BOOZER's facility reflected an open floor space for the area occupied by the palm trees, grass and sidewalk. The palm trees, grass and sidewalk were not reflected in the present configuration drawing. Both the floor plan and site plan were prepared by BOOZER's son with his approval. In evaluating the respective bid proposals, the evaluation committee rated the properties as follows: Fred D. BOOZER - 450 points Nottus, Inc.- 433 points Micah Savell - 384 points Trust NB-l - 360 points Professional Center V. Inc.- 357 points The location requirement found in Article D.3(b) of the bid package was taken into account. In evaluating the Nottus bid, including a zero rating from one of the evaluation committee members. As a result of the points awarded by the evaluation committee, a determination was made to award the bid to BOOZER, who was notified of this award on or about March 14, 1989 by letter dated March 14, 1989. On or about March 20, 1989, Petitioner, BOOZER, obtained a construction permit from the City of Melbourne to construct a fire wall and framing for additional shell building. This building permit was for the purpose of enclosing the area that was occupied by the palm trees, grass and sidewalk at the time of the bid proposal being submitted. Upon being awarded the bid, Petitioner, BOOZER then made a decision to commence construction to complete the premises subject to his bid proposal, and had expended $28,000 thereon through the hearing date. On or about March 29, 1989, HRS, through Ernie Wilson and Lynn Nobley, discovered the fact that approximately 2,500 square feet represented as being a part of the existing building, in fact was not existing pursuant to the bid specifications. At the time of this discovery, construction under the construction permit had not been completed. Mr. Wilson advised BOOZER at that time that he was concerned that BOOZER's bid was nonresponsive because the premises subject to the bid proposal were not in an "existing" building at the time of the bid submittal. The normal procedure for HRS in awarding a bid where the initial award is cancelled or thrown out is to award the bid to the second and next best lowest bidder. It is not the normal practice of the HRS evaluation committee to measure the applicable properties at time of evaluation to determine net rentable square footage. At the time of discovery of the foregoing status of BOOZER's building, Ernie Wilson, contacted a Nottus representative, Fred E Sutton, its President, to advise him of the possible nonresponsiveness of BOOZER's bid and requested information to determine whether Nottus, the second low bidder, still had facilities available pursuant to its bid documents and whether Nottus would agree to continue to continue to be bound by the terms thereof. Mr. Sutton advised Ernie Wilson that the facilities were still available and that Nottus would agree to abide by the terms of its bid proposal. Following the procedural steps necessary to advise the appropriate individuals within HRS of the possible nonresponsive bid by BOOZER, Ernie Wilson was advised by the Director of HRS General Services, King W. Davis, by letter dated April 2, 1989 to withdraw the award for the proposed lease 590:2054 from BOOZER because of approximately 2,500 feet of nonexisting space. He was also instructed to award same to Nottus as the second lowest bidder. On or about April 14, 1989, Ernie Wilson advised BOOZER of the Notice of Withdrawal of the award from BOOZER and award to Nottus, together with the reasons therefor, which was received by BOOZER on April 17, 1989. Petitioner, BOOZER, timely initiated these actions by filing his Notice of Intent to appeal the withdrawal of the award of bid to him and the award to Nottus, and by timely filing a formal written protest and request for formal hearing. Attachment "D" of the bid package required the submittal of a proposed plan to a division of the State Fire Marshal for review of any proposed construction or renovation to determine whether such construction or renovation complied with the uniform fire safety standards. Said plans were required to be prepared by licensed architects and engineers for certifications outlined in Attachment "D". These matters were all to be completed prior to the commencement of any revocation or alteration. Petitioner, BOOZER, commenced said improvements prior to said approval. In fact, BOOZER submitted no plans in compliance with these requirements prior to construction. Petitioner, BOOZER, is a licensed builder in the State of Florida, and has been for ten years. BOOZER further acknowledged that at the time of signing and submitting the bid proposal, he certified that he understood the terms of the bid specifications and agreed to be bound by them. TRUST NB-1 attempted to initiate an appeal of the award of the bid to Nottus by submitting a facsimile "notice of protest" to HRS predicated on the award of the bid to Nottus occurring greater than sixty (60) days following the bid opening date. TRUST NB-1 received notice of the award to Nottus on April 18, 1989 and attempted facsimile delivery on April 21, 1989. The facsimile "Written Notice of Protest" was not filed until April 25, 1989. The regular mail receipt of said Notice was received by HRS and filed on April 24, 1989. 38. The "formal written protest" was filed with HRS on May 1, 1989. 39. signature The facsimile Notice of Intent to Protest did not contain of a representative of TRUST NB-1. the original 40. Ernie Wilson is the custodian of records for bid protests for HRS, District 7, and is also the person designated in the bid documents as the contact person for the bid on Lease No. 590:2054. TRUST NB-1 was ranked number four in relation to the five bids submitted. Bidder Micah Savell, not a party to these proceedings, is the next low bidder after BOOZER and Nottus, Inc.