The Issue Whether or not Petitioner Restat's response to the Respondent Department of Administration's Invitation to Bid (ITB) 92-08 was responsive and is the lowest and best response.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That the Department of Administration enter a final order dismissing Restat's Protest/ Petition and ratifying its intended award of ITB 92-08 to Consultec. DONE and ENTERED this 20th day of February, 1992, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of February, 1992.
The Issue The dispute in this case arises from various policy decisions of Respondent that underlie and inform a request for proposals that Respondent has issued for the purchase, through competitive bidding, of durable medical equipment and related services. The ultimate issue is whether Respondent’s decisions in connection with the competitive bidding process at the heart of this controversy have complied with state and federal law governing the Medicaid program.
Findings Of Fact Setting the Stage Medicaid is a cooperative federal-state program in which Florida has voluntarily elected to participate in partnership with the national government. Medicaid provides medically necessary health care——including, relevantly, durable medical equipment (“DME”)——to lower income persons. In addition to shouldering administrative and regulatory responsibilities, Florida partially funds the Medicaid program, contributing about 42 percent of the money budgeted for the program’s operation in this state. Federal funds make up the balance. In Special Appropriation 252 of the General Appropriations Act of 2001, the Florida Legislature appropriated an amount for Medicaid compensable home health services, such as DME, that reflected a budget cut of approximately $1.3 million. By way of explanation, the legislature wrote: Funds in Specific Appropriation 252 reflect [an overall] reduction of [about $1.3 million] as a result of implementing a policy to pay for specific durable medical equipment products on a competitively bid basis, effective October 1, 2001. Ch. 2001-253, Section 3, Laws of Florida. As a cost containment measure, competitive bidding for publicly funded healthcare is a subject that academics and policy makers have been studying and debating for some years. Proponents view competitive bidding as a means of bringing market forces to bear on possibly inflated, predetermined fees, exposing providers’ true costs and producing lower prices as competition trims the fat. Critics fear that competitive bidding will result in a diminution of the quality of available healthcare because the relatively few providers who win contracts will thereafter have little or no incentive to innovate or otherwise exceed minimum contractual requirements—— and, indeed, will be rewarded for cutting costs to the bone. To decide the instant case does not, however, require a finding or conclusion that competitive bidding is either a good policy choice or a bad one under the circumstances. Without reaching that issue, it is determined that, once made, the broad policy decision to use competitive bidding as a means of purchasing healthcare for Medicaid recipients entails the considerable challenge of devising a detailed competitive bidding model that balances the interest of cost containment, on one side, against competing interests such as the continued availability of quality care, on the other. At bottom, because the course of performance under the resulting contracts can be expected to exert a regulatory effect on providers and recipients alike, competitive procurement in this particular environment demands that significant policy choices be made. One substantial impact that competitive bidding can have on recipients——which impact happens to be pertinent here—— is the abridgement of their freedom to choose a provider. Federal law requires, as a general principle, that Medicaid recipients be granted the freedom to obtain medical assistance from any authorized provider. This general rule yields under certain circumstances, as will be discussed in detail in the Conclusions of Law below, but the fact is that federal Medicaid policy expresses a preference for allowing recipients the freedom of choice. Consonant with that preference, this state’s policy prior to the present dispute was to allow each Medicaid recipient to obtain DME from any willing, Medicaid-enrolled provider. (To serve the Medicaid population, a DME provider must “enroll” in the program by agreeing to comply with the prescribed terms and conditions of coverage and to accept payment from Medicaid at predetermined rates set forth in fee schedules.) The Players The Agency is the state agency charged with administering the Medicaid program in Florida. At the federal level, the Centers for Medicare and Medicaid Services (“CMS”) of the U.S. Department of Health and Human Services is the agency authorized to administer Medicaid. The Agency administers Medicaid in Florida pursuant to a State Medicaid Plan (the “State Plan”). In whole or in part, the State Plan is incorporated by reference, and thereby adopted as rules, in the Florida Administrative Code. FAMES is a trade association whose members are providers of DME and related services. FAMES represents its members’ interests before state and federal administrative and legislative bodies. Policy Decisions The Agency construed the explanatory language of Specific Appropriation 252 as a binding legislative directive to initiate a competitive bidding process for the procurement of DME and related services. In response to this perceived mandate, the Agency prepared a Request for Proposals——identified as RFP – AHCA 0203 (the “RFP”)——which, according to its terms, “establishes the requirements for the durable medical equipment and medical supplies program.” In choosing which particular items to put out for bids1——a function that necessarily required important underlying policy decisions to be made——the Agency considered fungibility to be a weighty criterion; however, the Agency was strongly motivated, as well, to select things that were thought to offer the greatest potential for cost savings.2 Consequently, while the RFP states that the “procurement [hereunder] is limited to hospital beds, and respiratory equipment and supplies,” the procurement is not quite as limited as this description might suggest. For in addition to goods the Agency is also seeking to purchase services, as the RFP itself discloses: “The purpose of this document is to request proposals from qualified organizations to provide quality, selected Medicaid services to Medicaid recipients.” (Emphasis added). The most significant of these services are those provided by respiratory therapists. As licensed health care practitioners, respiratory therapists are an integral part of the delivery of respiratory equipment, particularly the ventilators which are covered by the RFP. When a ventilator is placed in a patient’s home, a respiratory therapist must periodically visit the patient to monitor the patient’s oxygen levels and adjust the equipment as needed. In this, the respiratory therapist makes clinical assessments and exercises independent judgment. There is no doubt that, through the provision of such services, a professional relationship is established between the therapist and the patient. Obviously, respiratory therapists are not fungible in the way that, for example, hospital beds might be. Another set of important decisions that shaped the design of this competitive procurement concerned the number of contracts to be let and their nature and scope. In this regard, the Agency decided to award a single prime contract for each of the areas served by the Agency’s 11 regional offices. It determined that the same contractor may be selected for more than one regional area. And it announced that, once selected, the prime contractor——and only the prime contractor——will be responsible for serving all of the Medicaid eligible recipients in the specified region; all other providers will be precluded from delivering the same DME goods and services in that area. The upshot of these decisions is that 11 DME providers, at most, will hold prime contracts. Even after accounting for subcontracting, which is allowed, it is clear that the number of eligible providers of the subject DME——which is around 1,500 under the prevailing “any willing and authorized provider” policy——will be dramatically reduced. Like the decisions that led to the selection of the specific items covered by the RFP, the decisions that will, if fully implemented, overhaul the existing delivery system for the specified DME are matters of policy committed to the Agency’s discretion. While FAMES has raised legitimate concerns about the wisdom and efficacy of these decisions, establishing that reasonable people could disagree with the Agency’s solutions, the evidence does not show that the Agency abused its discretion or acted arbitrarily or capriciously in formulating the RFP. That said, it cannot seriously be disputed——and is hereby found——that if the Agency completes the competitive process contemplated by the RFP, the outcome will substantially affect, and indeed will regulate, both providers and Medicaid patients.3 It is clear, in other words, that there are substantive Medicaid policies embedded in, and articulated through, the RFP. The Agency has not yet amended the State Plan or any Medicaid handbook to account for the changes in Florida Medicaid policy being effected through the competitive bidding process established in the RFP. An Important Negative Decision As mentioned, federal law requires as a general rule that Medicaid recipients be guaranteed the right to choose their own providers. Without getting into the legal details at this point, federal law further provides that, under certain circumstances, a state may be granted a waiver of, or fall within an exception to, this freedom of choice requirement. At the time it was devising the competitive bidding model reflected in the RFP, the Agency believed that it could proceed with the subject procurement in the absence of any formal approval from the federal government, notwithstanding the fact that the project will, if implemented, curtail recipients’ freedom of choice. This belief was based on a single telephone conversation between Florida Medicaid Director Robert Sharpe and an unnamed employee of CMS, which had taken place prior to the 2001 legislative session. The federal official apparently had told Mr. Sharpe that a state does not need to obtain from CMS a waiver of the freedom of choice requirement in order to purchase DME on a competitive-bids basis because DME providers are vendors whose relationships with recipients are not “personal.” This opinion was never reduced to writing. Because the only evidence of the substance of the aforementioned telephone conversation is Mr. Sharpe’s testimony, it is impossible to make a finding of fact as to whether the preceding paragraph contains an accurate and complete statement of CMS’s policy; there is, simply, no admissible nonhearsay evidence in the record to support such a finding. Although the undersigned accepts Mr. Sharpe’s testimony and finds that such a discussion occurred, this fact has little or no probative value because the Agency must comply with federal law, not the informal advice of an employee of CMS. In any event, it is undisputed that the Agency decided not to ask CMS to approve either a waiver of, or an exception to, the freedom of choice requirement. Consequently, neither the Secretary of the U.S. Department of Health and Human Services nor CMS has made a finding that adequate services or devices will be available to Medicaid recipients under the competitive bidding process that the Agency has initiated through the RFP. Though negative in nature, the Agency’s decision not to seek and obtain federal approval, in the form of a waiver or exception, was as important as other, positive decisions regarding the purchase of DME through competitive bidding. As will be seen, federal law requires a waiver or an approved exception in these circumstances. The Agency does not have the discretion to circumvent the federal requirements. The Notices The Agency caused the first notice of the RFP to be published in the February 22, 2002, edition of the Florida Administrative Weekly. This notice described the contract, advised that the RFP would be issued on February 28, 2002, provided instructions for obtaining a copy of the