Findings Of Fact The Florida Department of Transportation (hereinafter "DOT") advertised for bids on State Project No. 72190-3530 in Duval County, Florida, with the bids to be closed on June 19, 1985. The notice to contractors and the special provisions included with the bid package provided that the subcontractor participation goal for the project for firms owned and controlled by Disadvantaged Business Enterprises (hereinafter "DBE") was eight percent and for firms owned and controlled by Women Business Enterprises (hereinafter "WBE") was two percent of the total contract bid for that traffic signal installation and resurfacing project. In response to that advertisement for bids, Regency Electric Contracting Company (hereinafter "Regency") submitted a bid of $571,561.86 for the project. Mike Hunter, Inc.; Traffic Control Devices, Inc.; and Wiley N. Jackson Company also submitted bids for that project. Regency was the apparent low bidder. The bid submitted by Regency proposed to utilize 6.21 percent DBE subcontractors and .39 percent WBE subcontractors. Mike Hunter, Inc., proposed to utilize 5.4 percent DBE subcontractors and 2.8 percent WBE subcontractors. Traffic Control Devices, Inc., proposed to utilize 9.8 percent DBE subcontractors and 2.6 percent WBE subcontractors. Wiley N. Jackson proposed to utilize 39.9 percent DBE subcontractors and 2.7 percent WBE subcontractors. DOT, after reviewing the bids, issued a notice of switch in apparent low bidder for the project based upon the failure of Regency to achieve the DBE/WBE project goals and failure to submit documentation of good faith efforts to achieve those goals. Since Mike Hunter, Inc., (the second lowest bidder), also failed to achieve the project's DBE/WBE goals, DOT declared Traffic Control Devices, Inc. (the third lowest bidder), to be the low responsible bidder with its bid of $660,240.47 which is $88,678.61 more than the bid submitted by Regency. The 9.8 percent DBE participation proposed by Traffic Control Devices, Inc., was achieved by allocating a portion of the electrical work being performed by Traffic Control Devices, Inc., to a single DBE subcontractor at a price which was approximately double that proposed to be charged by Regency utilizing its own forces. W & T Enterprises, Inc., is the sole DBE subcontractor proposed to be utilized by Traffic Control Devices, Inc. Although W & T is a North Carolina corporation, it is certified by DOT as a DBE subcontractor for participation in contracts awarded by DOT. W & T qualified to transact business in the State of Florida on August 4, 1980, but its permit to transact business in Florida was revoked on December 16, 1981 for failure to file the annual report as required by law. Since that time, W & T has not re-qualified itself to do business in Florida, and W & T cannot now qualify to do business in Florida since there is now a Florida corporation under the name of W & T Enterprises, Inc. which is not affiliated with the North Carolina corporation, so that that name is no longer available in the State of Florida. Further, the North Carolina W & T Enterprises, Inc. is not registered under a fictitious name in Seminole County where it is alleged to maintain an office. Since Regency's Utilization Form No. 1 reflected that Regency had failed to achieve either the DBE or the WBE goals required for the project, an evaluation was made by DOT's "good faith efforts" review committee of Regency's "good faith efforts" documentation required to be submitted with its bid. In an attempt to evidence "good faith efforts" Regency submitted with its bid a one-page note which lists the DBE and WBE firms contacted by Regency. Regency only contacted a total of ten potential subcontractors and did not contact all of the potential subcontractors in any of the possible areas of subcontracting. The note further fails to indicate when the solicitations were made or that the solicitations were made at least seven days prior to the bid letting. Further, the few solicitations that were made were done by telephone and not by certified mail, return receipt requested, or by hand-delivery with a receipt. There is no evidence to indicate what information was given in the solicitations or that Regency offered to assist the firms contacted with preparation of their quotes, with review of the bid package, or with the obtaining of any required bonding or insurance. Lastly, none of the quotes obtained from any of the DBE or WBE firms contacted were attached to Regency's bid. DBE goals and WBE goals are established by DOT on a project-by-project basis. The evidence in this cause indicates that there were a number of facets to the project including, for example, grassing, asphalt/concrete, barricades/signs, guard rails, signalization and striping. Although one of Regency's witnesses who was not qualified as an expert made the statement that there was an insufficient amount of work available for subcontracting in the project, no specifics were offered as to the basis for that opinion other than the fact that Regency did not choose to subcontract any of the signalization work. No evidence was offered to show what portions of the project involved other-than-signalization work what portion of the project involved materials, or why no portion of the signalization should be subcontracted other than that witness's testimony that loop assembly work proposed to be subcontracted to W & T Enterprises Inc., by Traffic Control Devices, Inc., doubled the price of that portion of the work over Regency's estimate of the costs to do the loop assembly using Regency's own forces. Further, two of the four bidders were able to allocate sufficient portions of the project to subcontractors to meet the DBE goals set by DOT for the project, and three of the four bidders met the WBE goals.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED that a Final Order be entered declaring the bid of Regency Electric Contracting Company on State Project No. 72190-3530 nonresponsive, rejecting that bid, and dismissing with prejudice Regency's formal protest of intent to award a contract. DONE and ORDERED this 1st day of November, 1985, at Tallahassee, Florida. Hearings Hearings LINDA M. RIGOT, Hearing Officer Division of Administrative The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative this 1st day of November, 1985. APPENDIX TO RECOMMENDED ORDER, CASE NO. 85-2820 The following proposed findings of fact of Regency Electric Contracting Company have either been adopted verbatim or have been adopted as modified to conform to the evidence: 3-6 and 16-19. The following proposed findings of fact of Regency Electric Contracting Company have been rejected as not constituting findings of fact but as constituting either argument of counsel or conclusions of law: 1, 2, 13-15, and 20. The following proposed findings of fact of Regency Electric Contracting Company have been rejected as unnecessary: 7-12. The following proposed findings of fact of the Department of Transportation have either been adopted verbatim or have been adopted as modified to conform to the evidence: 1, 4, 7, and 8. The following proposed findings of fact of the Department of Transportation have been rejected as not constituting findings of fact but as constituting either argument of counsel or conclusions of law: 2, 3, 6, and 11. The following proposed findings of fact of the Department of Transportation have been rejected as unnecessary: 5, 9, and 10. The following proposed finding of fact of the Department of Transportation has been rejected as not being supported by any evidence: 12. COPIES FURNISHED: Larry D. Scott, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301 Ronald W. Brooks, Esquire 863 East Park Avenue Tallahassee, Florida 32301 Thomas Drawdy, Secretary Department of Transportation Haydon Burns Building, M.S.-58 Tallahassee, Florida 32301
The Issue Pursuant to chapter 287, Florida Statutes, and section 255.25, Florida Statutes,1/ the Department of Management Services (DMS) released an Invitation to Negotiate for a contract to provide tenant broker and real estate consulting services to the State of Florida under Invitation to Negotiate No. DMS-12/13-007 (ITN). After evaluating the replies, negotiating with five vendors, and holding public meetings, DMS posted a notice of intent to award a contract to CBRE, Inc. (CBRE) and Vertical Integration, Inc. (Vertical). At issue in this proceeding is whether DMS’s intended decision to award a contract for tenant broker and real estate consulting services to CBRE and Vertical is contrary to DMS’s governing statutes, its rules or policies, or the ITN’s specifications, or was otherwise clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based on the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Background5/ DMS released Invitation to Negotiate No. DMS-12/13-007 on March 18, 2013, and released a revised version of the ITN on May 14, 2013, for the selection of a company to provide tenant broker and real estate consulting services to the State of Florida. Thirteen vendors responded to the ITN. The replies were evaluated by five people: Bryan Bradner, Deputy Director of REDM of DMS; Beth Sparkman, Bureau Chief of Leasing of DMS; Rosalyn (“Roz”) Ingram, Chief of Procurement, Land and Leasing of the Department of Corrections; Clark Rogers, Purchasing and Facilities Manager of the Department of Revenue; and Janice Ellison, Section Lead in the Land Asset Management Section of the Department of Environmental Protection. Five vendors advanced to the negotiation stage: Cushman (score of 87), JLL (score of 87), CBRE (score of 87), Vertical (score of 89), and DTZ (score of 86). DTZ is not a party to this proceeding. The negotiation team consisted of Beth Sparkman, Bryan Bradner, and Roz Ingram. Janice Ellison participated as a subject matter expert. DMS held a first round of negotiations and then held a public meeting on July 16, 2013. DMS held a second round of negotiations and then held a second public meeting on August 1, 2013. A recording of this meeting is not available, but minutes were taken. Also on August 1, 2013, DMS posted Addendum 8, the Request for Best and Final Offers. This Addendum contained the notice that “Failure to file a protest within the time prescribed in section 120.57(3) . . . shall constitute a waiver of proceedings under chapter 120 of the Florida Statutes.” The vendors each submitted a BAFO. DMS held a final public meeting on August 14, 2013, at which the negotiation team discussed the recommendation of award. All three members of the negotiation team recommended Vertical as one of the two vendors to receive the award. For the second company, two of the three negotiation team members recommended CBRE and one negotiation team member recommended JLL. DMS prepared a memorandum, dated August 14, 2013, describing the negotiation team’s recommendation of award. The memorandum comprises the following sections: Introduction; The Services; Procurement Process (subsections for Evaluations and Negotiations); Best value (subsections for Selection Criteria, Technical Analysis, Price Analysis, and Negotiation Team’s Recommendation); and Conclusion. Attached to the memorandum as Attachment A was a memorandum dated April 30, 2013, appointing the evaluation and negotiation committees, and attached as Attachment B was a spreadsheet comparing the vendors’ BAFOs. DMS posted the Notice of Intent to Award to CBRE and Vertical on August 16, 2013. Cushman and JLL timely filed notices of intent to protest the Intent to Award. On August 29, 2013, JLL timely filed a formal protest to the Intent to Award. On August 30, 2013, Cushman timely filed a formal protest to the Intent to Award. An opportunity to resolve the protests was held on September 9, 2013, and an impasse was eventually reached. On October 10, 2013, DMS forwarded the formal protest petitions to DOAH. An Order consolidating JLL’s protest and Cushman’s protest was entered on October 15, 2013. Scope of Real Estate Services in the ITN Prior to the statutory authority of DMS to procure real estate brokerage services, agencies used their own staff to negotiate private property leases. Section 255.25(h), Florida Statutes, arose out of the legislature’s desire for trained real estate professionals to assist the State of Florida with its private leasing needs. The statutorily mandated use of tenant brokers by agencies has saved the state an estimated $46 million dollars. The primary purpose of the ITN was to re-procure the expiring tenant broker contracts to assist state agencies in private sector leasing transactions. Once under contract, the selected vendors compete with each other for the opportunity to act on behalf of individual agencies as their tenant broker, but there is no guarantee particular vendors will get any business. The core of the services sought in the ITN was lease transactions. The ITN also sought to provide a contract vehicle to allow vendors to provide real estate consulting services, including strategies for long and short-term leases, space planning, and space management as part of the negotiation for private leases. As part of providing real estate consulting services, vendors would also perform independent market analyses (IMAs) and broker opinions of value (BOVs) or broker price opinions (BPOs). In almost all instances, this would be provided at no charge as part of the other work performed for a commissionable transaction under the resulting contract. However, the resulting contract was designed to allow agencies to ask for an IMA or BOV to be performed independently from a commissionable transaction. In addition to the primary leasing transactions, the contract would also allow state agencies to use the vendors for other services such as the acquisition and disposition of land and/or buildings. These services would be performed according to a Scope of Work prepared by the individual agency, with compensation at either the hourly rates (set as ceiling rates in the ITN), set fees for the service/project, or at the percentage commission rate negotiated between the vendor and the individual agency. However, these services were ancillary to the main purpose of the contract, which was private leasing. In Florida, most state agencies are not authorized to hold title to land. However, the Department of Environmental Protection (DEP) serves as staff for the Board of Trustees of the Internal Improvement Trust Fund (“Board”), which holds title to land owned by the State of Florida. In that capacity, DEP buys and sells land and other properties on behalf of the Board. DEP recently began using the current DMS tenant broker contract for acquisitions and dispositions. The process was cumbersome under the current contract, so DEP asked to participate in the ITN in order to make the contract more suitable for their purposes. The ITN was revised to include DEP’s proposed changes, and DMS had Ms. Ellison serve first as an evaluator and later as a subject matter expert. At hearing, Ms. Ellison testified that she was able to participate fully, that her input was taken seriously, and that the proposed contract adequately addressed DEP’s concerns. While DEP anticipated that under the proposed contract it would use more BOVs than it had previously, there was no guarantee that DEP would use the proposed contract. DEP is not obligated to use the contract and maintains the ability to procure its own tenant brokers. Additionally, administration and leadership changes may cause a switch of using in-house agency employees instead of tenant brokers to perform real estate acquisition and disposition services. Specifics of the ITN The ITN directed vendors to submit a reply with the following sections: a cover letter; completed attachments; pass/fail requirements; Reply Evaluation Criteria; and a price sheet. The Reply Evaluation Criteria included Part A (Qualifications) and Part B (Business Plan). Qualifications were worth 40 points, the Business Plan was worth 50 points, and the proposed pricing was worth 10 points. For the Business Plan, the ITN requested a detailed narrative description of how the vendors planned to meet DMS’s needs as set forth in section 3.01, Scope of Work. The ITN requested that vendors describe and identify the current and planned resources and employees to be assigned to the project and how the resources would be deployed. Section 3.01, Scope of Work, states that the primary objective of the ITN is to “identify brokers to assist and represent the Department and other state agencies in private sector leasing transactions.” The ITN states that the contractor will provide state agencies and other eligible users with real estate transaction and management services, which include “document creation and management, lease negotiation and renegotiation, facility planning, construction oversight, and lease closeout, agency real estate business strategies, pricing models related to relocation services, project management services, acquisition services, and strategic consulting.” Id. The ITN also specifies: Other real estate consulting services such as property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales or those identified in the reply or negotiation process and made part of the Contract (e.g., financial services, facilities management services, lease v. buy analyses). The ITN lists