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.
The Issue Whether the Florida Fish and Wildlife Conservation Commission’s (“Respondent” or “FWC”) determination that Tallahassee Corporate Center, LLC (“Petitioner” or “TCC”), submitted a nonresponsive reply to FWC’s Invitation to Negotiate (“ITN”) No. 770-0235 is contrary to the Commission’s governing statutes, the agency’s rules or policies, or the solicitation specifications; and, if so, whether it was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact The following Findings of Fact are based on exhibits admitted into evidence, testimony offered by witnesses, and admitted facts set forth in the pre-hearing stipulation. ITN No. 770-0235 and Background FWC is a state agency that seeks office space to be occupied by personnel from six of FWC’s divisions. FWC currently leases office space from TCC, which expires in October 2019. On July 19, 2017, FWC issued ITN No. 770-0235, seeking vendors that could provide 53,000 square feet of office space for lease. FWC anticipates occupying the space by November 1, 2019. Between August 15, 2017, and November 2, 2017, FWC issued four addenda to the ITN, which contained amendments, modifications, and explanations to the ITN. There were no bidders that challenged the terms, conditions, or specifications contained in the ITN or its amendments. TCC and NLH were two of the potential lessors that submitted replies in response to the ITN. FWC seeks to lease either a building that already exists or a non-existing building to be constructed in the future. The ITN describes the proposals requested as follows: Competitive proposals may be submitted for consideration under this Invitation to Negotiate (ITN) for the lease of office space in either an existing building or a non- existing (build-to-suit/turnkey) building. NOTE: All buildings must comply with the Americans with Disabilities Act (ADA) as stated in Attachment A, Agency Specifications, Section 6.D., page 32. OPTION 1 - an ‘existing’ building: To be considered an ‘existing’ building, the facility offered must be enclosed with a roof system and exterior walls must be in place at the time of the submittal of the Reply. OPTION 2 - a ‘non-existing’ building: Offeror agrees to construct a building as a ‘build-to-suit’ (turnkey) for lease to FWC. Each applicant that submitted a proposal in response to the ITN was required to meet the specification in Attachment A of the ITN. The ITN provides as follows: FWC is seeking detailed and competitive proposals to provide built-out office facilities and related infrastructure for the occupancy by FWC. As relates to any space that is required to be built-out pursuant to this Invitation to Negotiate in accordance with this Invitation to Negotiate, see Attachment ‘A’ which includes the FWC Specifications detailing the build-out requirements. The specifications in Attachment A provided the basic requirements for the potential leased space such that proposals offering existing or non-existing building may be compared and evaluated together. The ITN included certain provisions to clarify the rights contemplated by the ITN, and included the following disclaimer: This ITN is an invitation to negotiate and is for discussion purposes only. It is not an offer, contract or agreement of any kind. Neither FWC nor the Offeror/Lessor shall have any legal rights or obligations whatsoever between them and neither shall take any action or fail to take any action in reliance upon any part of these discussions until the proposed transaction and a definitive written lease agreement is approved in writing by FWC. This ITN shall not be considered an offer to lease. The terms of any transaction, if consummated, shall not be final nor binding on either party until a Lease Agreement is executed by all parties. This ITN may be modified or withdrawn by FWC at any time. The ITN also included a provision expressly reserving FWC’s “right to negotiate with all responsive and responsible Offerors, serially or concurrently, to determine the best-suited solution.” The term “Offeror” was defined by the ITN to mean “the individual submitting a Reply to this Invitation to Negotiate, such person being the owner of the proposed facility or an individual duly authorized to bind the owner of the facility.” This reservation of rights placed interested lessors on notice that only responsive lessors could be invited to negotiations. While TCC and NLH were two of the potential lessors that submitted replies in response to the ITN, the bidders submitted different proposals. TCC submitted a proposal for an existing building, and NLH submitted a proposal for a non- existing building. During an initial review of all replies, FWC determined TCC’s reply to be nonresponsive based on TCC’s response to ITN section IV.G (Tenant Improvements) and a statement titled “Additional Response” that TCC submitted with its reply. As a result, FWC did not evaluate or score TCC’s reply. After TCC’s reply was declared nonresponsive, there were no further negotiations with TCC regarding the ITN. NLH’s reply passed the initial responsiveness review and was then evaluated and scored by FWC. FWC ultimately issued an intended award of the contract to NLH after conducting negotiations. Tenant-Improvement Cap The ITN prohibited vendors from proposing conditional or contingent lease rates that included a tenant-improvement cap, or allowance. A tenant-improvement cap reflects the maximum amount the landlord is willing to spend to make improvements to leased space. Mr. Hakimi asserted that the tenant-improvement cap would be an incentive to FWC to enter a lease. However, the tenant-improvement cap would also place a limit on improvements. According to ITN section IV.E, any reply offering a lease rate with a tenant-improvement cap would be deemed nonresponsive: FULL SERVICE (GROSS) RENTAL RATE The Offeror shall provide FWC with a Full Service (gross) lease structure. Therefore, the lease rate must include base rent, taxes, all operating expenses (including, but not limited to, janitorial services and supplies, utilities, water, insurance, interior and exterior maintenance, recycling services, garbage disposal, pest control, security system installation and maintenance, and any amortization of required tenant improvements to the proposed space). There shall be no pass through of additional expenses . . . . Offerors must provide their best, firm lease rates. Lease rates that are contingent, involve a basic rate plus “cap” or “range” for such things as tenant improvements will be deemed nonresponsive. The ITN also provided, in section IV.G, that any current lessor must meet all ITN requirements, including those set forth in ITN Attachment A: TENANT IMPROVEMENTS The State requires a “turn-key” build-out by the Landlord. Therefore, Offeror shall assume all cost risks associated with delivery in accordance with the required specifications detailed in this ITN, including Attachment A (see pages 28-45). Additionally, replies for space which is currently under lease with, or occupancy by, the Florida Fish and Wildlife Conservation Commission does not exclude the Offeror from meeting the requirements specified in this ITN document. Offeror agrees to provide “turn-key” build-out/improvements in accordance with the specifications detailed in this ITN. (use an X to mark one of the following): YES or NO TCC responded “NO” to the statement “Offeror agrees to provide ‘turn-key’ build-out/improvements in accordance with the specifications detailed in this ITN.” Additional Response Not only did TCC include a barred tenant-improvement cap, but TCC also attached an addendum to its proposal, which provided the following: The reality is that as the current Landlord, it would be impossible to ask FFWCC to move out of its existing office space in order to meet the requested Agency Specifications in Attachment A. If this condition makes our response to the Invitation to Negotiate (ITN) “non-responsive”, we stand willing to continue further negotiations with FFWCC. There was no provision in the ITN for additional responses outside what was requested in the ITN. More importantly, the addendum indicated TCC could not comply with the ITN, unless certain conditions were met. Mr. Hakimi confirmed the effect of what was written in the addendum when he testified that TCC is unable to meet Attachment A’s specifications because it presently has a tenant in place (i.e., FWC) that prevents it from constructing the building improvements necessary to comply with ITN Attachment A. Proof of Ownership of Property The ITN also provided that to be responsive, each lessor was required to submit certain documentation demonstrating the lessor’s control of the property proposed for the leased space: Replies must completely and accurately respond to all requested information, including the following: (A) Control of Property (Applicable for Replies for Existing and/or Non- Existing Buildings). For a Reply to be responsive, it must be submitted by one of the entities listed below, and the proposal must include supporting documentation proving control of the property proposed. This requirement applies to: The real property (land); The proposed building(s) (or structure(s); The proposed parking area(s). Control of parking includes the area(s) of ingress and egress to both the real property and the building(s). The owner of record of the facility(s) and parking area(s) – Submit a copy of the deed(s) evidencing clear title to the property proposed. The authorized agent, broker or legal representative of the owner(s) – Submit a copy of the Special Power of Attorney authorizing submission of the proposal. The Special Power of Attorney form was attached to the ITN as Attachment K. TCC’s certification was executed by TCC president, Lyda Hakimi. However, TCC did not execute Attachment K or include an executed power of attorney to demonstrate that TCC has control of the property. The evidence offered at hearing of the property’s ownership contained in TCC’s reply was a deed showing DRA CRT Tallahassee Center, LLC to be the property owner. Respondent argued that although TCC owns DRA CRT Tallahassee Center, LLC, the two are different legal entities. Because these were two different legal entities, TCC was required to provide a copy of Attachment K to its response to be deemed responsive. Broker Commission The ITN required lessors to agree to execute a broker- commission agreement, which was attached to the ITN as Attachment J: Offeror understands FWC is utilizing the services of a Tenant Broker representative for this lease space requirement and the successful Offeror shall execute a Commission Agreement, in coordination with FWC’s Tenant Broker representative, within fifteen (15) business days of notification of Award. Offeror agrees and acknowledges that a Tenant Broker Commission Agreement is a requirement and the successful Offeror shall be required to execute a Commission Agreement as described above. (use an X to mark one of the following): YES or NO The ITN included a schedule for the commission rate based on the total aggregate gross base rent that could be paid ranging from 2.50 percent to 3.50 percent. TCC conditioned its reply by agreeing to pay a two-percent broker commission, which is inconsistent with the commission schedule. By offering a lower commission rate, TCC could save money. TCC would then have a competitive advantage over other bidders. TCC’S Bid was Nonresponsive Based upon the foregoing, TCC’s bid submission added a tenant-improvement cap, failed to comply with the broker commission rate, failed to provide supporting documents to demonstrate proof of property ownership, and added additional conditions regarding compliance with the ITN requirements. The information requested and terms of the ITN were required for TCC’s bid to be responsive. TCC did not file a challenge to the specifications or any of the requirements of the ITN. It is now too late for such a challenge. TCC’s inclusion of a tenant-improvement allowance limits the amount that would pay for improvements. The lower broker commission increases the profit advantage for TCC more than for other bidders, which would be an unfair advantage over other bidders. TCC’s failure to comply with the terms of the ITN and failure to provide the required attachment to show proof of ownership were not minor irregularities, which FWC could waive. Therefore, FWC properly determined that TCC’s bid submission was nonresponsive. Standing TCC submitted a bid proposal that did not conform to the requirements of the ITN and it seeks relief that includes setting aside FWC’s rejection of its proposal. Therefore, TCC has standing to bring this protest. If it is determined that TCC was nonresponsive, NLH has standing to the extent the procurement process could be deemed contrary to competition.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Fish and Wildlife Conservation Commission enter a final order dismissing Tallahassee Corporate Center, LLC’s Petition. DONE AND ENTERED this 27th day of March, 2018, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN 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 27th day of March, 2018.