RFP, and established March 7, 2002, as both the deadline for responses and the proposal opening date. A second notice, similar to the first one, was published in the March 8, 2002, Florida Administrative Weekly. It changed the response deadline/opening date from March 7 to March 11, 2002. A third notice, published in the March 22, 2002, Florida Administrative Weekly, changed the deadline for proposal submission yet again, from March 7 to April 5, 2002. (Although this third notice did not mention the proposal opening date, presumably it, too, was changed to April 5, 2002.) The Agency did not directly notify DME providers or FAMES about the RFP. Factual Determinations Regarding FAMES’s Standing Members of FAMES are providers of DME goods and services, including those that are the subject of the RFP. DME providers, such as FAMES’s members, are not necessarily Medicaid providers, however. If a DME provider wants to participate in Medicaid and supply goods to Medicaid recipients, it must become enrolled in the Medicaid program. It is not possible to make a finding, based on the evidence in this case, as to how many (or what percentage) of FAMES’s members are enrolled Medicaid providers of DME. The Agency’s decision to award contracts, through competition, for Medicaid reimbursable DME poses an immediate threat of harm only to existing Medicaid providers, not to all DME providers. DME providers who are not presently participating in the Medicaid program might be interested in the outcome of this proceeding, but the resulting final agency action will not immediately affect their substantial interests one way or the other.4 As a result, FAMES’s standing must be predicated on its representation of members who are enrolled Medicaid providers of DME. FAMES’s vice president, Robert Lichtenstein, testified that at least 25 to 50 of FAMES’s 300 or so members provide DME to Medicaid recipients. Mr. Lichtenstein’s understanding of this asserted fact was based not on personal knowledge, he explained, but on conversations with members who had contacted him to discuss the RFP. Because Mr. Lichtenstein had not spoken with all of FAMES’s members, he was unable to state, with any degree of certainty, the total number of Medicaid-enrolled DME providers that belong to FAMES. Mr. Lichtenstein’s testimony about the minimum number of enrolled providers in FAMES’s ranks rested on statements of declarants (the members) made outside the hearing room, which statements were apparently offered as proof of the matters asserted. Mr. Lichtenstein’s testimony that no fewer than 25 to 50 of FAMES’s members are enrolled Medicaid providers was based, in other words, on hearsay and cannot, for that reason, support a finding of fact on its own.5 On the other hand, Mr. Lichtenstein’s testimony that he personally had talked to some 25 to 50 members about what was happening with the RFP is not hearsay to the extent that fact is relevant without reference to the truth of the matters discussed. Thus, this testimony is admissible, and has been credited, for the relevant, nonhearsay purpose of establishing that at least 25 to 50 of FAMES’s members were sufficiently interested in the RFP to share their views about it with Mr. Lichtenstein.6 The testimony of Mr. Lichtenstein, which was not contradicted or impeached, establishes, at least inferentially, that FAMES represents a number of members who, as enrolled Medicaid providers of DME, have a substantial interest in being reimbursed under state and federal law pursuant to rule-based methodologies.7 The proposed switch to a methodology of reimbursement based on competitive bidding, which methodology allegedly fails to comply with these criteria, impinges upon this interest. While more and better evidence regarding the number of affected members should have been adduced, the fact that a noticeable percentage (roughly 8 to 16 percent) of FAMES’s members happened to speak with Mr. Lichtenstein about the Agency’s competitive bidding process shows a level of interest within the organization from which it reasonably can be inferred, and is hereby found, that the Agency’s decision to competitively award at most 11 exclusive contracts for certain DME goods and services would directly impact a considerable number of FAMES’s members. The Agency’s proposed procurement scheme promises to affect these members in two substantial ways. First, under the competitive bidding process, all of FAMES’s members who are Medicaid providers of DME must compete for the Agency’s favor, whereas before they competed for the business of individual recipients. Because, moreover, the Agency plans to select no more than 11 providers, most (if not all) of FAMES’s members who presently serve the relevant market stand to lose existing business and hence suffer economic loss. The injuries threatened here are not, however, solely economic. The other substantial effect on the Medicaid providers is the violation of their right to be reimbursed in accordance with state and federal law pursuant to methodologies prescribed in lawful rules. To the extent, as FAMES contends, that the Agency is not following either federal law or duly promulgated rules, such unlawful conduct affects FAMES’s members in a way that differs from the effect of such conduct on the public at large. In short, the substantial interests of a substantial number of FAMES’s members would be determined by the proposed agency action at issue. Further, there is no real dispute, and it is hereby found, that the substance of the Agency’s decision to award exclusive contracts for DME goods and services on a competitive- bids basis is within FAMES’s general scope of interest and activity. Finally, the relief requested is appropriate for FAMES to receive on behalf of its members because if the Agency’s decision is rescinded and the proposed competitive procurement abandoned or substantially modified, it is reasonable to suppose that the ultimate remedy will inure to the benefit of FAMES’s injured members.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a Final Order that stops the procurement under the RFP until after (1) the Agency has submitted the certification required under 42 C.F.R. § 431.51(d) and CMS has notified the Agency that all of the requirements for an exception under 42 C.F.R. § 431.54(d) have been met or, alternatively, (2) CMS has granted the Agency a waiver of the freedom of choice requirement in connection with this procurement. It is further RECOMMENDED that the Agency update its DME Handbook to reflect or accommodate any new competitive reimbursement methodologies that might be put into effect, and to adopt such amendments as a rule, as soon as feasible and practicable, to avoid violating Section 120.54(1)(a), Florida Statutes. DONE AND ENTERED this 18th day of October, 2002, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 18th day of October, 2002.
The Issue Whether Respondent properly rejected Petitioner's bid on the grounds that the bid did not meet a fatal item requirement.
Findings Of Fact On April 24, 1992, Respondent published a Request for Proposals (RFP) for the provision of housekeeping services to South Florida State Hospital. Attached to the RFP as Appendix I was a blank copy of Respondent's "Standard Contract" which is also referred to as its "core model contract". Paragraph 1.a. of Section D of the RFP contains the following instructions to bidders: BIDDER RESPONSE a. State of Florida Request for Proposal Contractual Services Acknowledgment Form, Pur 7033 The State of Florida Request for Proposal, Contractual Services Acknowledgment Form, PUR 7033, Appendix II must be signed and returned ... with the proposal or submitted by itself if you choose not to submit a proposal and wish to remain on the department's active vendor list. Paragraph 1.g. of Section D of the RFP, contains the following instructions to bidders: Required Bidders Certification Contract Terms and Conditions The proposal must include a signed statement in response to the RFP indicating acceptance of the terms and conditions of provisions of service as specified in the RFP and contained in the core model contract. Bidders were provided a copy of the RFP rating sheet which contained the following under the heading of Fatal Items: The following criteria must be met in order for the proposal to be considered for evaluation, failure to receive a "Yes" response for any time [item] will result in automatic rejection of the proposal. * * * Does the proposal include a statement agreeing to terms and conditions set forth in the core model contract and the RFP? Petitioner was represented at a "Bidders' Conference" held May 15, 1992, at which the fatal items were discussed. Bidders were advised that it would be necessary for the responses to contain a statement agreeing to the terms and conditions set forth in the core model contract. The State of Florida Request for Proposal, Contractual Services Acknowledgment Form, PUR 7033, contains the following certification: I certify that this proposal is made without prior understanding, agreement, or connection with any corporation, firm, or person submitting a proposal for the same contractual services, and is in all respects fair and without collusion or fraud. I agree to abide by all conditions of this proposal and certify that I am authorized to sign this proposal for the proposer and that the proposer is in compliance with all requirements of the Request for Proposal, including but not limited to, certification requirements. In submitting a proposal to an agency for the State of Florida, the proposer offers and agrees that if the proposal is accepted, the proposer will convey, sell, assign or transfer to the State of Florida all rights, title and interest in and to all causes of action it may now or hereafter acquire under the Anti-trust laws of the United States and the State of Florida for price fixing relating to the particular commodities or services purchased or acquired by the State of Florida. At the State's discretion, such assignment shall be made and become effective at the time the purchasing agency tenders final payment to the proposer. The State of Florida Request for Proposal, Contractual Services Acknowledgment Form, PUR 7033, was signed by Richard A. Cosby on behalf of Petitioner and submitted as part of Petitioner's response to the RFP. Upon receipt of all responses, Respondent convened an evaluation committee to evaluate the responses. The evaluation committee determined that the response submitted by Petitioner did not contain the required statement agreeing to the terms and conditions set forth in the core model contract and the RFP. Consequently, the evaluation committee rejected Petitioner's proposal from further consideration. Petitioner does not challenge the specifications of the RFP, but, instead, asserts that Mr. Cosby's execution of the State of Florida Request for Proposal, Contractual Services Acknowledgment Form, PUR 7033, was sufficient to meet the requirement the evaluation committee found lacking. The language of the Contractual Services Acknowledgment Form, PUR 7033, that most closely approximates the certification that the bidder accepts the terms and conditions set forth in the core model contract and of the RFP is as follows: I agree to abide by all conditions of this proposal and certify that I am authorized to sign this proposal for the proposer and that the proposer is in compliance with all requirements of the Request for Proposal, including but not limited to, certification requirements. The proposal submitted by Petitioner did not contain any other statement which could be construed as accepting the terms and conditions set forth in the core model contract and the RFP. The broad language of the Contractual Services Acknowledgment Form, PUR 7033, upon which Petitioner relies does not state that the bidder accepts the terms and conditions set forth in the core model contract and the RFP. The evaluation committee properly determined that Petitioner's response failed to meet this fatal item. In this proceeding, there was evidence that the Respondent routinely inserts in its Request for Proposals the fatal item requirement that the bidders agree in writing to accept the terms and conditions set forth in the core model contract and the RFP, and that Respondent has never waived that fatal item requirement. There was no evidence that Respondent was using this fatal item requirement to discriminate against or in favor of any bidder.