the following duties the contractor will perform: Act as the state’s tenant broker, to competitively solicit, negotiate and develop private sector lease agreements; Monitor landlord build-out on behalf of state agencies; Provide space management services, using required space utilization standards; Provide tenant representation services for state agencies and other eligible users during the term of a lease; Identify and evaluate as directed strategic opportunities for reducing occupancy costs through consolidation, relocation, reconfiguration, capital investment, selling and/or the building or acquisition of space; Assist with property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding property, property auctions and direct sales; and Provide requested related real estate consulting services. The ITN set the commission percentage for new leases at 4 percent for years 1-10 and 2 percent for each year over 10 years; 2 percent for lease renewals, extensions, or modifications; and 2 percent for warehouse or storage space leases. Id. For “other services,” the ITN states: With respect to all other services (e.g., space management services, general real estate consulting services, property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales), compensation will be as outlined in an agency prepared Scope of Work and will be quoted based on hourly rates (set as ceiling rates in this ITN), set fees for the service/project or by percentage commission rate as offered and negotiated by the broker and the using agency. The ITN also required that vendors specify the number of credit hours to be given annually to DMS. Each vendor gives a certain number of credit hours at the start of each year under the contract. The state earns additional credit hours as the vendors perform transactions. DMS manages the pool of accumulated credit hours and gives them to individual agencies to use on a case-by-case basis as payment for individual projects. These credit hours are commonly allocated to pay for IMAs and BOVs that are not part of commissionable transactions. With the exception of one legislatively mandated project, DMS has never exhausted its pool of credit hours. The ITN further specified that IMAs and BOVs must be offered at no cost when performed as part of a commissionable transaction. Historically, most IMAs and BOVs are performed as part of a commissionable transaction. They have only been performed separately from a commissionable transaction a handful of times under the current contract, and many of these were still provided at no cost through the allocation of free credit hours available to the agencies. Therefore, most IMAs and BOVs to be performed under the proposed contract will likely be at no cost. The ITN states that points to be awarded under the price criterion will be awarded based on the number of annual credit hours offered and the commission rate paid per transaction per hour of commission received. The ITN further provides that DMS will evaluate and rank replies in order to establish a competitive range of replies reasonably susceptible to award, and then the team will proceed to negotiations. Regarding negotiations, the ITN states: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent’s demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the section criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. The ITN also states: At the conclusion of negotiations, the Department will issue a written request for best and final offer(s) (BAFOs) to one or more of the Respondents with which the negotiation team has conducted negotiations. At a minimum, based upon the negotiation process, the BAFOs must contain: A revised Statement of Work; All negotiated terms and conditions to be included in Contract; and A final cost offer. The Respondent’s BAFO will be delivered to the negotiation team for review. Thereafter, the negotiation team will meet in a public meeting to determine which offer constitutes the best value to the state based upon the selection criteria. The Department does not anticipate reopening negotiations after receiving BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the State. The ITN and draft contract permit subcontractors to perform under the contract and provide an avenue for a contractor to add subcontractors by submitting a written request to DMS’s contract manager with particular information. Best and Final Offers After the conclusion of negotiations, the negotiation team requested each vendor to submit a BAFO, to be filled out in accordance with the RBAFO format. The RBAFO noted that each vendor would get a set percentage commission for leasing transactions, but asked vendors to submit their prices for IMAs, BOVs, and BPOs performed outside a commissionable transaction and to submit the number of annual credit hours vendors would give DMS at the start of the new contract. In an effort to increase potential savings to the state, DMS lowered the percentage rates of the commissions for lease transactions in the RBAFO below the rates initially set in the ITN. By selecting only two vendors instead of three, the additional potential volume for each vendor on the contract could support the lower commission rates being requested of tenant brokers. The state would ultimately save money due to the impact of the reduced commissions on the overall economic structure of each lease. Beth Sparkman, Bureau Chief of Leasing of DMS, expounded on the rationale for reducing the number of vendors under the new contract to two: The Court: To me, it’s counterintuitive that having fewer vendors would result in more favorable pricing for the state of Florida; and yet you said that was the anticipated result of reducing the number of vendors from three to two – The Witness: Correct. The Court: -- for the new contract. I’m unclear. Tell me the basis for the team’s anticipation that having fewer vendors would result in better pricing. The Witness: When the original ITN was released, it had the same percentages in there that are under the current contract. And I’ll talk, for context, new leases, which right now is at 4 percent. So the discussion was – and 4 percent is typical of the industry. That’s typical for what the industry pays across the board. So the desire was to reduce the commission, to reduce those commission amounts to drive that percentage down. So we went out with the first BAFO that had a range that said for leases that cost between zero – and I can’t remember – zero and a half million, what would your percentage be? Thinking that when we had a tiered arrangement, those percentages would come down. They really didn’t. So when we sat down as a team and discussed: Well, why didn’t they – and you know, because typical is 4 percent. So we came back and said: Well, if we reduce the percentage on new leases to 3.25 but restrict the reward to two vendors, each vendor has the potential to make as much money as they would have made at 4 percent, but the savings would be rolled back into the state. Each of the five vendors invited to negotiate submitted a BAFO, agreeing as part of their submissions to comply with the terms and conditions of the draft of the proposed contract and agreeing to the lowered set percentage commission rates in the RBAFO. The RBAFO listed selection criteria by which the vendors would be chosen, to further refine the broad criteria listed in the ITN. The RBAFO listed the following nine items as selection criteria: performance measures (if necessary), sliding scale/cap, IMA set fee, broker’s opinion of value, balance of line (can be quoted per hour or lump sum), contract concerns, credit hours (both annual and per deal hour), hourly rates, and vendor experience and capability. CBRE’s BAFO submission followed the format indicated in the RBAFO, but CBRE included an additional section giving its proposed commission rates for acquisitions and dispositions of land. These rates were also submitted by other vendors at other parts of the procurement process, but CBRE was the only vendor to include such rates as part of its BAFO submission. DMS considered this addition a minor irregularity that it waived. In its BAFO submission, Cushman offered a three-tiered approach to its pricing for IMAs and BOVs. For the first tier, Cushman offered to perform IMAs and BOVs for free as part of a commissionable transaction. This is redundant, as the ITN required all vendors to perform IMAs and BOVs at no cost when part of a commissionable transaction. For the second tier, Cushman offered to perform IMAs and BOVs at no cost when the user agency has previously hired Cushman on tenant representative work. Ms. Sparkman testified that this provision was unclear, as Cushman did not define the scope of this provision or what amount of work qualified the agency for free services. For the third tier, Cushman offered to perform IMAs and BOVs for $240 when not part of a commissionable transaction for an agency with which it had never done business. Best Value Determination The five BAFOs were sent to the negotiation team for review on August 8, 2013, and on August 14, 2013, the team met in a public meeting to discuss the BAFOs, consider the selection criteria, discuss the team’s award recommendation, and draft a written award recommendation memorandum. During the August 14, 2013, meeting the team determined that CBRE and Vertical represented the best value to the state, by a majority vote for CBRE and by a unanimous vote for Vertical. Ms. Sparkman stated at the meeting that, from her perspective, CBRE and Vertical represented a better value than the other vendors because they were more forward thinking in their long term business strategies for managing Florida’s portfolio. Also at this meeting, Ms. Sparkman noted that CBRE’s prices for IMAs and BOVs were somewhat high but that she would attempt to convince CBRE to lower its prices during the contract execution phase. This was part of an attempt to equalize costs to ensure user agencies selected vendors based on individual needs rather than cost. However, CBRE represented the best value to the state regardless of whether its pricing changed. At hearing, Ms. Sparkman testified that if CBRE had refused to lower its pricing, DMS would still have signed a contract with them based on the pricing submitted in its BAFO. Ms. Sparkman also stated at the public meeting that if she were unable to come to contract with both CBRE and Vertical, she would arrange for another public meeting to select a third vendor with whom to proceed to the contract execution phase. This statement did not refer to DMS selecting a third vendor to replace CBRE should CBRE refuse to lower its price, but rather reflected the possibility that during the contract execution phase, DMS and either one of the vendors could potentially be unable to sign a contract because the vendor was unwilling to execute the written terms and conditions. The “contract negotiations” referenced during the public meeting are the remaining processes to be worked out during the contract execution phase and are distinct and separate from the negotiation phase. At hearing, Ms. Sparkman testified that in the past, vendors have refused to sign a contract because their legal counsel was unwilling to sign off on what the business representatives agreed to. Thus, if either CBRE or Vertical refused to sign the contract altogether, DMS would potentially have selected a third-place vendor in order to have a second vendor on the contract, according to Ms. Sparkman. International experience weighed in favor of CBRE and Vertical, according to team member comments made at the public meeting. Although the phrase “international experience” was not specifically listed in the selection criteria of the ITN or RBAFO, many vendors highlighted their international experience as part of the general category of vendor experience. Vendor experience and capability is specified in both the ITN and RBAFO as part of the selection criteria. Ms. Sparkman testified that international experience is indicative of high quality general vendor experience because international real estate market trends change more rapidly than domestic market trends. None of the negotiation team members recommended Cushman for a contract award, and in fact, Cushman's name was not even discussed at the award meeting. The Award Memorandum Also during the August 14, 2013, public meeting the negotiation team prepared a memorandum setting forth the negotiation team’s best value recommendation of CBRE and Vertical, and many of its reasons for the recommendation. There was no requirement that the memorandum list every single reason that went into the decision. For example, the memorandum did not state that the team found CBRE and Vertical’s focus on long term strategies more impressive than Cushman’s focus on past performance under the current contract. The award memorandum included a “Selection Criteria” section which simply repeated the nine selection criteria that had been previously identified in the RBAFO. The memorandum then went on to include a section labeled “B. Technical Analysis” that stated: Analysis of pricing is provided in section C below. As to the remaining selection criteria items, the Team identified the following key elements for the service to be provided: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. The selection criteria provided above were used by the Team to make its best value recommendation. Ms. Sparkman testified that while the choice of wording may have been imprecise, the items listed in the Technical Analysis section were simply elaborations of the selection criteria in the ITN and RBAFO, and not new criteria. The first four are subsumed within vendor experience and capability, and the fifth was specifically listed in the RBAFO. Indeed, Cushman’s Senior Managing Director testified at hearing that Cushman had addressed the first four items in their presentation to DMS during the negotiation phase to demonstrate why Cushman should be chosen for the contract. The memorandum failed to note that CBRE had included non-solicited information in its BAFO regarding proposed rates for the acquisition and disposition of land. However, the negotiation team considered CBRE’s inclusion of these proposed rates a minor irregularity that could be waived in accordance with the ITN and addressed in the contract execution phase, since those rates were for ancillary services, and there was no guaranteed work to be done for DEP under that fee structure. The memorandum included a chart, identified as Attachment B, that compared the proposed number of credit hours and some of the pricing for IMAs and BOVs submitted by the vendors in their BAFOs. The chart listed Cushman’s price for IMAs and BOVs as $240 and failed to include all the information regarding the three-tiered approach to IMAs and BOVs Cushman listed in its BAFO. However, Ms. Sparkman testified that the chart was meant to be a side-by-side basic summary that compared similar information, not an exhaustive listing. The Cushman Protest Negotiations After Award of the Contract Cushman alleges that DMS’s selection of CBRE violates the ITN specifications because DMS selected CBRE with the intent of conducting further negotiations regarding price, which provided CBRE with an unfair advantage. Cushman further argues that the procedure of awarding to one vendor and then possibly adding another vendor if contract negotiations fail violates Florida’s statutes and the ITN. Amended Pet. ¶¶ 23, 28 & 31. Section 2.14 of the ITN specifically reserved DMS's right to reopen negotiations after receipt of BAFOs if it believed such was in the best interests of the state. Specifically, section 2.14 A. provides: The highest ranked Respondent(s) will be invited to negotiate a Contract. Respondents are cautioned to propose their best possible offers in their initial Reply as failing to do so may result in not being selected to proceed to negotiations. If necessary, the Department will request revisions to the approach submitted by the top-rated Respondent(s) until it is satisfied that the contract model will serve the state’s needs and is determined to provide the best value to the state. The statements made by Ms. Sparkman at the August 14, 2013, public meeting and in the award memorandum, that DMS would attempt to reduce CBRE's prices for ancillary services during the contract execution process were not contrary to the ITN or unfair to the other vendors. Both Ms. Sparkman and Mr. Bradner, the two negotiation team members who voted to award to CBRE, testified that they recommended CBRE as providing the best value even considering its arguably higher prices for ancillary services. Ms. Sparkman further confirmed that even if CBRE refused to lower its prices during the contract execution phase, DMS would still sign the contract, as CBRE's proposal would still represent the best value to the state. The anticipated efforts to obtain lower prices from CBRE were simply an attempt to obtain an even better best value for the state. Ms. Sparkman also testified that section 2.14 F. allowed continued negotiations, even though it was silent as to timeframe. Paragraph F states: In submitting a Reply a Respondent agrees to be bound to the terms of Section 5 – General Contract Conditions (PUR 1000) and Section 4 – Special Contract Conditions. Respondents