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent enter a final order: (a) Finding the bid of Petitioner, BOOZER, to be unresponsive and that the cancellation of the award by Respondent was justified. Find the bid of Intervenor, NOTTUS to be unresponsive. Find that Petitioner, TRUST NB-1, lacks standing and its protest should be dismissed. Reject all bids. DONE AND ENTERED this 21st day of July, 1989, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 July, 1989. APPENDIX Proposed Findings of Fact by Petitioner, Fred O. Boozer: 1-5 Rejected. 6 and 7 Accepted as incorporated in the Recommended Order. Proposed Findings of Fact by Intervenor, Nottus, Inc. Accepted. Accepted as modified. 3-30. Accepted. 31. The first two sentences rejected as argument and not supported by the evidence. Last sentence in paragraph accepted. 32-40. Accepted. COPIES FURNISHED: Thomas Houck, Esquire 312 South Harbor City Boulevard Suite 1 Melbourne, Florida James A. Sawyer, Esquire District 7 Legal Counsel Department of Health and Rehabilitative Services 400 West Robinson Street Suite 911 Orlando, Florida Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
Findings Of Fact During March 1988, the Respondent issued an Invitation to Bid by which it sought to lease 17,973 net usable square feet of office space to be located within a specified geographic area in Tampa, Florida, under a nine year lease with two additional three year option periods. This Invitation to Bid is referred to as Lease Number 590:1927. Three bids were received in response to the Invitation to Bid, and they were opened on May 13, 1988. Bids were received from the Petitioner, 8900 Centre, Ltd., and the Allen Morris Management Company. All bidders were determined to be responsive to the Invitation to Bid. Despite the fact that petitioner submitted the lowest bid, Respondent notified Petitioner by letter dated June 10, 1988, of its intent to award Lease Number 590:1927 to 8900 Centre, Ltd., as the lowest and best bidder. Petitioner has timely filed its protest seeking review of that decision. It is undisputed that Petitioner submitted the lowest bid. For the first year of the lease, Petitioner bid $7.85 per square foot, while 8900 Centre bid $7.95 per square foot. Thereafter, Petitioner proposed a yearly increase of 50 cents per square foot, reaching $11.85 per square foot in the ninth year of the lease, while 8900 Centre proposed annual increases of approximately 75 cents, reaching $14.00 per square foot in the ninth year. This equates to an actual dollar difference over the nine year term of approximately 185,000. However, using a present value methodology and a present value discount rate of 8.81 percent referred to on page 17 of the bid submittal form, the present value difference in these two bids is approximately $1,000 per month, which would result in a present value difference between Petitioner and 8900 Centre of approximately $108,000 over the nine year period. Neither the Invitation to Bid, bid specifications, nor the actual bids were offered into evidence. One page of the bid submittal form, designated as page 17 of 18, was offered and received in evidence. This portion of the bid submittal form states that the "successful bid will be that one determined to be the lowest and best." It also sets forth evaluation criteria, and assigns weights to each criteria. The evaluation criteria include associated fiscal costs (35 points), location (40 points) and facility factors (25 points) . A synopsis of bids was also offered and received in evidence showing the points awarded to each bidder by the Respondent's bid evaluation committed. Out of a possible 100 points, 8900 Centre received 95.17 points, while Petitioner received 82.25 points and the Allen Morris Management Company received 70.67 points. Petitioner asserts that the members of the evaluation committee were not qualified or knowledgeable in basic construction, design and engineering principles, and therefore could not competently evaluate the bids submitted. However, Petitioner did not offer competent substantial evidence to support this contention. Only the chairperson of the committee, Susan Jennings, was called to testify, and she appeared thoroughly knowledgeable in the bid process, the needs of the agency, the bid requirements and the representations made to the committee members by each bidder, including Petitioner, when the committee made its site visit to each location. Since the actual Invitation to Bid, bid specifications, and evidence about the other committee members were not introduced, it is not possible to know what the specific duties of the committee were, how they were to carry out their duties their qualifications and training, and whether they failed to competently carry out these duties, as alleged by Petitioner. Despite Petitioner's lower bid, Respondent awarded this lease to 8900 Centre, Ltd., based upon the evaluation committee's determination assigning 8900 Centre the highest number of evaluation points. Out of a possible 35 points for fiscal costs, Petitioner received 34 and 8900 Centre received 31.5. Thus, Petitioner's status as low bidder is reflected in the points awarded by the committee. Since neither the bid invitation or specifications were introduced, no finding can be made as to whether the difference between these two bidders comports with any instructions or directions provided by the agency to potential bidders, or whether this difference of 2.5 points on this criteria reasonably reflects and accounts for the dollar difference in these two bids. Petitioner received 34.75 points out of a possible 40 points on the general evaluation criteria "location," while 8900 Centre received the full 40 points. Within this criteria, there were three subcategories, and on the first two subcategories (central area and public transportation) there was an insignificant difference of less than one-half point between Petitioner and 8900 Centre. The major difference between these two bidders which accounts for their significant difference on the location