Recommendation Based upon the foregoing findings of fact and conclusion of law, it is hereby RECOMMENDED that the Respondent dismiss Petitioner's bid protest. DONE AND ENTERED this 18th day of August, 1992, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of August, 1992. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 92-4311BID The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner. 1. The proposed findings of fact submitted by Petitioner are accepted in material part by the Recommended Order. Petitioner's conclusions based on those facts are rejected for the reasons discussed in the Recommended Order. The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent. 1. The proposed findings of fact submitted by Respondent are adopted in material part by the Recommended Order. COPIES FURNISHED: Richard A. Cosby, Vice President National Cleaning of Florida, Inc. 1101 Holland Drive, #32 Boca Raton, Florida 33487 Colleen A. Donahue, Esquire District 10 Legal Office Room 513 201 West Broward Boulevard Fort Lauderdale, Florida 33301-1885 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Slye, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The issues are whether Personnel Pool of North Central Florida, Inc., d/b/a Medical Personnel Pool (MPP), is the lowest qualified bidder on Contract No. R- 2119 or whether Suwannee Valley Medical Personnel Corporation (Suwannee) is entitled to the award of Contract No. R-2119 or is entitled to have all bids rejected and the contract relet for bids.
Findings Of Fact The ITB on Contract No. R-2119 was developed jointly between the Department's Central Office and the Region II contracting staff. The Region II staff sent a draft of the ITB to the Central Office, where it was reviewed by Gerald Ellsworth, the Department's Human Service Program Specialist. Mr. Ellsworth is responsible for reviewing the Department's contracts and plans, as well as for development of the Department's proposed invitations to bid and other related types of documents. Mr. Ellsworth has considerable experience in drafting and reviewing governmental contracts for purchasing of services at the state, local and federal government levels. The ITB was also reviewed by the Department's legal office, the Office of Management and Budget and the Correctional Medical Authority, with regard to both the specifications and the contract language in the ITB. The Department properly published the ITB on or about June 28, 1989. The ITB was published under cover of a formal State of Florida Invitation to Bid for Contractual Services, Form PUR: 7031 (Rev. 10/18/88), containing the State of Florida standard general conditions for bids for contractual services. Among those conditions were detailed requirements regarding the sealed nature of bids, requirements for the execution of bids, requirements regarding the opening of bids and conditions regarding prices, terms and payment, interpretations and disputes, conflict of interest, awards, governmental restrictions, default, legal requirements, advertising, assignment, liability, facilities, cancellation and public records. The same general conditions on the first page of the ITB specifically provided an exclusive mechanism for the bidders to resolve questions and disputes regarding the conditions and specifications of the ITB: INTERPRETATIONS/DISPUTES: Any questions con- cerning conditions and specifications shall be directed in writing to this office for receipt no later than ten (10) days prior to the bid opening. Inquiries must reference the date of bid opening and bid number. No interpretation shall be considered binding unless provided in writing by the State of Florida in response to requests in full compliance with this provision. (Emphasis added.) The body of the ITB stated that the Department was soliciting bids for registered and licensed practical nurse services in the Department's Region II, on all shifts, for the care and treatment of inmate patients, as further defined in the ITB's section entitled "Responsibilities of Successful Bidder; Scope of Work." The ITB also contained detailed requirements regarding Nurse Professional Qualifications, Quality Management Standards, Scheduling of Nurses, Records, Invoicing, Insurance, Legal Requirements, Conflict of Interest, Unsatisfactory Performance, Brokering of Contract, Subcontracts, Verbal Instructions, detailed procedural requirements regarding the submission, review and evaluation of the bids, a description of the institutions covered and a copy of the sample contract. One of the procedural requirements in the body of the ITB repeated that: All inquiries from Bidder's [sic] concerning this Invitation to Bid shall be submitted in writing to the office identified on the cover of this Invitation to Bid. Such inquiries shall be received by the office on or before the date indicated above in the Calendar of Events as the "Last Day for Written Inquiries" [July 10, 1989]. (Emphasis added.) The ITB contained a "Bid Price Sheet" which contained separate blanks for RN and LPN services, separate blanks for each service for weekdays and weekend/holidays, and separate blanks for each of these categories for each of the three geographic areas of Region II, in each of the three years of the contract. That Bid Price Sheet stated that prices quoted "shall be firm net prices regardless of travel involved. . . " The body of the ITB specified that bidders must submit "all costs in the format specified on the Price Quote Sheet provided." (Emphasis added.) Further, the "Proposal Evaluations" section of the ITB specified that the figures to be inserted in the blanks on p. 15 were to be "hourly rates" for each type of nursing service. The next paragraph of this section of the ITB, however, stated that "Total cost, and cost breakouts on the Price Quote Sheet shall be clearly stated." The undisputed testimony of Gerald Ellsworth established that the intent of these provisions of the ITB was to require the bidders to state the total cost (i.e., net firm price) for each hour of nursing services in a particular geographic area at a particular point in time. Even though the ITB set forth an estimate of the hours that would be required under the contract, this information was clearly only in the nature of an estimate, and it was never the intent of the ITB to require the bidders or the Committee to project or evaluate, respectively, the total cost of the contract (as opposed to the total cost of each hour of service) by multiplying the bidders' bid costs for each hour of service by the corresponding estimate of hours needed over the three- year life of the contract for each of those categories. The primary reason for this focus upon the cost of an hour of service, rather than the cost of the entire contract, is that the estimated hours needed, as indicated by the ITB, are only estimates. Actual demands for service and workloads are likely to vary considerably, both by type of nursing position and geographic area. These demands could also vary as a result of factors such as the vacancy levels in the Department's own staff of employee nurses or changes in administrative personnel at a given institution. The ITB called for a mix of both objective and subjective evaluation of materials submitted by the bidders. The cost data, submitted in response to p. 7, para. E; p. 12, para. F.2.e; and p. 15, para. 7 was entirely objective, as was the Committee's role in evaluating that data. On the other hand, the information required from bidders under p. 12, para. F.2.a ("Project understanding and statement of work and reference from clients"), and p. 12, para. F.2.b ("Nurse Professional Qualifications"), called for a mix of both subjective and objective information and evaluation. The former, referred to throughout the testimony as "Criterion A," required the bidder to submit "a narrative statement of work to be performed, and references from clients in accordance with the specifications appearing at p. 4, para. 2.A. The latter, referred to in the testimony as "Criterion B," required bidders to: submit professional qualifications, experi- ence, and CPR certification for Department reviewers which documents the Bidders [sic] capability to provide registered and licensed practical nurse personnel that meet the training specifications. as set forth at pp. 4-5, para. 2.B. Within Criterion B, for example, an entirely objective requirement is the proof of the bidders' nurses' CPR qualification. A subjective element of this same criterion would be the quantity and quality of documentation of available nurses. The ITB required the Committee to award points to the respective bidders based on a formula which takes into account each of these objective and subjective criteria. That Formula, at its first level, assigned a point value of 20 points for Criterion A (Project understanding and statement of work, and references from clients), 30 points for Criterion B (Nurse Professional Qualifications) and 50 points for Criterion C (Bid Cost). Specifically as to Criterion C (Bid Cost), this criterion was entirely objective and did not require any subjective analysis by the Committee. The ITB specified that the lowest bidder "shall" be awarded 50 points, based on the average of the three years' quotes for cost of hours of nursing services. The ITB specified that the remaining bidders "shall" be awarded points for bid cost based on the following formula: Points Awarded Equals 50 x (1-A/B) where A equals the difference between the respective bidders' average bid and the lowest average bid, and B equals the lowest bidder's average bid. Unlike Criterion C, the Committee members' evaluation of the bidders' responses to Criteria A and B was left to their judgment