should assume those terms will apply to the final contract, but the Department reserves the right to negotiate different terms and related price adjustments if the Department determines that it provides the best value to the state. Ms. Sparkman also cited section 2.14 I. as authority for reopening negotiations following receipt of the BAFO’s. That section provides: The Department does not anticipate reopening negotiations after receiving the BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the state. Ms. Sparkman’s statement that if DMS failed, for any reason, to successfully contract with either of the two vendors selected, it would consider pulling in another vendor, is not inconsistent with the clear language of the ITN. Selection Criteria Cushman alleges that DMS used criteria to determine the awards that were not listed in the ITN or the RBAFO. Amended Pet. ¶ 25. Section 2.14 E of the ITN established broad selection criteria, stating: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent's demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the selection criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. (emphasis added). Following the negotiations, and with the assistance of its subject matter expert, the negotiation team provided in the RBAFO additional clarity as to the selection criteria, and identified the "Basis of Award/Selection Criteria" as follows: Performance Measures (if necessary) Sliding scale/cap IMA set fee Broker's opinion of value Balance of line (can be quoted per hour or lump sum) Contract concerns Credit hours (both annual and per deal hour) Hourly rates Vendor experience and capability The foregoing selection criteria, as well as the selection criteria stated initially in the ITN, make clear that pricing was only one of the criteria upon which the award was to be made. Indeed, Cushman's representative, Larry Richey, acknowledged during his testimony that criteria such as "Performance Measures," "Contract Concerns," and "Vendor Experience and Capability" did not refer to pricing, but rather to the expected quality of the vendor's performance if awarded the contract. As the principal draftsman of the ITN and DMS's lead negotiator, Ms. Sparkman explained that the RBAFO's statement of the selection criteria was intended to provide greater detail to the broad selection criteria identified in the ITN, and was used by the negotiation team in making its best value determination. Ms. Sparkman further testified that the best value determination resulted from the negotiation team's lengthy and extensive evaluation of the vendors' initial written replies to the ITN, review of the vendors' qualifications and comprehensive business plans, participation in approximately two and a half hours of oral presentations by each vendor (including a question and answer session with regard to the proposed implementation and management of the contracts), and a review of the vendors' BAFOs. Applying the selection criteria contained in the ITN and the RBAFO, the negotiation team selected Vertical for several reasons, including its performance indicators, employees with ADA certification, computer programs and employee training not offered by other vendors, its presence in Florida, and the strength of its business plan and presentation. Similarly, the negotiation team selected CBRE for an award based on the strength of its ITN Reply, its broad look at long-term strategies, its key performance indicators, the experience and knowledge of its staff, the comprehensiveness of its proposal and business plan, size of its firm, and creative ideas such as use of a scorecard in transactions. Ms. Sparkman observed that both Vertical and CBRE specifically identified the CBRE staff who would manage the state's business and daily transactions, while it was not clear from Cushman's ITN reply and related submissions who would actually be working on the account. Cushman likewise did not discuss out-of-state leases and how such leases were going to be handled, which was a significant concern because DMS considered out-of-state leases to be particularly complex. Ms. Sparkman also noted that with respect to the vendors' business plans, both Vertical and CBRE focused primarily on strategic realignment and plans for the future, whereas Cushman discussed their current transactions at length, but did not demonstrate forward thinking to the negotiation team. Cushman's reply to the ITN also included various discrepancies noted at the final hearing. While Cushman's ITN reply identifies a Tallahassee office, Cushman does not in fact have a Tallahassee office, but instead listed its subcontractor’s office.6/ Additionally, two of the business references presented in Cushman's ITN Reply appear not in fact to be for Cushman, but instead for its subcontractor, Daniel Wagnon, as Cushman's name was clearly typed in above Mr. Wagnon's name after the references were written. Finally, Cushman failed to provide in its ITN Reply the required subcontractor disclosure information for at least one of its "Project Management Partners," Ajax Construction. Based on all of the above, DMS's decision to award contracts to Vertical and CBRE as providing the best value to the state was not arbitrary, capricious, clearly erroneous, or contrary to competition. Simply stated, and as the negotiation team determined, the submissions by Vertical and CBRE were more comprehensive and reasonably found to offer better value to the state than Cushman's submission. Indeed the negotiation team did not even mention Cushman as a potential contract awardee, but instead identified only Vertical, CBRE and JLL in their deliberations as to best value. Cushman's argument that DMS award memorandum improperly relies on the following as "key elements" related to services does not alter this analysis: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. While Ms. Sparkman acknowledged that the choice of language in the memorandum could have been better, it is clear that the foregoing are indeed "elements" of the selection criteria stated in the ITN and RBAFO, as the first four elements plainly relate to the vendors' ability to effectively provide the services, their technical proposal, performance measures, and vendor experience and capability, while the last element relates to the pricing portion of the criteria. Cushman also argues that the award memorandum failed to inform the final decision-maker that Cushman offered IMAs and BOVs at no charge when Cushman was engaged in a commissionable transaction or was performing other work for an agency under the contract. As a result, Cushman asserts, the Deputy Secretary was provided with inaccurate information relating to price. Cushman's argument that the award process was flawed because the pricing chart attached to the award memorandum did not accurately reflect Cushman's proposed pricing is without merit. As Ms. Sparkman testified, the chart was prepared by the negotiation team to provide for the decision-maker an apples-to- apples broad summary comparison of the vendor's proposed pricing for the proposed ancillary services. The chart was not intended to identify all variations or conditions for potential different pricing as proposed by Cushman.7/ Best Value Determination Cushman contends that the negotiation team’s decision to award a contract to CBRE did not result in the best value to the state. Amended Pet. ¶¶ 26, 28 & 29. Cushman further argues that DMS did not meaningfully consider differences in proposed pricing. The failure to consider price for potential ancillary services, Cushman argues, was contrary to competition as it gave an unfair advantage to CBRE whose prices were higher than Cushman’s prices in all but one category. Although pricing for the potential ancillary services was relevant, the ITN's initial scoring criteria made clear that DMS was primarily focused on evaluating the experience and capability of the vendors to provide the proposed services. For this reason, the ITN's initial scoring criteria awarded 90 percent of the points based upon the qualifications and business plan of the vendors, and only 10 percent of the points based on the pricing for potential ancillary services. The negotiation team members testified that this same focus on qualifications and the vendors' business plan continued during the negotiation phase and award decision, although without reliance on the mathematical scoring process utilized during the initial evaluation phase. Nothing in the ITN specifications altered this focus, and the negotiations were directed to gaining a greater understanding of the vendors' proposed services, the qualifications and bios of individuals who would actually do the work, vendors' approach to the work and parameters the vendors would use to evaluate their performance. Pricing remained of relatively minor significance primarily because the RBAFO established a uniform lease commission rate for all vendors, effectively removing pricing as a means to differentiate between the vendors. As a result, vendors were required to quote pricing only for certain potential ancillary services, including IMAs and BOVs, and the number of free credit hours to be provided to the state. Pricing for these potential ancillary services was not considered particularly important, since historically these services were seldom used, and the ITN required all vendors to provide IMAs and BOVs free of charge when related to a commissionable transaction (thereby greatly reducing the impact of any "free" IMA or BOV services). For these reasons, the negotiation team considered the potential ancillary services and pricing for these services not to be significant in the award decision and only incidental to the core purpose and mission of the intended contract, to wit, leasing and leasing commissions. As a result, the negotiation team referred to these potential ancillary services as "balance of line" items which were nominal and added little value to the contract. Notwithstanding Cushman's argument that it should have been awarded the contract because it offered the lowest pricing for these ancillary services, its prices were not in fact the lowest offered by the vendors. Indeed JLL offered to provide all IMA and BOV services (with no preconditions) at no cost. Cushman's pricing for the ancillary services also was not materially different than CBRE's pricing. CBRE's consulting services rates are comparable, if not lower, than Cushman's rates, and the difference between Cushman's and CBRE's proposed charges for IMAs and BOVs is only a few hundred dollars. When considered in terms of the anticipated number of times the ancillary services will be requested (rarely, based on the prior contract), the total "extra" amount to be spent for CBRE's services would be at most a few thousand dollars. The negotiation team reasonably considered this to be insignificant in comparison to the multimillion dollar leasing work which was the core purpose of the intended contract.8/ Because pricing for the potential ancillary services was of lesser significance to DMS's award decision, Cushman's position that DMS should have awarded Cushman a contract based upon its pricing for ancillary services is not consistent with the ITN and does not render DMS's intended awards to Vertical and CBRE arbitrary, capricious, clearly erroneous or contrary to competition. To the contrary, DMS articulated a rational, reasonable and logical explanation for the award. CBRE’s Proposal Non-Responsive to ITN and RBAFO? Cushman alleges that CBRE’s BAFO was not responsive to the ITN and the RBAFO because CBRE included a set rate for acquisitions and dispositions in its proposal. Amended Pet. 30. Since CBRE's BAFO materially deviated from the ITN's specifications, CBRE’s proposal should have been deemed non- responsive and therefore rejected, Cushman argues. The ITN originally requested pricing related only to credit hours as the ITN set the rates for leases. The ITN stated that “other services” would be determined on a case-by- case basis as negotiated by the agencies. However, as part of the ITN process, DMS discussed with the vendors the potential for them to assist the state in the sale and acquisition of property, and what commission rates might be charged for this work. For this reason, CBRE included proposed commission rates for acquisition and disposition services in its BAFO. DMS considered the inclusion of potential rates for acquisitions and dispositions to be a minor irregularity which did not render CBRE's BAFO non-responsive. This determination is consistent with the terms of the ITN, which at section 2.14(g) states "[t]he Department reserves the right to waive minor irregularities in replies." The form PUR 1001 incorporated by reference into the ITN likewise reserves to DMS the right to waive minor irregularities and states: 16. Minor Irregularities/Right to Reject. The Buyer reserves the right to accept or reject any and all bids, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if the Buyer determines that doing so will serve the state's best interests. The Buyer may reject any response not submitted in the manner specified by the solicitation documents. Consistent with the above-cited provisions, the negotiation team noted at its August 14, 2013, meeting that CBRE's inclusion of the proposed rates was not material, and that during the contract execution process, DMS would either exclude the proposed rates from the contract, or possibly include such as a cap for these services. Both of these alternatives were available to DMS given CBRE's commitment to follow the terms of the draft contract, which specifically stated that fees for acquisitions and dispositions would be negotiated on a case-by-case basis. Finally, CBRE's inclusion of proposed commission rates for acquisitions and dispositions did not give CBRE an advantage over the other vendors, or impair the competition, because Cushman and JLL also submitted, as part of their ITN responses, proposed commission rates for the acquisition and disposition of property. Do the ITN Specifications Violate Section 255.25? Cushman's final argument is that the ITN specifications, and the proposed contract, violate section 255.25(3)(h)5., Florida Statutes, which states that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract and may not be supplemented or modified by the state agency using the contract." Cushman's argument has two components. First, Cushman argues that the specifications included at Tab 5, page 13 of the ITN violate the statute by providing: "With respect to all other [ancillary] services, . . . , compensation shall be as outlined in an agency prepared Scope of Work and will be quoted based on an hourly rate (set as ceiling rates in this ITN), set fees for the service/project or by a percentage commission rate as offered and negotiated by the using agency.” Cushman also argues that the language in the award memorandum stating that the BOV rates are "caps" and "may be negotiated down by agencies prior to individual transactions," violates the statute. This latter reference to "caps" correlates to the "ceiling rates" stated in the above quoted ITN specification. Section 120.57(3)(b), Florida Statutes, requires vendors to file a protest to an ITN’s terms, conditions, or specifications within 72 hours of the release of the ITN or amendment; failure to protest constitutes a waiver of such arguments. DMS included this language with the release of the ITN and each amendment, so Cushman was on notice of its protest rights. Cushman's challenge to the ITN specifications as violating section 255.25 is untimely and has been waived. Having been fully informed of this specification since May 14, 2013, when the revised ITN was published, Cushman could not wait until the ITN process was completed some four months later, and then argue that the ITN specifications do not comply with section 255.25 and must be changed. Such argument plainly constitutes a specifications challenge, and such a challenge is now time-barred. Even were Cushman’s challenge not time-barred, it would still fail. Section 255.25 requires only that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract," and not that all terms identifying the compensation be specified. The challenged ITN specification, actually added via Addendum 2 at the request of DEP and its subject matter expert, does specify the approved methods by which the state could compensate the vendor, which DMS determined would best be determined on a case-by-case basis. By stating the approved methods which can be used by the state agencies, the ITN specifications and term contract did specify the terms "relating to" the compensation of the vendor, i.e., an hourly rate (set as ceiling rates in the ITN), set fees for the service/project, or a percentage commission rate. DMS established these terms because the exact compensation would best be determined by the state agency on a case-by-case basis in a Statement of Work utilizing one of the specified compensation methods.9/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered denying the petition of Cushman & Wakefield of Florida, Inc., and affirming the Notice of Intent to Award to CBRE, Inc., and Vertical Integration, Inc. DONE AND ENTERED this 24th day of January, 2014, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 2014.