criteria, was in the subcategory of environmental factors, in which Petitioner received 15.17 points and 8900 Centre received the full 20 points. Petitioner did not present competent substantial evidence to discredit or refute the committee's evaluation in the subcategory of environmental factors. To the contrary, the only testimony from a committee member was that of Susan Jennings, and according to her, Petitioner failed to explain the availability of individual air conditioning and heating controls, or the possibility of separate program entrances, which could be made available under its bid. Although Petitioner sought to explain at hearing that these desires of the agency could be accommodated in its bid, there is no evidence that such an explanation was provided in its bid or during the bid process when the evaluation committee visited the Petitioner's site. The committee was aware, however, that 8900 Centre would provide individual heating and air conditioning controls, as well as separate outside entrances for the three programs which would occupy the leased space. Additionally, the committee was concerned, according to Jennings, that parking areas at Petitioner's facility were more remote and removed from the building entrance than at 8900 Centre, and were somewhat obscured by trees and shrubbery, thereby presenting a potential safety concern for employees working after dark. Finally, every employee would either have a window or window access at 8900 Centre, while it was not explained that Petitioner's site would offer a similar feature. Thus, Petitioner failed to establish that the evaluation committee erred in assigning a significantly greater number of points for environmental factors to 8900 Centre than to Petitioner. The evidence reflects a reasonable basis for this difference. The other significant difference between these two bidders was in the subcategory for layout and utilization under the evaluation criteria "facility." Petitioner received 13.67 points while 8900 Centre received a full 20 points. Jennings explained that the separate outside entrances leading directly into the three programs that would occupy this space was preferred to a single reception area for all three programs. Petitioner offered the single reception area in its bid and site visit presentation, while 8900 Centre made it clear that each program would have its own entrance. Since these programs do not have a receptionist position, and none wanted to give up a secretarial position to serve as receptionist for all three programs, the committee did not consider the single reception area entrance to be desirable. Additionally, Petitioner's facility was a two-story building, while 8900 Centre is a single story facility. Jennings explained that the committee considered a ground level facility to be preferable to a two story building, particularly since the Medicaid program was to occupy the major portion of this space. The Medicaid program would have to be split up at Petitioner's facility, either in two separate buildings or on two levels of the same building, while at 8900 Centre, Medicaid could be accommodated in one, single story building, with the other two programs in a second, single story building. Finally, parking at 8900 Centre was directly next to, and outside the entrance of the building, while Petitioner offered to make assigned spaces available in a general parking area which serves its entire 100,000 square foot complex. The parking offered by Petitioner is more remote than that offered by 8900 Centre, and would be less secure at night due to a greater distance from the building entrances and the parking lot. Thus, Petitioner failed to establish that the committee erred in assigning a significantly greater number of points for layout and utilization to 8900 Centre than to Petitioner. There is a reasonable basis for this difference, according to the evidence in the record.
Recommendation Based upon the foregoing, it is recommended that Respondent enter a Final Order dismissing Petitioner's protest to Lease Number 590:1927. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of December 1988. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1050 Filed with the Clerk of the Division of Administrative Hearings this 9th day of December 1988. APPENDIX (DOAH Case Number 88-3765 BID) Rulings on Petitioner's Proposed Findings of Fact: Adopted, in part, in Finding of Fact 1, but Rejected in Finding of Fact 10, and otherwise as not based on competent substantial evidence in the record. Adopted in Finding of Fact 5. 3-5. Adopted in Finding of Fact 4, but Rejected in 7. 6-7. Rejected in Finding of Fact 8. Rejected in Finding of Fact 10, and otherwise as not based on competent substantial evidence in the record. Rejected in Findings of Fact 9 and 10, and otherwise as not based on competent substantial evidence. Rulings on the Respondent's Proposed Findings of Fact: Adopted in part in Finding of Fact 1, but otherwise rejected as not based on competent substantial evidence. Adopted in Finding of Fact 4. 3-4. Adopted in part in Findings of Fact 5 and 6, but otherwise rejected as not based on competent substantial evidence in the record of this case. Adopted In Findings of Fact 5, 7-10. Adopted in Finding of Fact 5. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Rejected as irrelevant and unnecessary since the point difference in this subcategory is insignificant. Adopted in Finding of Fact 9. 11-12. Adopted in Finding of fact 10. COPIES FURNISHED: Michael V. Giordano, Esquire 7821 North Dale Mabry Suite 100 Tampa, Florida 33614 Jack Farley, Esquire W. T. Edwards Facility 4000 West Buffalo Fifth Floor, Room 520 Tampa, Florida 33614 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Whether or not the actions of the petitioner in amending its lease agreement resulted in increased costs which are reimbursable by the Department of Health and Rehabilitative Services through an interim rate request.