and discretion. While the ITB set forth factors that were to be taken into consideration by the Committee members under these criteria, there was no required method by which an evaluator was to assign points for Criteria A and B. Specifically, there was no requirement in the ITB that the evaluators rank the bidders under Criteria A and B. An evaluator was free, for example, to give all bidders full point credit under either criterion, or to assign them any variation of points. This type of point system for mixed weighing of subjective and objective criteria is not unusual in governmental purchasing contracting and competitive bidding and is, in fact, normal procedure. The bid criteria set forth in the ITB, as well as the system set forth therein for evaluation of those bids by a mix of subjective and objective criteria, is rational. Further, and specifically, the ITB's requirement that costs be quoted as a rate per hour of service, by geographic area and point in time, is rational. It would be irrational to evaluate bid cost under this ITB by multiplying each bidder's price quotes for individual hours of service, broken down by geographic area and point in time, by the corresponding estimates of hours needed, set forth at p. 3 of the ITB, and then comparing the resulting "total cost" of the contract under each bid, since the estimated hours were intended to be no more than estimates, and the Department recognizes that these hours are subject to significant variation over the term of the contract. This probable variation would make the latter calculation entirely meaningless and baselessly speculative. It was not the intent of the ITB to find the "lowest and best" bidder. Instead, the intent of this ITB was to find the lowest bidder who met the qualifications and specifications set forth in the ITB. This is not the same as "lowest and best." The Bidders and Their Bids Medical Personnel Pool MPP, the successful bidder on Contract No. R-2119, timely submitted its bid for that contract. MPP's bid showed that MPP is a nationally recognized health care provider, with over twenty years of experience in serving the health care needs of both home health clients and facility clients. Its franchise office in Gainesville, Florida, is one of four offices operated in the Region II area by Mr. Ed Bixby, a former vice president of MPP's parent company, Personnel Pool of America, Inc. Mr. Bixby personally has over fifteen years of experience in medical staffing. All MPP offices follow the same national corporate standards for quality assurance, office operation and general business practice. Further, MPP is a financially sound and viable business, with an ongoing corporate recruitment program that regularly attracts new employees. MPP's client service representatives are on-call and available 24 hours a day, seven days a week, to meet the Department's staffing needs. The agency has been managed since October 1987, by Mr. Duane Gorgas, who has seventeen years of experience in facility clinical laboratory medicine, and who is licensed by the Department of Health and Rehabilitative Services as a clinical laboratory supervisor. MPP demonstrated compliance with Criterion B of the ITB by showing that each of its nurses is carefully and personally screened and tested for nursing skills prior to being sent into the field. In addition, MPP personally verifies all nurses' licenses with the Department of Professional Regulation, as well as their CPR certifications. A minimum of one year's documented current clinical experience is required prior to a nurse's being sent into the field. Further, MPP is itself an approved provider of nursing and other professional continuing education programs (DPR Provider No. 27M0938) and provides continuing education directly to its employees on a regular basis. MPP's Gainesville franchise already provides RN's and LPN's to correctional facilities, hospitals and nursing homes throughout sixteen counties in north central Florida. A list of the prisons and county jails currently and historically staffed by MPP in both Regions II and III was included in the bid, and includes thirteen corrections facilities in those two regions. A broad range of references from these and other clients, both institutional and personal, was included as Attachment II to MPP's bid. Copies of the licenses of 48 experienced MPP nurses, qualified and available to provide the services called for under Contract No. R-2119, were attached to the bid as Attachment III. Suwannee Suwannee's bid was also timely submitted. Whereas Suwannee now protests that the Department's manner of determining bid costs as net cost per hourly unit of service is irrational, that contention is belied by Suwannee's own bid. In the first place, Suwannee did not quote cost as a multiplication of hourly rates times total estimated hours anywhere in its bid, even though its president, Mr. Fortner, now contends this is the only rational way to quote or determine bid cost under the ITB. Further, Mr. Fortner expressly conceded that the ITB did not call for any such calculation of "total cost" by multiplication of rates by estimated hours. Even so, Suwannee has waived any objection or question it may now have as to the method of determining bid cost. Mr. Fortner conceded that he was fully aware of the standards set forth at pp. 1 and 11 of the ITB, requiring that questions or objections to the reasonableness, necessity or competitiveness of the terms and conditions of the ITB be submitted in writing in a timely manner prior to July 10, 1989. Mr. Fortner nevertheless conceded that he failed to submit any such questions or objections regarding the reasonableness, necessity or competitiveness of the terms and conditions of the ITB, until the filing of his protest after the award of the bid to MPP, and long after July 10, 1989. Having failed to file any timely written objections to the reasonableness, necessity or competitiveness of the terms and conditions of the ITB, therefore, Suwannee has waived any objections to the Department's method of calculating bid costs by averaging each bidder's unit net price for an hour of service by geographic area and point in time, as opposed to Suwannee's after- the-fact preferred method of multiplying these rates by estimated hours to determine Suwannee's definition of "total cost." Suwannee's bid, as supported by its president's testimony, showed that Suwannee was only incorporated in late July 1988, less than a year before the ITB was published. Prior to that time its then-22-year-old president's business experience consisted of operating a video store. Mr. Fortner conceded he had no prior experience whatsoever in providing any sort of nursing or medical services. Prior to the bid letting, Suwannee's sole experience in attempting to staff a correctional facility was at Baker Correctional Institute. Mr. Fortner testified that his first client was Lake City Medical Center, yet no reference from that facility appears in his bid. On the other hand, MPP's bid contains a highly favorable reference from Lake City Medical Center's director of nursing, indicating a completely satisfactory contractual relationship with MPP since 1987. Whereas MPP directly provides continuing education to its nurses under its own provider number, Suwannee takes the position that continuing education requirements are the nurses' responsibilities, and that they must meet these requirements at their own expense. Further, while Mr. Fortner stated that he believes Suwannee tests its nurses, he admitted he did not know how, and Suwannee's bid was silent on this aspect of Criterion B of the ITB. Suwannee's bid was also silent on screening of new nurse applicants. Suwannee has only recently hired a full-time director of nursing. Whereas MPP submitted qualifications for 48 nurses to staff the estimated hours under contract, Suwannee proposed to staff the same number of estimated hours with only 31 nurses. Mr. Fortner testified that the number of licenses in Suwannee's bid constitutes the full complement of nurses he deems necessary to provide the number of hours of service estimated in the ITB. The Bid Evaluation Process Objective Evaluation of Criterion C Initially, because of a confusing misprint in the ITB regarding the mathematical formula for calculating points to be awarded to bidders, other than the lowest average cost bidder, under Criterion C (bid cost), some of the four Bid Evaluation Committee members calculated the ranking of bidders under that criterion differently. That calculation was corrected by Dr. Rechtine, the Committee chairperson, however, in consultation with officials of the Region II office. The correction did not alter the ultimate overall ranking of the bidders, although it made slight differences in the points awarded individual bidders by some members of the Committee, and in one case the second and third bidders under Criterion C were reversed on one evaluator's tally sheet. All four of the Committee members testified that they agreed with the corrected calculation of points to be awarded each of the bidders under Criterion C. At no time was any other part of any Committee member's points awarded altered or changed. Subjective Evaluation of Criteria A and B Steven Smith Committee member Steven Smith, Regional Health Services Administrator for Region II, responsible for assisting institutions in the region with health service issues, including contracting for health services, evaluated the respective bids of MPP and Suwannee in a rational and reasoned manner. With respect to Criteria A and B, Mr. Smith thoroughly reviewed the entire bid document of each bidder and made judgments as to the merits of each bid. His evaluations were based