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 whereby agencies seeking space for their operation 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 there 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 have been solicited and the preproposal conferences have been held, the bids are then received, evaluated, and a recommendation for an award is forwarded by the agency to the Department of General Services. DGS reviews the supporting documents required by the provisions 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 of the plans and specifications and code compliance. Section 255.249 and Section 255.25, Florida Statutes, sets forth the requirement for soliciting and awarding bids for lease space in an amount in excess of 2500 square feet. This provision requires that an award of this nature be made to the lowest and best bidder, and DGS subscribes to 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, 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 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 Service Coordinator for DHRS District III. Of the bids submitted by the twelve bidders, the lowest bid 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 high bids would be evaluated if the four lowest were found to be unacceptable. Among the four bids considered were bids of Chuck Bundschu, Inc.; Kenneth McGunn, the Intervenor (Mr. McGunn submitted five price schedules for his bid and of these only one was considered); Elizabethan Development, Inc.; and TSU. A recommendation by the evaluation committee which met at DHRS District III that Intervenor'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, was, upon completion of the committee's evaluation, also evaluated by Mrs. Goodman in the Bureau of Property Management of DGS. She also considered the McGunn bid as the lowest and best of the eleven non-disqualified bids. In that regard, not only Mr. McGunn'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, Mrs. Goodman considered the documentation submitted by DHRS. This included a letter of recommendation supported by a synopsis of all proposals, the advertisements for bids, and any information pertinent to the site selection process. The letter from DHRS dated December 22, 1983, which recommended award of the lease to Mr. McGunn, included Mr. Litza's December 21, 1983 analysis and recommendation letter which, itself, was attached to McGunn's primary bid documents. Her analysis did not include a prior award recommendation and analysis from Mr. Litza, dated December 8, 1983. It also did not include the site plan, the floor plan for the proposed building, or a survey of the site, but these areas are considered to be within the discretion of the leasing agency. Their absence is not considered to be particularly significant. In her analysis, Mrs. Goodman found that Petitioner's bid was also responsive. However, comparing it with Mr. McGunn's bid, she and her staff found that the latter was the lowest bid submitted. The determing factor in her decision was cost. In determining that McGunn's bid was the lowest as to cost of all bids, Mrs. Goodman compared the average rate per square foot per year for each. This did not take into consideration proration of costs per year, but strictly the average over the fifteen years of the term of the lease (10 year basic plus 5 year option) . According to Mrs. 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 Mrs. 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 many years and many of the bidders have bid before using this same system. While Mrs. Goodman is not certain whether TSU has ever bid before, using this system, she does not consider it to be unfair because all bidders are considered on the same footing in an evaluation. They are notified of what information to submit and if they do so, their information will be considered along with all 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. In the instant case, DHRS followed procedure for solicitation and evaluation utilized in the past and DGS followed its own policy in evaluating the submissions. In short, the primary consideration for DGS is the price factor and all other factors are considered to be within the expertise of the requesting agency. In Mrs. Goodman's opinion, based on the fact that she worked with the Florida Legislature on the development of the controlling statute, and helped develop the existing rule within DGS, that was the intent of the Legislature. Consequently since the statute requires award to the lowest and best bidder, it can be said that in this case the term "lowest" falls within the purview of both DHRS and DGS but "best" is solely within the purview of DHRS. Therefore, utilizing the lowest and best criteria and accepting the fact that the lowest bid may not be the best bid, the determination of "non-best" should be based on the reasonable "end objective" of the agency and need not be based on a criterion which is set forth in the bid proposal. In other words, it is not necessary for the agency to set forth the manner of evaluation it will use or the factors it will consider, according to Mrs. Goodman. With regard to the bid and evaluation committee process, Mr. Litza, the facilities manager for DHRS in Gainesville, was involved in putting together the bid package along with Mr. George Smith from Tallahassee, Litza's predecessor in the job in Gainesville. He worked with Mr. Smith in order to take advantage of Smith's experience in evaluating bids for leases. So far as he knew, the bid package contained minimum standards for all parts of the bid, and the package was, in fact, approved by officials in Tallahassee before being released. While no particular factors were identified to prospective bidders as being significant, Mr. Litza did conduct a bid conference for them prior to the date the bid was due and was available to answer any questions that prospective bidders might have. He did not receive any questions regarding the significance of any particular factor from any bidder. The bids were advertised and when received, were opened and read properly in accordance with the terms of the solicitation. When the bids were received and opened, it was seen that Mr. McGunn had submitted five different bids for the same project. Litza had not been confronted with this situation before and asked Mr. Smith what to do about it. Mr. Smith's reply was to put all five McGunn bids in with the rest and extract the lowest five of all bids. When this was done, Mr. McGunn was shown to have submitted two of the lowest five bids. In determining which were the lowest five bids, Mr. Litza utilized the average cost per square foot formula utilizing therein the entire 15,772 square feet authorized for the project. Once the five lowest bids were determined, Mr. Litza selected an evaluation committee made up of local Palatka DHRS supervisors except for the fiscal member, Mr. Foust, Mrs. Shinholster, Litza's secretary and Litza himself. He gave each of the members a score sheet with point values for each area. Each member filled out the form independently. Though he gave very little briefing to the evaluation committee, he admits that he did, in advance, tell each member that Mr. McGunn was the lowest bidder and should be awarded the highest points for criteria number 1, which related to cost. There were several irregularities in Mr. Litza's processing of the evaluation committee's results. For example, on the evaluation of the file conducted by member Sheryl Dollar, regarding criteria number 2, which relates to the conformity of space offered to the specific requirements contained in the invitation to bid (with a weight of 25 points), Mr. Litza admitted he lowered Mrs. Dollar's point award in that area from 35 to 25 without first checking with her to insure that his action would meet with her approval. While this is irregular, it is of little or no consequence since - the maximum number of points that could be given for that particular item was 25 and Mr. Litza's actions did not reduce that member's award to less than the maximum allowable. He contends that his action was based on what he considered to be a mistake on her part. In another apparent irregularity, Mr. Litza prepared a recommendation letter based on his and the other committee members' evaluation of the files to DHRS Headquarters in Tallahassee on December 8, 1983. In that letter, be indicated that McGunn would provide gas heat for the proposed building for free. Though McGunn had not specifically stated this, he implied it from the energy features paragraph in the Intervenor's bid. On the other hand, the bid by TSU contained an express comment offering to pay the utility charges. This specific provision was overlooked and omitted from the evaluation and report to Tallahassee by Litza, who contends that this omission was merely an oversight. There are other discrepancies as well. In his testimony, Mr. Litza indicated Mr. McGunn proposed to build one building but his letter of December 8th and that of December 21, 1984, both reflect two buildings. Here again, Mr. Litza explains this as the result of his being confused. Nonetheless, this erroneous information was referred to Mrs. Goodman at DGS. This is significant in that at the evaluation committee meeting, when the forms were given out, several of the members expressed a preference for a two-building complex. After the award, Mr. Litza secured agreement from McGunn to build two buildings. Mr. Litza admits that much of this was done in an attempt to insure that McGunn, as the low bidder, got the award. Mr. Litza equated the lowest bid with the best and had Petitioner been the low bidder, he contends he would have done the same thing. In most areas, he would not, however, have given Petitioner's four-building concept a high score because of the increased heat and air requirements of four buildings. Mr. Litza also downgraded Petitioner on that bid criteria which relates to the proximity of offered space to the clients to be served because Petitioner's site, he contends, was too close to the clients to be served. In this case, a housing project for low income families which make up much of the clientele to be served by DHRS, was located across the street from the proposed site offered by the Petitioner. Mr. Litza contends that he was thinking of the potential damage to the building because of increased activity by virtue of the facility being so close. There were other questionable areas in Mr. Litza's testimony. For example, he testified that though Petitioner provided 15 more parking spaces than Intervenor, this would result in mud being tracked in from the adjacent dirt road 200 feet away in greater quantities than in Intervenor's proposal. He also considered positively that the Intervenor's proposed site was closer to a restaurant than that of the Petitioner. Though it was recommended by DHRS Headquarters in Tallahassee that only two of the committee members be from the Palatka office, Mr. Litza disregarded that advice because, he contends, there was a morale factor in that office and the people assigned there wanted to have a part in this decision. Because of this, he allowed Ms. Stouffenberg to put five extra members of her staff on the committee. Nonetheless, the evaluation committee serves only in an advisory capacity. Its recommendation is no more than an advisory opinion. The ultimate decision as to which of the bidders should be awarded the contract is made at DHRS Headquarters in Tallahassee. Ms. Shinholster, a Clerk IV in the DHRS Gainesville office, who works as a secretary to Mr. Litza and several others, was advised she would be on the committee for the evaluation at the same time she was given the bid file. She did not get an opportunity to meet with other committee members to talk about the standards to be used, nor was she given any standards by which to evaluate the files. All she was told by Mr. Litza was that McGunn was the lowest bidder. She cannot explain how she accorded points on her evaluation sheets except that she gave the low bidder the highest number of points. Mr. George Smith, a Senior Analyst with DHRS in Tallahassee, relied on Mr. Litza's input when he made his recommendation to his superiors that the award should be made to McGunn. He also formulated his own opinion, based on his own analysis of the bids. He resolved any dispute regarding cost in favor of Mr. McGunn on the basis of the average rental, and regarding space, in favor of McGunn on the basis of the number of buildings. Dr. Perry, an economist with the University of North Florida, testified to the Federal Government's policy regarding the desirability of using the present value of money methodology and the determination of an acceptable discount rate or index in calculating the actual cost of the bids. Both experts, Dr. Perry and Dr. Scott, who testified for DGS, agree that the present value methodology is valid and presents a more accurate analysis of cost than the average rental cost methodology which does not utilize this theory. The major difference between the two was primarily in the percentage to be utilized in applying the discount rate. Whereas Dr. Perry adopted the Federal policy and suggested a 10 percent discount rate, Dr. Scott testified that a more viable percentage rate in November, 1983, at the time the award was to be made, would have been 3.3 percent. If the 10 percent rate were used, then the Petitioner's bid would be the lowest of all submitted. On the other hand, if the 3.3 percent rate were used, Intervenor's bid would be the lowest. If a different discount rate, that of 5.7 percent were to he used, the bid of Elizabethan Development Corporation would be low. It is at about the 6 percent point and above that Petitioner's bid becomes the lowest. Nonetheless, the State has not adopted the present value of money theory 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 are no written instructions (rules) on evaluating bids for leases of this nature. Oral instructions given by DGS to each agency are that the average rate per square foot is to be computed using, if the square footage is constant, for each year of the lease, the basic square footage requested, multiplied by the rental rate proposed for each year of the basic lease, divided by the number of years. If the square footage is not constant in every year of the lease, evaluators are directed to apply the rate per square foot proposed in each year to the square footage to be utilized in that year, total up the annual rentals, total up the square footage involved, and divide to arrive at the average rate per square foot per year. Utilizing one or the other of those two methods in evaluating both the McGunn and the TSU bids, it becomes clear that the McGunn bid results in an average of $8.86 cost per square foot per year and the TSU bid an average of $9.58 per square foot per year. Recalculation of DHRS' evaluation by DGS showed the DHRS' figures as stated above were correctly arrived at. This procedure is followed on all turnkey and non-turnkey leases in the State of Florida. The reason the State uses this process instead of the present value of money process is because it is easy. DGS statistics indicate that most 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 of Florida follow this procedure. Also, this procedure does not require computer-based calculations, and it does not require economists to work with it. Both latter reasons are amplifications of the first. In Mrs. Goodman's estimation, if the present value of money system were to be adopted, her division would have to hire at least two $30,000 per year economists and buy an in-house computer to operate the system. This additional cost, she believes, would far outweigh the paper savings to be realized by utilizing the present value of money system. As of the hearing date, considering all the factors, in Mrs. Goodman's opinion, DGS would nonetheless still recommend Mr. McGunn's bid as the lowest and best bid.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore RECOMMENDED that DHRS lease Number 590:8030 be awarded to Kenneth R. McGunn. RECOMMENDED this 5th day of September, 1984, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1984. COPIES FURNISHED: Donald E. Holmes, Esquire William E. Townsend, Jr., Esquire Post Office Drawer D Palatka, Florida 32078-0019 James A. Sawyer, Jr., Esquire District III Legal Counsel Department of Health and Rehabilitative Services 1000 Northeast 16th Avenue Gainesville, Florida 32609 Stephen J. Kubik, Esquire Department of General Services Room 452, Larson Building Tallahassee, Florida 32301 H. Allen Poll, Esquire 112 South Main Street Gainesville, Florida 32601 Linda C. McGurn, Esquire 1717 Northeast 9th Avenue Gainesville, Florida 32301 David H. Pingree, Secretary Department of Health and Rehabilitative Services 1321 Winewood Boulevard Tallahassee, Florida 32301 Ronald W. Thomas, Executive Director Department of General Services 115 Larson Building Tallahassee, Florida 32301
Findings Of Fact Petitioner, E. J. Strickland Construction, Inc. (Petitioner), submitted to Respondent, Department of Transportation (Department), a bid on State Project No. 75030- 3518. Petitioner's was the lowest bid received by the Department. Petitioner's bid failed to meet the D.B.E. goals on State Project No. 75030-3518. The D.B.E. goal was 12 percent; under Petitioner's bid, only .04 percent of the contract would be performed by economically disadvantaged business enterprises. The only effort Petitioner made to secure bids of certified D.B.E. contractors to incorporate in its bid to the Department was to run a legal advertisement in the Orlando Sentinel on January 18, 19 and 20, 1986. The Department was scheduled to open all bids on January 22, 1986. Petitioner documented only the advertisements and the fact that it incorporated the only response to the advertisements in its bid in an effort to demonstrate good faith effort to meet the D.B.E. goals. 2/ There is no evidence that Petitioner acted with specific discriminatory intent in preparing its bid on State Project No. 75030-3518. Petitioner proved that it acted in this case precisely as it acted in the only other Department job on which it bid. In that case, Petitioner ordered from the Department plans and specifications and was sent plans, specifications and a bid package and was placed on the Department's list of prospective bidders. In accordance with the custom in the industry, the Florida Transportation Builders Association (FTBA) obtained from the Department the list of prospective bidders as of ten days before the bid letting date and distributed the list to its members. In accordance with the custom in the industry, several DBE and WBE contractors contacted Petitioner, verified that Petitioner was bidding on the project and submitted proposals for inclusion in Petitioner's bid. In that way, Petitioner received enough response from certified DBE and WBE contractors to meet the DBE and WBE goals on the job. In this case, in accordance with the Department's normal practice, the Department only sent Petitioner plans and specifications in response to Petitioner's December 30, 1985 request for plans and specifications. Also, since Petitioner did not specifically request a bid package, the Department did not include Petitioner on its list of prospective bidders. For that reason, no FTBA members, including the certified DBE contractor who bid on Petitioner's previous job with the Department, received notice that Petitioner was a prospective bidder on State Project No. 75030-3518. Had Petitioner been included on the FTBA list, Petitioner probably would have received enough response from certified DBE contractors to meet the DBE goals on this job, too. All four of the other bidders on State Project No. 75030-3518 met the DBE goals. One of them relied entirely on the FTBA list to notify prospective certified DBE contractors. One of them -- including the next lowest bidder, Cone Constructors, Inc. -- also sent a written request for a proposal to Pary, Inc., the same certified DBE contractor who previously had contracted with Petitioner on a Department job that was still ongoing. Another of the bidders on State Project No. 75030-3518 telephoned Pary, Inc., and asked for a proposal. Petitioner is not a member of the FTBA and did not inquire whether it was listed as a prospective bidder on the FTBA list. Petitioner did not make any effort to use the Department's DBE directory to directly contact certified DBE contractors concerning the job. Petitioner did not even contact Pary, Inc., to request a bid although Pary, Inc., was working for Petitioner at the time and had not responded to Petitioner concerning State Project No. 75030-3518. Petitioner's small effort to meet the DBE goals on State Project No. 75030-3518 did not rise to the level of good faith efforts. The evidence that Petitioner acted in this case precisely as it acted in the only other Department job on which it bid does not prove that Petitioner made a good faith effort in this case. To the contrary, it proved only that Petitioner was lucky to meet the DBE goals on the prior contract.