Findings Of Fact Hallandale is a licensed nursing home facility located in Hallandale, Florida, and at all times material hereto, Hallandale was certified to and was participating in the Florida Medicaid Program. The participation was subject to a standard nursing home provider agreement entered into by the parties. Pursuant to the agreement, Hallandale provides nursing care for Medicaid recipients and receives as payment the recognized rate of Medicaid reimbursement established for Hallandale by HRS in accordance with the applicable state and federal laws, regulations, and guidelines. The agreement may be cancelled by either party after giving thirty (30) days notice. In 1971, Hallandale entered into a lease agreement with the owners of the nursing home facility and began operating the nursing home. The lease called for a payment of $84.00 per month, per bed, had no escalation clause, and would not expire until 1986. At the time the lease was negotiated, the owners had been operating the nursing home themselves at a loss. To avoid bankruptcy or having to sell the property at a loss, the owners leased the property to Hallandale. However, within seven or eight years the owners began to put pressure on Hallandale to renegotiate the lease because the owners did not think they were getting a fair return on their investment. In 1981, the owners and Hallandale entered into negotiations to amend the terms of the lease to provide an increased rental rate and an extension of the lease term. The negotiations were not successful, and finally, by letter dated July 6, 1983, the owners issued the following ultimatum: "Although the lease has a renegotiation clause six months prior to expiration, we must renegotiate the terms and conditions of this lease immediately. The partnership has made a decision that we will definitely not renew or extend your lease unless we can come to some satisfactory arrangement regarding terms and conditions, effective immediately." On December 13, 1983, Hallandale and the owners entered into an amendment to the original lease. The amendment increased the lease payments and extended the lease until August of 1998. The amended lease provided for a minimum rental of $110 per month, per bed, as of September 1, 1983, with increases in the rental every year thereafter. Saul Lerner has been president of Hallandale since 1975 and has been associated with the facility since it was first leased in 1971. Mr. Lerner is an astute businessman who has been involved in a variety of businesses for forty years. He was chiefly responsible for renegotiating the lease with the owners. Although the lease was renegotiated due to the owners' threats to sell the facility, 1/ Mr. Lerner did not merely accede to the owners' demands. There were several offers and counteroffers made before the final agreement was reached, and the renegotiated lease provided for a considerably lower rental rate than that demanded by the owners. Prior to entering into the lease amendment Mr. Lerner consulted with people in the industry, had a MAI appraisal performed, discussed the situation with James Beymer, a real estate broker specializing in nursing home and health related facilities, consulted with his accountants who had been in the health care field for 13 years, and talked with Sebastian Gomez of the Department of Health and Rehabilitative Services. Mr. Lerner consulted with his business associates, and the pros and cons of renegotiating the lease were carefully considered. Hallandale's determination to renegotiate the lease in 1983 was a reasonable and prudent business decision. By agreeing to increased rental payments for the three years that remained on the original lease, Hallandale gained an additional 12 years to operate the facility. This permitted Hallandale to project its costs and plan for the future. It could make additions and improvements to the building, buy new equipment, and provide for stability in staffing. On the other hand, had Hallandale refused to renegotiate the lease, it faced an uncertain future. There was a strong possibility that the owners would not be willing to renew the lease when it expired, which would result in Hallandale's losing the equipment and improvements it had put into the building. In addition, the owners were threatening to sell the property, and even though Hallandale had the right of first refusal, it would have had difficulty in obtaining the money required to purchase the property. Further, Hallandale realized that even if the owners would be willing to negotiate a new lease in 1986, Hallandale would not have the same leverage or bargaining power in 1986 as it had in 1983. Hallandale has participated in the Medicaid program continuously since 1971. At the time of the hearing the facility had 142 patients, of which 45 were Medicaid patients. 2/ Hallandale has never refused a Medicaid patient, and some of the patients have been there 8 or 9 years. The Medicaid patients are treated the same as the private patients, to such a degree that no one knows which patients are Medicaid patients. Although the agreement with HRS allows a provider to leave the Medicaid program with 30 days notice, Hallandale has no intention to ever discontinue participation in the Medicaid program. The extended term of the renegotiated lease is not only advantageous to Hallandale, it is also beneficial to Hallandale's patients, including Medicaid patients. It secures continuity of care for the patients and ensures that the patients will not have to be moved to a new facility in 1986. The transfer from one facility to another can be a very traumatic event for an elderly person; some patients have died within weeks of a transfer. Further, the patients benefit immediately because the extended term of the lease allows Hallandale to make improvements to the facility and buy equipment that it would not have been able to do without the security of a long term lease. The lease payments called for by the new lease are not out of line with lease payments made by similar institutions. Mr. Lerner looked at other lease payments being made in the community and found that $110 per bed per month was not an exorbitant amount. James Beymer leased nursing home facilities that were not as nice as the Hallandale facility for $138 per bed per month $166 per bed per month, and $225 per bed per month. Had Hallandale purchased the facility for $3 million, the price asked by the owners, the cost per month per bed would have been over twice the amount of the lease payment. 