The Issue The central issue in this case is whether the Respondent is indebted to the Petitioner for agricultural products and, if so, in what amount.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: Petitioner, Oglesby Nursery, Inc., is a commercial nursery providing a variety of landscape agricultural products. The principal office for Petitioner is located at 3714 SW 52nd Avenues Hollywood, Florida. Respondent, Garden of Eden Landscape and Nursery, Inc., is an agricultural dealer with its office located at 3317 So. Dixie Highway, Delray Beach, Florida. Respondent, Garden of Eden, is subject to the licensing requirements of the Department of Agriculture and Consumer Services. As such, Garden of Eden is obligated to obtain and to post a surety bond to ensure that payment is made to producers for agricultural products purchased by the dealer. To meet this requirement, Garden of Eden delivered a certificate of deposit from Sun Bank of Palm Beach County to the Department. On or about August 22, 1986, Garden of Eden ordered and received delivery of $7673.40 worth of agricultural products from Petitioner. This purchase consisted of nine may pan coconuts and thirty green malayans trees. All of the trees were accepted and no issue was made as to their condition. On or about September 2, 1986, Garden of Eden ordered and received delivery of $1190.00 worth of agricultural products from Petitioner. This purchase consisted of seven coconut malayans dwarf trees. All of the trees were accepted and no issue was made as to their condition. The total amount of the agricultural products purchased by Garden of Eden from Petitioner was $8863.40. The total amount Garden of Eden paid on this account was $5000.00. The balance of indebtedness owed by Garden of Eden t o Petitioner for the purchases listed above is $3863.40. Petitioner claims it is due an additional sum of $247.77 representing interest on the unpaid account since the assessment of interest to an unpaid balance is standard practice in the industry and since Respondent took delivery of additional products knowing interest on past due accounts to be Petitioner's policy. No written agreement of acknowledgment executed by Garden of Eden was presented with regard to the interest claim.
The Issue The issue is whether Respondent properly awarded a contract for automated payment options to E-Commerce Group, a non-party.
Findings Of Fact Respondent is a local governmental body, corporate and politic, organized pursuant to Chapter 2001-324, Laws of Florida. Respondent is responsible for providing certain water, wastewater, and sanitation services in Escambia County, Florida. Petitioner is a Florida for-profit corporation. It is organized and authorized to do business under Florida Law. Currently, Respondent offers its utility customers several different types of payment options, including the following: (a) over-the-counter payments; (b) drive-in payment; (c) mail-in payments; (d) automatic bank drafts; and (e) in-person payments. In May 2002, Respondent released Request for Proposal (RFP) 2002-36. Through the RFP, Respondent was seeking the lowest and most responsible proposal for automated payment options for Respondent's utility customers. According to the RFP, the vendors needed to be capable of providing Internet and telephone payment options so that Respondent's customers could use their credit cards to pay their utility bills. The RFP stated that the sealed bids would be opened on June 27, 2002. Section 1, the administrative section of the RFP, provides the following information regarding Respondent's operations as of September 30, 2001: (a) Respondent served 85,000 water customers; (b) Respondent served 55,800 sewage collection and treatment system customers; (c) Respondent served 59,900 solid waste customers; (d) Respondent generates approximately $64,000,000 in revenue per year; and Respondent's average residential bill is $60. Section 2 of the RFP discusses Respondent's current management information system. This section states that Respondent needed to "know about and understand all the costs and changes necessary to implement the solution proposed." Section 3 of the RFP requests information about the vendor. This section includes a vendor questionnaire and request for information about the vendor's prior customers. Section 4 of the RFP sets forth the project requirements. Of particular note is the following reference to a convenience fee in Section 4.1: Convenience Fee Since the convenience fee is the method the vendor will [use to] generate compensation for this service, ECUA requires the rate (fixed or sliding) to be fixed for the duration of the contract. You may propose a sliding scale for lowering or raising the fee based upon use of the solution once a preliminary period has expired (the preliminary period to be set in vendor's contract). Section 4.3 of the RFP sets forth the project considerations. A cost-effective and timely solution is listed as one of six considerations. Section 5 of the RFP sets forth the requirements for vendor responses. Section 5.3 includes the following evaluation criteria: These criteria are to be utilized in the evaluation of qualifications for development of the shortlist of those vendors to be considered by interviews and/or potential negotiations. Individual criteria may in all probability be assigned varying weights at the ECUA's discretion to reflect relative importance. Vendors are required to address each evaluation criteria in the order listed and to be specific in presenting their qualifications. (Emphasis added) Experience/qualifications of Vendor. Vendors (sic) proposed staff, experience with contracts for services similar in scope. Capabilities, features, etc. of the proposed services and the degree to which the proposed services meet the needs of the ECUA. References of only similar contracts. The Vendor must have a demonstrative history of professional, reliable and dependable service. Demonstrated quality assurance procedures and schedule to insure a timely, effective and professional provision of services. Costs. Section 5.4 of the RFP discusses the process for scoring responses. It provides as follows in relevant part: Selection Procedure Selection shall be made of two or more vendors deemed to be fully qualified and best suited among those submitting proposals. The selection will be made on the basis of the factors involved in the Request for Proposal, including price if so stated in the Request for Proposal. Selected vendors will then conduct a presentation to the selection committee. After all presentations are made the selection committee will select the vendor which, in its opinion has made the best proposal and make a recommendation to ECUA's Board. ECUA's Board will award a contract to that vendor. Should the ECUA determine that only one vendor is fully qualified or that one vendor is clearly more highly qualified than the others under consideration, the presentation phase may be skipped. (Emphasis added) * * * Basis for Award Information and/or factors gathered during the interviews and any reference checks, in addition to the evaluation criteria stated in the RFP, and any other information or factors deemed relevant by the ECUA, shall be utilized in the final award. Section 6 of the RFP sets forth the functional requirements. This section is not at issue here. Section 7 of the RFP is entitled "Cost Summary." Section 7.1 includes the proposal form, which states as follows in relevant part: ITEM A - Customer Convenience Fee: ITEM B - Set Up Cost: ITEM C - Other (explain): The RFP does not have a section for definitions. It does not define the term "cost" other than as set forth above. The following four vendors submitted timely proposals to Respondent: (a) E-Commerce Group; (b) Petitioner; (c) Link2Gov Corp.; and (d) BillMatrix. The proposals were as follows: Vendor Name Customer Convenience Fee Setup Cost Other E-Commerce Group $2.95* for $1-$500 pymt. None N/A Optional E Bills fee $.35 per bill** Petitioner $2.50* per I/O, IVR & Web Trans. $3,750 Development hourly rate-- $75** $125 per unit swipe device Link2Gov Corp. $2.49 Internet/$2.89 IVR None $95.00 hosting fee per month BillMatrix $3.95 Per Credit Card Trans. None N/A E-Commerce Group: *If average payment more than $60, or if American Express payments to be accepted in addition to other major credit card associations, the convenience fee would be higher; no costs to ECUA for software use. **No other costs for using software, but if ECUA would like billing services, the fee per bill presented would be $0.35. Petitioner: *Will request review of convenience fee if average payment is more than $60 for three consecutive months. **To be charged