Findings Of Fact Based upon the testimony and proofs admitted in these proceedings, and upon the matters stipulated by the parties, the undersigned Hearing Officer finds the following facts to exist: Respondent solicited bids for the reroofing of its Winter Park 9th Grade Center Reroofing Project No. 9209 ("the Project"). Respondent also caused to be compiled a Project Manual for the Project, which among other things contains Instructions To Bidders which governed the bidding process. In its Advertisement For Bid, as well as its Instructions To Bidders, Respondent reserves the right to reject any or all Bids. The Instructions to Bidders also reserves the right to reject any and all bids when Respondent, in its sole discretion, deems it to be in its best interest to reject same. The Project Manual contains a bid form to be used by bidders. In it the bidder understands and agrees that the Owner (Respondent) reserves the right to reject the bid or any and all bids for the Project. Such language was contained in the bid submitted by Petitioner. Included in the Project Manual was a document entitled "Affirmative Action Minority and Women Business Enterprises Program for Construction Work and Construction Materials" (hereinafter "the MBE/WBE rule") which had been adopted by the School Board as an administrative rule. The MBE/WBE Rule established MBE/WBE subcontractor and supplier participation goals for Respondent construction projects, and in pertinent part: it requires bidders on Respondent construction projects to solicit (by newspaper advertisements and by letters) MBE/WBE subcontractor and supplier participation in the work on Respondent construction projects, it permits and requires a bidder who fails to meet the goals to demonstrate and prove to Respondent's MBE/WBE Manager that the bidder made a good faith effort to attain the goals, as a condition precedent to acceptance of his bid, and it establishes criteria which a bidder may use or meet in an effort to show a good faith effort. It also permits a bidder to show any other factor to prove the existence of a good faith effort. By Addendum No. 2 to the Project Manual for the Project, Respondent apprised bidders of its amendment to the MBE/WBE Rule which served to alter and increase the participation percentages of the Rule to 27.5 percent. Petitioner's bid was the apparent low bidder of five bids received by Respondent. Petitioner's bid was in the amount of $795,000.00 and was the only bid under budget. The next lowest bid was in the amount of $823,000.00. Cheesbro's bid showed that Cheesbro had no MBE/WBE subcontractor or supplier participation. All other aspects of Petitioner's bid were proper and responsive. None of the other bidders on the Project achieved the 27.5 percent M/WBE participation goal. Section II of the M/WBE Program acknowledges that the 27.5 percent M/WBE participation requirements "are goals only." This section of the M/WBE Program further states that "[n]o bid of any bidder will be rejected by the School Board solely because the bidder fails to attain the goals..., however, the bidder... must demonstrate to the MBE/WBE Manager, within 72 hours after the time of bid opening (exclusive of Saturdays, Sundays, and Holidays), that such bidder made a good faith effort to contract with qualified subcontractors and/or suppliers for the construction work sufficient to meet the requirements of the goals." Petitioner met with the Respondent's M/WBE Manager within 72 hours after the time of bid opening and demonstrated its good faith effort to contract with qualified subcontractors and/or suppliers for the construction work pursuant to the contract documents. The M/WBE Program requires that each bidder must solicit sub-bids and price quotations from MBE and from qualified MBE and WBE contractors. All potential bidders, including Petitioner, received a list of the qualified M/WBE contractors from the School Board at the pre-bid meeting. The M/WBE Program specifically sets forth the manner in which the bidders must solicit "from M/WBE subcontractors and suppliers" and "the failure of a Bidder to solicit same shall render the bid of such bidder unresponsive and the School Board will reject such bid." The School Board's M/WBE Program establishes the format by which each bidder must solicit bids from qualified M/WBE subcontractors and suppliers. Pursuant to the M/WBE Program, each potential bidder must publish advertisements in two daily newspapers which are published and widely circulated in Orange County. The Orlando Sentinel and Orlando Times are identified by the contract documents as two acceptable newspapers for these advertisements. Each bidder must also prepare and deliver, by certified or registered mail with return receipt requested, three solicitation letters to not less than three approved M/WBE subcontractors and/or suppliers. The contract documents identify an approved form for the referenced advertisements and solicitation letters. Further, the bidders must attach to their bids proof of publication and mailing for the advertisements and solicitation letters, respectively. Petitioner complied with each requirement set forth by the M/WBE with regard to soliciting sub-bids and price quotations from M/WBE subcontractors and suppliers. Petitioner timely published the requisite advertisement in the Orlando Sentinel and the Orlando Times as required by the contract documents. Petitioner also went beyond the three solicitation letters required by the contract documents and sent eight solicitation letters to approved M/WBE subcontractors on the Project. Petitioner also attempted to solicit an oral bid from Mavis Painters but none was received by them. Petitioner received only two telephone calls in response to its advertisements and solicitation letters. One M/WBE subcontractor advised Petitioner that it was going to bid on the Project as a prime contractor (which did not occur), and the other M/WBE subcontractors who called advised Petitioner that they would not bid the Project because they were too busy with other work. Petitioner received no other response to either its advertisements or solicitation letters. Petitioner attempted to make telephone contact with some of the M/WBE subcontractors to whom the letters were sent but was unable to contact them. Despite its efforts, petitioner received no price quotations from any approved M/WBE subcontractors or suppliers. And, none was included in Petitioner's bid. Petitioner is a licensed Florida roofing contractor. Petitioner bid the Project as a prime, rather than as a general, contractor. In this regard Petitioner was to retain a substantial portion of the work to be done by its own forces, rather than to subcontract out most of the work. There are certain portions of any project which lend themselves to work by subcontractors who are specialized in a particular trade. On this Project, Petitioner sought price quotations from electrical, mechanical, plumbing, lightweight concrete, and metal roofing subcontractors. These are the areas which Petitioner looked to subcontract to others on the Project. As a roofing contractor it was logical for Petitioner to do the actual roof work itself and to subcontract out the remainder of the work. Petitioner sought price quotations from approved M/WBE subcontractors on the electrical, mechanical, and plumbing portions of the work. None of the lightweight concrete installation or metal roofing M/WBE subcontractors listed by the School Board were approved applicators for the lightweight concrete installation and metal roof as specified for this Project by the School Board's architect. Therefore, Petitioner was unable to obtain any price quotations, and did not request quotations, from any approved M/WBE subcontractors in these two trade areas. Installation by a manufacturer's approved applicator is essential in order to obtain the warranty documents as required by the contract documents. Also, these two subcontract areas make up a substantially larger percentage of the overall contract amount than do the electrical, mechanical, and plumbing sections. While there may be some other areas which Petitioner could have subcontracted to other forces, these other areas were within the general "roofing" scope of work and better able to be performed by Petitioner. The pool of approved M/WBE subcontractors which Petitioner had available to choose from in order to meet the minority participation requirements was therefore severely restricted. Shortly after the bid opening, a representative of Petitioner met with the School Board's M/WBE Manager to demonstrate Cheesbro's good faith effort to achieve the M/WBE percentage participation goals. Petitioner explained the efforts which it had taken. These efforts were beyond the minimum required by the contract documents in order to obtain minority participation on the Project. However, the Assistant to the School Board's M/WBE Manager felt that Petitioner had not made a good faith effort and the Manager agreed and recommended to the School Board that it reject all bids and rebid the Project. This recommendation was based on the Manager's determination that petitioner should have actively solicited bids from M/WBE sub-contractors well beyond sending letters and the newspaper ads. On December 13, 1993, School Board furnished to Cheesbro a written notice of its intended decision to reject all bids. The basis of such intended decision was that no bidder had attained the MBE/WBE goals and that no bidder, including Cheesbro, had shown that it had made the good faith effort required by the MBE/WBE Rule. On December 14, 1993, School Board sustained the determination of the MBE/WBE Manager that a good faith effort was not shown by Cheesbro and rejected all bids as recommended by School Board's Superintendent of Schools. On December 27, 1993 Cheesbro filed a written Formal Protest, which is the subject of these proceedings. There is no evidence or claim that the MBE/WBE Manager, in determining that Cheesbro had failed to prove it made a good faith effort to obtain the goals, acted illegally, fraudulently or oppressively, in reaching her decision. However, the evidence shows that the determination was arbitrary and was not justified based on the proofs offered by Petitioner.
Recommendation Based on the foregoing findings of fact, it is RECOMMENDED that The School Board of Orange County enter a Final Order granting the relief requested by the Petitioner, Cheesbro Roofing Inc., and certifying that Petitioner is the lowest responsive bidder and enter into a contract with Cheesbro for the Project pursuant to the bid. DONE and ORDERED this 9th day of May, 1994, in Tallahassee, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of May, 1994. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Proposed findings of fact submitted by Petitioner. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 (in part), 23. Rejected as argument or conclusion of law: paragraph 22 (in part). Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 7, 8, 9, 10, 11 (in part), 12, 13, 14, 15, 16 (in part), 17 (in part). Rejected as argument or conlusion of law: paragraphs 6, 11 (in part), 19. Rejected as against the greater weight of evidence: paragraphs 16 (in part), 17 (in part), 18. COPIES FURNISHED: David K. Wittek, Esquire Wright, Fulford, Moorhead & Wittek, P.A. 145 N. Magnolia Avenue P. O. Box 2828 Orlando, Florida 32802 William M. Rowland, Jr., Esquire Broad and Cassel 390 N. Orange Avenue, Suite 1100 P. O. Box 4961 Orlando, Florida 32801 Dr. Donald Shaw Superintendent Orange County School Board P. O. Box 271 Orlando, Florida 32802-0271 Douglas L. "Tim" Jamerson Commissioner of Education The Capitol Tallahassee, Florida 32399-0400
Findings Of Fact Respondent, Florida Department of Transportation (DOT), is required by state and federal law to ensure that 10 percent of state and federal funds available for construction, design and consulting service-contracts be provided as an opportunity to small business concerns owned and controlled by socially and economically disadvantaged individuals (DBE). DBE contract goals are established by DOT for each construction contract. Every bidder must submit a form to DOT which either documents compliance with the DBE contract goal or, if compliance is not met, must provide sufficient information to demonstrate that good faith efforts were made by the bidder to meet the goal. Prior to June 1984, DOT's practice allowed contractors ten days after the bid letting to correct their DBE forms or to submit their good faith effort documentation. However, effective May 23, 1984, DOT adopted Rule 14- 78.03(2)(b), F.A.C., which provides in pertinent part: 4. For all contracts for which DBE . . . contract goals have been established, each bidder shall meet or exceed or demonstrate that it could not meet, despite its good faith efforts, the contract goals set by the Department. The DBE . . . participation information shall be submitted with the contractor's bid proposal. Award of the contract shall be conditioned upon submission of the DBE . . . 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. Failure to satisfy these requirements shall result in a contractor's bid being deemed nonresponsive and the bid being rejected. (Emphasis supplied.) In August 1984, subsequent to the adoption of Rule 14.78.03(2)(b)4., F.A.C., DOT sent a "Notice to All Contractors" which advised . . . all submittals for evaluating Good Faith Efforts in meeting DBE/WBE goals must be submitted with the bid proposal in order to be considered for award of the contract. Failure to submit the Good Faith Effort documentation with the bid may result in rejection of the bid. Petitioner, Wiley N. Jackson Company, acknowledges receipt of the "Notice to All Contractors." By notice dated August 30, 1984, contractors were advised that sealed bids would be received until 10:30 a.m., September 26, 1984, on various road projects. The bid documents advised that the DBE goal for Job Number 89095-3411 was 10 percent. The specifications for Job Number 89095-3411 contain extensive provisions with regard to compliance with the DBE contract goals. Among these provisions is the following language contained in Section 2-5.3.2. For all contracts for which DBE and/or WBE contract goals have been established, each contractor shall meet or exceed or demonstrate that it could not meet, despite its good faith efforts, the contract goals set by the Department. The DBE and WBE participation information shall be submitted with the Contractor's bid proposal. 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. The Contractor's bid submission shall include the following information (Submitted on Form No. 141-12 - DBE/WBE Utilization Form No. 1): The names and addresses of certified DBE and WBE firms that will participate in the contract. Only DBEs and WBEs certified by the Department at the time the bid is submitted may be counted toward DBE and WBE goals. A description of the work each named DBE and WBE firm will perform. The dollar amount of participation by each named DBE and WBE firm. If the DBE or WBE goal is not met, sufficient information to demonstrate that the Contractor made good faith efforts to meet the goals. (Emphasis supplied.) The specifications list, as grounds for disqualification of bidders, failure to satisfy the requirements of Section 2-5.3. Further, Section 2-5.3.3 of the specifications advised bidders that: 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 (a) of the specific work the Contractor intends to subcontract; (b) that their interest in the contract is being solicited; and (c) 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 and 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 explanation 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 one percent. Whether the Contractor assisted interested DBEs and WBEs in obtaining any required bonding, lines of credit, or insurance. Whether the Contractor elected to subcontract types of work that match the capabilities of solicited DBEs or WBEs. Whether the Contractor's efforts were merely pro forma and given all relevant circumstances, 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. The above 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 efforts. Sections 2-5.3.2 and 2-5.3.3 are drawn directly and literally from Rule 14-78.03(2)(b). Consequently, all bidders were apprised by rule and bid specifications that if the DBE contract goal could not be met, sufficient information had to be submitted with their bid to demonstrate their good faith efforts to meet the goal, and the criteria that would be utilized to evaluate their efforts. On September 26, 1984, Petitioner submitted the low bid in the amount of $7,688,271.91 for Job Number 89095-3411. Attached to the bid was Form 141-12 - DBE/WBE Utilization Form No. 1, indicating that Petitioner's proposed utilization of DBEs was 0.2 percent of the total contract amount; $15,385 on a total bid of $7,688,271.91. Accompanying Petitioner's bid was a handwritten letter which stated: Gentlemen: To demonstrate good faith effort prior to the bid date for this project, we submitted seventy-three registered letters to prospective D.B.E. Subcontractors. On the major items we propose to sublet, comparative D.B.E. and non-D.B.E. quotations were received as follows: Box Culvert - J. E. Hill (D.B.E.) - 505,762.00 Shelton & Son - 369,092.00 Difference - $136,670.00 Fencing - Mikell (D.B.E.) - 55,727.00 Cyclone - 46,833.00 Difference - $ 8,894.00 Grassing - Mikell (D.B.E.) - 91,919.00 Agricultural Land - 63,198.00 Difference - $28.721.00 In view of the above, we are unable to meet the D.B.E. Goal and, at the same time, submit a realistic and competitive bid. Copies of pertinent quotations are attached and copies of D.B.E. solicitations (registered letters) and responses are available for your review. Quotations reflecting one unaccepted DBE proposal, and one accepted non-DBE proposal, in each of three areas--concrete, fencing and grassing--were attached to the letter. In each instance the DBE proposal exceeded the non-DBE proposal by more than one percent. No other documentation was submitted with Petitioner's bid to demonstrate its good faith efforts to meet the DBE contract goal. Respondent, Dickerson Florida, Inc. (Dickerson), was the second low bidder with a bid of $7,926,819.49. Dickerson's bid reflected a DBE participation of 10.8 percent. Upon the closure of bidding, Petitioner's bid was submitted to the Good Faith Effort Committee at DOT to evaluate the information contained in the bid to determine whether Petitioner's documentation evidenced a good faith effort to meet the DBE goal. That committee found Petitioner's bid documentation failed to demonstrate a good faith effort to meet the DBE goal, and recommended that Petitioner's bid be declared non-responsive and be rejected. DOT declared Petitioner's bid non-responsive and rejected its bid. DOT proposed awarding the contract to Dickerson. Petitioner's bid documentation failed to demonstrate a good faith effort to meet the DBE contract goals. The documentation failed to demonstrate that: (1) Petitioner, at least seven days prior to letting, had provided written notice to all certified DBEs, or, of what the DBEs had been informed, (2) Petitioner had selected economically feasible portions of the work to be performed by DBEs, (3) Petitioner had provided interested DBEs with assistance in reviewing the contract plans and specifications, and (4) Petitioner had selected for subcontract types of work that matched the capabilities of the solicited DBEs. Further, Petitioner's documentation did not include all quotations received from DBEs. Job Number 89095-3411 included several categories of work: box culverts, signs, landscaping, guardrail, fencing, traffic striping, trucking, paving, grading and miscellaneous concrete. The bid documentation submitted by Petitioner did not indicate the items it attempted to subcontract, nor what efforts, if any, it had expended to solicit DBE participation beyond "a letter" it had mailed, at an indeterminate date, to some 73 unidentified "prospective DBE subcontractors." Facially, Petitioner's documentation evidenced a pro forma effort. Subsequent to the bid closing, Petitioner forwarded to DOT copies of the 73 letters it had mailed to "prospective DBE subcontractors," together with the certified mail return receipts. Petitioner was in possession of these documents prior to the close of bidding, and could have submitted them with its bid. DOT's Good Faith Effort Committee declined to consider Petitioner's postbid submission. The committee interpreted Rule 14-78.03, F.A.C., to require the DBE participation information be submitted with the bid proposal, and to preclude consideration of postbid submissions. DOT has at all times acted consistently with this interpretation.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered by the Department of Transportation rejecting the bid submitted by Petitioner, Wiley N. Jackson Company, on State Project No. 89095-3411, Martin County, Florida, and awarding the contract to Respondent, Dickerson Florida, Inc. DONE and ENTERED this 31st day of May, 1985, at Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 31st day of May, 1985. COPIES FURNISHED: David T. Knight, Esquire Shackleford, Farrior, Stallings and Evans, P.A. Post Office Box 3324 Tampa, Florida 33601 Larry D. Scott; Esquire Department of Transportation Haydon Burns Building, M.S. 58 Tallahassee, Florida 32301-8064 Robert M. Ervin, Esquire Thomas M. Ervin, Jr., Esquire Ervin, Varn, Jacobs, Odom & Kitchen Post Office Drawer 1170 Tallahassee, Florida 32302 Paul A. Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301
The Issue The issues in this case, a bid protest, are as follows: Whether Respondent, Tampa Bay Estuary Program, an independent special district ("TBEP"), failed to follow the review process as outlined in the Request for Proposals ("RFP") and TBEP's own procurement policies. Whether TBEP failed to properly apply the scoring and review criteria set forth in the RFP. Whether the RFP instructions were followed, whether they lacked certain direction or standards, and whether these failures led to actions that were clearly erroneous, contrary to competition, arbitrary, or capricious. Whether the evaluation committee members acted arbitrarily in scoring, ranking, or making recommendations to the Management Board.