on how the bidders presented their respective documents, including the presentation and content of the narratives. While he did not assign any greater weight to either MPP's or Suwannee's references, Mr. Smith felt that MPP better articulated its understanding of the nature of the work. Mr. Smith was particularly impressed with MPP's understanding of the Department's court-ordered duty to improve access for inmates' to nursing services, which Mr. Smith felt was indicative of MPP's understanding of the contract's service requirements. He was also impressed with MPP's documentation of its 24-hour coverage. In sum, Mr. Smith felt MPP's bid was much clearer than Suwannee's. Cynthia Vathauer Committee member Cynthia Vathauer is a Department accountant, in charge of the inmates' welfare fund, who has previously served as an evaluator of competitive bids. Ms. Vathauer evaluated the respective bids of MPP and Suwannee in a rational and reasoned manner. With respect to Criteria A and B, Ms. Vathauer reviewed the ITB and next performed a detailed analysis of whether the bid components called for by the ITB under Criteria A and B were present in each bid. Her review of the bids under Criteria A and B consisted of listing all of the required components under each criterion and then checking off whether each bidder had adequately provided the required components, making notes where there was partial or questionable compliance and deducting points from the total allowable for each criterion which was missing or incomplete. Whereas Suwannee contends Ms. Vathauer made "no analysis" of the bids under Criteria A and B, simply because Ms. Vathauer stated that she did not read these components of the bids in detail for comparative content, this allegation is not supported by the weight of the competent, substantial evidence. Ms. Vathauer's detailed analysis of the presence or absence of the factors called for by the ITB, supported by her contemporaneous notes, shows that Ms. Vathauer made a rational and reasoned analysis of the bids under those criteria, fully supporting her allocation of points to the bidders under those criteria. She admitted candidly that she was not familiar with the clinical or operational aspects of health service provision. Thus, for example, rather than attempt to compare the relative quality of nurse evaluations (which, incidentally, was not required under the ITB), Ms. Vathauer based her judgment of compliance with this criterion on the presence or absence of valid copies of actual licenses. Dianne Rechtine, M.D. Dianne Rechtine, M.D., is the medical executive director at North Florida Reception Center and acting medical services director for Region II. Dr. Rechtine also performed a rational and reasoned evaluation of the bids under the standards of the ITB. Dr. Rechtine read the respective bids and, with respect to Criteria A and B, assigned points based on her evaluation of those bids. Her notes of how she allocated points under these criteria appear as Joint Exhibit No. 4D and show that Dr. Rechtine actually scored Suwannee higher than MPP under Criterion A and the same as MPP under Criterion B. Suwannee has not been heard to assert that Dr. Rechtine's analysis under these criteria was other than rational and reasoned. Thus, it is found that Dr. Rechtine's analysis and evaluation of the bids was in fact rational and reasoned. Peggy (Richardson) Patray Since Peggy (Richardson) Patray was not called to the witness stand, MPP offered into evidence, without objection, her deposition testimony, taken prior to MPP's intervention and without benefit of cross-examination by MPP or its counsel. Nevertheless, that deposition and Ms. Patray's own evaluation notes appearing as Joint Exhibit No. 4E demonstrate that Ms. Patray, a registered nursing services consultant employed by the Department and previous nursing supervisor at New River Correctional Institute, carefully reviewed the ITB and analyzed and evaluated the bids under Criteria A, B and C prior to awarding points to the bidders. Ms. Patray looked at the types of facilities from which references were obtained and considered, for example, related jail-type experience to be a positive factor. Ms. Patray actually scored Suwannee superior to MPP under Criterion A for reasons related to the bidders' statements of understanding of work. She scored the two bidders evenly under Criterion B, even though she was favorably impressed by one (at the time of her deposition, she could not recall which) bidder's emphasis on pre-employment screening and in-service training, when contrasted with the other bidder's leaving of this responsibility to the individual nurses. Finally, Ms. Patray testified that she was favorably impressed with MPP's sources of references, as opposed to Suwannee's, and that there was not enough information in Suwannee's bid, in her opinion, regarding nurse professional qualifications. In sum, Ms. Patray's testimony and notes in Joint Exhibit No. 4E demonstrate clearly that she also performed a rational and reasoned evaluation of the bids of the parties under the terms and conditions of the ITB. Suwannee's Allegations There is no evidence on the record of this proceeding to support Suwannee's allegations that political or media pressure adverse to Suwannee influenced the decision to award Contract No. R-2119 to MPP. Each Department witness who testified in this proceeding testified that no such political pressure was brought to bear upon them or even attempted. The competent, substantial and unrebutted evidence of record demonstrates clearly that no such pressure or influence occurred or was attempted. In the same vein, Suwannee has alleged that the Committee improperly considered, to Suwannee's prejudice and detriment, factors or information outside of the ITB and the bid documents. The only evidence of record of Committee members having considered information outside of the ITB or the bids was the testimony of several of the Committee members that they either were aware of or considered allegations of past difficulties with MPP, not Suwannee. For example, Mr. Smith testified that he was aware of one past problem with MPP, but none with Suwannee. In any event, he did not consider anything outside of the bid documents in his review. Ms. Vathauer said nothing relating to this issue. Dr. Rechtine testified that she was aware of, and had considered, past problems with MPP, that she had received favorable input as to Suwannee and, to the extent that this knowledge affected her evaluation, she agreed that it did so to the advantage of Suwannee (scored 20 under Criterion A, 20 under Criterion B), and to the disadvantage of MPP (scored 12 under Criterion A, 20 under Criterion B). Finally, even Ms. Patray testified that she had received some negative reports on MPP, whereas she mentioned no such information regarding Suwannee. In sum, there is no evidence of record to support Suwannee's allegations that the Committee members improperly considered, to Suwannee's prejudice and detriment, factors outside the bid documents. Any error which may have occurred in this regard was entirely harmless as to Suwannee, and if it had any effect at all, it worked to Suwannee's benefit. Results of the Bid Evaluation Process The result of the bid evaluation process was that MPP received 88 overall points under the formula set out in the ITB, Suwannee received 85.62, Quality Care received 73.05 and Upjohn received 58.87. MPP was also the low bidder on cost, i.e., Criterion C. The weight and preponderance of the competent, substantial evidence demonstrates that Contract No. R-2119 should have been awarded to MPP, as it was, and that there is an ample, rational, reasoned and logical basis in the record supporting the decision of the Department to award the contract to MPP.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that The Department of Corrections enter a Final Order awarding Contract No. R-2119 to Personnel Pool of North Central Florida, Inc., d/b/a Medical Personnel Pool. DONE and ENTERED this 4th day of December, 1989, in Tallahassee, Florida. DIANE K. KIESLING Hearing Office 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 4th day of December, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-4566BID The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Suwannee Valley Medical personnel Corporation 1 Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1 (page 5). Proposed findings of fact 2-5, 7-12, 14-16, and 18 are subordinate to the facts actually found in this Recommended Order. Proposed findings of fact 6, 17, and 19 are unnecessary or irrelevant. Proposed finding of fact 13 is unsupported by the competent, substantial evidence. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Department of Corrections Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 2 (3); 3 (19, 25); 4 (page 5); 6 (11); 7 (12); 8 (16); 9 (46); 14 (44); and 15 (45) Proposed findings of fact 1, 5, and 10-13 are subordinate to the facts actually found in this Recommended Order. Specific Rulings on Proposed Findings of Fact Submitted by Intervenor, Medical Personnel Pool Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 16-50 (1-35) and 53-63 (36- 46) Proposed findings of fact 12-15 are unnecessary or irrelevant. Proposed finding of fact 51 is included on page 5 of the Recommended Order. Proposed finding of fact 52 is subordinate to the facts actually found in this Recommended Older COPIES FURNISHED: John F. Gilroy Attorney at Law Haben & Culpepper 306 North Nonroe Street Tallahassee, Florida 32302 Drucilla E Bell Perri M. King Attorneys at Law Florida Department of Corrections 1311 Winewood Boulevard Tallahassee, Florida 32399-2500 Thomas D. Watry Attorney at Law Parker, Hudson, Rainer & Dobbs 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 Richard L. Dugger, Secretary Department of Corrections 1311 Winewood Boulevard Tallahassee, Florida 32399-2500