only upon request from ECUA for specialized development tasks or if implementation requirements exceed est. setup costs, but only upon negotiation between parties. The proposals were initially reviewed by Respondent's finance department. In reviewing them, the director of finance recognized that the number of users of the automated payment option was unknown. However, Respondent's experience with other alternate payment options had generated very limited customer participation. Therefore, the director of finance concluded that it would be best if Respondent did not absorb a high set-up cost for a service that might have very limited use. Additionally, the director of finance believed it was in Respondent's best interest if the customers electing to use the automated payment option bore the fees and costs associated with those services, rather than having all ratepayers absorb this expense regardless of whether they were using it. Accordingly, the director of finance decided to recommend that Respondent select E-Commerce Group's proposal, as it was the lowest bid with no cost to Respondent. The director of finance's recommendation was presented to Respondent's finance advisory committee on July 16, 2002. The finance advisory committee is composed of members who are not Respondent's employees. After receiving the director of finance's recommendation, the committee members discussed which of the proposals were best for Respondent. Respondent's finance advisory committee decided to recommend that Respondent "select E-Commerce Group, the lowest bidder when considering there is no set-up cost to ECUA, as the vendor to provide these automated payment solutions, and enter into a one-year contract with an optional one-year extension." On July 25, 2002, Respondent considered the finance advisory committee's recommendation. During the meeting, Respondent's director of finance stated that approximately 13,000 people per year used credit card payment services to pay the Escambia County tax collector. There is no evidence that the director of finance had sufficient additional information to calculate the percent of the tax collector's customers that used credit cards. One of Petitioner's employees, John Parkin, also spoke at Respondent's July 25, 2002, meeting. He confirmed the number of people that pay the Escambia County tax collector using a credit card payment option provided pursuant to a contract between the tax collector and Petitioner. However, Mr. Parkin did not provide Respondent with any information about the percentage of taxpayers who availed themselves of this service. He provided no information to show how bills paid to Respondent and the tax collector were similar or dissimilar. During the meeting, Mr. Parkin stated that Petitioner would waive its $3,750 set-up costs. He did not otherwise attempt to explain how Petitioner's set-up costs could be amortized or recaptured over the first year of operation. Respondent did not allow Petitioner to amend its proposal to eliminate the $3,750 set-up costs. Instead, Respondent accepted the finance advisory committee's recommendation, awarding the contract to E-Commerce Group. Petitioner filed a timely protest. The finance advisory committee considered the protest in an informal hearing. During this proceeding, Petitioner had an opportunity to demonstrate why it should have been considered the lowest bidder. Respondent considered Petitioner's protest on October 24, 2002, in a regularly scheduled meeting. During the meeting, Respondent voted to refer the case to the Division of Administrative Hearings. Respondent acted within the requirements of the RFP when it determined that E-Commerce Group was the lowest responsible bidder primarily because there was no cost to Respondent to start the program. Respondent's RFP clearly indicated that set-up costs would be considered as one of the evaluation criteria. The RFP did not require Petitioner to designate any part of its proposed costs as set-up costs. Petitioner's set-up cost amortized over the estimated first year's transactions is approximately $2.63 per transaction. Additionally, it would take Respondent approximately 108 days (and over 8,000 transactions) to recapture the set-up costs by passing them along to the ratepayers. However, the RFP did not require Respondent to recalculate Petitioner's proposed costs using projected customer usage to amortize or recapture Petitioner's set-up costs before making a decision. In fact, Petitioner's proposal on its face did not indicate that Petitioner intended for Respondent to make such recalculations.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent enter a final order awarding the contract to E-Commerce Group. DONE AND ENTERED this 17th day of December, 2002, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 2002. COPIES FURNISHED: Archibald Hovanesian, Jr., Esquire 21 East Garden Street, Suite 201 Pensacola, Florida 32501 Bradley S. Odom, Esquire Stephen G. West, Esquire Kievet, Kelly & Odom 15 West Main Street Pensacola, Florida 32501 Linda Iverson, Board Secretary Escambia County Utilities Authority Post Office Box 15311 Pensacola, Florida 32514
The Issue Whether Respondents are indebted to Petitioner for 35 boxes of beans sold by Petitioner to Respondent, Weis-Buy Services, Inc., and, if so, the amount of the indebtedness.
Findings Of Fact Respondent, Weis-Buy Services, Inc., is a dealer in agricultural products licensed by the Florida Department of Agriculture and Consumer Services. Respondent, Aetna Casualty & Surety Company of Maryland acts as surety for Weis-Buy. On January 5, 1995, Mark A. Underwood, Vice President of the Petitioner, sold to Respondent, Weis-Buy Services, Inc., 35 boxes of beans. This sale was the result of the order placed by Hank Douglas, a duly authorized employee of Weis-Buy. The price agreed to by the Petitioner and Weis-Buy was $28.55 per box, for a total purchase price of $999.25. The beans sold by Petitioner to Weis-Buy had been purchased by Petitioner from another grower, Suncoast Farms. There was no written contract between Petitioner and Suncoast or between Petitioner and Weis-Buy. Weis-Buy took delivery of the beans at Petitioner's dock in Homestead, Florida, on January 5, 1995. The beans were loaded into a refrigerated truck in the employ of Weis- Buy on January 5, 1995. From Homestead, the truck drove to Belle Glade, Florida, a trip of approximately 3.5 hours. In Belle Glade, the truck picked up a load of radishes. The truck then went to Immokalee, Florida, where it picked up a quantity of squash. The following day, the truck picked up a load of cherry tomatoes. On January 9, 1995, the beans were inspected by a federal inspector in Columbus, Ohio. 1/ The inspector noted on his inspection report that the beans showed evidence of freeze damage that was ". . . so located as to indicate freezing injury occurred after packing but not at present location". The inspection report noted that the beans were to be dumped. The parties disagree as to when the freeze damage to the beans occurred. Because Weis-Buy believes that the freeze damage occurred before it took delivery of the beans, it has refused to pay Petitioner for the 35 boxes of beans. The reason Weis-Buy believes that the freeze damage occurred before the beans were loaded onto the truck is because the other vegetables that were transported by the refrigerated truck were not damaged. Partly because the beans had been purchased from another grower, Mr. Underwood inspected the beans immediately prior to their being loaded onto Weis- Buy's truck. Based on his testimony, it is found that there was no freeze damage to the beans when they were loaded on Weis-Buy's truck on January 5, 1995. It is found that the freeze damage to the beans revealed by the federal inspection on January 9, 1995, occurred after the beans had been delivered to Weis-Buy. Consequently, it is concluded that Petitioner fulfilled its obligations under the verbal contract and is entitled to be paid the sum of $999.25.
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 Agriculture and Consumer Services that adopts the findings of fact and conclusions contained herein, that finds Respondent Weis-Buy Services, Inc., is indebted to Petitioners in the amount of $999.25, directs Weis-Buy Services, Inc., to make payment to Petitioner in the amount of $999.25 within 15 days following the issuance of the order, and provides that if payment in full of this $999.25 indebtedness is not timely made, the Department will seek recovery from the Aetna Casualty & Surety Company of Maryland, as Weis-Buy's surety. DONE AND ENTERED this 16th day of February, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of February 1996.