Findings Of Fact (Findings of Fact 1 through 17 are taken from the parties' Prehearing Stipulation.) Dynamic is a Florida limited liability company with its principal place of business in Knoxville, Tennessee. TBEP is an independent special district formed by an Interlocal Agreement between 13 governmental entities pursuant to section 163.01, Florida Statutes. Janicki is a Florida corporation with its principal place of business in St. Petersburg, Florida. TBEP issued the RFP (for the Project) on or about March 4, 2011. The stated purpose of the RFP was to develop, calibrate, and validate an integrated set of numerical and/or empirical models. Nine project teams submitted responses to the RFP. Dynamic and Janicki timely submitted proposals on or about April 15, 2011. TBEP distributed, via email, its final rankings of the nine-project teams on May 13, 2011. TBEP notified Dynamic that it was the second-ranked candidate. TBEP notified Janicki that it was the first-ranked candidate. Dynamic timely filed its notice of written protest on May 19, 2011. Dynamic timely filed its Petition for Formal Administrative Hearing on May 31, 2011. In lieu of a security bond, Dynamic submitted a cashier's check as security in the amount of $11,979.08 to TBEP on May 31, 2011. TBEP referred Dynamic's Petition to DOAH on June 2, 2011. Janicki served its Petition to Intervene on or about June 8, 2011. Dynamic submitted a cashier's check as replacement security to TBEP on June 10, 2011. Dynamic did not submit a protest bond. Background on TBEP TBEP's mission is to assist local and regional governments in developing a comprehensive plan to restore and protect the body of water known as greater Tampa Bay. TBEP has an Interlocal Agreement whose stated purpose is to emphasize regional cooperation and regulatory flexibility that allows it to select cost-effective and environmentally beneficial bay improvement options for the surrounding communities. The Interlocal Agreement seeks to implement the Comprehensive Conservation & Management Plan for Tampa Bay, known as Charting the Course. TBEP's Interlocal Agreement establishes a Management Board and a Policy Board with specified duties and responsibilities, which are further described in TBEP's By-Laws. The Management Board serves as an advisor to the Policy Board. The Policy Board exercises all the powers of the entity and manages the business and affairs of TBEP. Only the Policy Board may promulgate TBEP policy or procedures or issue waivers of such policies and procedures. TBEP has adopted an Operating Procedures Manual ("OPM"), which sets forth procurement procedures. It provides that all procurement shall be conducted in accordance with the Code Of Federal Regulations (40 C.F.R. § 31.36) and, as applicable, chapter 287 and Florida Administrative Code Chapter 60A-1, to the extent the statutes and rules are not in conflict with applicable federal laws and standards. The OPM provides that the Policy Board must approve all contract awards for services in excess of $25,000, unless delegated by the Policy Board to the Management Board. Also, the OPM says an evaluation committee appointed by TBEP's executive director will review proposals received by TBEP in response to an RFP for services in excess of $25,000. The results of an evaluation committee's review of proposals are presented to the Management Board, which makes a recommendation to the Policy Board. The final procurement decision is made by the Policy Board. The Project is the result of a cooperative agreement between TBEP and Southwest Florida Water Management District (SWFWMD) to develop comprehensive models, to evaluate potential management actions, to improve water quality, and to expand seagrass coverage in Old Tampa Bay. The Project includes development, calibration, and validation of an integrated set of numerical (and/or empirical) models of: 1) watershed loading; hydrodynamic circulation; and 3) water quality/ecological response that will be used to evaluate management action scenarios in Old Tampa Bay. Total cost of the Project is estimated to be $1,200,000 to $1,300,000; the length of time needed to carry out the Project would be approximately 36 months. The Project will be jointly funded by TBEP and SWFWMD. TBEP is funded by the Environmental Protection Agency, the City of Clearwater, the City of St. Petersburg, the City of Tampa, Hillsborough County, Pinellas County, Manatee County and SWFWMD. The Project is the largest single project undertaken by TBEP in terms of costs, but TBEP has previously procured services and entered into contracts for other projects which are as technically complex as the Project. TBEP and SWFWMD developed a team of professionals in the fall of 2010 to begin development of the Project. In March 2011, TBEP issued the RFP for the Project. Proposals in response to the RFP were accepted until 2:00 p.m. (Eastern Standard Time) on Friday, April 15, 2011. Information was to be provided in each proposal under the following headings: Project Summary, Title Page, Table of Contents, Letter of Transmittal, Understanding and Approach, Respondent Qualifications, Quality Control and Conflict of Interest, Time Schedule and Effort Proposal, Listing of Deviations, and Additional Data. Respondents were also directed to indicate whether they had an affirmative action plan in effect. In addition, respondents had to disclose whether they had been involved in a government contract that ended in termination, litigation due to substandard quality, untimely submittal of deliveries, or for other reasons. All team members for each respondent were to be disclosed, including prime contractors and subcontractors. Responding entities were allowed until March 18, 2011, to submit any questions they had about the RFP process. All questions submitted, along with TBEP's responses, were then compiled and made a part of the RFP package. The RFP package was available to anyone who requested it. In response to one of the questions asked by a respondent, TBEP provided a list identifying all of the evaluation committee members. Dynamic represented that it was the respondent and provided appropriate contact information. Dynamic named Christopher Wallen, its vice-president, as the person authorized to make representations for and bind Dynamic to its proposal. The proposal indicated that Dynamic agreed to hold TBEP and SWFWMD harmless from any claims resulting from injury or damages incurred by volunteers participating in the program, although no executed hold harmless agreement was included in its proposal. Dynamic indicated some support or collaboration with other entities as part of its proposal. Both Old Dominion University ("ODU") and the University of South Florida ("USF") were named as part of Dynamic's "team" for purposes of their proposal. Professional biographical information for Dr. Mark Luther from USF and Dr. Richard Zimmerman from ODU was included in the proposal, along with information for Dynamic's employees and experts from other entities. There is no documentation from either of the universities, however, indicating they are expecting to participate in the Project. Dynamic takes the position that the two university-based experts were hired as independent consultants, working for their private consulting businesses, rather than for the universities. (This position is similar to TBEP's position on two of its committee members. See discussion herein.) However, the universities' logos appear on the front cover of Dynamic's proposal. Dynamic did not have, at the time of its proposal or even as of the date of final hearing, an affirmative action plan in place. However, as a minority-owned business (Wallen's wife is the president of the company), Dynamic does not believe it is required by law to have such a plan. Therefore, no plan was included in its application. By not having, or creating such a plan, Dynamic forfeited a point in its evaluation by committee members. Dynamic did not include information in its proposal concerning a government contract it had previously been awarded that had been terminated. However, the reason for that termination was that the government had stopped work on the project, when another party entered a protest of some sort. The contract was "terminated" pending resolution of the dispute, but was then reinstated. Dynamic did not feel as if those circumstances would warrant disclosure of the contract under the terms of the RFP. The RFP included instructions for the evaluation committee's use in reviewing proposals. Each committee member was to score each proposal and rank the respondents. The evaluation committee was expected to reach a consensus on a ranked list of the respondents at the end of the process. A hypothetical ranking table was included in the RFP instructions for consideration by the committee. TBEP's standard practice for RFP reviews was to use the rankings to award a contract. The scores assigned by each committee member were not generally as consistent, so rankings were used to reach a better decision. There were no instructions in the RFP as to how the committee was to handle a tie. Each evaluation committee member was allowed to use their own judgment as to how to reflect a tie. Some committee members used fractions while some would rank two respondents equally and leave one rank vacant. For example, one reviewer might rank the respondents: 1, 2, 3, 4, 4, 6, 7, 8, 9; another reviewer might use 1, 2, 3, 4, 4.5, 5, 6, 7, 8 to reflect the same ranking. Dynamic correctly pointed out that the instructions provided to the committee members included a sample format for making rankings. The sample did not include a ranking based upon a tie, but the instructions did not prohibit ties either. The evaluation committee was made up of nine members, each having a special area of knowledge or expertise as to the proposed project. The team members were: Mark Flock, Pinellas County staff; Lizanne Garcia, SWFWMD staff; Kristen Kaufman, SWFWMD staff; David Glicksberg, Hillsborough County staff; Holly Greening, TBEP staff Edward Sherwood, TBEP staff; Charles Kovach, Department of Environmental Protection; Dr. William Kemp, subject matter expert; and Dr. James Martin, subject matter expert. The Scoring Process The RFP Instructions include a set of eight criteria used to evaluate the proposals by assigning scores to the proposals based on the provided criteria. Evaluation committee members were to apply the first five technical criteria to score proposals.3/ Those criteria and potential scores for each were: Project Team Qualifications--20 points; Project Approaches--35 points; Level of Effort and Cost by Task--15 points; Performance Considerations--20 points; and Management Approach--5 points. The remaining three non-technical criteria were assigned by TBEP staff and were applied to each proposal. Those criteria were: Minority (business ownership); Previous Work Awarded; and Total Proposed Project Costs. The reviewers could then add "extra" points for the candidate's purported ability to adequately complete the tasks as outlined in the RFP. A total of 95 points could be awarded for each candidate. On April 15, 2011, the committee members were provided copies of the nine proposals submitted by interested respondents. Each committee member was also given a copy of the RFP, a blank score sheet, and a "Code of Standards of Conduct" statement to be completed for the purpose of showing no conflict of interest. The committee members were then directed to assign scores for the various criteria as the initial element of their review. The RFP provided directions as to how the process would work. At page 7 of the RFP, it states that "[E]valuation committee members may adjust scores based on discussion during the evaluation committee meeting prior to the finalization of scores" and that "each evaluation committee member will then add up their scores for Criteria 1 through 5 and staff-provided scores 6 through 8 for each respondent, and rank respondents based on their individual scores." The RFP then provided that once the scoring was complete, "[r]anks from each evaluation committee member shall be totaled, and an overall ranked short-list developed therefrom." Each of the committee members then completed scoring sheets for each respondent. The committee then met on April 29, 2011, to review, discuss, and rank the proposals. A short list of proposals was made at that time for the purpose of allowing certain respondents to make oral presentations to the committee. The list was developed by having each committee member give a score (or rank) of one or zero for each respondent. The four respondents who were ranked the highest were allowed to make oral presentations. The scores assigned by each committee member in their individual review on score sheets were not the sole basis for creating the short list. However, each committee member made a 1 or 0 rank for the respondents based at least, in part, on how they had scored the respondents. On May 6, 2011, the four highest ranked respondents, including Dynamic and Janicki, were allowed to make oral presentations to the committee. After the presentations, the committee met and deliberated for approximately two hours concerning their choices. At that time, the initial rankings were created. Each member's initial ranking of the nine respondents was placed on a white board at the front of the meeting room. As the rankings were discussed, some members decided to alter their rankings based on consideration of other members' input. Each of the committee members brought a particular expertise to the table, so each had pertinent insight to share with other committee members as to the abilities or capabilities of each respondent. The scores that each member had individually assigned to the respondents for the various categories were not specifically discussed as part of the ranking dialogue. Those scores were a preliminary method for each reviewer to compare the respondents' proposals on a comparatively even "apples to apples" review. The scores may or may not have formed the primary basis for each reviewer's initial ranking placed on the white board at the May 6, 2011, meeting. Nonetheless, the rankings could be changed upon discussion with other members of the committee. Dynamic argues that the scores on each evaluation committee member's score sheets should have been used without consideration of any other factors to make the final rankings. Although it is possible to interpret the scoring instructions in that fashion, the approach used by the evaluation committee was sufficiently consistent with the instructions and based on a logical, reasonable approach. There is nothing inherently deficient about how the committee reached its decision. The committee reached a consensus at the May 6, 2011, meeting that Janicki should be awarded the contract. Although the vote was close, 16 to 17, the committee all agreed with the final decision. With the exception of Kaufman, none of the committee members deviated from their individual final ranking made at the meeting. Kaufman, subsequently, determined that her ranking as shown on the white board mistakenly had Dynamic ranked as 1 and Janicki as 2, just the opposite of what she intended. Making that change would have resulted in Janicki winning by three points instead of one point. The committee then reported its decision to the Management Board, which met on May 12, 2011, and approved the evaluation committee's recommendation. The Management Board then recommended to the Policy Board that Janicki be awarded the contract. The Policy Board modified the committee's recommendation slightly, deciding that if contract negotiations were not successful with Janicki, then Dynamic should be awarded the contract. On May 13, 2011, the Policy Board accepted the recommendation and awarded the contract to Janicki. After the May 6, 2011, meeting, the committee members were asked to submit their final score sheets to TBEP to be used by TBEP to evaluate strengths and weaknesses of the proposals for future consideration. Some members submitted several erroneous score sheets prior to sending their final score sheet. Kaufman initially submitted a blank score sheet for one respondent and had mathematical errors showing the two top-ranked respondents as tied, even though Janicki actually had a higher score. Garcia submitted an additional score sheet along with a justification as to how she broke a tie by using the higher technical score. Kemp submitted revised score sheets in order to provide justification for how he derived his final rankings. Inasmuch as there were discussions between committee members after the initial scoring was done but before the final rankings, it is logical and reasonable that the final rankings may not be consistent with the scoring done by each committee member. Notification to Respondents Once the decision was made to award the contract to Janicki, all respondents were notified via email. The OPM states that TBEP will "provide notice of a decision concerning a bid solicitation or a contract award to all respondents by United States mail or by hand delivery or telephone facsimile." Email is not listed as a means of notification. Even though TBEP provided the notification via email, there is no showing that such notice prejudiced any respondent in any way. Email is similar to and as fast as facsimile transmission. There is no evidence that any respondent failed to receive the notice. Just as Dynamic failed to disclose information about the government contract that had been technically terminated, TBEP's use of email, rather than U.S. Mail or fax, is a minor error in the process that is not material to the final decision. Bid Protest Process After receipt of the notice that Janicki had been awarded the contract, Dynamic timely filed a bid protest. Part and parcel to any bid protest is the submission of a bid protest security, usually in the form of a security bond. Dynamic submitted a cashier's check on May 31, 2011, in the amount of $11,979.08, representing one percent of Dynamic's estimated contract amount. The check was erroneously made out to Holly Greening, the executive director of TBEP, rather than to TBEP, as stated in its cover letter. Dynamic cured this scrivener's error when it became aware of the mistake. TBEP objected to the amount of the security provided, saying that $50,000 was required, but did not substantiate the basis for that amount. TBEP also objected to the sufficiency of the cashier's check because it had a termination date, i.e., if not cashed within 90 days, the check would become void. Although that objection is well taken, Dynamic cured the defect when it sent in the replacement check made out to TBEP. Makeup of the Evaluation Committee Dynamic takes exception to the appointment of two consultants, Dr. Martin and Dr. Kemp, to the evaluation committee. According to the OPM, "[c]onsultants, whether or not they submit proposals to TBEP, are not permitted to serve on selection committees." It is clear that both Dr. Martin and Dr. Kemp often provide services to clients as private consultants. However, both are also university professors and were purportedly serving on the evaluation committee as representatives of their respective universities. Nonetheless, all respondents were advised about the makeup of the evaluation committee prior to submission of their proposals. It is disingenuous for a respondent to claim, after the fact, that it did not wish to be evaluated by certain members of the committee. Dynamic takes exception that Janicki's status as a local company was considered, because local connection was not a designated RFP criterion. It is logical and reasonable, however, for TBEP to consider that factor (and any other relevant information about the respondents) during discussions in a close decision such as this.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Respondent, Tampa Bay Estuary Program, upholding the award of the contract to Intervenor, Janicki Environmental, Inc. Tampa Bay Estuary Program shall include a statement of its costs and charges in the final order. If the parties cannot agree on the amount of such costs and charges, this matter may be remanded to the Division of Administrative Hearings for further proceedings as to that issue. DONE AND ENTERED this 31st day of August, 2011, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 31st day of August, 2011.