Findings Of Fact The Department of Health and Rehabilitative Services (Department or HRS) drafted and published an Invitation to Bid (ITB) DCPHU-93-02, inviting bids for laboratory services for the ten medical clinics located in Duval County, Florida. ITB DCPHU-93-02 provided that prospective bidders could submit written questions prior to the bidders' conference and make verbal inquiries at the bidders' conference regarding the terms of the ITB. The ITB provided that "no change, modifications or additions to the bids submitted will be accepted by the Department after the deadline for submitting bids has passed." The ITB provided that any prospective bidder could file a written protest of the provisions of the ITB as outlined in the Item 5 of the General Conditions. See Joint Exhibit 1, Page 13. The ITB provided that the vendor was responsible to develop the bid as clearly and succinctly as possible to avoid misinterpretations of the information presented, and that the bids would be reviewed and evaluated solely on the basis of the information contained therein. The ITB provided that the contract would be awarded to the bidder who satisfied the requirements of the evaluation criteria in Section E and who provided the lowest overall valued bid. The ITB specifically invited the attention of the prospective bidders to Section E of the ITB which contained fatal criteria, i.e., requirements which if the prospective bidders failed to meet would result in the rejection of their bid. Contained in Section E among the various fatal criteria was the specific requirement that bids were to include proof of registration with the Department of State to do business in the State of Florida. Section E, "Bid Evaluation Criteria," provided, "listed below are the minimum requirements (Fatal Criteria) that all bids must satisfy," and that "a bid given a 'no' response to one or more of these requirements will be removed automatically from further consideration." See Joint Exhibit Page 14. The Petitioner did not challenge bid specifications or designation of "proof of registration with the Department of State to do within business in the State of Florida" within 72 hours of receiving the ITB. No bidders provided written questions concerning the meaning of "proof of registration with the Department of State to do business within the State of Florida." Representatives of the Petitioner attended the bidders' conference on August 11, 1993. Although representatives of the Petitioner asked certain questions at the bidders' conference, they did not question the meaning of the term, "proof of registration with the Department of State to do business within the State of Florida." Shortly before the bid opening on August 18, 1993, a representative of the Department emphasized to a representative of the Petitioner the need to fully comply with the Fatal Criteria contained in the ITB. The Petitioner submitted its bid to the Department ten minutes prior to the bid opening scheduled for 10:00 a.m. on August 18, 1993. The bid opening was conducted in public with representatives of the various prospective bidders in attendance. Among those attending were three representatives of the Petitioner. The Department's representative opened four responses which appeared to be, and were, "no bids." The representative then opened SmithKline's bid and reviewed the Intervenor's submittal to determine if it complied with the Fatal Criteria. Upon review, it was determined that SmithKline complied with the Fatal Criteria. SmithKline's bid contained a certification from the Department of State of the State of Florida certifying that SmithKline Beecham Clinical Laboratories, Inc., was authorized to transact business in the State of Florida and that it had paid all fees and penalties due the State of Florida through December 31, 1993, filing its most recent annual report on May 1, 1993, and that its status was active. This certificate was dated the 13th day of August 1993 under the seal of the Secretary of State of the State of Florida. The Department's representative next opened the proposal of the Petitioner and evaluated it to determine whether it complied with the Fatal Criteria. This review of the Petitioner's proposal revealed that the Petitioner had not included in its submittal any specific document or paper showing that the Petitioner was registered with the Department of State to do business in the State of Florida. The Petitioner had not filed a certificate of the Secretary of State or a copy of its annual report required to be filed with the Department of State. The Department rejected the Petitioner's bid for failure to comply with the Fatal Criteria concerning proof of registration with the Department of State to do business in the State of Florida. Because of its rejection, the Department did not consider whether the Petitioner's bid complied with any of the remaining Fatal Criteria and did not consider any amount of the Petitioner's bid in considering which of the proposals was the lowest bid. At 4:30 p.m. on August 18, 1993, the Petitioner provided the Department a 1975 certificate from the Secretary of State indicating that the Petitioner was authorized to do business in the State of Florida and a copy of an annual report the Petitioner had submitted to the Secretary of State on March 10, 1993. These were filed too late to cure the fatal defect. The Department also determined that three other bidders, including Consolidated/St. Vincent's failed to comply with Fatal Criteria. Subsequent to its disqualification of Consolidated/St. Vincent's bid, said bidder brought to the Department's attention of the that its proposal included a copy of a corporate report filed with the Secretary of State and dated August 3, 1993. The Department determined that this was sufficient proof that the bidder was registered to do business in the State of Florida with the Secretary of State. On August 25, 1993, the Department awarded to the contract to SmithKline Beecham, Intervenor. On August 28, 1993, the Petitioner formally protested this award. The Petitioner did include in its proposal the following: a sworn statement of public entity crimes; a clinical laboratory certificate of licensure from the Department of Health and Rehabilitative Services of the State of Florida; a Federal Health Care and Finance Administration number issued pursuant to Federal law; and a College of American Pathology number.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer RECOMMENDS: that the Department dismiss the Petition of National Health Laboratories, Inc., and award the contract to the Intervenor, SmithKline Beecham Clinical Laboratories. DONE and ENTERED this 17th day of November, 1993, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of November, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-5552BID The Petitioner filed proposed findings which were read and considered. The Intervenor filed proposed findings which were read and considered. The Respondent adopted the findings of the Intervenor. The following states which of the proposed findings were adopted, and which were rejected and why. Intervenor's Recommended Order Proposed Findings Paragraph 1 Adopted in paragraph 1. Paragraph 2 Adopted in paragraphs 2 - 9. Paragraph 3 Adopted in paragraph 10. Paragraph 4 Adopted in paragraph 11. Paragraph 5 Adopted in paragraph 12. Paragraph 6 Rejected, argument. Paragraph 7 Adopted in paragraph 13. Paragraph 8 Adopted in paragraph 14. Paragraph 9 Adopted in paragraphs 15, 16 and 20. Paragraph 10 Adopted in paragraph 19. Paragraph 11 Adopted in paragraph 20 and 21. Paragraph 12 Adopted in paragraph 22. Paragraph 13 Adopted in paragraph 23. Paragraph 14-25 Arguments and ultimate findings contained in conclusions of law. Petitioner's Recommended Order Proposed Findings Paragraph 1 Adopted in paragraph 1. Paragraph 2, 3 Rejected, irrelevant. Paragraph 4 Adopted in paragraph 4. Paragraph 5 Adopted in paragraph 8. Paragraphs 6-13 Rejected, irrelevant. All argument based upon attack on criteria. Paragraph 14 Adopted in paragraph 13. Paragraph 15, 16 Rejected, irrelevant. Paragraph 17, 18 Adopted in paragraph 13. Paragraphs 19-31 Rejected. See comments to paragraph 6, et seq. above. Also see paragraphs 15, 16, 17 and 18. Paragraph 32 Adopted in paragraph 23 Paragraph 33-45 See comments to paragraph 19 above. COPIES FURNISHED: Thomas F. Panza, Esquire 3081 East Commercial Boulevard, Suite 200 Fort Lauderdale, Florida 33308 Scott D. Leemis, Esquire Department of Health and Rehabilitative Services Post Office Box 2417 Jacksonville, Florida 32231-0083 SmithKline Beecham Clinical Laboratories Donald E. Hemke, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler Post Office Box 3239 Tampa, Florida 33601 Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Kim Tucker, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Among the many issues in Case No. 00-3900BID, there are three main issues: whether it was proper for the Division of State Group Insurance ("DSGI" or the "agency") to reject and return unopened the response of Petitioner MedImpact Healthcare Systems, Inc., to DSGI's Invitation to Negotiate (the "ITN") for pharmacy benefits management services? If not, and the response should have been accepted and opened, whether DSGI's selection of an ITN as the method for soliciting suppliers eligible to provide pharmacy benefits management services for DSGI is an issue properly in the case? Finally, whether Merck-Medco Managed Care L.L.C. ("MMMC") has standing to intervene in this proceeding?