Conclusions This cause has come on for final agency action after the filing of a Notice of Voluntary Dismissal With Prejudice (Notice) by Suntree Pharmacy, inc. (Suntree) at the Division Of Administrative Hearings in Case No. 13-4637 on December 27, 2013 and that Division's entry of an Order Closing File And Relinquishing Jurisdiction (Order) on January 9, 2014. Having considered the Notice and the Order and the Order of Conditional Release From Stop Work Order (Release) and the Payment Agreement Schedule For Periodic Payment of Penalty (Payment Agreement) and associated documents (Attachment A hereto), IT IS HEREBY ORDERED that the Notice Of Assignment And Order issued herein on January 30, 2014 is hereby withdrawn as improvidently issued. IT IS HEREBY FURTHER ORDERED that the Order of Conditional Release From Stop Work Order and the Payment Agreement Schedule For Periodic Payment of Penalty are affirmed and remain in full force and effect until all terms and conditions thereof are satisfied. Should any term or condition therein be defaulted on by Suntree, the Release shall be immediately lifted and a bar against further work immediately re- ss igsyerneeminyeevnerttaneimm mee imposed and the Payment Agreement shall be accelerated and the full amount due thereunder shall become immediately due and payable. March THE DONE AND ORDERED this _@rel_day of February, 2014. Robert C. Kneip, Chief of Sta
Findings Of Fact Petitioner is a Florida corporation for profit located at 1933 Commonwealth Lane, Tallahassee, Leon County, Florida. At all times pertinent to this case Petitioner has operated a business in Florida. Respondent is a Florida state agency. Its duties include the administration of Community Development Block Grants in Florida, (hereinafter referred to as CDBG). Petitioner requested Respondent to reimburse money related to administrative services which Petitioner provided to Okaloosa County, Florida related to a CDBG. The petition for those monies was filed in February, 1993. The request for reimbursement was in the amount of $43,274.92. Respondent denied that request. In turn, by opportunity provided by Respondent, Petitioner sought an administrative hearing pursuant to Section 120.57(1), Florida Statutes, to challenge Respondent's preliminary agency decision denying the request for reimbursement. The case was forwarded to the Division of Administrative Hearings to assign a hearing officer to conduct a formal hearing to resolve the dispute between Petitioner and Respondent. The administrative proceeding concerning the reimbursement claim was considered in the case Clark, Roumelis & Associates, Inc., v. State of Florida, Department of Community Affairs, Respondent, DOAH Case No. 93-1306. At the time Petitioner initiated the action to seek reimbursement and was afforded the point of entry to contest the preliminary action denying the reimbursement request, Petitioner employed no more than twenty-five (25) full- time employees and had a net worth of not more than $2 million dollars. Following a formal hearing a recommended order was entered by the undersigned which recommended that Petitioner be paid $43,274.92. The recommended order was entered on September 29, 1993. In turn, Respondent's final order dated December 28, 1993 denied the petition for reimbursement. Petitioner took an appeal to the First District Court of Appeal, State of Florida, Case No. 94-0151. In an Opinion filed February 16, 1995, the First District Court of Appeal decided in favor of Petitioner by reversing Respondent's final order and remanding the case. Respondent sought rehearing and rehearing on en banc which was denied on March 24, 1995 by the First District Court of Appeal. Respondent sought further review before the Florida Supreme Court, Case No. 85,581, which denied that review by not accepting jurisdiction. That decision by the Florida Supreme Court was made on September 6, 1995. On September 13, 1995, Petitioner filed a petition with the Division of Administrative Hearings pursuant to Section 57.111, Florida Statutes. Through that action Petitioner sought the reimbursement of attorney's fees and costs associated with DOAH Case No. 93-1306 and the appeals that followed the December 28, 1993 final order denying the reimbursement. Contrary to the requirements set forth in Section 60Q-2.035(5)(a), Florida Administrative Code, Respondent did not file a response to the petition within twenty (20) days of the filing of the petition seeking reimbursement attorney's fees and costs. Neither party has sought an evidentiary hearing for the Division of Administrative Hearings to consider Petitioner's request for reimbursement of attorney's fees and costs. Therefore this case has proceeded without an evidentiary hearing. Rule 60Q-2.035(7), Florida Administrative Code. In that setting Respondent is deemed to have waived its opportunity to contest whether the attorney's fees and costs claimed are unreasonable; whether Petitioner is not a prevailing small business party in DOAH Case No. 93-1306; whether Respondent's actions in denying Petitioner's claim for monetary reimbursement related to administrative services provided to Okaloosa County, Florida in the CDBG was a decision which was substantially justified in law and fact; whether circumstances exist which would make the award of attorney's fees and costs unjust and to present the defense that the Respondent was only a nominal party in DOAH Case No. 93-1306. See Rule 60Q-2.035(5)(a), Florida Administrative Code. Consistent with Rule 60Q-2.035(7), Florida Administrative Code the following additional facts are found for or against the award of attorney's fees and costs, based upon the pleadings and supporting documents in the files and records in the Division of Administrative Hearings: Petitioner is a small business party and a prevailing small business party in the matters considered in DOAH Case No. 93-1306 and the court appeals that followed. Petitioner's attorney has submitted an affidavit claiming, "In the administrative proceedings of this action, 140.8 hours were expended to the date of Respondent's Final Order of December 28, 1993. Total Fees: $21,120.00." Petitioner's attorney has submitted an affidavit claiming, "In the administrative proceedings of this action, $2,141.78 in costs were incurred to the date of Respondent's Final Order of December 28, 1993." Petitioner's attorney has submitted an affidavit claiming, "In the appellate proceedings in this action (First District Court of Appeal Case No. 94-0151 in Florida Supreme Court, Case No. 85,581), 79.0 hours were expended and $310.66 in costs were incurred to the date of the Supreme Court's denial of September 6, 1995. Total Fees: $13,258.00. Total Costs: $310.66." The affidavits submitted by Petitioner concerning the claim for attorney's fees and costs incurred to the date of Respondent's final order of December 28, 1993, failed to adequately " . . . reveal the nature and extent of the services rendered by the attorney as well as the costs incurred in preparations, motions, [and] hearings . . . in the proceeding" by "itemizing" the claim. Section 57.111(4)(b)1, Florida Statutes. By contrast, the attorney's affidavit filed for attorney's fees and costs in the appellate proceedings was adequate to identify services rendered by the attorney and costs incurred related to appeals in the proceeding. Section 57.111(4)(b)1, Florida Statutes. The amount of attorney's fees and costs for appellate proceedings is within the $15,000.00 cap for recovery of attorney's fees and costs as set forth in Section 57.111(4)(d)2., Florida Statutes.
The Issue Whether Respondent has incurred and failed to pay Petitioner's surcharge tax in the amount of $12,746.97, including statutory interest and statutory penalty, in violation of Section 561.501, Florida Statutes (2005), and Florida Administrative Code Rule 61A-4.063(8).