The Issue 1. Whether the proposals submitted by Consultec and EDS met the mandatory requirements of the Request for Proposals, and, if not, whether the proposal submitted by GTE met the mandatory requirements; (2) Whether the evaluation of the proposals by HRS was infected with substantial, material irregularities which resulted in an arbitrary scoring and evaluation process; (3) Whether GTE has standing to contest the award of the contract to Consultec; and (4) Whether GTE has waived any of the issues it has raised due to its failure to timely challenge the terms and conditions of the Request for Proposals.
Findings Of Fact General Background of the RFP On January 6, 1987, HRS released a Request for Proposals for Florida Medicaid Program Fiscal Agent Services (RFP) for qualified organizations to implement and operate a certifiable Medicaid Management Information System (MMIS) for the Florida Medicaid Program. There were several reasons why HRS wanted a new MMIS system for the Florida Medicaid Program. First, the current system was more than ten years old and, although enhanced and modified numerous times, had been determined to be archaic. Second, the federal government indicated to HRS that it would not participate in future funding of the operation of the current system. Third, the federal government recommended that Florida purchase a new system. In February 1986, HRS began the process of preparing the RFP to be used in selecting the fiscal agent for the new MMIS. The process began with the development of an Advanced Planning Document (APD). Since the federal government pays for the large majority of Medicaid services, the federal Health Care Financing Administration (HCFA) of the Department of Health and Human Services (HHS) is very much involved in the various stages of the state procurement process. The purpose of the APD, which describes in detail the planned procurement process, is to obtain federal approval of the procurement process proposed by the state to ensure federal financial participation. The APD was submitted to and approved by HCFA. After approval of the APD, HRS contracted with Peat, Marwick, Mitchell and Company-Compass Consulting Group (PMM Compass) for consultant services regarding HRS's Medicaid fiscal agent procurement. PMM Compass is a nationally known consulting firm in Medicaid procurements. Its function was to review the proposed evaluation section of the RFP and to prepare a detailed evaluation plan, including written evaluation instruments and an evaluation manual, evaluation procedures, and evaluation training and materials, which would be used in evaluating the fiscal agent business and technical proposals. After the RFP was prepared, it was submitted to HCFA for approval. HCFA oversees federal financial participation in the Medicaid program and reviews state RFP's for MMIS systems to ensure that federal acquisition regulations have been met. The HCFA approved the RFP on November 28, 1986. On December 8, 1986, the Information Technology Resource Procurement Advisory Council of the Department of General Services approved the RFP. On January 6, 1987, the RFP was issued. Section 60.800 of the RFP provided that any party adversely affected by the bid solicitation must file a notice of protest within 72 hours after receipt of the RFP. No one filed a protest contesting any of the provisions of the RFP. On April 6, 1987, proposals were received from the following three offerors: Consultec, Inc. (Consultec), EDS Federal Corporation (EDS), and GTE Data Services, Inc. (GTE), subcontracting with The Computer Company (TCC). The RFP The RFP was issued for the procurement of fiscal agent services for the Florida Medicaid Program. The contractor chosen will serve as the HRS fiscal agent to administer the state's Medicaid program. The contractor must furnish all computer hardware, computer software, personnel, and other necessary resources to process approximately 24 million Medicaid claims each year and to keep current track of all Medicaid providers and recipients. The contractor must design and implement the computer and personnel systems to provide these services, must implement necessary changes to the system during the life of the contract, and must perform certain tasks to turn the system over to the state or to the new contractor at the end of the contract term. The total dollar amount paid during the contract will be approximately 45 to 50 million dollars. The RFP is a two-volume document containing approximately 500 pages, including the Appendix which is Volume II. The RFP consists of nine sections which are numbered 10, 20, 30, and so forth through 90. Section 10 provides an administrative overview; Section 20 provides a summary of the present system; Section 30 outlines the scope of the work required setting forth the responsibilities of the contractor and of the state; Section 40 sets forth the Florida MMIS System requirements; Section 50 contains the terms and conditions of the contract; Section 60 sets forth the procurement procedures; Section 70 contains the required contents of the technical proposal, which includes sections concerning corporate background and experience, project organization and staffing, project management and control, work plan and schedule, MMIS system description, and data processing; Section 80 sets forth the required content and format of the business proposal, which contains each offeror's price information; and Section 90 relates to the manner in which the proposals will be evaluated. The RFP provided that the proposal should be submitted in two parts: the technical proposal and the business proposal. The technical and business proposals had to be sealed separately, though submitted simultaneously, and would be open at different stages. The technical proposals were opened on April 6, 1987; the business proposals were opened on June 15, 1987, after scoring of the technical proposals was completed. Each technical proposal was several volumes in length. The Evaluation Process The evaluation process was conducted in accordance with the formal evaluation plan developed by the RFP Project Director, Tom Arnold, and PMM Compass. Section 90 of the RFP set forth the manner in which proposals would be evaluated. The evaluation was conducted in five phases: Phase 1, Evaluation of Mandatory Requirements of Technical Proposals; Phase 2, Evaluation of Technical Proposals; Phase 3, Evaluation of Mandatory Requirements of Business Proposals; Phase 4, Evaluation of Business Proposals; and Phase 5, Ranking of Proposals. The way in which the proposals would be evaluated in each of the five phases was described in Section 90 of the RFP. Phase 1 The first phase of the evaluation process was to review the technical proposals submitted by the offeror to ascertain whether the proposals complied with all the mandatory requirements of the RFP. The purpose of Phase 1, as stated in Section 90.200 of the RFP, was to determine whether each technical proposal was sufficiently responsive to the RFP to permit a complete evaluation. This phase of the evaluation was performed on a "pass-fail" basis and was conducted immediately following the proposal due date. Section 90.200 of the RFP lists the 27 questions that would be used to determine whether the technical proposals met the mandatory requirements of the RFP. HRS considered that an offeror met the mandatory requirements for the technical proposals if an affirmative answer could be given to all 27 questions. The 27 questions were divided into two categories, proposal submission and technical proposals. The questions under the proposal submission category were questions such as the following: Was the proposal received by HRS no later than 2:00 P.M. (Eastern Standard Time) on April 6, 1987? Did the vendor submit separate, sealed business and technical proposals and the required proposal bond? Is this the only proposal? (Alternate proposals not allowed). Are there fifteen (15) copies of the technical proposal? Does each copy of the technical proposal contain the required transmission letter? The questions under the technical proposal category were simply questions to ensure that each of the sections required to be included in the technical proposal had in fact been included. There were eight questions to correspond to the eight sections that were required. Each question was worded in the same manner, such as, "Is a Corporate Background and Experience section included? All three offerors submitted technical proposals that were determined to be sufficiently responsive to the RFP to permit a complete evaluation. Each offeror received a "pass" designation for all questions except GTE. GTE did not receive a pass on Question No. 4, which required that 15 copies of technical proposal be submitted. GTE submitted only 14 complete copies of its technical proposal by the deadline. However, HRS determined this was a minor irregularity, and GTE was allowed to submit the missing volume of its technical proposal the following day. In the appendix to the RFP a "minor irregularity is defined as follows: Minor irregularities are those exceptions which will not have an adverse effect on costs or performance. The first phase of the evaluation process was conducted by Tom Arnold, Tom Wallace, and Barbara Thrower of HRS. This phase was completed within 3 or 4 hours after the proposals had been opened. The mandatory requirements portion of the HRS evaluation manual was used in determining whether each offeror met the mandatory requirements. The same 27 questions listed in the RFP were contained in the evaluation manual. The evaluators were instructed in the manual to assign a "pass" score to each item for which their response to the question defined in the item is "yes." Phase 2 After determining that all of the technical proposals met the mandatory requirements and were sufficiently responsive to permit a complete evaluation, Phase 2 of the Evaluation Process was begun. The purpose of Phase 2 was to measure the individual merit of each technical proposal in each of several areas according to preestablished criteria. A maximum of 2,000 points could be received for each technical proposal. The basic categories evaluated and their maximum number of points were: Corporate Background and Experience 200 pts. Project Organization and Staffing 225 pts. Technical Approach 225 pts. Project Management and Control 150 pts. Work Plan and Schedule 200 pts. MMIS Description 800 pts. Data Processing 200 pts. Proposals were evaluated through four separate methods: (1) Review of the written response to the RFP; (2) Oral presentation; (3) Visits to sites where each offeror operated a baseline system; and (4) Reference checks. The RFP advised the offeror of the scoring system for the technical proposals and the ways in which information would be obtained. The offerors were advised by the RFP that detailed evaluation criteria had been developed for each of the categories listed. Further, for each of the categories listed, the RFP contained a paragraph which was meant to "describe generally the factors covered by the detailed criteria." Section 90.390 of the RFP set forth the manner in which points would be assigned to the technical proposal. Section 90.390 reads as follows: Scoring of the seven areas in each technical proposal shall be done using preestablished criteria and predefined scoring values. Each criterion within an area will be independently scored by evaluators. Indivi- dual raw scores from the evaluators, for each criterion, for each offeror's proposal, will be averaged then multiplied by a predetermined weight to get a weighted point value for that criterion. Scoring weights will not be available to the evaluation committee, but will be applied to raw scores by other designated staff. Weighted point values for all criteria in an offeror's proposal will then be tallied. The final technical score for each proposal is then calculated using the following methodology: A maximum of two thousand (2,000) weighted points will be assigned to the highest passing technical proposal. . . . The formula to be used to award all other offerors a proportional amount of points was also included. The formal evaluation and initial scoring of the technical and business proposals was performed by a Technical Evaluation Committee (Evaluation Committee) appointed by the Secretary of HRS. The Committee consisted of eleven members with backgrounds and experiences in MMIS program development, data processing, and financial analysis. While the members of the Evaluation Committee did not formulate the evaluation criteria which were used, they were well-qualified to apply the evaluation criteria provided. Further, on March 24-27, 1987, prior to the receipt of Proposals on April 6, HRS Sponsored a three and one- half day training session for the members of the Evaluation Committee. Judith Hansen, a consultant with PMM Compass, headed the training sessions. During the course of these training sessions, the evaluators went over each of the criteria on which proposals were to be judged to ensure that all of the evaluators understood the scoring criteria in the categories they would be scoring. Ten of the Evaluation Committee members were responsible for evaluating the technical proposals in Phase 2 of the evaluation process. The individuals were divided into subgroups representing each of the seven categories to be evaluated. Five of the categories had three evaluators. The MMIS Description category had six evaluators, and the Technical Approach category had five evaluators. None of the members of the Evaluation Committee was an evaluator in each of the seven categories; the most categories scored by any one evaluator was four. Each member of the Evaluation Committee scored each of the proposals in the categories to which they were assigned; however, to ensure that each proposal was judged solely by the detailed evaluation criteria provided rather than against each other, an evaluator was permitted to have only one proposal before him to score at a time. Evaluators were also instructed not to discuss their scoring with the other evaluators but to independently score each proposal. The Evaluation Committee began reviewing the technical proposals on April 7, 1987, the day after proposals were submitted. Proposals were evaluated by the committee members at the Government Employee's Credit Union, a location away from their normal work place. Each evaluator was given a technical proposal and was allotted two days simply to read the particular proposal and become familiar with it. They then began to evaluate the proposal in the categories assigned. When the evaluators had finished the first proposal, they turned in both the proposal they were reviewing and their scoring manual for that proposal and received another offeror's technical proposal to read and evaluate. Each evaluator was given a separate scoring manual for each of the offerors which contained the criteria to be used in scoring the proposal in the assigned categories. Each category had criteria to be scored. Different categories had a different number of criteria. For example, the Corporate Background and Experience category had fifteen criteria; the Project Management and Control had eight; and the MMIS Description had 49 criteria. Each criterion in every category was to be scored from zero to ten by the evaluator. A zero was to be given when the offeror had omitted the particular aspect of the area or did not establish the capability to perform it. One to three points was "poor," four to six points was "average," seven to nine points was "good," and ten points was excellent. The scoring manual was organized with the criterion to be scored, and matters that might be considered under that criterion, on the left-hand page. The scoring sheet for that criterion was on the right-hand page. The scoring sheet contained a space for the numerical points awarded and also provided space for comments to indicate the reason for the score given. All proposals were initially scored based on the information provided in the proposals. The scores were Subsequently reviewed and revised, if appropriate, as additional information became available through the reference checks, the oral presentations, and the on-site visits. The evaluations of the technical proposals took over two months to complete. Throughout this period, but after the initial scoring was completed, debriefing sessions were conducted with the evaluators to ensure that the evaluators neither misunderstood nor overlooked relevant information from the proposals, reference checks, oral presentations, or site visits. Reference checks were conducted to verify both the corporate capabilities of the offeror and the qualifications of proposed senior project personnel. The reference checks were conducted by two members of the Evaluation Committee, Diana Flagg and George Strickland. These two individuals were chosen to conduct the reference checking because of their skills and abilities--they both had experience in contract management functions and dealing with state agencies-- because their workload was such that they had the time available. Ms. Flagg and Mr. Strickland were given a reference check manual that had been prepared as part of the evaluation package which contained the questions to be asked; however, they were not told which references to call. After discussing the matter, they decided to contact three (3) different states as corporate references for each of the bidders. They used the following criteria to determine which states to contact: (a) whether the state used the same baseline system proposed by the offeror for Florida; (b) whether the state had recent experience with the offeror; and (c) whether the state had experience with the development and operations of MMIS systems that would be similar to Florida's. The term "baseline system" refers to the proposed subsections of a certifiable, operational MMIS. An MMIS is comprised of six to seven federally required general system design subsections. The RFP defined "Baseline System" as "[t]he basic systems code used for the FMMIS consisting of, at the minimum, the Claims Processing Subsystem, the Reference Subsystem and the MAR Subsystem." The RFP required offerors to propose a certifiable operational MMIS and stated that the baseline system had to be operational in some state. Therefore, contacting the states that had the same or a similar baseline system as that proposed for Florida was the important factor in choosing the states to be contacted. Based on the three criteria stated, HRS decided to contact Montana, Ohio and Washington