3/ Lease payments are included in a facility's "fixed costs." The fixed costs also include depreciation, real estate taxes and insurance. The state places a cap on reimbursement rates for fixed costs. In June 1983, prior to the renegotiation of the lease, Hallandale's fixed costs were $4.61 per patient day; under the renegotiated lease, the fixed costs would be $5.16 per patient day. Thus, even with the higher lease payment, the fixed costs are considerably under the state cap of $12.50 per patient day. A provider's reimbursement rate is determined by HRS from a cost report submitted by a provider. The rate is a prospective per diem rate. If, during the prospective period, the provider incurs an increase in costs, the provider has a right to submit an interim rate request to HRS. The Department uses the same principles to determine whether costs submitted in an interim rate request should be allowed as in determining whether costs submitted in a cost report should be allowed. Lease payments are allowable expenses under the Medicaid program subject to the Medicaid cost reimbursement principles. In calculating Hallandale's per diem rate, HRS allowed Hallandale $84 per month lease cost for each Medicaid patient in the facility based on the 1971 lease. Prior to executing the new lease, Hallandale contacted HRS to inquire if the new lease cost would be allowable and was informed that the new costs would probably not be allowable. On November 9, 1983, Hallandale submitted an interim rate request to cover the increased cost of the new lease payments. The interim rate request was procedurally correct. By letter dated May 30, 1984, HRS denied the interim rate request because "...the lease cost was negotiated for investment related reasons and is not related to patient care." On June 25, 1984, Hallandale filed its petition for a formal administrative hearing.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the interim rate increase requested by Hallandale be granted. DONE and ORDERED this 26th day of April, 1985, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS 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 26th day of April, 1985.
Findings Of Fact This case concerns what is-called a "Turnkey Lease". The program was developed by the State of Florida in 1971. It encompasses a situation where by agencies seeking space for their operations may, after a specific need is determined that cannot be filled by existing adequate space, solicit competitive bids from developers for the provision of land and the construction of a building thereon sufficient to-meet the agency's needs, for lease specifically to the agency requesting it. The Bureau of Property Management within DGS was given the initial responsibility to develop the guidelines, promulgate the rules, and seek statutory authority for such a program. The Bureau's current role is to work with agencies requesting this program. The agency certifies the need to the Bureau in addition to the fact that there is no available existing space present. The Bureau then determines agency needs and gives the agency the authority to solicit the bids for the turnkey project. Once the bids are then received, evaluated, and a recommendation for an award is forwarded by the agency to DGS, DGS reviews the supporting documents required by the provision of the Florida Administrative Code and either concurs or does not concur in the recommendation. If DGS concurs, the submitting agency is notified and is permitted to then secure the lease. Once the lease has been entered into; it is then sent back to DGS for review and approval as to the conditions; and thereafter the plans and specifications for the building are also referred to DGS for review and approval as to the quality and adequacy as well as code compliance. Section 255.249 and Section 255.25, Florida Statutes, set forth the requirements for soliciting and awarding bids for lease space in an amount in excess of 2,500 square feet. This provision requires that an award of this nature be made to the lowest and best bidder, and DCS utilizes that standard in evaluating and determining whether or not it will concur with an agency's recommendation. In the instant case, DHRS advertised for bids for the construction of office space in Palatka, Florida for its District III facilities. Before seeking to solicit bids, the District III staff conducted a search for other possible existing space within a five mile radius of the downtown area and located no adequate facilities. Thereafter, a Certification of Need was processed for a solicitation of proposals and approval was granted by DGS to follow through with the solicitation. A preproposal conference was advertised and held on October 14, 1983, and after project review by those present at the conference, bid opening date was set for November 22, 1983. Thirty-two bid packages were distributed and twelve bidders submitted proposals. The public bid opening was held as scheduled at 2:00 p.m., on November 22, 1983, in Palatka, Florida by Robert E. Litza, Facilities Services Coordinator for DHRS District III. Of the bids submitted by the twelve bidders, the lowest hid was rejected because of the failure of the bidder to comply with the requirements of the bid package. Of the remaining eleven bids, the four