Recommendation Based upon the foregoing Findings Of Fact and Conclusions Of Law, it is RECOMMENDED that Respondent, Department of Transportation, dismiss the bid protest of Petitioner, E. J. Strickland Construction, Inc., and award the contract in State Project No. 75030-3518 to the lowest responsive bidder, Cone Constructors, Inc. RECOMMENDED this 25th day of April, 1986, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 25th day of April, 1986.
The Issue The issues to be resolved on this occasion concern the question of whether the Petitioner or Intervenor is the lowest responsible bidder in several State of Florida, Department of Transportation road projects in which the private parties offered competing bid proposals.
Findings Of Fact The State of Florida, Department of Transportation advertised for competitive bids related to state road building projects, Nos. 72220-3510, 72220-3511, and 72220- 3512, Duval County, Florida, which will be subsequently referred to as Projects 3510, 3511, and 3512, or together as the "Projects." In response to the advertisement, bids were received effective December 5, 1984. Petitioner Barco, was the apparent low bidder on all projects and the Intervenor was the second low bidder. Through its review process, the Department of Transportation determined that the Barco bid was "non-responsive" and notified Barco of the department's intent to deny contract awards to Barco. The department also made known its intention to grant the contracts for the subject projects to Wiley N. Jackson Company. In view of this proposed agency action, Petition sought timely consideration of this adverse decision by requesting a Section 120.57(1), Florida Statutes (1984) hearing. The Intervenor Jackson was allowed to participate in the case as a substantially affected party. The Jackson petition for intervention was timely filed. Related to the projects at issue, and in furtherance of the requirements of Section 339.0805, Florida Statutes (1984), the Department of Transportation enacted rules which were designed to assist women and socially and economically disadvantaged persons to receive part of the work identified in the job specifications. The rules are found in Chapter 14-78, Florida Administrative Code (1984). The aforementioned statutory provision and rules chapter contemplate that job participation by the Disadvantaged Business Enterprises, known as "DBEs," shall be based upon assigning a percentage of each project for the benefit of the DBEs. In essence it is a percentage of the dollar volume of the contract amount which is set aside for the benefit of the DBEs. In the cases under consideration, those goals were as follows: PROJECT PERCENTAGE OF DOLLAR VOLUME TO BE ASSIGNED TO DBEs 3510 10 percent 3511 12 percent 3512 15 percent As envisioned by Chapter 14-78, Florida Administrative Code (1984), it was incumbent upon the bidders in the projects in dispute, to either comply with the goals established for DBEs or in the alternative to demonstrate that a good faith attempt had been made at gaining such compliance. Good faith compliance is measured in view of specific criteria and the basic impression of the department on the question of whether the quality, quantity and intensity of the efforts at gaining compliance were sufficient to allow a finding that the efforts were in fact in good faith. See Rule 14-78.03(2)(b)4.b., Florida Administrative Code (1984), infra. In these projects four companies offered bids. The dollar amount of those bids were as follows: PROJECT 3510: Barco $1,566,284.66 Jackson $1,794,878.40 Dickerson Florida Inc. $2,375,747.66 Anderson Contracting Co., Inc. $2,485,576.79 PROJECT 3511: Barco $1,721,294.99 Jackson $2,090,431.29 Anderson Contracting Co., Inc. $2,708,632.27 Dickerson Florida, Inc. $2,958,909.03 PROJECT 3512: Barco $1,956,065.94 Jackson $2,320,418.03 Anderson Contracting Co. $2,852,238.85 Dickerson Florida, Inc. $3,110,336.75 Through their bids, each of the bidders offered to comply with the DBE participation goals to the following extent: PROJECT 3510: PERCENT BIDDER ANTICIPATED DBE UTILIZATION BY DBE goal 10 percent Barco Jackson Dickerson Anderson 0 percent 10.2 percent 10 percent 4.6 percent PROJECT 3511: DBE goal 12 percent Barco 0 percent Jackson Dickerson 12.5 percent 12 Anderson 6.59 percent PROJECT 3512: DBE goal 15 percent Barco 0 percent Jackson 15.1 percent Dickerson 15 percent Anderson 12.65 percent This depiction demonstrates that Jackson and Dickerson complied with the DBE goals in each contract, whereas Anderson offered partial compliance with the goals and Barco offered no compliance with those goals. Consequently, if Barco were to be successful in gaining a contract to construct theme projects, it must demonstrate that its attempts at achieving the DBE participation goals were in good faith within the meaning of Rule 14- 78.03(2)(b)4., Florida Administrative Code (1984), which states in pertinent part: . . . award of the contract shall be conditioned upon submission of the DBE and WBE participation information with the bid proposal and upon satisfaction of the contract goals or, if the goals are not met, upon demonstrating that good faith efforts were made to meet the goals. Measurement of the attempt at compliance and the decision on the adequacy of that attempt is pursuant to Rule 14- 78.03(a)(b)4.b., Florida Administrative Code (1984), which states: b. In evaluating a contractor's good faith efforts, the Department will consider: Whether the contractor, at least seven days prior to the letting, provided written notice by certified mail, return receipt requested, or hand delivery, with receipt, to all certified DBEs and WBEs which perform the type of work which the contractor intends to subcontract, advising the DBEs and WBEs of the specific work the contractor intends to subcontract; 2) that their interest in the contract is being solicited; and 3) how to obtain information about and review and inspect the contract plans and specifications. Whether the contractor selected economically feasible portions of the work to be performed by DBEs or WBEs, including where appropriate, breaking down contracts or combining elements of work into economically feasible units. The ability of a contractor to perform the work with its own work force will not in itself excuse a contractor's failure to meet contract goals. Whether the contractor provided interested DBEs or WBEs assistance in reviewing the contract plans and specifications. Whether the DBE or WBE goal was met by other bidders. Whether the contractor submits all quotations received from DBEs or WBEs, and for those quotations not accepted, an explana- tion of why the DBE or WBE will not be used during the course of the contract. Receipt of a lower quotation from a non-DBE or non- WBE will not in itself excuse a contractor's failure to meet contract goals; provided however, a contractor's good faith efforts obligation does not require a contractor to accept a quotation from a DBE or WBE which exceeds the lowest quotation received from any subcontractor by more than 1 percent. Whether the contractor assisted interested DBEs and WBEs in obtaining any required bonding, lines of credit, or insurance. efforts. Whether the contractor elected to sub- contract types of work that match the capabi- lities of solicited DBEs or WBEs. Whether the contractor's efforts were merely pro forma and given all relevant circum- stances, could not reasonably be expected to produce sufficient DBE and WBE participation to meet the goals. Whether the contractor has on other contracts within the past six months utilized DBEs and WBEs. This list is not intended to be exclusive or exhaustive and the Department will look not only at the different kinds of efforts that the contractor has made but also the quality, quantity and intensity of these The requirements of Rule 14-78.03(2)(b), Florida Administrative Code (1984), pertaining to achievement of DBE goals and the necessity to establish good faith efforts in the absence of that compliance, were provided to Barco with the bid packages for the several projects. In preparing its bid submission, Barco solicited quotations from a number of subcontractors, associations and clearing houses, through the use of a solicitation letter. The date of that letter is November 20, 1984. By this correspondence reference is made to the several job numbers and a description is given of the general classes of work sought for quotation. A replica of this correspondence was attached with each of the bid blanks for the three projects in question. Forty-three companies were solicited through the letter, with twenty-seven of those being certified DBEs, eight certified WBEs, and eight non- DBEs. All solicitations were through certified mail return receipt requested. Evidence of the solicitations, as shown in the bid blanks related to the three projects, was in the way of summary sheets which listed each of the companies solicited, identifying that those companies were solicited through return receipt mail. These sheets also indicate that four companies did not and further those other quotations are listed as being the prices used in preparing the bid submission on the part of Barco. That form does not designate the names of those companies from whom Barco indicates it received the lower quotes. In the bid blank for Project 3511, which is Petitioner's exhibit number 2, a similar Barco quotation form for DBE subcontractors may be found. In this instance, in addition to the several DBEs who gave quotations in the Project 3510, a quotation was also received from J. E. Hill, DBE. Those quotations are listed together with the specific categories of work and then additional prices are quoted related to unidentified contractors, which additional quotations are lower than the quotations received from the DBE subcontractors and were used in preparing the bid submission. The bid blank related to Project 3512 also contains a quotation from DBEs on a form by the Petitioner. This lists quotations from the same four DBEs as are set forth in the form for Project 3511. As in the instance of that prior project, Project 3512, sets forth prices received from unidentified subcontractors which are lower than the prices quoted by the DBE subcontractors. Again Barco utilized the quotes announced by those unidentified subcontractors when establishing its bid submission. None of Barco's bid blanks for the several projects at issue contained actual written quotations or recorded telephone quotations made by the aforementioned DBEs, non-DBEs, WBE subcontractor, materialmen or suppliers who offered quotations on those projects. BARCO did not submit any of the quotations received from DBEs with its bid blanks, notwithstanding the availability of some of those DBE quotations at the time of the submission of the bid blanks. In response to a request by the Department of Transportation subsequent to the submission of its bid blanks, Barco provided that information. Those materials may acknowledge receipt of this mail. Contrary to this representation, only three companies failed to acknowledge receipt of the mail. The summary sheets also indicated whether Barco received written or phone contact from those companies solicited. On the summary sheets Barco indicates whether the solicitation letters had been responded to in writing or by phone by placing a check mark in a column denoting a written or telephonic response. Copies of the bid blanks related to the several projects beginning with 3510 through 3512 in series may be found as Petitioner's exhibits numbers 1 through 3 admitted. Petitioner's exhibit number 12 is the return receipt information for the several projects as bid by Barco. Although this exhibit was not submitted with the bid blanks for the projects in question, it clarifies concerns which the Department of Transportation has about the information set forth in the summary sheets referred to in this paragraph. In effect, it vouches for the prima facia information set forth in those summary sheets. All told, as it relates to each of the projects, four DBEs offered quotes on some or all of the projects. Of these only one DBE was offering its quotation in response to the solicitation letter as described before. In Petitioner's exhibit number 1 pertaining to Project 3510, there is a form utilized by the Petitioner which indicates the general category, name of the DBE or WBE subcontractor and the price quoted by those subcontractors for the selected categories of work. Princess Construction was the WBE who gave the quotation. The other three named subcontractors are DBE subcontractors. Princess Construction's quotations were also depicted on that form as being the lowest price received and as a consequence, Barco points to this quotation in its satisfaction of WBE goals for this project. On the same form opposite the names of the DBE subcontractors, that is E. Thompson, B. Griffith, and Oglesby and Hug, other prices are quoted as being the lowest prices received be found as Petitioner's exhibit number 11, containing quotations which predate the bid opening and postdate the bid opening. The quotations set forth in the several bid blanks as discussed in the previous paragraphs are found in those materials. Petitioner's exhibit number 11 verifies the amount of quotations of the four DBEs set forth in the bid blanks and identifies those companies whose quotations Barco used in preparing its bid responses. The companies used were non- DBEs, with the exception of Princess Construction. Those responses as set forth in Petitioner's exhibit number 11 do not contain quotations which are the product of additional solicitations which might have occurred subsequent to the time of the bid opening. While Barco fails to specifically mention the fact, there is greater than a 1 percent differential between the DBE quotations and the non-DBE quotations which were used in the several bid submissions. The quotations by the non-DBEs were lower by more than 1 percent. In view of that circumstance, Barco felt that it was appropriate to use the non-DBEs quotations as envisioned by Rule 14- 78.03(2)(b)4.b.v., Florida Administrative Code (1984). This perception by the Petitioner relates to that portion of the rule which says: . . . a contractor's good faith efforts obligation does not require a contractor to accept a quotation from a DBE or WBE which exceeds the lowest quotation received from any subcontractor by more than 1 percent. Had Barco chosen not to avail itself of the opportunity set forth in that rule, it had received sufficient DBE quotes to comply with all of the goals set forth in the several projects. In making solicitations Barco did not solicit all available DBEs set forth in the Department of Transportation's Directory of certified DBEs and WBEs. See Petitioner's exhibit number 10. Availability refers to the type of work and the geographical area where those DBEs would be willing to do their work. An example of the lack of solicitation would be the concrete work in these jobs in which thirty-three DBEs were listed in the directory and only twelve were solicited by Petitioner. Having examined the nature of the projects, Barco, through its management, determined to limit its solicitations to a portion of the available DBEs. This decision can be described as a business judgment on the part of Barco based upon prior experience with DBEs, their location and anticipated costs of mobilization for DBEs. In making decisions on the award of the contract, such as contemplated in the projects in dispute, the Department of Transportation conducts a review of the bid blanks at various levels within the department. One of those reviews is conducted by the Good Faith Efforts Review Committee. Its function is to ascertain whether the bids submitted comply with the requirements of Chapter 14-78, Florida Administrative Code (1984). This committee makes a recommendation to the department's Technical Review Committee. Specifically, the recommendation made to that next level of review is one which comments on whether the bidders have complied with the requirements of Chapter 14- 78, Florida Administrative Code (1984). The Technical Review Committee is not bound by the finding of the Good Faith Efforts Review Committee. In turn the Technical Review Committee makes known its recommendation on the contract award to the department's Awards Committee. The Awards Committee, being a higher level in the hierarchy, can reject the recommendation of both the Good Faith