for Consultec; Georgia, Tennessee and Virginia for GTE/TCC; and Arkansas, Kentucky and Georgia for EDS. The corporate reference checks were conducted in the following manner: After deciding the states to be contacted, Ms. Flagg and Mr. Strickland jointly called the person listed by the offeror as the corporate reference for that state. Upon reaching the listed person, Mr. Strickland asked the corporate reference the predetermined questions in the reference check manual regarding that state's experience with the offeror. The reference was asked to rate the offeror on a scale of 0 to 4 and to give comments supporting the score where appropriate. To insure accuracy, both Ms. Flagg and Mr. Strickland recorded both the scores and the comments given by the reference for each offeror. After each call was completed, they compared their notes to make sure the reference's scores and comments were accurately transcribed. The personnel reference checks were conducted by Ms. Flagg and Mr. Strickland in the same manner. The personnel references called were those listed as references in the proposal for the individual, except in one case the listed reference referred the evaluators to another individual who had worked more closely with the person being checked. After the corporate and personnel reference checks were completed, the reference check manual containing the information received was made available to all of the evaluators for use in scoring the proposals. Oral presentations by each offeror were held on May 26, 27, 28, 1987. The orals provided the offerors with a chance to present their proposals and provided the committee with an opportunity to obtain answers to questions developed during their initial review of the proposals, to observe the offerors in action, and to request clarification of an offeror's proposal. The offerors were advised at the beginning of the presentation that any answers given at the oral presentation would be considered part of the proposal. In addition to the oral presentation, six members of the Evaluation Committee, plus the project director and the evaluation oversight manager, made visits to one installation site where each offeror's baseline system was operational. The site visits gave the evaluators an opportunity to see the offerors in action and to speak with state personnel in person about the offeror. The following site visits were made: June 1-2 EDS Little Rock, Arkansas June 3-4 GTE Data Services/The Computer Company Nashville, Tennessee June 8-9 Consultec, Inc. Jefferson City, Missouri Columbus, Ohio For Consultec, two locations rather than one were visited because while Ohio utilizes the Consultec baseline system bid in Florida, Consultec does not-run the system. In Missouri, on the other hand, Consultec is operating an MMIS system originally designed by EDS. Thus, by visiting two locations, HRS was able to evaluate Consultec's baseline system and analyze Consultec's operations and capabilities as a fiscal agent. The information received as a result of the site visits was recorded in the Site Visits Manual for each offeror. The manual contained the questions to be asked at each site and was part of the evaluation package. As with the Reference Check Manual, the Site Visits Manual was made available to all of the evaluators. On June 15, 1987, after the scoring of the technical proposals was completed by the Evaluation Committee, the raw scores assigned by each evaluator for each criterion were transferred to a summary scoring document. The scores were averaged then multiplied by the weight factor assigned to that criterion. The weighted scores for each of the criteria in each category were then added together, providing a total score for category. The following are the weighted scores received by each offeror, rounded to the nearest whole number: Corporate Background Consultec EDS GTE and Experience 107 139 98 Project Organization and Staffing 128 115 112 Technical Approach 132 121 127 Project Management and Control 87 95 75 Work Plan & Schedule 88 118 80 MMIS Description 425 473 418 Data Processing 126 135 135 1093 1196 1045 34. Since EDS had the highest total points scored, it received 2,000 points for its technical proposal. The others received a comparable point value determined by dividing the offeror's score by EDS's score and multiplying the result by 2,000. Consultec received 1,828 points, and GTE received 1,747 points. The completed technical evaluation points were locked in a bank vault and were not disclosed. On June 15, 1987, the business proposals were publicly opened. Prior to that time the sealed business proposals had been kept in the vault. Thus, no one knew the contents of the business proposals while the technical proposals were being evaluated. At the public opening, the business proposal summary pricing schedules were read to all offerors and posted at HRS. Phase 3 Following the public opening of the business proposals, HRS reviewed the business proposals for compliance with the mandatory requirements for business proposals contained in the RFP. HRS conducted this "pass-fail review" of the business proposals by determining whether the business proposals submitted by each offeror complied with the requirements of Section 90.400 of the RFP. The first two paragraphs of this Section read: The purpose of this phase is to determine if the business proposal is sufficiently responsive to the RFP to permit a complete evaluation. The following items will be reviewed as mandatory requirements: Section 90.400 of the RFP then lists 19 questions regarding the business proposals submitted by offerors. HRS considered an offeror as having met the mandatory requirements for the business proposals if an affirmative answer could be given to all 19 questions contained in Section 90.400. All three offerors submitted business proposals which were determined to have met the mandatory requirements for business proposals contained in the RFP. Phase 4 The business proposals then underwent a more detailed review by three of the HRS evaluators, all of whom were accountants and two of whom were CPAs. This review was to determine whether the business proposal for each offeror was consistent with that offeror's technical proposal and whether the calculations in the pricing schedules contained in the business proposals were accurate. For each offeror, the overall business proposal was determined to be consistent with the technical proposal. Minor arithmetic errors and inconsistencies were noted by the evaluators on each of the business proposals. For example, GTE's installation task salaries appeared to be unreasonable compared to the effort required to complete the tasks proposed in the technical proposal. Although all three evaluators noted this problem, it was determined that the inconsistency was not significant enough, considering the entire project, to merit rejection of the bid. The evaluators noted that Consultec had combined the building and utility categories on the pricing schedules, but found this also to be insignificant Section 90.520 of the RFP provides as follows: "Any business proposal that is incomplete or in which there are significant inconsisten- cies or inaccuracies may be rejected by HRS. (e.s.) As specified in the RFP, points were awarded for the business proposal as follows: the lowest evaluated operational price, the total fixed price per claim for the five-year contract period, was awarded 850 points; the lowest total installation price, the sum of the planning, design and development, acceptance testing and implementation tasks, was awarded 50 points; the lowest systems personnel billing rate was awarded 50 points; the lowest total field representative price was awarded 25 points; and the lowest hourly cost of CPU time was awarded 25 points. The other offerors in each category were awarded a proportional share of the maximum points allowable. The price per claim category received 850 of the 1,000 possible points because this payment represents the most important work to be performed under the contract and because payment will occur during at least five years of the contract. The fixed price per claim is of vital importance to the state because it allows the risk of claims volume variance to be transferred to the contractor. A 10 million variance in annual claims volume, from 19 million to 29 million was established in the RFP, with provision for dealing with claims volume outside the range parameters. There is considerable risk for abnormal claims variance due to program changes that can occur during the life of the contract such as federal establishment of new eligibility groups, new services, or redefined claims definitions. The state legislature may require additional Medicaid services or additional eligibles. However, a fixed price per claim limits the cost of handling increased processing services. The following table displays the points awarded for the business proposals by offeror: Consultec EDS GTE Installation Price 23 43 50 ($7,439,321) ($4,030,129) ($3,433,822) Price Per Claim 850 620 689 ($.2652) ($.3637) ($.3270) Composite Hourly Rate 29 21 50 for Systems Personnel ($95/hr) ($134/hr) ($55/hr) Provider Field Reps 23 25 21 for Five years ($1,892,820) ($1,810,380) ($2,124,450) Price for CPU Time 25 13 4 ($1,100) ($3,625) ($400) TOTAL 951 722 814 Phase 5 After the proposals were rated by the Technical Evaluation Committee, points awarded to the business proposals were added to the technical points to determine the ranking and recommendation of the committee. The ranking and recommendation of the committee along with supporting materials were conveyed to the Steering Committee, composed of four HRS executives. The Proposal Evaluation Committee's Report to the Steering Committee provided a 116 page detailed summary of the overall evaluation results, concluding with the Evaluation Committee's ranking of proposals, which were as follows: Consultec EDS GTE Technical Proposal 1,828 2,000 1,747 Business Proposal 951 722 814 Total 2,779 2,722 2,561 Ranking 1 2 3 In addition to receiving the Evaluation Committee's report, the Steering Committee, through Mr. Moody, one of its members, became aware of a letter written by Senator Grant to the Secretary of HRS concerning the evaluation of the proposals. Attached to the letter was a position paper prepared by GTE which attempted to compare the business proposals submitted by Consultec and GTE by considering the "future value of funds" or "time value of money" based on interest that could be earned on the difference between Consultec's installation price and GTE's installation price. Mr. Moody, a CPA, had been assigned the task of responding to the letter and the position paper. Mr. Moody raised the topic with the Steering Committee and also explained the deficiencies in the GTE analysis. After a thorough review of the Evaluation Committee's report, the Steering Committee was satisfied with the evaluation process. The Steering Committee unanimously recommended the selection of Consultec as the contractor for fiscal agent services for the State of Florida. The Secretary of HRS concurred with the recommendation, and by letter dated July 9, 1987, the offerors were notified of the intent to award the contract to Consultec. GTE filed its notice of protest on July 15, 1987, and its Formal Written Protest on July 24, 1987. After announcing its decision to award the contract to Consultec, HRS informed HCFA of its choice and submitted to HCFA a revised APD reflecting the costs contained in Consultec's business proposal. After reviewing this document and, having previously approved the evaluation process used in selecting the successful offeror, HCFA informed HRS that it did not need any additional information in order to approve the contract award and that the initial review indicated that approval would be granted at the appropriate federal financial participation rate. However, HCFA cannot give the state final approval while the contract award is being disputed. DID THE PROPOSALS SUBMITTED BY CONSULTEC MEET THE MANDATORY REQUIREMENTS OF THE RFP? FINANCIAL STATEMENTS Among the several sections required in each technical proposal was one entitled "Corporate Background and Experience." The required contents of this section were set forth in Sections 70.400 through 70.440 of the RFP. Section 70.400 stated: The Corporate Background and Experience section shall include for the offeror and each sub-contractor (if any): details of the background of the company, its size and resources, details of corporate experience relevant to the proposed fiscal agent contract, financial statements, and a list of all current or recent Medicaid or related projects. The detailed requirements for each of the required elements listed in Section 70.400 was contained in the subsequent sections to the RFP. The requirement for financial statements was detailed in Section 70.420 as follows: Financial statements for the contracting entity shall be provided for each of the last three years, including at a minimum: balance sheets statement of income statements of changes in financial position auditors' reports notes to financial statements summary of significant accounting policies The word "shall" is defined in the Glossary of the RFP as "[i]ndicates a mandatory requirement or condition to be met." After the RFP was released but prior to the submission of bids, HRS provided an opportunity for all prospective offerors to submit written questions to HRS regarding the terms and conditions of the RFP. After receiving these questions, HRS sent all prospective offerors both the written questions submitted by the various prospective offerors and HRS' written responses to them. During this process, one bidder, EDS, submitted the following question to HRS: Since our parent corporation does not publish financial statements for each of its individual subsidiaries, will the financial statements for the parent company be satisfactory? In response, HRS provided all prospective bidders with the following answer: It is the department's intent to review the financial stability of each offeror. Offerors should present appropriate documen- tation to meet this requirement. From the answer given, it is apparent that HRS did not intend to preclude the submission of consolidated financial statements but did intend that each offeror should include "appropriate documentation" to allow HRS to review, and evaluate, the financial stability of the offeror. Like EDS's parent corporation, Consultec's parent, General American Life Insurance Company (General American), has a policy of not releasing the financial statements of its subsidiaries. Based on this policy and HRS' written response to the EDS question, Consultec submitted with its proposal the consolidated financial statements of its parent, General American. Consultec also submitted an annual report showing Consultec achieved a before tax income of $3.4 million in 1985. In its response to the RFP, Consultec indicated that the financial resources of General American backed any agreement Consultec entered into, as follows: The considerable resources of General American ensure Consultec's financial stability. Additionally, our access to the resources of our parent company (including manpower, data processing facilities, and financial support) ensures the successful performance of any contractual obligations. Because of this support, Consultec has greater capacity now than at any time in its corporate history to meet any and all contractual requirements and commitments. However, the General American consolidated, audited financial statements contained in the Consultec proposal contained no ascertainable information about the separate financial condition or financial performance of Consultec. Section 90 of the RFP explained how the technical proposals would be evaluated and specified what items would be considered "mandatory requirements." Technical proposal Mandatory Requirement No. 21 asks only the general question, "Is a Corporate Background and Experience section included? (Section 70.400)". A Corporate Background and Experience section was included in Consultec's submission. The detailed evaluation of criteria under the Corporate Background and Experience section occurred under the Phase 2 Evaluation of Technical Proposals. Oral presentations were considered a part of the technical proposal evaluation process. During Consultec's oral presentation, HRS asked Consultec to clarify its proposal by stating whether General American would be financially responsible for the Florida MMIS project. In a follow-up question, Mr. Tom Arnold asked Consultec if it would consider either submitting separate financial statements for Consultec or agreeing that General American would guarantee Consultec's performance if Consultec were awarded the contract. Consultec responded to this request by submitting a letter to HRS wherein Consultec stated that General American was willing to guarantee Consultec's performance under the contract. This letter was signed by Richard Martz, Senior Vice President of Consultec. RFP specifically stated that the state reserved the right to request amendments to the proposals or to waive minor irregularities. The purpose of the oral presentations was to clarify any information provided in the technical proposals. Further, the financial statements were considered in scoring only one criterion in the Corporate Background and Experience section which was worth a total of 10 points. Finally, GTE included in its proposal the financial statements of its parent, GTE Corporation, and all three evaluators considered the financial strength of GTE's parent in award points for that criterion. GTE also scored more points in this area than Consultec. Consultec received no material advantage over other offerors by submitting consolidated financial statements. If Consultec's failure to include its own financial statements in the technical proposal can be considered a deviation at all from the requirements of the RFP, in light of HRS's clarification of those requirements, it certainly cannot be considered a deviation that would require the rejection of its proposal. CONSISTENCY OF THE BUSINESS AND TECHNICAL PROPOSALS Sections 90.500 and 90.510 of the RFP provide: 90.500.--Each business proposal successfully meeting the mandatory requirements reviewed in Phase 3 will be examined to determine if the business proposal is consistent with the technical proposal and its calculations are accurate. 