lowest were evaluated with the understanding that additional higher bids would be evaluated if the four lowest bids were found to be unacceptable. Among the four bids considered were bids of Chuck Bundschu, Inc., Kenneth R. McGurn, one of the Intervenors (McGurn submitted five prices scheduled for his bid and of these, only one was considered); Elizabethan, Petitioner herein; and TSU. Only three bids are pertinent to the discussion here. They are #8-C (McGurn); #11 (Elizabethan); and #12 (TSU). In pertinent particulars, these bids provided as to rental costs: 8-C 11 12 1st yr $14.00/$220,808 $8.95/$ 61,916.10 S 7.16/$ 49,532.88 2nd yr 14.00/ 220,8088 8.95/ 141,159.40 7.35/ 115,924.20 3rd yr 14.00/ 220,808 8.95/ 141,159.40 7.62/ 120,182.64 4th yr 14.00/ 220,808 8.95/ 141,159.40 8.08/ 127,437.76 5th yr 14.00/ 220,808 8.95/ 141,159.40 8.33/ 131,380.76 6th vr 14.00/ 220,808 8.95/ 141,159.40 8.59/ 135,481.48 7th yr 14.00/ 220,808 8.95/ 141,159.40 8.86/ 139,739.92 8th yr 14.00/ 220,808 8.95/ 141,159.40 9.19/ 144,944.68 9th yr 14.00/ 220,808 8.95/ 141,159.40 9.58/ 151,095.76 10th yr 14.00/ 220,808 8.95/ 141,159.40 10.09/ 159,139.48 Renewal Option 1st yr3.00/47,316 9.93/ 156,615.96 10.51/ 165,763.72 2nd yr3.00/47.316 9.93/ 156,615.96 10.99/ 173,334.28 3rd yr3.00/47.316 9.93/ 156,615.96 11.48/ 181,062.56 4th yr3.00/47.316 9.93/ 156,615.96 11.99/ 189,106.28 5th yr3.00/47.316 9.93/ 156,615.96 12.51/ 197,307.72 Total Basic Overall Lease 1-15 yrs $1,971,500 $2,115,430.50 $2,181,434.12 Average Sq.Ft. for 15 yrs $8.60 $9.20 $9.58 A recommendation by the evaluation committee which met at DHRS District III, that McGurn's bid be selected, was forwarded to DGS in Tallahassee through the Director of DHRS's General Services in Tallahassee on December 22, 1983. The terms of the successful bid and the reasons for its being considered lowest and best are discussed below. The successful bid for the lease in question, lease number 590:8030, upon completion of the committee's evaluation was also evaluated by Ms. Goodman in the Bureau of Property Management of DGS. She also considered the McGurn bid to be the lowest and best of the eleven non-disqualified bids. In that regard, not only Mr. McGurn's bid but all of the twelve bids received were considered and reviewed not only at the local level but at DHRS and DGS headquarters as well. In her evaluation of the proposal and the bids, Ms. Goodman considered the documentation submitted by DHRS. This included a letter of recommendation supported by a synopsis of all proposals, the advertisement for bids, and any information pertinent to the site selection process. In determining the McGurn's bid was the lowest as to cost of all the bids, Ms. Goodman compared the average rate per square foot per year for each. This did not take into con- sideration pro-ration of costs per year, but strictly the average over the fifteen year probable term of the lease (ten years basic plus five year option). According to Ms. Goodman, this same method of calculating cost has been used in every lease involving a turnkey situation and in fact in every lease since 1958 - as long as she has been with DGS. This particular method, admittedly, is not set forth in any rule promulgated by DGS. However, the agencies are instructed by DGS to advertise and bidders to bid on an average square foot basis, the basis utilized by Ms. Goodman and her staff in analyzing the bids submitted. In that regard, the request for proposals does not, itself, indicate how the calculation of lowest cost would be made by DHRS and DGS but it does tell prospective bidders what information to submit. This procedure has been followed exclusively in situations like this for may years and many of the bidders here have bid before using this same system. All bidders are considered on the same footing in an evaluation. They are notified of what information will be considered along with that of all the other bidders. Further, anyone who inquires as to the basis for evaluation will be given a straight and complete answer as to the method to be used. Petitioner contends that McGurn's bid does not conform to either the normal bidding procedure followed by contractors in this type of procurement over the past years or to the normal bidding procedures adopted by Respondent, DHRS. It urges that the questioned bid is non-responsive and front-end loaded to the detriment of DHRS. With regard to the front-end loading objection, Mr. Taylor, testifying for Petitioner, attempted to indicate by graphic evidence that Elizabethan's bid, which he claims is not front-end loaded, is cheaper to the State than that of McGurn. Due to the large rental cost of the McGurn bid in the opening years of the lease, the State would have to borrow money to make the large rental payments; the interest cost of which, when added to the $3.00 cost in the option years, raises the cost considerably and makes the bid not the lowest. Though Mr. Taylor testified to this he failed to produce any independent evidence to support it. In addition, Taylor urges, under the McGurn schedule, McGurn would recoup his entire construction debt (approximately $423.00 plus interest) in the first four years of the lease: Comparing the two bids, it appears that the State would pay McGurn approximately $494,500.00 more than it would pay Elizabethan for the same period during the first seven years of the lease. Considering this, it is Taylor's belief that McGurn's profit after the fourth year is excessive. He contends also that when, after the tenth year, McGurn's rental rate drops to $3.00 per square foot for the remaining five years which constitutes the option period of the lease, the State could not afford to leave the low figure and as a result, the ten year lease is converted to a l5 year lease which is unresponsive. Further, the $3.00 figure for the last years, which would ostensibly show a loss to McGurn, is misleading in that