Findings Of Fact Based upon observation of the witnesses' demeanor while testifying, character of the testimony, internal consistency, and recall ability; documentary materials received in evidence; stipulations by the parties; and evidentiary rulings during the proceedings, the following relevant and material facts are determined: Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Division), is the state agency charged with the responsibility of administering and enforcing the beverage law in Florida. Chapters 561 through 568, Florida Statutes (2005). In this disciplinary action, the Division seeks to impose sanctions on the license of Respondent, Beer: 30 Grill & Pub, Inc., d/b/a Beer: 30 Grill & Pub, on the grounds that Respondent failed to pay to the State of Florida the surcharge tax owed for on- premise sales of alcoholic beverages made during the period February 2000 through March 2003. Respondent denied the charge and requested a final hearing to contest this allegation. Respondent is subject to the regulatory jurisdiction of the Division, having been issued beverage license number 69- 02225, 4-COP, by the Division. That license allows Respondent to make sales of beer, wine, and liquor for consumption on premises at the restaurant located at 1602 West Airport Boulevard, Sanford, Florida 32771. At all times material to this proceeding, Respondent, by its corporate officer John Aitcheson, applied for and was holding license number 69-02225, 4-COP. In Florida, a licensee must keep records of all purchases and other acquisitions and sales of alcoholic beverages for a period of three years to comply with Section 561.501, Florida Statutes (2005). This requirement applies to any beverage license holder in Florida. In addition to selling alcoholic beverages for on- premise consumption, Respondent also sells packaged alcoholic beverage for off-site consumption. Surcharge tax in the amount of $0.14 per gallon of beer, $1.07 per gallon of wine, and $4.28 per gallon of liquor is assessed for each and every drink sold by Respondent for on- premise consumption, but no such surcharge tax is owed for off- premise package sales. The surcharge tax is paid by the on-premise consumers (patrons) to the state, and the vendor only collects and remits this surcharge to the state. As a reward for their effort to timely report and remit the surcharge to the state, the vendors are allowed to keep monthly, as an allowance, one percent of the total surcharge owed for the alcoholic beverages sold during that month. Respondent testified that he has a very simple method of keeping sales records. He makes handwritten records of each and every off-premise sale and also collects and keeps the distributors' invoices for the purchase of his alcohol supplies. Every month, Respondent subtracts the off-premise sold alcoholic beverages from the total quantity bought as reflected by the invoices from distributors, obtaining through this indirect method the total on-premise sales. Then Respondent multiplies the resulting quantity of alcohol sold on-premise that month with the applicable tax rate, obtaining thus his surcharge liability for that particular month. Respondent provided the Division with handwritten off- premise sales records. With the exception of the records mentioned above, the Division does not have in the file any other records submitted by Respondent. As well, Respondent did not offer any evidence to substantiate his claim that he indeed provided the Division with any additional records. However, Respondent testified that he neither maintained on-premise sales records, as required by Section 561.501, Florida Statutes (2005), nor was he able at the hearing to offer any proof whatsoever that would corroborate his claim that during the audited period he actually made more off-premise sales than reflected in his handwritten records. To enforce the surcharge tax provisions, the Division performs periodic audits of all licensees who sell alcoholic beverages for on-premise consumption. As part of the audit process, the Auditing Bureau of the Division requests and receives monthly reports from alcohol distributors detailing all the sales made by each distributor to each particular licensee. An exception to the automatic monthly distributor reporting procedure is made for the Schenk Company, a beer distributor, which reports its sales to different vendors only when expressly requested by the Division. After receiving all the sales data concerning a particular vendor from the distributors, the Auditing Bureau uses a computer program to calculate the gross surcharge liability of that particular licensee. Special deductions are then allowed for off-premise sales, employee drinks, etc. The burden is on the holder of the license to demonstrate that such person qualifies for a deduction by providing accurate records of off-premise sales, giving employee drinks, etc. Fla. Admin. Code R. 61A-4.063(4) - 61A-4.063(9). It is each licensee’s obligation to accurately report all on-premise monthly sales and to pay the tax collected from customers. There is a penalty and interest surcharge for late reporting and late paying. In addition to the penalty and interest mentioned above, the Division is statutorily required to assess interest and penalties for any underreporting and/or underpayment of the tax due for the period of the audit. If underreporting/underpayment penalties and interest are assessed, they are applied only to the period of the audit. No penalty or interest is applied to any period over the end of the audit. In the present case, the Auditing Bureau calculated Respondent’s surcharge liability based on the data provided by the distributors. The audit allowed Respondent deductions for all off-premise sales recorded in Respondent's handwritten off- premise sales records. At no material time did Respondent request any other deductions nor did he provide any evidence that he would be entitled to any other deductions. It is incumbent to Respondent to carefully keep records of all sales that would entitle him to receive deductions. The Division cannot allow surcharge tax deductions that are not corroborated by any records. Fla. Admin. Code R. 61A-4.063(9). Moreover, Respondent did not even advance any amount of any additional deduction; his position being only that he should have been allowed more deductions because he made more off-premise sales. Absent evidence that more alcoholic beverages were sold off-premise than recorded in the records already taken into consideration by the audit, no additional deductions may be allowed to Respondent. Fla. Admin. Code R. 61A-4.063(9). The audit found that Respondent understated his tax reports and underpaid $7,433.66 in surcharge tax. For the failure to timely report and remit the entire surcharge tax due for the period February 1, 2000, through February 28, 2003, the Division assessed statutory interest of $1,693.85 and a statutory penalty of $3,619.46 for a total surcharge liability of $12,746.97.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order finding Respondent liable and ordering payment for the surcharge tax principal of $7,433.66, plus interest of $1,693.85 and a statutory penalty of $3,619.46 for a total surcharge liability of $12,746.97. DONE AND ENTERED this 24th day of January, 2006, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 2006.
The Issue The issue in this case is whether Respondent's intended award of a contract to Intervenor pursuant to Invitation to Negotiate No. 2011-18 is contrary to Respondent's governing statutes, Respondent's rules and policies, and the specification of the solicitation.
Findings Of Fact The Department issued the ITN, Revised Standards Tutorial, on December 17, 2010. The purpose of the ITN was to contract with one or more vendors "to provide assistance with the state's need to support teachers in the implementation, and students in the mastery of the English Language Arts and Mathematics Common Core State Standards (CCSS) and the Next Generation Sunshine State Science and Civics Standards." The Department sought to purchase, among other things, the following: [T]he development of a new robust web-based system that includes but is not limited to interactive adaptive student practice lessons for each of the Common Core State Standards and Next Generation Sunshine State Science and Social Studies Standards (Science grades 5, 8, Biology 1 and Civics) to address individual student needs and provide a means of individual progress monitoring for students, parents, and teachers; secure mini-interim assessment checks for students; student performance reports for teachers on the mini-interim assessment checks; and programming for parent, student, and teacher log-ins that provide different levels of access to support materials. The ITN required that the system developed would be the property of the Department during and after the contract and stated: All equipment, software and licenses, programming code and language, documentation and content (both instructional and informative) that is developed as part of this project will be the property of the Department during and after the grant period. All such items must be completely transferred to the Department prior to the end of the contract period, including any licenses to the extent that they have not expired. Any proprietary products owned by the Contractor must provide for a perpetual royalty free and non-exclusive license for use by the Department. Vendors were given the opportunity to ask technical questions about the ITN, and the Department posted the questions and the Department's responses on the vendor bid system on December 29, 2010. One vendor submitted the following question: "Will the DOE require a perpetual license to continued use of any content (assessments or lessons) after the end of the four- year contract if those materials are the vendor's proprietary, pre-existing materials that are provided for use in the Standards Tutorial?" The Department gave the following written response, which was included in Addendum No. 1 to the ITN. "All content and applications developed will be the property of the Department. All content, application code and documentation must be turned over to the Department upon deliverable completion." It is clear from the ITN and the first addendum that the Department required the materials developed pursuant to the contract to be the property of the Department. One of the main goals of the Department in issuing the ITN was to have a product that could be sustained after the contract period. When the ITN was developed, the Department was not aware of the variety of arrangements that might be possible in order to meet all of the Department's goals. However, the Department made the choice to go with ownership of the products developed for the contract and a perpetual, royalty-free non- exclusive license for products that were owned by the contractor and provided pursuant to the contract, but were not developed as a result of the contract. The Department could have worded the ITN so that the vendors would provide a solution for the sustainability component of the contract, but it did not do so. The method chosen by the Department to meet its sustainability needs became a requirement of the ITN. Sustainability was a material aspect of the contract, and, because the Department had specified the method to achieve sustainability in the ITN with no leeway for the vendors to propose a different methodology, the ownership of products developed pursuant to the contract became a material requirement of the ITN. Nothing prevented the Department from negotiating different methods of sustainability during negotiation, but in order to determine whether a vendor was responsive, the Department was bound by the ITN, no matter whether it inadequately reflected what the Department was seeking. The remedy to the flawed ITN would have been to change the specifications prior to the replies being submitted. The Department argues in its Proposed Recommended Order that the ITN did not call for ownership of the content or the software. This argument is disingenuous in light of the testimony of the Department's representative that the ITN contemplated complete ownership of the products developed pursuant to the contract. Section 7.1 of the ITN required that the vendor include completion dates for deliverables in its Reply and provided a list of deliverables for each year of the contract. The ITN stated that the Deliverable Completion date contained in the ITN was for "informational purposes only." The actual completion dates were to be negotiated. Section 3 of the ITN provides: "Award will be made to the responsible and responsive vendor that the Department determines will provide the best value to the state." Section 3.3. of the ITN defines a responsive bid as "a Reply submitted by a responsive and responsible vendor which conforms in all material respects to the solicitation." The term "Reply" is defined by the ITN as "the complete response of the Respondent[1/] to the ITN, including properly completed forms and supporting documentation." Section 4.11 of the ITN provides: As in the best interest of the state, the right is reserved to award based on all or none thereof, to a responsive, responsible Respondent. As in the best interest of the state, the right is reserved to reject any and/or all Replies or to waive any minor irregularity in replies received. Conditions which may cause rejection of Replies include, without limitation, evidence of collusion among Respondents, obvious lack of experience or expertise to perform the required work, failure to perform, or meet financial obligations on previous contracts. Section 5.2.2 of the ITN is entitled Mandatory Submittal Documents and requires that the vendors submit, among other things, a transmittal with their replies which contains the following: a statement certifying that the person signing the Reply is authorized to represent the Respondent and bind the Respondent relative to all matters contained in the Respondent's Reply the company's federal tax identification number a statement certifying that the Respondent has read, understands, comply [sic] and agrees to all provision of this ITN a statement that the Respondent is authorized to conduct business in Florida in accordance with the provisions of Chapter 607, F.S. In lieu of such statement, the Respondent alternatively must certify that authorization to do business in Florida will be secured prior to the award of the contract a statement certifying that the Respondent is registered on the MyFloridaMarketPlace website in accordance with the provisions by the state of Florida. In lieu of such statement, the Respondent must alternatively certify that registration authorization will be completed prior to the award of the contract. Once the replies were submitted, the ITN required that the replies be reviewed to determine if they met the mandatory submittal requirements. If it was determined that a reply met the mandatory submittal requirements, the reply would be evaluated by an evaluation committee. Section 8 of the ITN sets out the evaluation and negotiation process and provides: 8.1 REPLY EVALUATION AND NEGOTIATION PROCESS Using the evaluation criteria specified below, in accordance with Section 287.057, F.S., the Department shall evaluate and rank responsive Replies and, at the Department's sole discretion, proceed to negotiate with one or more Respondent(s) . . . : Section 8.2 of the ITN provides: The ITN is designed to assess the most points to the Respondent presenting the best solution for the required services. The Evaluation Committee will consider only those Replies, which are determined to meet the mandatory requirement review (See SECTION 5.2.2) first completed by the Department's Bureau of Contracts, Grants and Procurement Management Services. Each member of the Evaluation Committee will be provided a copy of each Technical Reply. Replies will be evaluated on the criteria established in the section above entitled "Criteria for Evaluation" in order to assure that Replies are uniformly rated. The Evaluation Committee will assign points, utilizing the technical evaluation criteria identified herein and the Procurement Office will complete a technical summary. Oral presentations (or seeking clarification) will be evaluated by the committee based on the criteria established in SECTION 5.2.1 above. During this stage Respondents will be asked to provide any clarifications needed by the evaluation committee to assist in evaluating their Reply. Information received in this stage will be added to the Respondent's Reply and evaluated as a part of the appropriate section above. Section 8.1 of the ITN provides that the evaluation of the prices would be done through a comparison of the prices submitted in the replies: "The maximum points will be awarded to the lowest acceptable Price Reply. Replies with higher costs will receive the fraction of the maximum points proportional to the ratio of the lowest Price Reply to the higher Price Reply." Section 8.1(E) of the ITN provides: In submitting a Reply Respondent agrees to be bound to the terms of this ITN, however, the Department reserves the right to negotiate different terms and related price adjustments if the Department determines that it is in the state's best interest to do so. Four vendors, including Infinity and Microsoft, submitted replies to the ITN by the deadline of January 10, 2011. Microsoft's Reply stated: The information contained in this document [the reply] (a) represents Microsoft's current statement of the features, functions, and capabilities of the products and services described herein, which is subject to change at any time without notice to you, (b) is for your internal evaluation purposes only and should not be interpreted as a binding offer or commitment on the part of Microsoft to provide any product or service described herein; and (c) constitutes Microsoft trade secret information and may not be disclosed to any third party. Any procurement that may result from this information is subject to negotiation and execution of a definitive agreement between [sic] and its chosen authorized Microsoft reseller incorporating applicable Microsoft commercial terms. Microsoft does not guarantee the accuracy of any information presented and assumes no liability arising from your use of the information. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT. The transmittal letter submitted by Microsoft stated: "[T]his letter certifies that Microsoft has read and understands the provisions of the ITN." The transmittal letter did not meet the requirements of the ITN that Microsoft certify that it complies and agrees with all provisions of the ITN. The reply submitted by Microsoft did not provide that all materials developed as a result of the contract would become the property of the Department. Microsoft intended to subcontract with Houghton-Mifflin-Harcourt (HMH) to develop the content, which includes the practice lesson plans for the students. Microsoft stated in its Reply: "The Department of Education will have a perpetual license to use these lessons; HMH will retain copyright and ownership of all lessons provided." Microsoft intentionally did not agree to provide complete ownership of the project deliverables to the Department when it submitted its reply. David Gallagher, Microsoft's representative and the person who submitted the reply on behalf of Microsoft, admitted at the final hearing that he did not have authorization to give the Department ownership of the project deliverables when he submitted Microsoft's reply. Section 5.2.3 of the ITN provided that prices were to be submitted on a form that was provided in the ITN. The price form contains the following language: We propose to provide the services being solicited within the specifications of ITN 2011-18. All work shall be performed in accordance with this ITN, which has been reviewed and understood. The below prices are all inclusive. There shall be no additional costs charged for work performed under this ITN. The price form submitted by Microsoft did not contain this language. Taking the evidence as a whole, it is clear that Microsoft did not intend to be bound by its reply and thought that anything that was contrary to the ITN would be worked out in negotiations. The Department appointed an evaluation team that met on January 18, 2011, to score each reply. Some of the evaluators made note in their evaluations that Microsoft's reply did not meet the requirements of the ITN relating to ownership of the project deliverables. The evaluation committee awarded the maximum number of points for price to Microsoft. The two top-scoring vendors, Infinity and Microsoft, were invited into negotiations. The Department submitted questions to both Infinity and Microsoft before the negotiations, and both vendors submitted written responses to those questions. The Department submitted the following question to Microsoft: Your proposal states "HMH will retain copyright and ownership of all lessons provided" (pp.3-25, 3-33). How does this meet the ITN requirement that "All equipment, software and licenses, programming code and language documentation and content (both instructional and informative) that is developed as part of this project will be the property of the Department during and after the grant period. All such items must be completely transferred to the Department prior to the end of the contract period, including any licenses to the extent they have not expired. Any proprietary products owned by the Contractor must provide for a perpetual royalty free and non-exclusive license for use by the Department." (p. 6)? Microsoft responded to the question of ownership, in part, as follows: Developments. Upon payment in full, we assign you joint ownership in all rights in any custom computer code or materials (other than products, fixes or pre-existing work) developed by us (or in collaboration with you) and provided to you in the course of performance of this contract ("developments"). "Joint ownership" means each party has the right to independently exercise any and all rights of ownership now known or hereafter created or recognized, including without limitation the rights to use, reproduce, modify and distribute the developments for any purpose whatsoever, without the need for further authorization to exercise any such rights or any obligation of accounting or payment of royalties, except you agree you will exercise your rights for your internal business operations only, and you will not resell or distribute the developments to any un-affiliated third party. These use restrictions shall survive termination or expiration of this contract. Each party shall be the sole owner of any modifications that it makes based upon the developments. * * * Educational-Digital Content & Assessments. We will grant a perpetual, royalty-free and non-exclusive license (except as set forth below) for all of the content and lesson instruction and assessments created as part of this project to the State of Florida. As such, we will retain copyright and ownership of this created material, while the State of Florida may leverage the material on an exclusive basis in the State of Florida anywhere within its offices, school facilities, and education programs, including use extended to staff, administration, teachers, students and parents. Much of the content, particularly in the Reading, Language Arts/Literature and Civics disciplines is integrated into the lessons from third-party sources. The ownership of material permissioned from outside our team is unavailable to be granted or transferred to the State of Florida. However as part of the sustainability plan for the Student Standards Tutorial, we will ensure that mechanisms are in place to allow for permission renewals as required by contract with third-party content owners for a period encompassing four years from the final delivery of the contract period. Although Microsoft was given an opportunity to clarify its position on ownership of the product deliverables developed for the contract, Microsoft's response was still not responsive to the requirements of the ITN. The Department appointed a negotiation team that met separately with Infinity and Microsoft on February 3, 2011. During the negotiation session, a Microsoft representative stated that it would be "impossible" for Microsoft to provide complete ownership of equipment and software, that there was no way that Microsoft could put in its best and final offer that the Department would have complete ownership, and that Microsoft did not want to be non-responsive but it did not know how to fix the problem. After the negotiation session with Microsoft, Regina Johnson (Ms. Johnson) and Mary Jane Tappen, who were members of the negotiation team, engaged in email communications regarding whether the Department could change the language of the ITN to allow the Department to accept the licensing proposal offered by Microsoft. Ms. Johnson noted that if the ITN language were not changed, Microsoft could be rejected for non-compliance. On February 7, 2011, after the negotiation sessions, Ms. Johnson sent an email to Infinity notifying Infinity that the Department would accept a license or co-ownership proposal, reflecting a change in the ITN specifications. Following negotiations, each vendor was given the opportunity to submit a Best and Final Offer (BAFO) by February 11, 2011. Both vendors submitted BAFOs. On February 16, 2011, the negotiators held an Intent to Award meeting. Following discussion, two negotiators voted for Microsoft, and one voted for Infinity. On March 1, 2011, Chancellor Frances Haithcock sent an Intent to Award memorandum to Commissioner Eric Smith (Commissioner Smith), explaining why Microsoft provides the best value to the state. Commissioner Smith signed that memorandum on March 4, 2011. On March 7, 2011, the Department posted the Intent to Award to Microsoft.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that the intended decision to award a contract to Microsoft pursuant to ITN 2011-18 is contrary to section 287.057 and the ITN. DONE AND ENTERED this 7th day of June, 2011, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of June, 2011.