Efforts Review Committee and the Technical Review Committee on the topic of compliance with requirements of Chapter 14- 78 Florida Administrative Code (1984). Finally, the Awards Committee makes its recommendation to the Department of Transportation Secretary, who as agency head has the power to accept or reject the recommendation of all subordinate levels of review on the topic of compliance with Chapter 14-78, Florida Administrative Code (1984). Ordinarily the recommendations as to compliance with Chapter 14-78, Florida Administrative Code (1984) as it is passed from one level of review to another is not disturbed. In due course, following the bid letting or opening on December 5, 1984, the Good Faith Efforts Review Committee examined the bid submissions related to the three projects as provided by Barco. As may be seen in the Petitioner's composite exhibit number 5, the recorded findings of the Good Faith Efforts Review Committee, related to the Barco bids, the initial recommendation was to award Barco contracts on all projects. In the comments sections, reference is made to the fact that Barco submitted a copy of the solicitation letter which included the classes of work and enclosed copies of the appropriate quantity sheets. The comments sections also reference the fact that Barco had solicited forty-three addressees, including the twenty-seven DBEs and the fact that Barco indicated if a return receipt was received. The comments sections note that Barco did not provide copies of the certified mail receipts. The comments sections relate that the contractor only received three DBE bids in Project 3510 and four DBE bids in the other projects and the related fact that the contractor indicates receiving lower bids from non-DBE subcontractors in those categories of work. In the comments sections it is noted, parenthetically, that those non- DBE subcontractors were not specified. Finally, the comments sections indicate that the DBE bids, i.e. quotes, exceeded the lower bids/quotes by more than 1 percent. The Good Faith Efforts Review Committee in its initial recommendation favoring the award of the contracts to Barco, was giving a liberal interpretation to the nine criteria for review of the good faith efforts at compliance with DBE contract goals. See Rule 14-78.03(2)(b)4.b., Florida Administrative Code (1984), supra. This recommendation was then forwarded to the Chairman of the Technical Review Committee. Given the fact that other bidders on the projects had met the department's goals related to utilization of DBE subcontractors, Mr. Potts, Chairman of the Technical Review Committee discussed this circumstance with Mr. Hilliard, a member of the Awards Committee. Hilliard in turn requested a meeting with members of the Good Faith Efforts Review Committee. That meeting took place and two of the three members of the Good Faith Efforts Review Committee were in attendance, to include the chairman, a Mr. Pitchford. In the course of this meeting, at which "executive guidance" was given to the Good Faith Efforts Review Committee attendees, Hilliard and Potts made known their desire to give a more stringent or literal interpretation to the underlying rules dealing with the question of good faith efforts at compliance with the DBE contract goals. Following this consultation, the Good Faith Efforts Review Committee met for a second time to consider the question of Barco's good faith efforts at compliance with the DBE contract goals. The summarization of the final findings of the Good Faith Efforts Review Committee pertaining to Barco and other bidders may be found in the Petitioner's composite exhibit number 6. On this occasion Barco was recommended for rejection as to all three projects, based upon alleged failure to show good faith efforts at compliance with DBE goals. In these findings reference is again made to the fact that Barco provided a copy of its solicitation letter in all projects, which included the classes of work and enclosed with those letters copies of the appropriate quantity sheets for the projects. The comments note that the addressees log was provided to include the twenty-seven DBEs and a column indicating if return receipts were received; however, it notes that copies of the certified mail receipts were not provided with the bids. It again notes the names of the DBE bidders from whom quotes were received and the fact of rejection of those bidders in favor of nonDBE bidders, in view of the fact that the DBE bids exceeded the lower bids by more than 1 percent. Finally, in the comments sections, the Good Faith Efforts Committee expresses what they describe as their primary concern, that is, based upon the performance of other bidders, and the availability of DBE bids/quotes as provided to Barco, Petitioner could have easily supported the program and the objective of achieving DBE participation. Under the circumstances the committee did not feel that Barco had supported the spirit and intent of the program. The Barco bids were ultimately rejected for reason of failure to demonstrate a good faith effort in attempts at achieving the DBE goals. In making known its position on the Barco bids in the second review, the Good Faith Efforts Review Committee was acting in accordance with the "executive guidance" given it by Mr. Hilliard in his expression of concern about the fact that other bidders were able to achieve the department's DBE participation goals, while Barco failed to meet those goals in any of the three projects. Having rejected Barco's bid, Wiley N. Jackson Company was deemed to be the lowest responsible bidder for the three projects in question. Beginning with the bid letting in December, 1984, related to the Barco matter, the Department of Transportation has decided that solicitation would be in the form of certified mail, return receipt requested, or hand-delivery with appropriate receipt and that bidders would provide copies of the certified mail receipts or other receipts with the bid blank. The claim on the part of the bidder that the solicitations were made by certified mail, naming the persons who were solicited would not suffice even if those assertions could be proven by evidence submitted after the bid opening, which evidence tended to verify the claims as set forth in the summary letter. Moreover, the department decided that contrary to its prior interpretation of its rules, a substantial number of solicitations to available DBEs and WBEs listed in the department's directory would not be sufficient. Beginning with the Barco situation it would be necessary to solicit all available DBEs and WBEs, without regard for perceptions by the bidders on whether responses would be forthcoming from all available DBEs and WBEs. The department also determined that all quotations already received from DBEs or WBEs should be provided with the bid blank. A written summarization or itemization of those quotations would not be sufficient. The department takes the point of view in its decision to reject the Barco bids that it would not allow Barco to rely exclusively on the 1 percent differential between the quotations between non-DBEs and the DBEs from whom it received quotations, given what the department deemed to be unacceptable efforts in compliance with other review criteria as discussed. Finally, in the overview, the department rejected the Barco bids because of the impression that the efforts made by Barco at good faith compliance with DBE goals were not of the quality, quantity and intensity that was necessary. The bidder, which the department found to be responsive, namely Wiley N. Jackson, had used the DBE quotation of H. S. Thompson Construction Co. in complying with the requirements of the DBE goals. This Thompson was not solicited by the Petitioner and no quotation was used from that subcontractor in preparing the Barco bid responses. Nonetheless, the quotations from Thompson to Jackson exceeded by more than 1 percent the quotations from non-DBEs which were used by Barco in its bid responses in the projects. Another bidder of these projects had used Mikel L. Grassing, Inc., for that aspect of the project and Barco did not solicit Mikel Grassing, Inc. Obviously, no one is certain of the outcome had Barco solicited all available DBEs; however, the possibility existed that some of those DBEs would have offered a quotation which was no more than 1 percent above the non-DBE quotations that Barco used in preparing its bid responses in the projects. In July, 1984, Barco bid on a Department of Transportation project in which the DBE goal was 12 percent and that goal was achieved. Barco on one other occasion had submitted a bid in which it did not meet the DBE participation goal, based upon the fact that the non-DBE quotes were more than 1 percent lower than the quotations from DBE subcontractors and had been awarded the contract on that occasion.
Findings Of Fact Based on the stipulations of the parties, on the exhibits received in evidence, on the testimony of the witnesses at the hearing, and on the deposition testimony received in evidence, I make the following findings of fact: On October 30, 1985, the Florida Department of Transportation ("FDOT") received and opened sealed bids on State Project Number 72270-3431, in Duval County, Florida. Five bids were submitted for this project. The lowest bid, in the amount of $6,235,948.35, was submitted by Hubbard Construction Company ("Hubbard"). The amounts of the other bids were as follows: the second low bidder, $6,490,796.91; the third low bidder, $6,519,447.90; the fourth low bidder, $7,470,941.74; and the fifth low bidder, $7,477,038.49. All bids submitted were more than seven per cent over FDOT's estimate of the project price. The two lowest bids also appeared to be unbalanced and, as set forth in more detail below, the Hubbard bid was in fact unbalanced in several particulars. It is FDOT policy to give special review to bids that are more than seven per cent above the estimated price of the project. All bidders were made aware of this policy by the following language on the first page of the Notice To Contractors: Bidders are hereby notified that all bids on any of the following projects are likely to be rejected if the lowest responsive bid received exceeds the engineer's estimate by more than seven per cent (7 percent). In the event any of the bids are rejected for this reason, the project may be deferred for readvertising for bids until such time that a more competitive situation exists. Upon review of the bids submitted on the subject project, FDOT decided to reject all bids. By notices dated December 6, 1985, all bidders were advised that all bids were rejected. The stated reasons for the rejection of all bids were as follows: All bids were too high; the apparent first and second low bidder's bids were unbalanced and the apparent first low bidder failed to meet the WBE Requirements. Hubbard submitted its formal written protest to the FDOT regarding the proposed rejection of its bid on the subject project on January 3, 1986. This protest was made pursuant to Section 120.53, Florida Statutes (1985), the instructions to bidders and bid information provided by the Department, and rules of the Department, including Rules 14-25.04 and 14-25.05, Florida Administrative Code. Unbalancing occurs when a contractor puts a higher price on a particular item of work in the project in anticipation of using more of that item than the FDOT has estimated will be required. Unbalancing can also occur when a lower than estimated price is placed upon a particular item. When a bid appears to be unbalanced, the bid is submitted to the Technical Awards and Contract Awards committees for review. In this case, the FDOT's preliminary estimate personnel discovered six items that were unbalanced within Hubbard's bid. The first item of concern was an asphalt base item for which the FDOT's estimate was $4.00 per square yard and the Hubbard bid was $19.29 per square yard. The second item was clearing and grubbing for which FD0T's estimate was $50,000 and Hubbard's bid was $200,000. The third item was removal of existing structures for which FDOT's estimate was $190,762 and Hubbard's bid was $38,000. The fourth item was installing new conductors for which FDOT's estimate was $251,000 and Hubbard's bid was $141,000. The fifth item was removal of existing pavement for which FDOT's estimate was $78,000 and Hubbard's bid was $153,000. Finally, the sixth item was surface asphalt items for which FDOT's estimate was $98,000 and Hubbard's bid was $169,000. The FDOT has a policy that any bid that is seven per cent or more over the estimate will go before the Awards Committee for review. Further, the FDOT has a policy that whenever the bids are more than seven per cent higher than the estimate, the FDOT's Bureau of Estimates will then review their estimate and the apparent low bidder's bid to determine whether the original estimate was correct. The FDOT maintains a Women's Business Enterprises ("WBE") program. The FDOT's program requires that successful bidders provide for participation of women owned and controlled business in FDOT contracts. The program is implemented by the setting of so-called "goals" for certain projects. The goal is stated as a percentage of the total dollar bid for each project. Thus, the WBE goal for a project requires that the bidder utilize FDOT certified WBE's in constructing the project to the extent that the FDOT's goal is a percentage of the total bid. The FDOT has implemented rules to effectuate its WBE program. Rule 14- 78, Florida Administrative Code (amended effective May 23, 1984). In submitting a bid, the rules offer the bidder the option of meeting the WBE goals or submitting proof of a good faith effort to meet the goal and if a good faith effort is sufficient, the FDOT may waive the goal. The FDOT's bid package and specifications, as furnished to contractors, in no place referred to the Department's rule providing that only 20 percent of the amount of subcontracts with WBE suppliers shall count toward the goals on Federal aid projects. The specifications clearly state that WBE suppliers may be counted toward the goals. The specifications as furnished by the Department also imply that the 20 percent rule applies only to non-federal aid jobs. The project in question in this case is a Federal aid project. There is a conflict between the rule and the language of the specifications which creates an ambiguity in the specifications, as well as a trap for the unwary bidder who overlooks the requirements of the rule. The FDOT is in the process of amending the specifications to make them conform to the rule. The Special Provisions contained within the bid specifications established certain minority participation goals for this project--ten per cent for Disadvantaged Business Enterprises (DBE) and three per cent for Women Business Enterprises (WBE). FDOT personnel analyzed the bid documents submitted by Hubbard according to the criteria set forth at Rule 14-78, Florida Administrative Code, and determined that Hubbard exceeded the DBE goal but failed to meet the WBE goal. Hubbard's WBE participation was two per cent. All other bidders on the project met both of the DBE and WBE goals. When Hubbard submitted its bid on this project, Hubbard thought that it had complied with the three per cent WBE goal by subcontracting 3.5 per cent of the contract price to WBE certified firms. However, 2 per cent of the contract price was to be subcontracted to a WBE for supplies to be furnished by a WBE who was not a manufacturer. Accordingly, when the 20 per cent rule discussed above was applied to that 2 per cent, the total amount of WBE participation which could be counted toward Hubbard's compliance with the rule was approximately 2 per cent, which was less than the 3 per cent goal. Once it was determined that Hubbard had failed to meet the WBE goal, FDOT personnel analyzed Hubbard's good faith efforts package pursuant to Rule 14-78, Florida Administrative Code. Hubbard's good faith efforts package failed to demonstrate that Hubbard had taken sufficient action in seeking WBE's to excuse its failure to meet the WBE goal for this project. Similarly, Hubbard's evidence at the hearing in this case was insufficient to demonstrate that Hubbard had taken sufficient action in seeking WBE's to excuse its failure to meet the WBE goal for this project. Most telling in this regard is that all four of the other bidders on this project were successful in meeting or exceeding the DBE and WBE goals.