9O.510--Any business proposal that is incomplete or in which there are significant inconsistencies or inaccuracies may be rejected by HRS. The state reserves the right to reject all proposals. In its Formal Protest, GTE alleged that Consultec's business and technical proposals were not consistent because Consultec "front-end loaded" its proposal. "Front-end loading" means moving a cost from the later part of a contract to the front or charging for a cost that will not be incurred until later in the contract. Section 80 of the RFP describes the RFP's requirements for the business proposals. In the business proposal, each offeror sets forth the costs of its proposed FMMIS. The RFP directs each offeror to include in its business proposal "a firm fixed price for each of the requirements contained on the pricing schedule. . . ." One of the five requirements is installation costs. Section 81.210 of the RFP states that Pricing Schedule B of the business proposal summarizes the four major tasks involved in the installation phase of the Florida MMIS system as described in the RFP. Those four major tasks are described in the RFP at Sections 30.120 through 30.450. The offeror is directed to "schedule the fees for each of these tasks on the detailed Schedules B-1 through B-4" and is told that "[t]hese fees will form the basis from which the installation price is determined." Section 80.120 similarly states that "the installation price will be calculated as the combined sums of the prices of the Planning Task, Design and Development Task, Acceptance Testing Task and the Implementation Task." As required by the RFP, Consultec submitted a business proposal including Pricing Schedule B, which set out the price components of its installation price by task. One line item of the price components is labeled "computer resources." GTE's argument is that the cost of certain computer equipment (computer hardware and software) which Consultec included in the installation price under "computer resources," should have been allocated over the life of the contract and included in the operational price. Consultec's total price bid for the installation phase was $7,439,321, as compared to $4,030,129 for EDS and $3,433,822 for GTE. These differences are largely explained by differences in the cost item, "computer resources." These costs total $3,049,809 for Consultec, $1,130,856 for EDS, and $608,493 for GTE. The treatment of the acquisition price of the computer equipment to be purchased by Consultec is not consistent with generally accepted accounting practices. Proper accounting practices would distribute the cost of the equipment over its useful life rather than charging the entire purchase price as an initial cost in the installation period. Nevertheless, nothing in the RFP required the use of "generally accepted accounting practices" in allocating costs. Nothing in the RFP required that the costs of purchasing the computer equipment be made a part of the operations costs, by allocation over the life of the contract, as opposed to being charged as an installation cost at the time of purchase. Section 30.220 specifically states that it is the contractor's responsibility in carrying out the Design and Development Task, described as part of the installation phase, to [a]cquire the equipment to be used for the design, development, implementation, and operation of the new system." GTE has failed to show how Consultec's business proposal was inconsistent with its technical proposal. The purpose of requiring consistency between the two proposals, generally, is to ensure that each bidder has sufficient funds in its business proposal to perform the tasks required in the technical proposal. If computer hardware to be used during the life of the contract is purchased during the installation phase, the expense is incurred and paid for at that time, and inclusion of such cost as an installation cost is appropriate. GTE also argues that Consultec's business and technical proposals are inconsistent because Consultec has failed to provide sufficient data entry operators in their proposal. GTE attempted to establish this shortage through the testimony of Ms. Clark. However, there were discrepancies in her calculations and she was confused in her testimony. Further, her testimony was based on several assumptions that Consultec did not necessarily make or have to make. Finally, Ms. Clark's calculations indicated that Consultec was short 10 data entry operators in the first year of operation, yet Consultec provided 49 data entry operators the first year--the same number provided by both EDS and GTE in their proposals. In short, there was no competent evidence presented to show that Consultec's proposal provided for an insufficient number of data entry operators. After HRS announced its intent to award the contract to Consultec, HCFA reviewed Consultec's technical and business proposals to determine whether they were consistent with one another. After conducting this consistency review, it was HCFA's conclusion that Consultec's technical and business proposals were consistent. PRICING SCHEDULES - CORPORATE REGISTRATION In its formal protest, GTE alleged that Consultec "modified several of the pricing schedules in its proposals so that the cost categories submitted were different from those required." This was not included as an issue in respondent GTE's prehearing statement, and at the hearing, GTE presented no evidence that any such modifications were material or gave Consultec an advantage. In its formal protest GTE alleged that the corporate charter number provided by Consultec in its transmission letter was for a corporation named "General American Consultec, Inc." This was not included as an issue in GTE's prehearing statement, and there was no evidence presented to support this allegation. WAS THE EVALUATION OF THE PROPOSALS BY HRS INFECTED WITH SUBSTANTIAL, MATERIAL IRREGULARITIES? CRITERIA USED IN THE TECHNICAL EVALUATION. In evaluating the technical proposals, the HRS evaluators used an evaluation or scoring manual which contained the criteria to be used in scoring the technical proposal in each of the seven sections or categories. In its Formal Protest, GTE alleged that the scoring manual used by the HRS evaluators contained criteria and tests which were materially different from those set forth in RFP. The RFP evaluation criteria for the "Corporate Background and Experience" section of the proposal included, among others: (a) large scale data processing development and implementation experience, (b) medical claims processing experience, and (c) medicaid and MMIS experience. The RFP evaluation criteria for the "Data Processing" section of the proposal included, among others: (a) telecommunications network support, and (b) telecommunications experience. GTE has no previous MMIS contracts, but is the country's fourth-largest data processing company. It designed and submitted its proposal expecting to be graded on large-scale data processing experience, telecommunications network support and telecommunications network experience. Mr. Brandenburg, a Medicaid project director for GTE, testified that he felt HRS' scoring manual did not give any weight to an offeror's large scale data processing experience or telecommunications network experience even though these were listed as items HRS would consider in the RFP. However, several of the scoring criteria reference communication links, telecommunications network support, telecommunications network experience and number of persons engaged in claims processing operations. Further, in scoring GTE on criteria 8, 13 and 5 under the Data Processing section, the evaluators referred to GTE's section on telecommunciation experience and support. Section 90 of the RFP made it quite clear that proposals would be evaluated based on preestablished criteria that had been developed for each of the various sections of the technical proposals. The RFP stated that paragraphs 90.320 - 90.380 described "generally" the factors covered by the criteria. In essence, because "large-scale data processing development and implementation experience" was listed as one of the factors that would be covered by the criteria under Corporate Management and Experience, GTE assumed that it would be accorded more weight than it was in the evaluation criteria. Mr. Brandenburg felt that too much consideration was given to MMIS experience in the evaluation process and not enough to experience outside the MMIS industry. However, section 90.310 of the RFP provides: Offerors should note that the entire evaluation will place considerable emphasis on demonstrated experience directly applicable to MMIS transfer or replacement, modification development, and Medicaid fiscal agent operations. In summary, there was no competent evidence presented to support GTE's allegation that the scoring manual used to evaluate the proposals contained criteria that was materially different than those set forth in the RFP. THE EVALUATION PROCESS AND REFERENCE CHECKS Although the RFP set forth generally the criteria to be used in evaluating the technical proposal, the specific criteria used in evaluating the proposal were not included in the RFP. However, the RFP made it clear to offerors that there were predetermined criteria that would be used. The RFP indicated that information would be obtained from reference checks, from the proposal itself, from site visits, and from oral presentations. The RFP specified that the raw scores from the evaluators for each criterion would be averaged and then multiplied by a predetermined weight to get the point value for each criterion. None of the offerors protested the method of evaluating the proposals. Further, there was no evidence presented to suggest that the use of undisclosed weights was irregular. The initial recommended weights from the evaluation expert, PMM Compass, were modified by the Issuing Officer to reflect the areas most important to Florida, then reviewed with and approved by HCFA officials. Mr. Larry Platt of HCFA confirmed that the use of non-disclosed weights is very typical. Indeed, he had not been involved in any procurements in which weights were disclosed to offerors. He also confirmed that it was customary not to include the detailed evaluation criteria in the RFP. GTE also challenged the manner in which corporate reference checks were conducted. In this regard, Dr. Elton Scott testified that it would have been better if the HRS evaluators had contacted all the states where the offerors had certifiable MMIS systems even though this would result in as many as 18 states being contacted for one offeror and as few as 3 for another. Dr. Scott admitted, however, that if, due to time restraints or other reasons, less than all of the listed references could be contacted, it was reasonable to contact those states which used a baseline system similar to the offeror's proposed system for Florida, to contact states with recent experience with the offeror, and to contact states with experience similar to Florida's. Larry Platt has had extensive experience with state RFPs in his position with HCFA and his testimony is accepted. He testified that it was important that an equal number of references be contacted for each offeror and that a state's decision to contact three corporate references for each offeror was reasonable. He further testified that contacting states with recent experience with the offeror and states with the same baseline system were the criteria normally used in determining which states should be contacted as references. In support of its contention that the corporate reference checks were unreliable due to the number of references contacted, GTE introduced into evidence the depositions of Joel Schnedler, Jeff Harriott, Helen Condry, Ruth Fisher, and Robert Kelly, to show that, had additional references been contacted, GTE's corporate reference checks would have been better. However, with one exception, these individuals are Medicaid officials in states purposefully not contacted by HRS as corporate references. Mr. Schnedler is employed by the State of Missouri, which was not contacted because the baseline system operated by Consultec in Missouri was designed and installed by EDS. Ms. Condry is employed by the State of West Virginia, which was not contacted as a corporate reference for GTE/TCC because TCC's responsibilities in West Virginia are limited--TCC does not perform many of the provider relations and some of the other operations. Ms. Fisher is employed by the State of Delaware, which was not contacted as a corporate reference for GTE/TCC because the baseline system used in Delaware has not been certified by the federal government, a requirement for the baseline system proposed for Florida. Robert Kelly is an employee of the State of Pennsylvania, which was not contacted as a corporate reference for GTE/TCC because the baseline system operated in Pennsylvania was not developed, designed or installed by GTE or TCC. GTE contended that it received lower scores on the corporate background and experience questions dealing with MMIS experience solely because the experience shown in its proposal for that area was that of a subcontractor, TCC. In fact, the evaluators did not penalize GTE's proposal in this or any other manner. If the evaluators had not considered the MMIS experience of TCC in evaluating GTE's proposal, GTE would have received zero points in this area for the simple reason that GTE had no previous MMIS experience. Although Ms. Flagg testified that her scoring might have been different if GTE's and TCC's roles were reversed, it does not mean GTE did not receive proper credit for TCC's experience. If their roles were reversed, GTE and TCC would be performing different functions, and thus the scoring would very likely be different. The evaluation of the technical proposals in this case may not have been perfect; however, a review of the entire evaluation package and the evaluation manuals completed by the individual evaluators reveals that the evaluation was thorough and fair. The evaluation package was reviewed by HCFA section by section to determine whether the evaluation process ensured open and free competition. The evaluation package was approved by HCFA. Mr. Platt felt that the evaluation manual was "a very thorough job." Mr. Platt reviewed the evaluation itself after it was completed to ensure that the evaluation plan had been followed. He was satisfied with the process. The completed evaluation manuals show that the evaluators performed their tasks conscientiously and were well-informed. The analyses performed by Dr. McClave revealed high consistency among evaluators and good inter-evaluator reliability. These results support the conclusion that the evaluation procedure was reliable. There was no evidence to suggest that scores were assigned arbitrarily or that the evaluation process was infected with substantial material irregularities. PRESENT VALUE EVALUATION: As stated previously, the RFP provided that business proposals would be scored according to a preestablish point system for the five different types of costs required to be bid. The various categories of costs and the maximum number of points to be awarded to the low bidder for each category were: Max. Pts. Available Installation Price 50 Price Per Claim 850 Hourly Rate for Systems Personnel 50 Provider Field Representatives 25 Price for CPU Time 25 From the above scoring system contained in the RFP, prospective offerors knew or should have known that the State did not propose to evaluate bids on a present value basis. At the time that the RFP was developed, Mr. Arnold was aware of Section 287.0572, Florida Statutes, which requires the use of present value methodology to evaluate the cost of contracts "which require the payment of money for more than 1 year and include provisions for unequal payment streams or unequal time payment periods." Mr. Arnold did not believe that the statute applied to this RFP, and therefore did not change the scoring system. Merrill Moody is the Assistant Secretary for Administration. In that capacity, Mr. Moody oversees personnel, budget, finance, accounting, staff development and training, revenue enhancements, contracting, purchasing, leasing, management systems, audit, and quality control for HRS. Mr. Moody is a CPA, has been employed by HRS for nine years, and oversees a 60 million dollar budget. Like Mr. Arnold, Mr. Moody had considered whether Section 287.0572, Florida Statutes, applied to this procurement prior to the issue being raised by GTE. It was Mr. Moody's considered opinion that the statute did not apply because the contract does not call for an uneven payment stream. Dr. McClave, an expert in econometrics, testified that there is not enough certainty in this RFP to say whether or not there are unequal payment streams, and, accordingly, whether or not the statute applies. He also explained why the application of the statute would be an exercise in futility. First, the only part of the contract arguably subject to present value analysis is the installation phase. This takes place within the first year of the contract and, accordingly, makes it practically impossible to do a useful present value analysis. Furthermore, even if the installation phase payments could be construed as an unequal payment stream within the meaning of the statute, the statute does not require a present value analysis to be applied to unequal payment streams which are to take place under a contract whose duration is less than one year. To apply a present value analysis to the installation phase price would be counterproductive. During the installation phase, the contractor is to be paid at certain points during the first year at which milestones or tasks are completed. At such points, the contractor is to be paid a certain percentage of the total installation price. If a present value analysis were performed, the proposal most highly valued would be that in which all tasks would be finished on the last day of the contract, clearly not a result in the state's best interest. The application of present value analysis to the remaining four fixed price components of the bids is simply not necessary. Each one of the remaining categories called for a fixed price for a certain unit of services to be delivered to HRS by the contractor. There is clearly not an unequal payment stream or unequal time payment periods for these items. Where there is a fixed price for a unit of service, there is obviously no need to apply a present value analysis. If, for example, HRS knows that it will be charged $.2652 per claim by Consultec as opposed to $.3270 per claim by GTE, Consultec's price will always be lower regardless of claim volume. To apply a present