The Issue Whether Respondent Florida Department of Health and Rehabilitative Services (HRS), acted illegally, dishonestly, fraudulently, arbitrarily or/and capriciously in determining to award the contract for RFP 95-142CM-FAP to Unisys Corporation (Unisys).
Findings Of Fact On November 14, 1994, HRS's Office of Information Systems distributed the RFP, entitled "FLORIDA System --Applications Programming Services." The RFP was designed to procure the programming services required by HRS to complete the software programming of, among other things, the state's federally mandated Child Support Enforcement System, and to maintain and enhance the system upon its completion. Upon selection of the winning proposal, HRS intended to enter into the contract for thirty-six months, renewable upon agreement of the parties for an additional 12 months. The cost proposal rates for the initial three-year term would be binding for any subsequent work on the project. HRS also reserved the right to acquire additional consulting services from the contractor for related activities for up to one year after the termination of the Contract. HRS began developing this RFP in the late spring or early summer of 1994 in anticipation of the expiration of the current contract with Deloitte for provision of applications programming services. Before release to prospective proposers, the RFP was approved by HRS' Office of Contract Services and the Information Technology Resources Procurement Advisory Commission (ITRPAC), a body consisting of various state officials including the head of the Division of Purchasing, which ensures that the RFP complies with state rules. In addition, various federal agencies approved the RFP before its release to prospective proposers. The RFP provided that 60 percent of the proposal scoring would be based on the technical proposals contained in the responses to the RFP, and that the remaining 40 percent of the score would be assigned to the costs as submitted in the proposals. After scoring and weighting of the scores, the weighted scores were to be combined to determine the winning proposal. The breakdown of scoring between technical and cost components is based upon HRS' standard practice and its experience with the format required by other state and federal agencies with whom HRS works. The division of the scores was also intended to ensure that an unqualified vendor did not secure the bid solely on the basis of low cost. The selection of the evaluation criteria and weighting of evaluation points for this RFP were subject to the discretion of the Department at the time the RFP was prepared. On December 12, 1994, HRS held a bidders' conference at which representatives of Deloitte and Unisys were in attendance. EVALUATION OF RESPONSES On January 6, 1995, Deloitte and Unisys submitted the only two proposals in response to the RFP. Both proposals were deemed responsive to the requirements of the RFP. HRS appointed a five member Evaluation Committee to review and evaluate the proposals. HRS provided training to the Evaluation Committee members specifically directed to the proper method for reviewing and scoring proposals submitted in response to the RFP. Each member of the Evaluation Committee was qualified by training, education and experience to review and evaluate the technical merits of each proposal. The RFP defined the criteria by which the proposals would be reviewed, scored and ranked by the Evaluation Committee, and the contract awarded. Included in the RFP were blank cost proposal forms which the proposers were to complete. Those forms did not include any blank spaces to be filled in referencing costs associated with any "renewal" periods or otherwise provide for including information about proposed costs for any renewal periods. The Evaluation Committee members each independently reviewed the technical proposals submitted in response to the RFP over a period of approximately two weeks. Committee members submitted the raw scores from their technical evaluations to Karin Morris, the HRS System Program Administrator. The cost proposals were opened and scored on January 20, 1995 by Ms. Morris. The RFP provided, in Section 6.0, that a comprehensive, fair, and impartial evaluation would be conducted of all proposals received. The RFP also provided for the grouping of evaluation criteria into six categories with points assigned as follows: - Mandatory Requirements 0 points - Management Summary 0 points - Corporate Capabilities 200 points - Project Staff 200 points - Technical Approach 100 points - Project Workplan 100 points - Cost 400 points Section 6.0 of the RFP also contained the following language: Selection of the successful proposer will be based on the proposal that is determined to be in the best interest of the department, taking into consideration cost and other criteria set forth in the RFP. Further, the RFP provided, in Section 6.1, that: An Evaluation Committee will be established to assist the department in selection of the winning contractor(s). All proposals not meeting the mandatory requirements will be rejected. The committee will evaluate the technical approach, corporate capabilities and project staff of all responsive proposals. The committee will rank proposers by the resulting scores and make a recommended award. The committee will summarize their findings and prepare an evaluation report to the Deputy Secretary for Administration. The report will then be presented to the Secretary of HRS. The Secretary will review the final report, pertinent supporting materials and make the determination of the final award, taking into consideration cost and other evaluation criteria set forth in the RFP. The Secretary reserves the right to take any additional administrative steps deemed necessary in determining the final award. (Emphasis added). Most importantly, Section 6.3(D) of the RFP dealing with the evaluation of the cost proposals stated: The points awarded for the three cost evaluation categories will be totaled and added to the points awarded for technical evaluation cate- gories 3 through 6 to determine the winning proposer. (Emphasis added). After reviewing and comparing the weighted scores of both proposals, the Evaluation Committee issued a "Final Report," with recommendations, on January 30, 1995. The weighted technical scores reflected in the Evaluation Committee's Final Report are as follows: DELOITTE UNISYS Corporate Capabilities 200 186.36 Project Staff 200 159.07 Technical Approach 100 76.62 Project Workplan 100 76.73 TOTAL 600 499 The weighted cost scores were: DELOITTE UNISYS Fixed Price Tasks 10.0 2.27 Monthly Price 357.90 380.0 Hourly Price 7.77 10.0 TOTAL 375.67 392.2 Totaling all categories as required by paragraph 6.3(D) of the RFP, the Department's Evaluation Committee arrived at the following final ranking: DELOITTE UNISYS Technical Proposal 600 499 Business Proposal 376 392 TOTAL 976 891 Based upon the Evaluation Committee's scores, Deloitte's demonstrated technical capability is 20 percent higher than that of Unisys. Under the terms of the RFP, there was no discretion involved in scoring the cost portion of the proposals, including the weight to be accorded costs in the final overall scoring to determine the winning bidder. Based upon HRS' inclusion of the specific criteria in the RFP, the cost portion scoring was merely a mechanical calculation. Both of the proposers' cost proposals fall within the agency's budgetary limits for the current year for accomplishing the work requested by the RFP. Four of the five members of the HRS Evaluation Committee recommended award of the contract to Deloitte, in the following language: Deloitte & Touche scored higher in all areas including recommendations. Deloitte and Touche is the incumbent contractor and therefore there are no risks associated with the transition. Deloitte understood the requirements of the RFP and addressed them more completely in their proposal. Therefore, it is our recommendation that the contract should be awarded to Deloitte & Touche. (Emphasis added). One member of the Evaluation Committee recommended the decision be left to the Secretary of HRS. None of the members of the HRS Evaluation Committee recommended award of the contract to Unisys. HRS SECRETARY'S DECISION TO AWARD TO UNISYS On January 27, 1995, prior to preparation of the recommendations contained in, or the issuance of, the Evaluation Committee's Final Report, HRS Secretary James Towey convened a meeting with Deputy Secretary Lowell Clary, John Holland, Bill Belleville and the department's legal counsel to discuss the contract award process, a draft of the Evaluation Committee's Final Report and other matters the Secretary felt relevant to HRS' ultimate decision on the RFP. At the meeting, Towey was informed by Bill Belleville that Deloitte's proposal was the "best." Towey was also