Findings Of Fact The State Group Insurance Program The State Group Insurance Program (the "Program") is established in Section 110.123, Florida Statutes. Its purpose is the provision of a comprehensive package of health care benefits to state employees. Responsibility for management, administration, and procurement for the Program is assigned to the Division of State Group Insurance ("DSGI") in the Department of Management Services ("DMS"). Program members include active state employees, retired state workers, surviving spouses of employees or retirees, persons eligible for COBRA, and eligible dependents. It is the intention of DSGI that the Program's benefits be offered to members in a cost-efficient and prudent manner and that members be given a choice of benefits that best meets their individual needs. The Division of State Group Insurance, therefore, offers two options to members. One of the options is a preferred provider organization (the "PPO Plan"). The PPO Plan is "a self-insured plan offering health care benefits administered by Blue Cross and Blue Shield of Florida (BCBSF) and prescription drug care benefits administered [at the time the procurement commenced in this proceeding] by Eckerd Health Services (EHS)." (Joint Exhibit 2, p. 1, Section 1.0, OVERVIEW, Subsection 1.1). With regard to pharmacy benefits management under the Plan, the State's objective, inter alia, is "to ensure that PPO Plan participants have access to high quality pharmacy benefits that are provided in a cost-efficient manner." (Joint Exhibit 2, p. 1, Section 1.2). With that objective in mind, DGSI, on April 3, 2000, sought proposals from pharmacy benefits management organizations licensed to do business in the State of Florida. The procurement method by which the proposals were sought was an Invitation to Negotiate (an "ITN"), one of the solicitation methods used by the state of Florida when procurement is competitive. Competitive Procurement Solicitations When a state agency wants to procure commodities or contractual services subject to competition, there are three main methods of solicitation: Invitations to Bid ("ITB"), Requests for Proposals ("RFP") and Invitations to Negotiate ("ITN"). The first two, ITBs and RFPs, enjoy the status of specific recognition in statute: (11) "Invitation to bid" means a written solicitation for competitive sealed bids with the title, date, and hour of the public bid opening designated and specifically defining the commodity, group of commodities, or services for which bids are sought. It includes instructions prescribing all conditions for bidding and shall be distributed to all prospective bidders simultaneously. The invitation to bid is used when the agency is capable of specifically defining the scope of work for which a contractual service is required or when the agency is capable of establishing precise specifications defining the actual commodity or group of commodities required. * * * (15) "Request for proposals" means a written solicitation for competitive sealed proposals with the title, date, and hour of the public opening designated. The request for proposals is used when the agency is incapable of specifically defining the scope of work for which the commodity, group of commodities, or contractual service is required and when the agency is requesting that a qualified offeror propose a commodity, group of commodities, or contractual service to meet the specifications of the solicitation document. A request for proposals includes, but is not limited to, general information, applicable laws and rules, functional or general specifications, statement of work, proposal instructions, and evaluation criteria. Requests for proposals shall state the relative importance of price and any other evaluation criteria. Section 287.012, Florida Statutes. A bid that conforms in all material respects to the invitation to bid and is submitted by a qualified bidder is a "[r]esponsive bid." Section 287.012(16), Florida Statutes. Similarly, a proposal that conforms in all material respects to a request for proposals submitted by a qualified proposer is a "responsive proposal." Id. Invitations to negotiate do not enjoy the status of specific statutory recognition. The term "invitation to negotiate" is currently defined by a DMS rule that was amended effective January 2, 2000, three months or so before the ITN in this case was issued. The current rule provides both a definition of "invitation to negotiate" and requirements to be met when such an invitation is selected as the solicitation document for procurement: (2) Invitation to Negotiate - Competitive solicitation used when an Invitation to Bid or Request for Proposal[s] is not practicable. Agency shall document file as to conditions and circumstances resulting in this decision. Rule 60A-1.001(2), Florida Administrative Code. This definitional section contains the only criteria expressed in agency rules "for the selection of an invitation to negotiate as the chosen method for procurement." (Petitioner's Exhibit 16, Barker Deposition, pgs. 13-14.) A submission in response to an ITN is referred-to by DMS in its ITN Acknowledgement Form as a "negotiation." (See Joint Exhibit 2a). If a submission pursuant to an ITN is not unresponsive, it is denominated a "responsive negotiation." As testified to by Mr. Barker, the concept of an "invitation to negotiate" grew out "of a very large contract the state entered into some years back [when] . . . it became apparent that the invitation to negotiate would give agencies latitude, particularly in very complex, difficult procurements, an opportunity to at least structure how they were going to go out and negotiate and lend to them general conditions to be considered in this negotiation process." (Id., at 15-16.) Indeed, an "invitation to negotiate" provides greater flexibility than the other two competitive solicitation methods just as an RFP provides more flexibility over an ITB. This flexibility is advantageous not just for the State but for the vendors and suppliers as well. For example, one of the main advantages of the ITN over an RFP is that when the highest ranked negotiator and the state cannot reach a contract, the next ranked negotiator can be considered. By way of comparison, when the highest ranked proposer to an RFP cannot reach a contract with the agency, the procurement process must begin anew. Beginning anew will often greatly delay ultimate procurement for commodities or services needed by the state and can be extremely frustrating for the proposer next-in-line who has submitted a responsive proposal. Hence, when appropriate for use, a state agency may very well choose an ITN as its solicitation method. Vendors of commodities and suppliers of services, moreover, may be reluctant to contest the agency's selection of an ITN because they know that if they are next-in- line after a higher-ranked vendor or supplier is unable to reach a contract, then they have a chance at a contract much sooner than if the procurement process begins anew. Non-rule Requirements for ITNs prior to the existing rule Although ITNs are not specifically recognized in statute, the state has authority in statute to negotiate in competitive procurement. In order for invitations to negotiate to "happen without a rule [the Bureau of Procurement and Contract Management in DMS] put in place a memorandum that instructed agencies . . . to ask for authority to negotiate." (Id., at 16). The memorandum was prepared and drafted by H.P. Barker, Jr., Chief of the Bureau of Procurement and Contract Management, the bureau in DMS "responsible for contracting for personal property that's used by the state in large volume." (Petitioner's Exhibit No. 16, Deposition of H.P. Barker, Jr., 3). Ultimately, the memorandum was published June 15, 1998, by George C. Banks, CPPO, Director of State Purchasing. DMS Memorandum No. 21-(97-98), in pertinent part, reads: The purpose of this memorandum is to clarify the current procedure for an agency to use an Invitation to Negotiate as an alternative process to Invitation to Bid or Request for Proposal. Until a revision is made to our current rules, agencies cannot proceed with an Invitation to Negotiate without prior approval from this office. However, an agency head may make a one-time request for this authority. Upon approval, the attached procedures are to be utilized in this process and agencies may proceed in the same manner they do when selecting an invitation to bid or request for proposal. (Petitioner's Exhibit No. 3, emphasis supplied.) Selection of ITNs by DSGI in the Midst of Changing Rules - DSGI's Chief of the Bureau for Policy and Development: Dr. Phillips After a career beginning in 1981 as an agricultural economist followed by work as a health care economist and consultant doing research in the health care field, Susan Phillips, Ph.D., came to work for DSGI in July of 1998. She remains today in the position for which she was hired: Chief of the Bureau for Policy and Development. Her duties include the procurement of insurance and related products. At the time Dr. Phillips commenced employment with it, DSGI, was in the Executive Office of the Governor. Its statutory duties and staff soon thereafter were transferred to DMS by an act of the legislature. The transfer was effective July 1, 1999. See Section 110.123, Florida Statutes. - The January 1999 ITN In January of 1999, Dr. Phillips was appointed by Charles Slavin, Director of DSGI, as the Issuing Officer for the procurement of a health insurance management information system and related services. To the best of Dr. Phillips' recollection, she recommended to Director Slavin that the solicitation be by ITN and "he agreed." (Petitioner's Exhibit 15, p. 38). The recommendation and the approval by the director were not written but communicated in oral conversation, most likely in Director Slavin's office. The conversations were not memorialized. Following the approval, Director Slavin sent a letter to the Director of State Purchasing, Mr. Banks. The letter, drafted by Bill Dahlem and reviewed and approved by Dr. Phillips, is dated January 4, 1999. About the choice of an ITN for solicitation, the letter states: We are seeking authority because we have determined that the Request for Proposal process is not the most appropriate means for securing the commodities and services desired. We believe the Invitation to Negotiate method is more appropriate because the commodities and services we are seeking can be provided in several different ways. Also, the contractor's qualifications and the quality of the commodities and services provided are at least as important as the contract price. (Petitioner's Exhibit No. 4, emphasis supplied). Dr. Phillips' intent with regard to the letter "was to comply with all rules and regulations." (Petitioner's Exhibit No. 15, p. 53). The rule in effect at the time of the selection of the January 1999 ITN and governing such selection was Rule 60A-1.018, Florida Administrative Code. In pertinent part, it states: 60A-1.018 Procedures for Negotiation of Contracts for Purchases of Commodities/Contractual Services. * * * Negotiation of Contracts Without First Seeking Competitive Sealed Bid/Proposals Exceeding the Threshold for Category Two -- When determined to be in the best interests of the State, the Division may contract by negotiation or may delegate to any agency the authority to contract by negotiation. When contracting by negotiation, the following procedures shall be followed: An agency seeking delegated authority to negotiate a contract shall submit a request in writing to the Division, detailing the necessity to contract by negotiation, the proposed steps to be followed by the agency in negotiating the contract, and the proposed vendors that will be used in the negotiations. The Division's intended decision to contract by negotiation or to delegate to an agency the authority to contract by negotiation shall be posted in the office of the Division. Any person adversely affected by the Division's intended decision may protest in accordance with Rule 60A-1.006(3), F.A.C. (Rule 60A-1.018 was repealed prior to the selection of