there would be sufficient income from the advance profit garnered in years 5 to 10, when invested, to cover the soft costs and more in these later years. Admitting that because of its involvement in other turnkey projects in Florida, Elizabethan is aware of the State policy on cost evaluation, Taylor contends that while his bid does not violate State policy, McGurn's bid does because it would be fiscally irresponsible for the State to pay so much up front. This conclusion is his opinion, however, and not supported by any independent evidence. Both expert witnesses, Respondents Scott and Perry, who testified for the Intervenor, TSU, agree that the present value of money should be considered in evaluating rental costs. Their major point of difference is in the percentage of discount rate to be applied. Dr. Perry urges that use of the 10% rate mandated by the U. S. Government in its procurements of this nature. Dr. Scott, on the other hand, considers this to be too high and urges a rate in the area of 3% be used. The significance of this is that at the lower of the range spread, McGurn's bid is lowest. At the higher end, TSU's bid is lowest. From 5.7% up to below 6%, Petitioner's bid is lowest. Whichever would be appropriate, the State has not adopted the present value of money methodology and the policy followed by the State is not to consider that methodology in analyzing costs. State policy is to use only the average rental methodology. There is, in addition, no prohibition against front- end loaded bids encompassed within this policy. By the same token, there is nothing in the bid package issued to all prospective bidders that in any way stipulates the method of computing lease costs or prohibits from loaded bids. DGS zone rates, criteria stipulating the maximum agencies can send on rent without approval by DGS, are not part of the bid package and do not constitute a factor in determining whether a bid is conforming or not. These zone rates may be waived by DGS at the time the proposed award is submitted for DGS approval. In practice, within the memory of Joseph Lambert, HRS' Administrator of Facilities Services, who administers the Department's leasing program, he cannot recall DGS ever denying a DHRS request for waiver of the maximum zone rate in any case where it was pertinent. In this case, since the lease payments at-least in the second through tenth years-of the McGurn bid exceed the zone limits, the award would have to be approved by the Governor and Cabinet in addition to DGS. It has not yet been placed on the Cabinet agenda because of the protests filed. As was stated before, there are no rules governing the evaluation of bids for leases of this nature. Oral instructions given to each agency, when applied here, reveal that the McGurn bid, as was seen above, has an average cost of $8.86 per square foot per year. TSU's bid costs $9.58 per square foot per year, and Elizabethan's bid costs $9.29 per square foot per year. These same calculations are followed on all turnkey and non- turnkey leases in the State. The reason the State uses this process instead of the present value of money methodology is that it is easy. DGS statistics indicate that at least 50% of the landlords in the approximately $32,000,000 worth of leases presently existing with the State are "Mom and Pop" landlords. These people are not normally trained lease evaluators. By using the straight average rental rate method, there are no arbitrary variables. It has always worked because people can understand it and all agencies which lease property in the State follow this procedure. In the opinion of Ms. Goodman, the costs involved in utilizing the present value of money methodology would far outweigh the paper savings to be gained, notwithstanding the testimony of Dr. Perry to the contrary. With regard to the option issue, it was the position of DGS in reviewing the proposals that the very low $3.00 lease cost per square foot in the last five years (the option period) did not make the McGurn bid unresponsive. There were no limits imposed upon the bidders except that a five year option to a ten year lease be included. Were it not there, the bid would be unresponsive. DGS would issue approval for a ten year lease with a five year option but not a fifteen year lease. Ms. Goodman cannot recall a situation in which an option was not exercised by it if the need for the space continued though there have been some instances where option costs have been renegotiated.
Recommendation Based on the foregoing, it is, therefore; RECOMMENDED THAT DHRS License Number 590:8030 be awarded to Kenneth R. McGurn. RECOMMENDED this 5th day of September, 1984, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkwav Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1984. COPIES FURNISHED: David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood 8Oulevard Tallahassee, Florida 32301 Morgan Staines, Esquire 2204 East Fourth Street Santa Ana, California 92705 Thomas D. Watry, Esquire 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 Steven W. Huss, Esquire Department of Health and Rehabilitative Services 1317 Winewood boulevard Tallahassee, Florida 32301 Ronald W. Thomas, Executive Director Department of General Services 115 Larson Building Tallahassee, Florida 32301 Steven W. Huss Assistant General Counsel Department of Health and Rehabilitative Services 1317 Winewood Blvd. Tallahassee, Florida 32301 Gary J. Anton, Esquire P.O. Box 1019 Tallahassee, Florida 32302 Harden King, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 406 Tallahassee, Florida 32301
The Issue Whether the Petitioner, Willis Phillips, may challenge the specifications of the invitation to bid at issue in this proceeding? Whether the Petitioner has standing to challenge the Department of Health and Rehabilitative Services' proposed award of lease number 590:2166 to the Intervenor, Rutherford Rentals, Inc.?