value analysis to the cost per claim, systems personnel hourly rate, and CPU hourly rate would create uncertainty in the cost evaluation. This is because the RFP did not specify the number of claims or hours involved. The RFP contained an estimate of between nineteen and twenty-nine million Medicaid claims per year, a ten million claim difference. Likewise, the number of hours of systems personnel time and CPU time is not specified. To conduct a present value analysis assumptions would have to be made. If the assumptions prove wrong, the lowest present value cost bid could become the most costly contract. Dr. James E. Pitts, an expert in the field of economics, agreed with Dr. McClave's conclusion that given the range of possible volumes on the number of claims as well as in systems personnel and computer time, a present value analysis would provide a "horrendous" range of possible present values and the analysis would be extremely sensitive to the assumptions that would be made. Although a present value analysis of the cost of the proposal would require certain assumptions to be made, and thus swould provide a comparison of costs that is not as accurate as comparing the fixed rate costs, a present value analysis can be performed using reasonable assumptions. However, the present value analyses of both GTE and HRS show that Consultec's business proposal yields the lowest present value. Accordingly, had a present value analysis been performed, Consultec would remain the lowest bidder. GTE's expert Dr. Scott, HRS' expert Dr. McClave, and Consultec's expert Dr. Pitts all agreed that even when a present value analysis was used, Consultec's bid remained less than GTE's. THE EDS BID GTE alleged that the proposal submitted by EDS did not comply with the mandatory requirements of the RFP in two respects: (1) It submitted consolidated financial statements; (2) it proposed to supply one element of the FMMIS by using a subcontractor's "propriety" software. The first allegation has been previously discussed in reference to the Consultec proposal. The submission of consolidated financial statements did not make EDS's proposal unresponsive. The financial statements were used as a source of information from which the financial stability and corporate background of the offeror could be evaluated. As to the second allegation, GTE has simply failed to show how EDS's proposal materially deviated from the requirements of the RFP. EDS's transmittal letter stated that EDS would use Health Information Designs (HID) as a subcontractor to produce Drug Utilization Review Reports, thus subcontracting out a total of .78 percent of the work as measured by total contract price. The letter from HID stated that it would not "convey access to or title in any of HID's proprietary DURbase software or system documentation." When EDS was questioned at the oral presentation about how it would comply with Section 50.900, which would be part of the contract to be entered into and requires that HRS shall receive "a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use . . . all software . . . and documentation comprising the Florida MMIS", EDS responded that the purchase of DUR-based services was the procuring of services, not software. Further, if the subcontractor's statement in its letter is considered a deviation from the requirements of the RFP, then EDS complied with the requirements of Section 70.100 of the RFP by identifying and explaining the deviation in the transmittal letter. There was no evidence presented to show that the deviation was material or that the state could not accept the proposal with the deviation. Section 50.000 provides that modification of the contract can be made by mutual agreement of the state and contractor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order awarding the contract for the Florida MMIS system to Consultec. DONE and ENTERED this 19th day of November, 1987, in Tallahassee, Florida. DIANE A. GRUBBS 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 19th day of November, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3188BID GTE's proposed findings of fact 1-19. Accepted generally, though not with same wording or quotations. 20-21. Rejected due to contrary findings. 22-27. Accepted as true but not included in detail in RO because unnecessary. 28-33. Rejected as irrelevant, except to the degree these paragraphs reflect that Consultec intends to purchase computer equipment in the installation phase and charge the cost during the installation phase. Rejected - no competent substantial evidence (CSE) that Florida will pay for costs not attributable to this contract. Accepted in part; rejected in part by contrary finding. 36-40. Rejected as unnecessary. Rejected as not supported by CSE. Accepted. Rejected as not supported by CSE. 44-45. Accepted. 46-53. Rejected as unnecessary. Accepted. Rejected as unnecessary. First sentence accepted, second rejected. Rejected. 58-59. Rejected as irrelevant. Accepted to the degree relevant. Accepted generally. Rejected as unnecessary. Accepted generally. Accepted generally. Rejected. 66-70. Accepted to the degree relevant. 71. Rejected. 72-73. Accepted, except for last sentence which is rejected as not supported by CSE. 74-77. Accepted generally. 78. Rejected as irrelevant, there was no evidence of bias in scoring. 79-81. Rejected generally by contrary finding. Rejected as unnecessary, last part of last sentence rejected for lack of CSE. Accepted generally. 84-85. Rejected by contrary findings. HRS's proposed findings of fact 1-26. Accepted generally. 27-34. Accepted to the degree that Dr. McClave's analyses support the conclusion that the evaluation process was reliable. Accepted generally. Rejected, not supported by cited reference. Though criterion 2 related to the prime contractor, the criterion also related to financial resources not MMIS experience. Last part of paragraph accepted. 37-39. Accepted generally. Accepted generally; however, first sentence rejected because the evaluation manuals of all three evaluators reflect that the guarantee was factor in scoring. However, the comments also reflect that it was not the only consideration. Accepted in part. Part relating to GTE rejected as unnecessary. Last sentence rejected in that letter is not in the exhibit cited. 42-51. Accepted generally. 52. Rejected as unnecessary. 53-54. Accepted generally that Consultec had computer equipment costs in installation phase. Unnecessary. Accepted generally. Unnecessary. Unnecessary. 59-60. Accepted generally. 61-80. Accepted generally. 81-82. Unnecessary. Consultec's proposed findings of fact 1-18. Accepted. 19. Accepted, except as to date and when scoring was begun. 20-38. Accepted generally. 39. Accepted generally, except third from last sentence. 40-42. Accepted generally. Rejected, in that was not reflected in information known at time of evaluation. Accepted generally. Rejected as unnecessary, but accepted as true. 46-55. Accepted to the degree necessary considering Ms. Clark's testimony was not credible. 56-98. Accepted generally but included in order only to the degree necessary. COPIES FURNISHED: Douglas L. Mannheimer, Esquire M. Stephen Turner, Esquire BROAD AND CASSEL 300 E. Park Avenue Post Office Drawer 11300 Tallahassee, Florida 32302 C. Gary Williams, Esquire Jann Johnson, Esquire Steven C. Emmanuel, Esquire AUSLEY, McMULLEN, McGEHEE CAROTHERS AND PROCTOR Post Office Box 391 Tallahassee, Florida 32302 H. Michael Madsen, Esquire James Hauser, Esquire MESSER, VICKERS, CAPARELLO, FRENCH AND MADSEN First Florida Bank Building Suite 701 215 South Monroe Street P. O. Box 1876 Tallahassee, Florida 32302-1876 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The issues in this case are whether, and how, the Florida Real Estate Commission (FREC) should discipline the Respondent, Theresia Helton, on charges that she: failed to account and deliver rental payments and deposits; was culpably negligent and in breach of trust in her dealings regarding rental property; failed to escrow rental payments and deposits; failed to properly reconcile her escrow account; and failed to make transaction agreements and bank statements available for inspection.
Findings Of Fact At the time of the events giving rise to the Administrative Complaint in this case, the Respondent, Theresia Helton, held two Florida real estate broker licenses (BK 3077530 and BK 3248280) and was the owner and qualifying broker for 1010 Apartments, Inc., a real estate brokerage firm. However, on May 22, 2013, FREC entered a Final Order suspending those licenses for five years. The Final Order is on appeal by the Division, which seeks to revoke the Respondent's licenses, as recommended by the Administrative Law Judge in that case. Eileen and Ernest Armitage ("the Armitages") reside in New Jersey and own a condominium located at 15599 Latitude Drive, Bonita Springs, Florida ("the property" or "condo"). In 2010, the Armitages began communicating with the Respondent and asked her to find a tenant for the property. In return for the Respondent's services, the Armitages verbally agreed to pay her a commission of ten percent of the annual gross rent. In September 2010, the Respondent obtained a tenant, Marion Ward Bentson, to rent the property for $1,400 a month and pay a security deposit in the amount of one month's rent. The Respondent filled in a form lease to begin on September 14 of that year. On September 8, 2010, the lease was signed by Ms. Bentson and by the Respondent on behalf of the Armitages (in one place as their agent, and in another as landlord). The Respondent collected the $1,400 security deposit and $700 prorated first month of rent from Ms. Bentson. The lease directed the tenant to mail future rent payments to "Ilene [sic] Armitage/1010 Apartments, Inc." at the brokerage's address in Naples. The Respondent then submitted the lease to the homeowners association (HOA) for approval. The lease was approved by the HOA on September 14, 2010, and became effective on that date. The Respondent kept the $2,100 collected from the tenant in payment of the $1,680 commission, plus other charges. Some details of the 2010 transactions remain unclear. The Armitages testified that the Respondent sent the lease to them and that they made corrections, signed the corrected lease, and returned it to the Respondent. The Respondent testified that the HOA sent the lease to the Armitages after approval and that no corrected lease signed by the Armitages was returned to her. A corrected lease was introduced in evidence. It indicates that Eileen Armitage corrected the spelling of her name, clarified that the Armitages were the landlord under the lease, clarified that future rent and notices were to be sent to the Armitages in New Jersey, initialed the changes, and signed the corrected lease on September 15, 2010. The corrected lease apparently was not presented to the HOA for approval, and it is not clear what happened to it. It is, however, clear from the evidence that the parties' subsequent conduct was consistent with the corrected lease, and that the Armitages had no complaints about the Respondent's conduct with respect to the Bentson lease. In July 2011, Ms. Bentson stopped paying rent and gave notice that she was moving out. The Armitages contacted the Respondent and asked her to help them find a tenant to replace Ms. Bentson. It was agreed verbally, or assumed, that the Respondent again would be paid a commission of ten percent of the annual gross rent. The Armitages testified that there also was a verbal agreement that the commission on the Bentson lease would be prorated, entitling the Armitages to a refund. The Respondent denied that there was any agreement to prorate the Bentson lease commission. On this disagreement, the Respondent's testimony was more believable. The Armitages remained in communication with the Respondent while she attempted to find a new tenant. At the end of August 2011, Laurie Ungar contacted the Respondent regarding the Armitage property, and the Respondent arranged for Mrs. Ungar to see the condo. Mrs. Ungar noted that there were scuff marks on the walls, trash that needed to be removed, and carpet and a patio deck that needed cleaning. She expressed her interest in renting the condo, if those items were corrected. The Respondent reported to the Armitages, who were under the impression that the condo already was in good condition and did not agree to spend money for additional repairs. The Respondent decided to proceed with the lease negotiations and arrange for whatever work would be needed to satisfy the Ungars. The Respondent met with Mrs. Ungar on August 31, 2011, and negotiated on behalf of the Armitages. The Respondent filled in a form lease to begin on September 21, 2011. Mrs. Ungar signed for herself and her husband and gave the Respondent a check for $75 for the HOA application fee. The lease identified "Ilene [sic] Armitage" as landlord and provided for notices to be sent to her, although no contact information was included for her. The Respondent signed as landlord in one place on the form and as agent in another. She also initialed the lease as landlord. By checks dated September 1, 2011, Mrs. Ungar gave the Respondent $500 for the first month's prorated rent, $1,500 for the following month's rent, a security deposit in the amount of $1,500, and a pet security deposit in the amount of $250. The Respondent reported to the Armitages that the Ungars signed the lease. She then sent someone to touch up the scuff marks on the walls and clean up the apartment. Either the Armitages or the HOA apparently asked for a pet fee from the Ungars, which they delivered to the Respondent by check dated September 13, 2011. The Respondent then submitted the lease to the HOA for approval. The lease was approved by the HOA on September 19, 2011. The Ungars moved in at 3 a.m. on September 21, 2011. When the Ungars arrived, they still were dissatisfied with the condition of the condo. The walls had been touched up with the wrong color paint, so it looked like graffiti. There was still trash at the condo, and the patio deck and carpet still needed cleaning, in their opinion. They contacted the Respondent, who came over with a can of paint and removed some of the trash. The Ungars remained very dissatisfied with the condition of the condo. Shortly after the Ungars moved in, the Armitages began asking the Respondent for a copy of the lease. For reasons not clear from the testimony, they did not receive the lease or any money from the Respondent and became increasingly agitated about it. At the end of the month, the Armitages received a final bill from the utility company. When they inquired, they were told that the utilities had been transferred to another payor, who was occupying the condo. They contacted the Ungars directly, and the Ungars told them that they still were dissatisfied with the condition of the condo and wanted to terminate the lease at the end of October and get their deposits refunded. The Armitages told them that they did not have the deposits, as the Respondent still had not forwarded them any money. Mr. Ungar went to the Respondent's office, told her about the conversation with the Armitages, and demanded a refund of the deposits. She told him she already had sent the money to the Armitages. On October 6, 2011, the Respondent emailed the Armitages to report her conversation with Mr. Ungar and tell them it was up to them if they wanted to let the Ungars out of the lease, but that she had earned her commission. She stated that she had cleaned up the condo for the Ungars after the Armitages had declined and had mailed the Armitages a check for $1,500, which was what was left of the moneys paid by the Ungars after deducting her commission in the amount of $1,800, a cleaning fee of $150, another $150 for pressure-washing the patio deck, a painting fee of $200, and another fee of $200 for cleaning and hauling out trash. There was no evidence that those sums actually were incurred by the Respondent or that any of the work had been done, except for the poor touch-up of the scuff marks on the walls. After the Respondent sent the email, she thought better of sending the $1,500 check since both the Armitages and the Ungars were claiming it. The money remained in her operating account. She believed she was entitled to keep the balance of the $4,000 paid by the Ungars. She did not notify FREC of any deposit dispute. On October 7, 2011, the Armitages emailed the Respondent to again ask for a copy of the signed lease and listing agreement. On October 10, 2011, they emailed to again ask for the signed lease and ask for the invoices for the work done (or at least contact information for the vendors). By email dated October 12, 2011, they followed up to again request the information. They got no response from the Respondent, except to say that she did not mail the check referred to in the email on October 6, 2011. The Armitages and Ungars renegotiated the lease. The Armitages reduced the monthly rent to pay the Ungars for painting, cleaning, and other work they did at the condo to make it satisfactory to them. The Armitages sued the Respondent and settled for $2,700, which was paid by check dated July 12, 2012. The Armitages used $2,000 from the settlement to return deposits to the Ungars. During the Division's investigation, the Respondent was asked to provide a copy of her agreement with the Armitages and her escrow bank account records. There were no such records. Later, a subpoena was issued for the records for the Respondent's operating account, which were produced. There was no evidence that the Division asked for the records for the operating account before issuing the subpoena. The Respondent's license is suspended until May 21, 2018, because the Division proved charges that in the fall of 2010, she was culpably negligent, in violation of section 475.25(1)(b), and failed to account and deliver, in violation of section 475.25(1)(d)1. The Respondent is the single mother of two daughters, whom she was supporting by income earned as a real estate broker, as well as child support payments. The Division has incurred costs in the amount of $825 in prosecuting this case against the Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order: finding the Respondent guilty as charged in Counts I through V of the Administrative Complaint; revoking her licenses; and assessing costs in the amount of $825. DONE AND ENTERED this 21st day of November, 2013, in Tallahassee, Leon County, Florida. S J. LAWRENCE JOHNSTON 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 21st day of November, 2013.