informed by John Holland and Bill Belleville that both companies could perform under the contract. However, neither Holland's nor Belleville's assessments were based on responses to the RFP, but rather upon their own experience with the two vendors outside of this RFP process. Belleville conceded that he believed that a proposer was qualified to perform the contract by merely meeting the "mandatory" requirements of the RFP, a category that was accorded zero points in the scoring criteria. Informed that both companies could perform under the contract, Towey "zeroed in" on costs as the major consideration for the award of the contract. At the meeting, he considered a present-value calculation of the payments that the State would make over the course of a contract, if the contract had been for a 48 month term. The calculation had been prepared by Dean Modling, an HRS senior management analyst supervisor, although the RFP had been approved by the Department of Management Services without provision for such an analysis. The RFP not inform proposers that a present-value analysis would be performed and provision for the present-value of a contract was not included in the scoring criteria for the proposals. Present value calculation became an issue when it was raised and discussed at the January 27, 1995 meeting, and subsequently used in the Secretary's decision to award the contract to Unisys. Towey also considered, in deciding to award the contract to Unisys, a calculation of "raw costs," provided after the January 27, 1995 meeting. These "raw costs" were presented on two charts. Both added up the amounts submitted by each proposer for fixed price tasks and monthly costs, over 36 months. Although the RFP did not request, and neither proposer submitted costs for a 48 month contract, the two charts included a calculation for a hypothetical 48 month contract using the same monthly payments submitted for the 36 month contract. In addition, one of the two charts included a 5.8 percent factor for overtime, which was also not addressed by the RFP or by the proposals submitted in response to the RFP. There was no evaluation criteria contained in the RFP which dealt with the issue of "raw costs" over the term of the contract. Prior to the decision to award to Unisys, HRS never performed and Towey never considered a present value analysis for the 36 month contract period provided for in the RFP. Finally, as a result of concern expressed at the January 27, 1995 meeting regarding whether Unisys could handle the immediate tasks required by the contract, including requirements of the Child Support Enforcement and federal certification programs, Towey considered whether there would be any risk of transition if Unisys were unable to hire some of Deloitte's employees and subcontractors should he decide to award the contract to Unisys. Towey specifically requested Deputy Secretary Clary to research this issue. In order to obtain information, Clary had HRS personnel directly contact Deloitte's subcontractors. Clary responded to Towey three days later on January 30, 1995, the day before the decision by Towey to award the contract to Unisys, that Deloitte's subcontractors would not be prohibited from working for Unisys. Consideration of overtime and risk of transition were not criteria contained in the RFP, nor were these elements evaluated and scored by the HRS Evaluation Committee. By way of a January 31, 1995 memorandum to Clary announcing the award of the contract to Unisys, Towey stated: I have now had an opportunity to review the report of the evaluators of this RFP, the recommendations contained therein, the raw data submitted with the proposals, and the RFP. I understand the nature of the project and its importance to the agency. Based upon my review of the information presented to me and my understanding of similar projects in the past, my decision is to award the contract to Unisys as the proposal most advantageous to the state of Florida, taking into consideration the price and other criteria set forth in the RFP. Although I have considered the risk of transition to a new contractor, I find that I am unable to ignore the dollar savings which will result in awarding the contract to Unisys. Since you and your staff have assured me that both companies are technically competent to perform the work, I believe the monetary savings outweigh any risk that might exist in the transition of contractors. Therefore, I have determined that it is in the state's best interest to award the contract to Unisys. Please take whatever steps are necessary to implement this decision. (Emphasis added). By his actions, Towey exercised more than the prerogative conferred by the RFP to "take any additional administrative steps deemed necessary in determining the final award" and actually evaluated criteria other than that contained in the RFP in reaching his decision to award the contract to Unisys. Further, in awarding the contract to Unisys, Towey effectively altered the relative weight of the criteria as specified in the RFP. Towey relied upon the advice of Clary. Illustrative of Clary's perspective is his testimony at the final hearing that he believed the 60/40 weighting contained in the RFP to be inapplicable to decision making by the Secretary of HRS. Neither Bill Belleville nor John Holland reviewed, in detail, the proposals submitted in response to the RFP. Neither performed their own independent analysis of the responses. Further, Clary never reviewed the RFP nor the proposals submitted in response to the RFP. In the course of his decision making process with regard to award of the contract to Unisys, Towey relied on the advice of Clary, Belleville and Holland, referred to by Towey as his "top managers", despite their undisputed lack of familiarity with the Deloitte and Unisys proposals. While his memorandum dated January 31, 1995, states he reviewed the RFP, Towey admitted in his testimony at the final hearing that he had not personally reviewed the document. Further, he never reviewed or performed his own analysis of the two proposals submitted in response to the RFP. The members of the Evaluation Committee members were the only persons to fully and carefully evaluate the two proposals and score them under the criteria contained in the RFP. Since that time, no one else from HRS has attempted to reevaluate or re-score the proposals. Neither Towey nor anyone else involved in the January 27, 1995 meeting disagrees with the analysis and scoring of the proposals by the Evaluation Committee. PRESENT-VALUE ANALYSIS Section 1.2 of the RFP, states, in part: This RFP will result in a thirty-six month contract. Further, Section 4.12(C) of the RFP states, in part: Upon selection of the winning proposal, the department shall enter into a contract for thirty-six (36) months. Although the possibility of renewal of the contract for a maximum of a single, one year term is contained in the RFP, there is no provision in the RFP which requires that HRS renew the contract after 36 months or that the contractor accept a renewal after 36 months for any specific term. By the terms of the RFP, any renewal of the contract for a period beyond the 36 month term is subject to negotiation between the contractor and the department. While proposals submitted by Unisys and Deloitte commit to maintaining the same costs in the event of renewal, negotiation as to the length, price and staffing for any renewal period less than a year, is not excluded by the terms of the RFP. Neither HRS nor the contractor is bound, under the terms of the RFP, to any extension of the contract. HRS' own manual, HRSP 75-3, entitled "Developing a Request for Proposal," states, in the section on contract renewals: If Contract Renewals have been provided for in this RFP, include the following recommended language in the Special Provisions subsection of the RFP: This contract may be renewed on a yearly basis not to exceed two (2) years beyond the initial contract or for a period no longer than the term of the original contract whichever period is longer. Such renewals shall be contingent upon satisfactory performance evaluations as determined by the department and shall be subject to the availability of funds. As specified in the provider's response to the RFP/ITB, the total cost for the contract under the' first year renewal will not exceed $ and the second year renewal will not exceed $ . Each renewal shall be confirmed in writing and shall be subject to the same terms and conditions set forth in the initial contract. (Emphasis added). Another in-house document at HRS is HRS manual, HRSM 75-2 (May 1, 1994 update), entitled "Contract Management System for Contractual Services". Chapter 5 of that document, entitled "Contractual Procurement Requirements," states, in pertinent part: The dollar amount and the manner in which the