Recommendation For all of the foregoing reasons, it is recommended that the Florida Department of Transportation issue a Final Order rejecting all bids on Federal Aid Project No. ACIR-10-5 (76) 358 (Job No. 72270-3431). DONE AND ORDERED this 24th day of March 1986, at Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 24th day of March 1986. APPENDIX TO RECOMMENDED ORDER IN DOAH CASE NO. 86-0O24BID The following are my specific rulings on each of the proposed findings of fact submitted by each of the parties. Rulings on findings proposed by the Petitioner, Hubbard Construction Company The substance of the findings of fact proposed by the Petitioner in the following paragraphs of its proposed findings have been accepted and incorporated into the findings of fact in this Recommended Order: 1, 2, 3, 4, 5, and 8. The substance of the first sentence of paragraph 6 is accepted. The remainder of paragraph 6 is rejected as an unintelligible incomplete statement. Paragraph 7 is rejected as not supported by competent substantial evidence. (The Standard Specifications for Road and Bridge Construction were not offered in evidence.) Paragraph 9 is rejected for a number of reasons, including not being supported by competent substantial evidence, being to a large part irrelevant, being predicated in part on an erroneous notion of which party bears the burden of proof, and constituting in part legal argument rather than proposed findings of fact. The first and third sentences of paragraph 10 are accepted in substance. The second and fourth sentences of paragraph 10 are rejected as irrelevant. The last sentence of paragraph 10 is rejected as irrelevant and as not supported by competent substantial evidence. Paragraph 11 is rejected as irrelevant and as including speculations which are not warranted by the evidence. Paragraph 12 is rejected as irrelevant and as including speculations which are not warranted by the evidence. Paragraph 13 is rejected as not supported by competent substantial evidence and as being contrary to the greater weight of the evidence. Rulings on findings proposed by the Respondent, Department of Transportation The substance of the findings of fact proposed by the Respondent in the following paragraphs of its proposed findings have been accepted and incorporated into the findings of fact in this Recommended Order: 1, 2, 3, 4, 5, 6, 7, and 8. Paragraph 9 is rejected as irrelevant. COPIES FURNISHED: John E. Beck, Esquire 1026 East Park Avenue Tallahassee, Florida 32301 Larry D. Scott, Esquire Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32301-8064 Thomas Drawdy, Secretary Department of Transportation Mail Station 57 605 Suwannee Street Tallahassee, Florida 32301-8064
Findings Of Fact In 1984 and for many years prior Petitioner held a Certificate of Qualification to bid on and be awarded contracts let by the Department. On April 10, 1984, Petitioner entered into a voluntary plea, and was convicted of a one-count criminal violation of Title 15, USC, Section 1, which is commonly known as "The Sherman Antitrust Act." The charge involved a public contract with the Florida Department of Transportation in which Petitioner received a complimentary bid from another contractor who was bidding on the same project which was awarded to Petitioner. This practice is commonly known as "bid rigging." The conviction took place in the U. S. Northern District Court of Florida. Petitioner would have submitted the same bid on this project without the benefit of the complimentary bid. 33 C.F.R, Part 16, provides for a maximum debarment on first conviction of 36 months by a federal agency. Petitioner was debarred by the Federal Highway Administration for only six (6) months based upon a review and determination of culpability of the Petitioner in the crime of which Petitioner was convicted. Immediately subsequent to December 17, 1984, Petitioner was declared acceptable for employment on highway projects which required approval or concurrence of the Federal Highway Administration. On June 18, 1984, Respondent revoked the Petitioner's Certificate of Qualification for a period of 36 months pursuant to Florida Statutes 337.165(2)(a). The only reason given for the revocation was the aforementioned conviction. With the exception of Petitioner, who has never had a decision rendered on a Petition for Reinstatement by Respondent, every contractor who has been debarred and/or had its Certificate of Qualification revoked by Respondent pursuant to Section 337.165, Florida Statutes, who has petitioned for reinstatement, has been reinstated by Respondent. Exhibit "A" hereto is a list of contractors who were debarred by Respondent and were reinstated. It was in the public interest to reinstate each of these contractors. It is in the public interest and the interest of the Respondent to build roads, build them at a good price, and have a competitive bidding system with integrity. Petitioner has promptly and voluntarily continued to pay its fine of $65,000 to the Federal Court. No payment of damages has ever been requested by the State as a result of the Petitioner's violation of state or federal antitrust laws. The Petitioner notified the Respondent within thirty (30) days after his conviction of the contract crime. Petitioner has the manpower, equipment, financial resources, and contracting experience to meet the Respondent's requirements in those areas for the purpose of a Certificate of Qualification. Howard H. Hewitt became affiliated with Square D Contracting Company in 1967 when he acquired a minority interest in the company. He subsequently increased that interest to 50 percent. In 1980 he acquired the remainder of the stock and changed the name of the company to Hewitt Contracting Co., Inc. In 1980 the Florida Attorney General's Office commenced an investigation of bid rigging by road contractors. In February 1983 the Attorney General's Office subpoenaed Hewitt to appear under their Civil Investigative Demand procedures and give evidence about his knowledge of bid rigging in Florida. He appeared and, on the advice of counsel, refused to give testimony claiming protection under the Fifth Amendment. By Court Order, Exhibit 8, dated June 24, 1983, Hewitt was directed to give testimony to the Florida Attorney General under grant of immunity from criminal prosecution and from any civil penalty as provided in s. 542.21(1), Florida Statutes (1981), as to those transactions about which he testifies. In compliance with that order he submitted documents and testified before assistant attorneys general three times. A grant of immunity by the Florida Attorney General's Office would not shield Hewitt from federal prosecution. Following the filing of charges by the Federal District Attorney, Hewitt provided testimony to federal officials several times regarding his knowledge of contract crimes, dropped his membership in the Florida Road Builders Association, started using a different hotel during his appearances in Tallahassee, and limited his contacts with fellow contractors to those necessary to conduct business. In a subsequent damage trial brought by the Attorney General's Office against Ezelle Construction Company, Hewitt advised both parties that he would testify for neither and, upon advice of counsel, would claim the Fifth Amendment if subpoenaed. Neither side subpoenaed Hewitt. The jury found Ezelle not liable for damages as claimed by the Attorney General. The only witness called by Respondent, Assistant Attorney General Bayard W. Heath, testified that the critical part of the bid rigging investigation in which he was involved occurred in 1983 at which time Hewitt asserted the Fifth Amendment privilege and caused a change in the investigation plans of the antitrust division. When Hewitt's counsel in January 1985 advised Heath that Hewitt would take the Fifth Amendment if subpoenaed to testify in the civil damages suit brought against Frank Ezelle, et al., he released Hewitt from the subpoena and did not attempt to enforce the subpoena. Petitioner presented one rebuttal witness, the attorney who represented Hewitt during the civil investigative demand procedures by the antitrust division of the Attorney General's Office. He testified that he was never advised by Heath or any other attorney from the Florida Antitrust Division that there was a critical period during which Hewitt's testimony was wanted, or that they were in any manner dissatisfied with the cooperation given by Hewitt after the grant of immunity. This witness also testified that an offer by Hewitt to settle any charges against him by an offer to pay damages to the state was flatly rejected by the antitrust division and that he was told that if Hewitt cooperated with the antitrust division they would decide after the fact what action they would take against petitioner. Prior to the revocation of its Certificate of Qualification in 1984, Square D and subsequently Hewitt Contracting Co., Inc., enjoyed a reputation as a competitive bidder who completed projects in a timely and professional manner. Two witnesses employed by Respondent in the area of Petitioner's headquarters opined that reinstatement of Petitioner's Certificate of Qualification would enhance the road building and construction work in Florida by the addition of Petitioner as an active participant in the bidding process. Subsequent to the conviction in the Federal Court Petitioner prepared a Code of Conduct for Employees of Hewitt Contracting Company (Exhibit 4) and distributed this to all personnel involved in preparing bids for Petitioner. Additionally, Howard H. Hewitt personally approves all bids submitted by Petitioner and supervises those preparing these bids. Howard H. Hewitt expressed remorse about the company's prior activity leading to the conviction and is committed to ensuring that it never occurs again.
Findings Of Fact The Parties Petitioner is a Florida corporation that provides software development and consulting services to various commercial entities and state agencies. It has its principal place of business in Jacksonville, Florida. Respondent is an agency of the State of Florida charged with the responsibility to regulate various professions and businesses licensed by the State of Florida. In carrying out its responsibilities it engages the services of outside vendors through competitive bidding. Respondent's principal business office is at 1940 North Monroe Street, Tallahassee, Florida. Intervenor is a California corporation that designs, manufactures and services equipment and systems for measurement, computation and communications, together with its consolidated subsidiaries. The RFP In 1993, Respondent was created by legislative action merging the Department of Professional Regulation and Department of Business Regulation. Respondent perceives that the merger was intended to improve the efficiency of the regulatory process and to facilitate accurate and efficient processing of consumer complaints. To further those purposes, on April 12, 1996 Respondent issued RFP 96-006. In the executive summary to the RFP prospective vendors who considered responding to the RFP were informed: This RFP has been developed in support of the merger for the purpose of acquiring contractor consulting service and software development to support the conversion of existing computer application systems for the Division of Florida Land Sales, Condominiums and Mobile Homes, the Division of Hotels and Restaurants, the Division of Pari-Mutual Wagering, and the conversion of regulatory, inspection, investigation and complaint processing for all the Business Regulation divisions, including the Division of Alcoholic Beverages and Tobacco. Through this Outcome Based RFP, the Department intends to contract with a vendor to not only provide analysis, system design, development, conversion, and selective consulting services, but serve as an integrator and primary contractor on this project. Contractor responding to this RFP will be expected to recommend services based on deliverable specified in this RFP. Since this is an Outcome Based RFP (see definition on Page 2), the Department will not be specifying unique contractor products and/or services or how the contractor is to design the system. In the RFP "Outcome Based RFP" was described as: A Request For Proposal in which the contractor's client will specify concepts, technology directions, size/number of things, and required results (primarily standards and system deliverables). The contractor will respond by recommending the design and proposed solutions -- how to get desired results, by what means (hardware, software, process, and contractor services), and for what cost. The purpose of the RFP was further described as: The purpose of this Outcome Based Request for Proposal (RFP) is to contract with a contractor (serving as integrator as well as contractor) to recommend (RFP bid response) and provide consultant services in conjunction with selected Department staff to: conduct an information management analysis study to identify the business functions performed as well as the data and information flows required to support these functions for the Divisions of Hotels and Restaurants, Land Sales and Condominiums, Pari-Mutual Wagering and regulatory, inspection, investigation and complaint management for all the Business Regulation Divisions, including Alcoholic Beverages and Tobacco, develop an integrated, data-driven information systems design that addresses the needs of the Business Regulation divisions and their information requirements, convert the business functions and data into the appropriate agency application system, develop detailed design and program specifications, modify existing applications and develop new applications necessary to support the system design, develop an implementation plan which provides a phased approach for migrating from the current environment to the planned environment, including system testing and training of agency personnel, provide post-implementation support for the resolution of problems. The contractor will be expected to contribute (under contract) a predetermined number of calendar months, not to exceed 26, towards systems analysis and design, specification and application development, conversion, testing, training, implementation and post- implementation support. The contractor will be responsible for designing, in detail, the methodology by which data files are to be converted from the multiple applications and various platforms and loaded into predefined relational data bases. The contractor will be responsible, under contract, for all services meeting the requirements of this RFP. All components proposed by the contractor must be at a turn-key level with 100 percent compatibility as far as integrating with installed hardware and software currently utilized by BPR. The scope of the work contemplated by the RFP through services performed by the contractor was to this effect: The Florida Department of Business and Professional Regulation (BPR) is requesting contractors to propose consulting services for system analysis, design, specification development, application, development, conversion, training, implementation and post- implementation support. The contractor will propose recommendations for products and services required and serve as an integrator/contractor. At minimum, this Business Regulation/Complaint Regulatory Management Conversion solution shall be capable of providing those services outlined within this RFP. The section addresses ten subject areas that must be addressed in contractor's proposal. Section III-A (Contractor Proposal Format) presents the required "Tab" format and refers backs to details in this section for the contractor to use. In the RFP an "Integrator" is defined as: The contractor who has total accountability, under contract, for all products and services being provided to a customer even those supplied by or acquired from other vendors and/or sub-contractors. In the RFP the term "Turn-Key" is defined as: Contractor is solely responsible for delivering a completed system with sign- ificant client involvement. Vendor awarded contract, will be responsible, under bond, for specified deliverables to the department, as well as being the integrator and contractor for the complete system as proposed which will include the roles of the contractor and appropriate involvement of BPR personnel. The RFP provided the vendors with instructions concerning the format for proposals, especially as it related to Tabs 1 through 24 and the need to complete those tabs consistent with the instructions. The vendors were reminded: [A]s required by Tab, the proposal will present specific consulting services that are recommended, and how these services will technically meet requirements as stated, and/or requirements developed and/or uncovered by the vendor that have been determined to be necessary for the project to be successful. Respondent provided a questionnaire to the vendors concerning the prospective vendors' commitment to the project. Those questions were to be answered "yes" or "no" with the opportunity for clarifying sentences to accompany the answers. The RFP instructed the vendors concerning the submission of cost information. It reminded the vendors that they should "submit firm costs to provide the state with the required deliverables, found in Section II of the RFP." The RFP described the manner in which the proposals would be evaluated through two separate committees, a "technical subcommittee" and a "vendor evaluation committee." The vendors were also reminded that the proposals would first be reviewed by the purchasing arm of the Respondent to assure that the vendors provided all mandatory documentation required by the RFP. In the instance where required documentation was missing the response would be determined "non-responsive." The evaluation process contemplated the "technical subcommittee" evaluating technology sections in responses to the RFP and providing those results to the "vendor evaluation committee." The latter committee would then evaluate other subject areas in the proposals and consolidate/finalize results from both evaluation processes into an overall rating. The RFP explained the subject areas that were to be considered by the two committees