The Issue Whether Petitioner's bid on State Job No. 86075-3459 was non-responsive and Respondent's award of the bid to the next lowest responsible bidder was arbitrary, illegal or dishonest.
Findings Of Fact Petitioner timely submitted its bid on State Job No. 86075-3459 and this bid was the lowest received by DOT on this project. The DBE requirement on this bid was 11%. This means each bidder had to show on its submittal that at least 11% of the project cost would go to a minority business subcontractor. With its bid submittal, on the Disadvantaged Business Enterprise (DBE) Utilization Summary (Form 275-020-003 Minority Prog. 11/87), Petitioner listed as DBE subcontractors Reliable Trucking, Inc. with $100,000 as the dollar amount for DBE goal and $280,000 for Community Asphalt Corporation. (Exhibit 1.) These two figures exceeded the 11% minimum DBE requirement. Community Asphalt Corporation had been a certified DBE subcontractor in early 1990 but in May 1990 its certification expired and was not renewed. Accordingly, at the time of the bid opening, Community Asphalt was not listed on the list of certified DBE subcontractors DOT provided to bidders with the bid forms to complete for this project. Petitioner had initially shown only Reliable Trucking, Inc. on Exhibit 1 with $400,000 as the dollar amount for the DBE goal. Reliable Trucking is a certified DBE. Petitioner received a late quote from Community Asphalt and just before submitting its bid added Community Asphalt to its DBE Utilization Summary, interlining the $400,000 amount for Reliable Trucking and changed this amount to $100,000. Although Petitioner still intended to use Reliable Trucking for work on this project in excess of $400,000 its policy, which was here followed, is to show on its DBE Utilization Summary submitted with its bid only a small percentage over the required minimum. Therefore, when Community Asphalt was added as a DBE subcontractor, the dollar amount to Reliable Trucking was reduced. Petitioner's employee who added Community Asphalt to the DBE Utilization Summary checked to see that Community Asphalt was a certified DBE but, unfortunately, looked at the list of certified DBE subcontractors furnished by DOT for an earlier bid--not the current list. The current list which had been supplied to Petitioner did not list Community Asphalt as a certified DBE. When the bids received were first checked by the DOT employee who reviews bids to see that DBE requirements are met, she approved the bid but set it aside for further check. Later, after realizing Community Asphalt was not on the approved list of DBE's she disapproved the bid and it proceeded to the Good Faith Efforts Committee for review. Petitioner submitted no documentation of any good faith efforts to comply with the DBE requirements. This is understandable as Petitioner thought when the bid was submitted that Community Asphalt was a certified DBE and its bid complied with the DBE requirements. In reviewing and accepting bids for DOT projects, Respondent relies entirely on the documentation submitted with the bid and does not allow bidders to supplement the bid after opening.
Recommendation It is recommended that the protest of Bergeron Land Development, Inc. to the rejection of its bid submitted on State Job No. 86075-3459 be dismissed with prejudice. DONE and ENTERED this 23rd day of October, 1990, in Tallahassee, Leon County, Florida. KEN N. AYERS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of October, 1990. APPENDIX Respondent's proposed findings are generally accepted, except for: Rejected. The DBE forms submitted by Petitioner, as corrected by Petitioner before submittal, showed Reliable Trucking, Inc., a certified DBE, to receive only $100,000 in subcontracts, far less than the 11% DBE participation required. Rejected. Whether Reliable Trucking had a firm contract with Petitioner to provide in excess of $400,000 subcontracting work on this project is immaterial if the DBE utilization form submitted with the bid fails to show the DBE utilization goal is attained or documentation of good faith efforts are not included. Rejected that the mistake by Petitioner was a non-material mistake. Bids have to be accepted as received. Rejected. Rejected. Rejected. Accepted as an accurate quote of Rule 14-78.003,Florida Administrative Code. The legal conclusion that the ruledoes not require evidence of good faith efforts be included withthe bid submitted is rejected. The conclusion of law that Respondent violated its own rule is rejected. COPIES FURNISHED: John H. Beck, Esquire 1026 East Park Avenue Tallahassee, Florida 32301 Paul J. Martin, Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 John Radey, Esquire Post Office Drawer 11307 Tallahassee, Florida 32302 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams, Esquire General Counsel Department of Transportation 605 Suwannee Street, Room 562 Tallahassee, Florida 32399-0458
The Issue The issues in this case are whether Respondent violated Subsections 489.129(1)(g)1., (j) and (m), Florida Statutes (2004),1/ and, if so, what penalty should be imposed.
Findings Of Fact The Parties At all times relevant to this proceeding, Respondent was a certified general contractor in the State of Florida, having been issued License No. CG C1507065. Respondent's license as a general contractor was first issued on April 12, 2004, and is current and active. At all times relevant to this proceeding, Respondent was part-owner and the qualifying agent of a Florida corporation named Golden Rule Construction Group, Inc. (hereinafter referred to "GRCG"). The Board is the state agency charged with regulating the practice of contracting in the State of Florida pursuant to Chapters 455 and 489, Florida Statutes. Facts Related to Freedman Property On or about June 1, 2005, Barry Freedman (hereinafter referred to as "Freedman") entered into a contract to construct a room addition and remodel a bathroom at Freedman's residence at 2349 East Manor Avenue in Port St. Lucie, Florida. The pre-printed contract indicated that the contractor was GRCG. Also, the letterhead on the contract included the name "Golden Rule Construction Group, Inc." and the company's address, telephone number, fax number, and Respondent's general contractor's license number. The contract was executed by Freedman, as the homeowner, and Steve DiBenedetto (hereinafter referred to as "DiBenedetto"), as the contractor. All negotiations and presentations relative to the contract were between Freedman and DiBenedetto. The contract price was $52,652.00. Of this amount, Freedman paid $14,657.00, all of which was accepted by DiBenedetto as contractor for GRCG. Initially, on or about May 31, 2005, Freedman gave DiBenedetta a $10,000.00 check as a deposit for the construction project. On or about July 13, 2005, Freedman gave DiBenedetto a $4,657.00 check as a second payment under the contract. The payee on both checks was GRCG. DiBenedetta and a man identified as John Smith3/ commenced the bathroom remodeling project in June 2005 and satisfactorily completed that project by September 2005. The bathroom remodeling project was started and completed, even though no building permit had been pulled. Based on representations of DiBenedetta and/or John Smith, Freedman believed no permit was necessary for the bathroom remodel.4/ The Contract does not delineate or specify the cost of the room addition and the cost of the bathroom remodeling project. However, the value of the bathroom remodel was estimated by a qualified independent third party to be $7,804.00. The room addition was to begin in September or October 2005, after the plans for the addition were completed. The plans were never provided by GRCG, and it never commenced work on the room addition as provided for in the Contract. Eventually, Freedman went to the architect and purchased the plans for the room addition in order to move forward on the project. After completing the bathroom remodel, GRCG abandoned the project and never began the room addition that was provided for in the contract. The amount paid by Freedman to GRCG, $14,657.00, exceeds the value of the work performed by $6,853.00. Facts Related to Ekstrom Property On or about October 28, 2004, Larry Ekstrom (hereinafter referred to as "Ekstrom") entered into a contract (hereinafter referred to as "Ekstrom Contract") with GRCG to construct a new home a 117 Creek Drive in Port Charlotte, Florida (hereinafter referred to as "Eckstrom property"). The Ekstrom Contract was executed by Ekstrom, as the owner, and Keith Powell, as the contractor. The Ekstrom Contract price was $808,306.31. The Ekstrom Contract provided that work on the construction project was to commence upon issuance of the permit by Charlotte County. In accordance with that contract, after the permit was issued, GRCG began work on the construction project at the Eckstrom property. Eckstrom's understanding was that, pursuant to the Eckstrom Contract, GRCG would request periodic payments from Eckstrom that would be used to pay for materials, suppliers, and sub-contractors. Ekstrom made two payments to GRCG as payment for the project under the Ekstrom Contract. The first payment in the amount of $40,420.00 was made on October 29, 2004, when the Ekstrom Contract was fully executed. The second payment in the amount of $82,900.59 was paid to GRCG on or about March 3, 2005, as a "progress payment" under the terms of the Ekstrom Contract. On or about July 1, 2005, a Claim of Lien was recorded against Eckstrom's property by Tom Brunton Masonry, Inc. (hereinafter referred to as "Brunton Masonry"), for $18,029.91. The Claim of Lien was for the unpaid costs of labor, services, and materials furnished by Brunton Masonry for improvements to the Ekstrom property at 117 Creek Drive from April 2005 until May 2005. According to the Claim of Lien, Brunton Masonry provided the subject labor, services, and materials pursuant to a contract it had with GRCG. The Claim of Lien indicated that the total value of the labor, services, and materials furnished by Brunton Masonry was $39,243.91, "of which there remains an unpaid balance of $18,029.91." Eckstrom successfully negotiated with Brunton Masonry and the $18,029.91 lien was reduced to $14,000.00. On or about October 25, 2005, Eckstrom paid Brunton Masonry the negotiated amount of $14,000 to satisfy the Claim of Lien. On or about August 2, 2005, a Claim of Lien was recorded against the Eckstrom property by Murphy Concrete Works, Inc. (hereinafter referred to as "Murphy Concrete"), for $35,400.00. The Claim of Lien was for labor and material furnished by Murphy Concrete to perform concrete work on the Eckstrom property in accordance with a contract with GRCG. According to the Claim of Lien, the subject labor and materials were furnished between March 4 and 11, 2005. In order to remove the lien from his property, in or about September 2005, Eckstrom paid Murphy Concrete $35,400.00 to satisfy the Claim of Lien. Eckstrom paid a total amount of $49,400.00 to satisfy the above-referenced liens against his property. In April, May or June 2005, Eckstrom had a conversation with Keith Powell, in which Powell told Eckstrom that there was a company takeover by one of GRCG partners. In or about early summer 2005, GRCG stopped work on the Eckstrom property. Prior to that time, GRCG scraped and filled the lot and put in the foundation footers and stem wall. Prior to the liens being recorded against the Eckstrom property and after GRCG had ceased working on the property, Mr. Powell talked to Eckstrom and offered to complete the construction project. However, because previous discussions and representations with Powell had not yielded any positive results, Eckstrom had no confidence in Powell and, thus, did not accept Powell's offer. After GRCG ceased work on the Eckstrom property for more than 90 days, Eckstrom contracted with Towles Corporation to complete the construction project. Towles completed the construction of the house at a cost of $934,000.00.5/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, the Department of Business and Professional Regulation, Construction Industry Licensing Board, enter a final order: (1) finding that Respondent, Keith C. Powell, violated Subsections 489.129(1)(g)1., (j), and (m),6/ Florida Statutes, and imposing a $1,000.00 fine for each violation, for a total of $3,000.00; (2) requiring Respondent to make restitution to Barry Freedman in the amount of $6,853.00; (3) requiring restitution to Larry Eckstrom in the amount of $49,400.00; and (4) requiring Respondent to attend a minimum of seven additional hours of continuing education. DONE AND ENTERED this 31st day of January, 2008, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of January, 2008.