costs for the . . . renewals will be calculated must be specified in the response to the RFP and in the resulting contract document. By contrast, the RFP contains none of the language specified in either HRS manual regarding renewal. Section 4.12(c) of the RFP merely states: This contract term shall be renewable for a max- imum of a one year term upon the mutual agreement in writing of the contractor and the department. (Emphasis added). Terms of the RFP did not invite proposers to submit a specific cost or any other information for a renewal period or explain how costs for a renewal period would be calculated. Neither did the RFP contain any language that renewals would be conditioned on satisfactory performance by the contractor. Proposers, on blank cost forms, were requested in the RFP to provide HRS with their proposed prices for fixed price items, monthly costs and hourly costs. The forms, contrary to the requirements of HRS manuals applicable in situations where information for a renewal term is requested, did not provide a place for proposers to indicate costs for any renewal term or to demonstrate how those costs were calculated. Both contractors understood that any renewal would be subject to negotiation. The "Standard Contract" contained in the RFP provides only for a term of 36 months and a cost for that specific contract term. Consistent with the terms of the RFP that the contract was for a 36 month term, HRS submitted, on more than one occasion, materials to ITRPAC. In those materials, HRS represented that the proposed budget amounts of $25 million and $28 million for the project were for a three year term contract. The Notice of Award which HRS issued stated that a three year contract was to be awarded. Although the RFP addressed staffing at a maximum of 107 persons, HRS was aware that 100 percent staffing might not always occur. Section 2.l(B)(5) of the RFP permits 90 percent of the maximum staffing level at a given time without the vendor incurring a penalty. At one point in the RFP preparation, a draft of the RFP required 95 percent staffing. Even that level was considered by HRS to be too restrictive and anti-competitive and was amended to 90 percent out of fear that a 95 percent staffing level would discourage submission of competitive proposals. The 90 percent figure was also used in the RFP to account, in part, for projected attrition of contractor employees that HRS had historically experienced on this project. From the standpoint of budgetary allowances by HRS for the project, it is realistic to believe that the job will be staffed at somewhere between 90 percent and 95 percent rather than at the maximum staffing level of 107 employees. Although Section 4.15(D)(5) of the RFP states that the State is not responsible for paying contractor's employees for leave or vacation time, the testimony of Petitioner's financial expert, Dr. Elton Scott, establishes that a reasonable assumption is to assume that each employee is entitled to, and would take, at least two weeks vacation. Such an assumption should also be included when performing a present value analysis, particularly when assuming 100 percent staffing. Depending on budget allocations for this project, it is possible that HRS would only require that the contractor provide as few as 46 employees. The present value calculation performed by HRS indicated that, over 48 months, at 100 percent staffing (107 employees), the monetary cost of awarding the contract to Unisys would be approximately $500,000 less than the cost of awarding the contract to Deloitte, a savings of approximately 1.5 percent over the term of the contract. As demonstrated by HRS' subsequent present value calculation performed at final hearing in this cause, for the 36 month actual contract period, at maximum staffing, HRS would realize a savings of no more than $39,802 by awarding the contract to Unisys, a savings of less than 2/10ths of 1 percent. None of HRS' present value calculations accounted for leave/vacation time or for any staffing levels under 100 percent for any other reasons. Based upon the terms of the RFP, the language of HRS' procurement manuals, and the expert testimony of Dr. Scott, any valid present-value analysis should have included a 36 month term contract. Any such analysis should also have taken into account varying levels of staffing, leave/vacation time, and overtime if staffed at the minimum required. A properly performed present-value analysis indicates that Deloitte's proposal is less expensive than the Unisys proposal in the following amounts over a 36 month contract term, at the staffing levels indicated: Employees Leave/Vacation Time Overtime Deloitte Savings 107 2 weeks none $12,791 96 none none $109,062 96 none 5.8 percent $ 18,327 46 none none $844,473 (Pet. Exh. 15) The only scenario in which the Unisys proposal is less costly than the Deloitte proposal, using the proper present value analysis, would be at 107 employees, with no accounting for leave time. This unlikely future scenario would result in a savings of no more than $47,378, or less than 2/10ths of l percent of the contract amount over 36 months. Because it requires an up-front payment of more than $1,600,000 (as compared to $78,000 for Deloitte), the Unisys proposal places the State of Florida at substantially more financial risk than the Deloitte proposal in the event of nonperformance by Unisys. On February 1, 1995, HRS posted its notice of intent to award the Contract to Unisys. Deloitte filed its timely notice of intent to protest on February 3, 1995, and filed its timely formal protest and request for hearing on February 13, 1995.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered which declines the award to Unisys and takes into account the foregoing findings of fact and conclusions of law when deciding the future course of contracting for the services sought by the RFP. DONE and ENTERED this 12th day of May, 1995. DON W. DAVIS, 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 May, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made with regard to purposed findings of fact submitted by the parties. Intervenor's Proposed Findings: Adopted. Adopted as to 1st sentence. Remainder not relevant with exception of last sentence which is adopted. Rejected, subordinate to HO findings. Accepted. Rejected, subordinate to HO findings. 6.-7. Rejected, cumulative. 8. Accepted. 9.-10. Rejected, subordinate to HO findings. Accepted. Rejected, subordinate to HO findings. Accepted. Rejected, cumulative. 15.-17. Rejected, subordinate. 18.-20. Rejected, relevance. 21.-22. Accepted. 23. Rejected, subordinate to HO findings. 24.-25. Accepted. 26.-29. Rejected, subordinate to HO findings. 30. Accepted. 31.-36. Rejected, subordinate. Rejected, weight of the evidence. Rejected, opinion, weight of the evidence. 39.-41. Rejected, subordinate. Respondent's Proposed Findings: 1.-3. Adopted, not verbatim. 1.-6. Adopted by reference. 7. Rejected, relevance. 8.-9. Rejected, cumulative, unnecessary. 10.-12. Accepted. 13. Rejected, cumulative. 14.-16. Accepted. Rejected, weight of the evidence. Rejected, relevance. Rejected, weight of the evidence. 20.-21. Rejected, argument. 22.-23. Rejected, subordinate to HO findings. 24. Rejected, argument. 25.-27. Rejected, subordinate, weight of the evidence. 28.-29. Rejected, relevance. 30.-31. Rejected, subordinate. Rejected, weight of the evidence. Rejected, subordinate, weight of the evidence. Rejected, relevance. 35.-36. Rejected, cumulative. Rejected, weight of the evidence. Accepted. Rejected, argument, weight of the evidence. Rejected, relevance, argument. 41.-42. Rejected, argument. Rejected, subordinate. Rejected, 20 percent difference, improper characterization. Rejected, relevance, argument. Rejected, argument, subordinate. Rejected, redundant, subordinate. Rejected, legal conclusion. Rejected, relevance, argument, lack of credible evidence. Rejected, weight of the evidence. Rejected, subordinate. Rejected, weight of the evidence. Rejected, relevance. Rejected, argumentative, legal conclusion. Rejected, legal conclusion, argument. Rejected, legal conclusion. Petitioner's Proposed Findings Of Fact: 1.-43. Accepted, though not verbatim in some instances. 44. Subordinate to HO findings. 45.-48. Accepted. Subordinate. Accepted. Subordinate. 52.-70. Accepted. COPIES FURNISHED: William E. Williams, Esq. Red D. Ware, Esq. Huey, Guilday & Tucker, P.A. 106 E. College Ave., Ste. 900 Tallahassee, FL 32301 William A. Frieder, Esq. Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 W. Robert Vezina, III Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Dr. Tallahassee, FL 32302 Steven A. Blaske Unisys Corporation 4151 Ashford Dunwoody Rd. Atlanta, GA 30319 Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 Kim Tucker, Esq. Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700