with particularity. The RFP described in detail the assignment of points and set forth the format for carrying out the evaluation process. The successful vendor would be selected upon the basis of the highest points awarded. The maximum points that could be received were 1950. The maximum points that could be received for the vendors' proposed costs were 250. The RFP sets terms and conditions and identifies mandatory requirements as: The state has established certain require- ments with respect to proposals to be submitted by proposers. The use of "are", "shall", "must" or "will" (except to indicate simple futurity) in the RFP indicates a requirement or condition. A deviation is material if the deficient response is not in substantial accord with this [sic] RFP requirements. Moreover, the RFP reminded the vendors that: Any proposal which fails to meet the mandatory requirements stated in this Request For Proposal shall be rejected. The RFP gives further instructions involving the rejections of proposals where it is stated: The department reserves the right to either make awards or to reject proposals by individual category, groups of categories, all or none, or a combination thereof. Any proposal which fails to meet the mandatory requirements stated in this Request For Proposal shall be rejected. Any proposal that contains material deviations or is conditional or incomplete shall be rejected. The department may waive an immaterial defect, but such waiver shall in no way modify the RFP requirements or excuse the proposer from full compliance with the RFP specifications and other contract requirements if the proposer is awarded the contract. The RFP refers to subcontracts where it states: The contractor is fully responsible for all work performed under the contract resulting from this RFP. The contractor may, with the consent of the department, enter into written subcontract(s) for performance of certain of its functions under the contract. The sub- contractors and the amount of the subcontract shall be identified in the contractor's response to this RFP. Subcontracts shall be approved in writing by the department's Executive sponsor, or designee, prior to the effective date of any subcontract. The Sub- contractor shall provide the Executive sponsor documentation in writing, on company letterhead, indicating known responsibilities and deliverables, with timeframes. No sub- contract which the contractor enters into with respect to performance under the contract resulting from this RFP shall in any way relieve the contractor of any respons- ibility for performance of its duties. All payments to sub-contractors shall be made by the contractor. Tabs 16, 17, 19, 20 and 21 require specific information about sub- contractors the vendor might employ in meeting the requirements in the RFP addressed under those tabs. In addition to the specific requirements in the RFP, paragraph 4 to the general conditions reminds the vendor to submit "firm prices." Paragraph 6 to the general conditions states that contract awards are made: As the best interest of the State may require, the right is reserved to reject any and all proposals or waive any minor irregularity or technicality in proposals received. Proposers are cautioned to make no assumptions unless their proposal has been evaluated as being responsive All awards made as a result of this proposal shall conform to applicable Florida Statutes. The RFP explained the manner in which addenda to the RFP would be provided, in which case the addenda would be in writing with the content and number of pages described and sent to each vendor that received the original RFP. The RFP also contemplated the possibility that Respondent might require the vendors to supplement their responses to the RFP with oral presentations to either of the evaluation committees. The RFP explained that there would be a bidders' conference to discuss the contents of the RFP, in view of any written inquiries from the vendors and recommended changes. On April 30, 1996 the bidders' conference was conducted. In this conference information was presented to the vendors and questions from the vendors were presented to Respondent, both oral and written. On May 10, 1996, addendum number 1 resulting from the bid conference was provided to the vendors. Through addendum number 1, Respondent more specifically informed the vendors concerning its expectations in the vendors' responses to the RFP. Additionally the addendum rescheduled certain events in the bid process. It changed the proposal due date and public opening of the technology portion of the proposal to June 7, 1996. The date for opening of proposals in the cost portion was changed to July 12, 1996. The date for posting of the intended award was changed to July 17, 1996. Two vendors responded to the RFP. Those vendors were Petitioner and Intervenor. In addition to the information provided through responses to the RFP, Respondent propounded written questions to the vendors as attachments A and B. Attachment A constituted common inquiry to the vendors. Attachment B was designed to solicit additional information unique to the respective vendors. Both vendors responded to the questionnaires on July 9, 1996. Both vendors' proposals were found responsive. The two committees performed their respective evaluations. Through this process Petitioner was awarded 1206.46 points. Intervenor was awarded 1321.39 points. As a consequence, on July 16, 1996 Respondent posted notice that it intended to award a contract to Intervenor. Respondent also sent a letter on that date notifying the Petitioner that it intended to contract with Intervenor. As described in the preliminary statement, and incorporated here, Petitioner gave notice and formally challenged the decision to award. In its opposition to the decision to award to the Intervenor, Petitioner does not allege that Respondent failed to implement the procedures for evaluation in scoring the competitor's. Rather, Petitioner challenges the results obtained in that implementation. Where Respondent found Intervenor responsive to certain alleged material requirements in the RFP, Petitioner asserts that Intervenor was not responsive to those material requirements. In performing their duties the committee members who evaluated the proposals had a week to prepare themselves to render their input. During that time they were allowed to review the responses to the RFP. Following that opportunity the evaluators were allowed to seek clarification on any items where there might be uncertainty, to include legal advice from the Respondent agency. In carrying out their assignment the evaluators compared the requirements in the RFP to the responses by the vendors. Through this process no evaluator indicated that either proposal was unresponsive. In their review function the evaluators also considered the answers to the questions that had been provided by the vendors on July 9, 1996. The evaluators had been instructed to review the requirements contemplated by Tabs in the RFP, to read the RFP and the addendum to the RFP. Petitioner specifically challenges Respondent's determination that Intervenor was responsive in meeting the following alleged requirements in the RFP: Did the Intervenor Fail to Submit an Outcome Based Proposal in Response to the RFP? The RFP contemplates the necessity that a vendor will submit a proposal that is Outcome Based as defined in the RFP and explained in other provisions within the RFP. The requirement to submit an Outcome Based Proposal is a material requirement. If a vendor does not meet that requirement, the failure to comply is a material deviation from the requirements in the RFP. If a vendor does not meet the requirement for providing an Outcome Based Proposal and the evaluators ignored that irregularity, their actions would be arbitrary. Tab 3 discusses: Business Regulation/Complaint Management Conversion Project Life Cycle Presentation: This section will present the overall scope of the project and the methodology. This section will need to specifically deal with how the vendor addressed the technical design requirements as spelled out in Project Scope. As described, this Tab was designed to have the vendor identify the overall scope of the proposal and the methodology to be employed in reaching the outcome required by the RFP. As Section 3-1 to its response Intervenor replied: Hewlett-Packard's (HP) approach is to provide BPR with both fixed price and 'time-boxing'. Time-boxing is defined as an allocation of consulting hours (3360) which will be delivered by HP technical consultants or sub- contractors. HP is proposing to fix price the Information Management Analysis Study, Integrated System Design, and Project Management. The remaining sections (Detail Design and Program Specification, Data Conversion Phase, Development, System Testing, Implementation, Training, Post-Implementation Support) will be time-boxed with a total of 3360 hours. HP has made suggestions as to the number of hours to be used for these sections. However the final allocation will be mutually agreed upon by HP's project manager and BPR's project manager. HP Professional Services Methodology Moving from a legacy computing model, to a distributed, open client/server computing environment, requires the organization to rethink the process, people, and technology requirements of the enterprise. Organiza- tional integration and effective evaluation of IT solutions tend to get lost in the rush to develop specific applications. If not lost, there is rarely a structured logical process that is followed in defining, designing, developing, implementing, and operating the solution. The remaining provisions within Section 3 to the Intervenor's response to the RFP detail the overall scope of the project and the methodology to be employed. In other respects the Intervenor's response to the RFP explains the manner in which it would reach the outcome contemplated by the RFP in all phases related to its proposed consulting services in this project. Facts were not presented that proved that the evaluators acted arbitrarily in determining that the Intervenor's proposal was based upon the required outcome in the project. Did the Intervenor Submit a Firm Price Proposal? The RFP creates a material requirement that a vendor complete Attachment "E" to the RFP. Attachment "E" provides cost information from the vendor. In every respect Intervenor has complied with that requirement. The evaluators were not arbitrary in determining that the requirement was met. Notwithstanding the use of "time-boxing" for certain phases in the project, the cost information submitted in Attachment "E" assigns a money amount for those phases. By that assignment the consulting hours that are "time-boxed" have an equivalent dollar figure which constitutes firm costs for those deliverables/phases in the project. The evaluators did not act arbitrarily in assigning 234 points to the Intervenor for its cost proposal. Did the Intervenor fail to Submit a List of Sub-contractors Whose Services will be used by the Intervenor? Tab 16, Corporate (vendor) qualifications and commitment; makes it incumbent upon the vendor to indicate the sources committed to the project in terms of personnel and other resources, to include sub-contractors involved with the project. Tab 17, Corporate (vendor) financials; requires the vendor to produce financial information about it and any sub-contractors involved with the project. Tab 19, Individuals proposed to work on contract; requires resumes of individuals who work for the vendor or a sub-contractor and information about key personnel of the vendor and sub-contractors. Tab 20, Contract and support services including post-implementation plan, requires; the vendor to indicate where its services will be provided by the vendor or sub-contractors. Tab 21, Contractor questionnaire; solicits information from the vendor about sub-contractors. As seen, in many provisions the RFP requires a vendor to identify information about sub-contractor whose services would be used by the vendor. These are material requirements. If the evaluators ignored the requirements, their actions would be arbitrary. In addressing intervenor's proposal, the evaluators acted arbitrarily. The problem is that Intervenor in many places in its response has left open the possibility that it would use sub-contractors without naming those sub- contractors and their contribution to the project. Ultimately, the lack of disclosure could provide the Intervenor with an advantage that Petitioner does not enjoy and potentially adversely impact the interests of the Respondent. The following are examples in response to the RFP where Intervenor has maintained its option to use sub-contractors without disclosing information about the sub-contractors: Section 1-3: "The Regulatory Management Conversion solution being proposed is comprised of world-class services from HP and our partners." The reference to partners is seen to include the possibility that sub-contractors might be used. Section 3-1, that has been commented on, referring to time-boxing, describes allocation of the 3360 consulting hours through delivery by the intervenor's technical consultants or sub-contractors. Section 10-2, refers to the implementation of the management plan which follows-up "sub- contractor's work." Section 12-2, refers to Intervenor and its training partners offering "standard and custom instructor led training, computer based training and net work based training." Training partners is taken to mean some persons who reasonably could be considered sub-contractors. Section 13-1, makes reference to third party services involved with the Intervenor's custom solution to the project needs. The reference to third party is equivalent to a sub-contractor. Section 16-9, referring to the flexibility in managing the engagement (project) describes partnering and involvement in sub-contracting. Section 21-2, in responses to the question- naire to Tab 21, Intervenor refers to its time- boxing approach for providing services, in which, according to Section 3-1, Intervenor leaves open the possibility that it would use sub-contractors to deliver the services. It is realized that on occasions in which Intervenor was required to provide contemporaneous and detailed information concerning its intentions to use sub-contractors, answers that it gave in association with Tabs 16, 17, 19 and 20 did not refer to sub-contractors. Consequently, one might assume that Intervenor did not intend to employ sub-contractors in this project notwithstanding references to unnamed sub-contractors found in other places in the response to the RFP. This raises the issue whether the lack of reference and response to the more specific questions about the use of sub-contractors overcomes the implications of the possibility that sub-contractors will be used that is made in response to other requirements in the RFP. That internal inconsistency should not favor an interpretation that creates advantage for Intervenor and potential difficulty for Respondent, which it does. For the evaluators to allow the conflict to remain is an arbitrary act. To seek to resolve the conflict would also constitute an arbitrary act as it would require an amendment to the Intervenor's response. The fact that Respondent must approve subcontracts before their effective dates does not satisfactorily mitigate the need to disclose subcontractor information with the response. Did Intervenor's Proposal Fail to Meet the Requirements in the RFP in the Technical Categories for Tabs 4 through 7, 10, 12, 14, 15 and 21? Petitioner made allegations concerning those issues associated with Intervenor's technical responses in those tabs. However, in the proposed recommended order Petitioner limited its discussion to Tabs 5, 6, 7 and 11. It is assumed that Petitioner abandoned its contentions concerning the remaining tabs described in the interrogatory. Tab 5, Integrated system design, states: In this section the vendor will present the methodology to be used in support of the RFP requirements. The evaluators found that Intervenor had met this requirement. It has not been shown that the evaluators acted arbitrarily in determining that the Intervenor had complied with requirements at Tab 5. Tab 6, Detail design and program specifications, states: In this section the vendor will present the methodology in support of the RFP requirements. Petitioner has failed to prove that the evaluators acted arbitrarily in concluding that the Intervenor met the requirements for Tab 6. Tab 7, Data conversion states: In this section vendor [sic] will provide a description of their approach to the data conversion phase. Petitioner has failed to prove that the evaluators acted arbitrarily in determining that the Intervenor met the requirements for Tab 7. Tab 11, Post-implementation support, states: In this section the vendor [sic] will provide a description of their approach to post-implementation support. Petitioner has failed to show that the evaluators acted arbitrarily in concluding that the Intervenor had met the requirements for Tab 11. Nor has it been shown in any respect that the evaluators acted illegally, fraudulently, or dishonestly. Was the Intervenor a responsible proposer? Petitioner alleged in its petition that the Intervenor was not a responsible proposer. Petitioner did not offer proof to sustain that allegation.
Recommendation Upon consideration of the facts found in the conclusions of law reached it is, RECOMMENDED: That a final order be entered which declares Intervenor to be unresponsive to the RFP and takes such other action as Respondent deems appropriate in pursuing this project. DONE and ENTERED this 10th day of October, 1996, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 10th day of October, 1996. COPIES FURNISHED: Timothy G. Schoenwalder, Esquire Blank, Rigsby and Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301 R. Beth Atchison, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399 Mary C. Piccard, Esquire Cummings, Lawrence and Vezina, P.A. Post Office Box 589 Tallahassee, Florida 32302-0589 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Richard T. Farrell, Secretary Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Forida 32399-0792