Findings Of Fact The Department issued an Invitation to Bid for Existing Facilities, lease number 590:2166 (hereinafter referred to as the "ITB"), seeking to rent office space in Madison, Florida. Responses to the ITB were to be filed with the Department by 2:00 p.m., March 6, 1990. Included as part of the ITB was a map of the City of Madison (hereinafter referred to as the "Map"). Joint Exhibit 1. On page 1, paragraph 3, of the Bid Submittal Form which was included as part of the ITB it was indicated that "[s]pace to be located in Madison, Florida within boundaries depicted in the attached map (Attachment B.) Bidder to mark location of site on map Attachment B." The ITB referred to the Map as a "Map showing bid zone boundaries." See page 4 of the ITB. The Map was labeled as "Attachment B" and included the following language at the bottom of the Map: "WITHIN CITY LIMITS WITH EXCEPTIONS OF UNDESIRABLE LOCATIONS AS INDICATED." The Map included two areas within the City of Madison which were cross- hatched. At the bottom of the Map the word "UNDESIRABLE" had been written in black. This word only appears below the larger of the two cross-hatched areas. The Department intended to exclude any office space located within both of the cross-hatched areas on the Map. The Petitioner spoke by telephone with Robert Smith, a Facilities Services Managers Assistant for the Department, prior to submitting a response to the ITB. The Petitioner initiated the conversation. Based upon this conversation, the Petitioner was aware that property located within either of the cross-hatched areas on the Map was excluded from consideration under the ITB. The property which the Petitioner intended to offer to the Department in response to the ITB is located in the smallest of the two cross-hatched areas on the Map. The Petitioner was informed by Mr. Smith that the property located within the smaller cross-hatched area was excluded as undesirable. Mr. Smith informed the Petitioner that he could not submit a response to the ITB offering to rent property located in the small cross-hatched area. The exclusion from consideration of property located in the areas within the City of Madison which were located in the two cross-hatched areas of the Map could have been more clearly designated. The Department's designation of the excluded areas, however, was not ambiguous. It was clear that the Petitioner's property was located in an excluded portion of the City of Madison and that the Petitioner was aware of the exclusion of his property. Despite the Petitioner's knowledged that his property was located within an excluded area, the Petitioner submitted a response dated March 6, 1990, to the ITB proposing property located in the smaller cross-hatched area. In the Petitioner's response to the ITB he did not indicate the location of his property on the Map. Instead, the Petitioner submitted a different map of a portion of the City of Madison which included his property. Rules 10-13.006 and 10-13.007, Florida Administrative Code, require that protests of the bid specifications of the Department must be filed within 72 hours of receipt of notice of the bid specifications. The ITB did not indicate that persons adversely affected by the ITB could challenge the specifications of the ITB or that any such challenge had to be filed within 72 hours of receipt of notice of the ITB. The following statement appears of the last page of the Bid Submittal Form included with the ITB and submitted by the Petitioner: I hereby certify as owner, officer, or authorized agent that I have read the Invitation to Bid Package and all its attachments, and agree to abide by all requirements and conditions contained therein. . . . This certification was signed by the Petitioner. The Department decided to award the lease to the Intervenor. The Department determined that the Petitioner's bid should be rejected because the proposed property was located in an excluded area. The Petitioner filed a Formal Protest and Petition for Formal Administrative Hearing on April 23, 1990, with the Department. The Petitioner challenged the Department's proposed award of the lease to the Intervenor and asserted that he was the lowest and best bidder. The Petitioner did not challenge the specifications of the ITB. The Department filed a Motion to Dismiss on Mazy 4, 1990. The Petitioner filed a Motion for Leave to File Amended Petition and an Amended Formal Protest and Petition for Formal Administrative Hearing on May 14, 1990. For the first time, the Petitioner challenged the specifications of the ITB.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order granting the Department's Motion to Dismiss and dismissing with prejudice the Formal Protest and Petition for Formal Administrative Hearing filed by the Petitioner. DONE and ENTERED this 12th day of July, 1990, 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 12th day of July, 1990. APPENDIX The Petitioner and the Department have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1-2 See 9. 3-5 Not supported by the weight of the evidence. 6 6-7. 7 and 11 Not relevant. 8-10 and 12-15 These proposed findings are consistent with Ms. Goodman's testimony. Ms. Goodman's opinions, however, are not supported by the weight of the evidence. Although this proposed finding of fact is generally true, the weight of the evidence failed to prove that the Petitioner was not aware that both cross-hatched areas were excluded areas. See 9. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1. 2 2 and hereby accepted. 3 5-8. 4 7. 5 6. 6 12. 7 9. 8 13 and 17. 9 4. 10 12. 11 17. 12 15. 13 16. 14 18 and hereby accepted. 15 20. 21 and hereby accepted. 22 and hereby accepted. Hereby accepted. Cumulative. Hereby accepted. Copies Furnished To: John C. Pelham, Esquire Gary Walker, Esquire Post Office Box 13527 Tallahassee, Florida 32317-3527 John L. Pearce, Esquire District Legal Counsel Department of Health and Rehabilitative Services 2639 North Monroe Street Tallahassee, Florida 32303-2949 Clay A. Schnitker, Esquire Post Office Drawer 652 Madison, Florida 32340 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0500