the ITN with which this case is concerned.) The Invitation to Negotiate (the "January 1999 ITN") was duly issued. When the January 1999 ITN was issued it was accompanied by "PUR Form 7006." The form included a "notice of protest rights" (Petitioner's Exhibit No. 15, p. 51). The notice provided a "point of entry" into administrative proceedings for parties who might choose to contest the selection of the January 1999 ITN as the solicitation method for the procurement. - Selection of the ITN in this case In March of 2000, Dr. Phillips was named as the Issuing Officer for the procurement of the pharmacy benefits management services in conjunction with the PPO Plan. The decision to solicit suppliers of the services by ITN was made around the time she was named the Issuing Officer. The decision to use an ITN came about through a multi- step process. Just as in the case of the January 1999 ITN, Dr. Phillips recommended to the Director of the Division, Charles Slavin, that an ITN be used. He concurred and authorized its use. Both the recommendation from Dr. Phillips and the authorization by Director Slavin were done in oral conversation rather than in writing. As before, in the case of the January 1999 ITN, the conversation was not memorialized as to either the recommendation or the approval. Unlike in the case of the January 1999 ITN, however, no request was made by DSGI or any other DMS personnel in writing to the Division of State Purchasing, as had been done through Mr. Banks' letter on January 4, 1999, for the January 1999 ITN. It was the understanding of Dr. Phillips in the spring of 2000 that a written request and written approval from the Division of State Purchasing were not required. Ms. Phillips' understanding was based in part on another conversation held the year before when she received approval for the January 1999 ITN. This conversation was between Dr. Phillips and H.P. Barker, Jr., Chief of the Bureau of Procurement and Contract Management for DMS. It took place in January of 1999. During this conversation, Dr. Phillips requested and was granted approval in writing to use an ITN for the procurement of the health insurance management information system and related services. Following the conversation with Mr. Barker, Dr. Phillips was left with the impression that approval by DMS was not necessary every time the bureau selected an ITN as a procurement method for commodities or services needed by DSGI. Dr. Phillips' impression that Mr. Barker had so told her, however, was mistaken. Mr. Barker did not tell her that an ITN could be selected as the procurement solicitation method without seeking further approval. It is easy, nonetheless, to comprehend why Dr. Phillips might have had a such a misimpression. Dr. Phillips had received written approval to use the January 1999 ITN. That coupled with the statement in DMS Memorandum No. 21-(97-98) [the memorandum referred-to in Finding of Fact No. 15, above] that an agency could make a one-time request for authority to use invitations to negotiate for solicitation of vendors and suppliers in a competitive procurement explains why Dr. Phillips believed she no longer needed prior approval. As it turned out, Dr. Phillips was right that she no longer needed prior approval but not because of impressions she took from conversation with Mr. Barker. Moreover, miscommunication occurred between Dr. Phillips and Mr. Barker about prior approval, proved immaterial. It was unnecessary, actually, for Dr. Phillips to obtain approval of the use of the ITN because of a change in DMS rules governing ITNs. - DMS Rules Change On July 16, 1998, through publication in the Florida Administrative Weekly, the Division of Purchasing had commenced rule development by proposing a number of amendments to the General Regulations of the Division's rules. Two months prior to Dr. Phillips' appointment as the Issuing Officer for the pharmacy benefits management service procurement at least one of the proposed amendments became effective. It provided a new definition of "Invitation to Negotiate" and set out substantive requirements for the circumstances under which an ITN could be selected. The amended rule, effective January 2, 2000, that freed DSGI from obtaining prior approval for the ITN is Rule 60A- 1.001(2), Florida Administrative Code. It rendered any conversation with Mr. Barker or anyone else in the Agency that might be contrary to its requirements and DMS Memorandum No. 21- (97-98) obsolete. - Rule 60A-1.001(2), the ITN Rule Rule 60A-1.001(2), Florida Administrative Code (the "ITN Rule"), is clear and brief. However curt, it is comprehensive in attempt. It provides a definition of an ITN. It states when an ITN may be used in favor of other solicitations. And it succinctly sets out what an agency must do when an ITN is selected as the solicitation method for competitive procurement: 60A-1.001 Definitions. * * * (2) Invitation to Negotiate - Competitive solicitation used when an Invitation to Bid or Request for Proposal is not practicable. Agency shall document file as to conditions and circumstances resulting in this decision. Unfortunately, Dr. Phillips did not know at the time of her appointment as Issuing Officer in March of 2000, that Rule 60A-1.001, Florida Administrative Code, had been amended effective two months or so earlier. Dr. Phillips' testimony that she did not know of the existence of the ITN Rule as amended January 2, 2000, is consistent with other testimony that she offered in the proceeding. For example, she testified that she did not the know the rule change was underway. She was not asked for any input into the Rule's development. Nor did she know that the Rule change had taken place even after rule-making had concluded and the rule had taken effect. (Petitioner Exhibit No. 15, p. 50). As odd as Dr. Phillips' unawareness of the Rule may seem to some, particularly since DSGI and the Bureau for Policy and Development are within DMS, the promulgator of the ITN Rule, her testimony about being out of the rule-making loop went unrefuted in the proceeding. - Decision to Use an ITN In any event, the ITN was selected as the solicitation method. Dr. Phillips, as the Issuing Officer, determined that an ITN was the "most appropriate" solicitation method and that it was a method "more appropriate" than either an ITB or an RFP. Most critically, because she was unaware of the Rule, Dr. Phillips did ensure that the selection complied with Rule 60A-1.001(2), Florida Administrative Code, the new rule governing ITNs. A decision was not made that an ITB or an RFP "is not practicable." A decision was made only that it was more "appropriate" to use an ITN than an RFP. The terms "appropriate" and "practicable" have meanings that are at the very least slightly different. "Appropriate" means "suitable or fitting for a particular purpose, occasion, person, etc." The Random House College Dictionary, Revised 1988. On the other hand, Practicable is that which may be done, practiced, or accomplished; that which is performable, feasible, possible; (Petitioner's Exhibit 13, Black's Law Dictionary: 1979). There is, then, an obvious difference between the two words in the context of cases involving selections of procurement solicitations. It might be suitable to use an ITN in a given case. But if it is also practicable to use an ITB or an RFP then no matter how suitable an ITN is, its use is not allowed under the ITN Rule. There was no evidence in this case that a decision was made that an ITB or an RFP was not practical. Not only is there no evidence of such a decision but the "conditions and circumstances resulting in [any such] decision [if made]" were not documented and placed in the file. In short, the decision to use an ITN in this case did not conform to the rules of DMS, the agency within which DSGI is housed. - No Objection or Protest to Use of the ITN MedImpact received a copy of the ITN, albeit later than it should have. See paragraphs 65 to 71, below. Representatives of MedImpact did not at any time after receiving notice of the selection of the ITN contact DSGI for the purpose of discussing the use of an ITN. Nor did representatives of MedImpact raise any objection to its use prior to the rejection of its late-submitted negotiation. The lack of discussion about the use of an ITN and the failure to object to its use prior to the rejection were not for lack of opportunity. Representatives of MedImpact not only contacted DMS personnel about the pharmacy benefits management services procurement but also attended the proposer's conference on April 28, 2000. MedImpact, moreover, despite the opportunity provided by the ITN, did not submit to DSGI any written questions or comments of objections regarding the use of an ITN as they were allowed to do under the terms of the ITN. Even in this proceeding, despite its position that the parties should return to the "status quo ante" the selection of the ITN, MedImpact has not asserted any manner in which the use of an ITN prejudiced or affected them in the procurement process at issue. - Selection of a Third ITN After selection of the ITN in this case, DSGI selected an ITN for a third competitive procurement, this one described by DSGI as the "Long-term Care Insurance" ITN. Again, Dr. Phillips was the Issuing Officer. Consistent with what she had done with regard to the January 1999 ITN and the ITN in this case and consistent with someone unaware of the amendments to Rule 60A- 1.001(12) that govern ITNs, Dr. Phillips determined that an ITN was more "appropriate" than an RFP. "The Long-term Care Insurance Invitation to Negotiate (ITN Number DSGI 00-002) was issued on August 15, 2000." (Petitioner's Exhibit No. 12.) On August 29, 2000, a memorandum was issued by Dr. Phillips to the Long-term Care Insurance Invitation to Negotiate File. The subject of the memorandum is "Justification to use Invitation to Negotiate." The memorandum, in part, states: On August 29, 2000 it was learned that the Division must document to the file the justification for using an ITN instead of an Invitation to Bid (ITB) or a Request for Proposal (RFP). The purpose of this memorandum is to comply with Rule 60A- 1.001(2). The Division believes that the ITN method is more appropriate than the ITB or RFP because the product and services we are seeking can be provided in different ways. Also, vendor qualifications and the quality of products and services provided are at least as important as price. . . . (Id.) The memorandum demonstrates that, in late August, Dr. Phillips had become aware of the ITN Rule. Nonetheless, she continued to fail to comply with it. While the memorandum documents the file as to conditions and circumstances resulting in the decision to use an ITN, as required by the ITN Rule, it does not document the decision to choose an ITN over an ITB or RFP because the latter two "are not practicable." For the second time this year, but this time with professed awareness of the ITN Rule, DSGI failed to comply with the rules of the agency in which it is housed, DMS. In other words, for the second time this year, DSGI failed to follow its own rules. The ITN, itself Among the many provisions in the ITN are the following: Section 2.0 INVITATION TO NEGOTIATE PROCESS AND PROCEDURES General Information It is entirely the proposer's responsibility to examine this Invitation to Negotiate, to ensure that its requirements are clearly understood, and to submit its proposal in a timely, complete, and procedurally correct manner. (Joint Exhibit 2, p. 6, emphasis supplied). Section 2.2, entitled "ITN Calendar of Events" contains a chart with columns that sets out a "[d]eadline for receipt of proposals from proposers" (Joint Exhibit 2, p. 7) of 5:00 PM EDT, May 12, 2000. The same calendar provides a location for the receipt by DSGI at its Tallahassee address. Section 2.13 of the ITN denominated "Deviations from ITN Specifications" (Id. at p. 10) states "[t]he Division reserves the right to reject any proposal not prepared according to the requirements set forth in this ITN. Section 2.18, entitled "Minor Irregularities and Clarification" (Id. at p. 11) states: The Division, by means of this ITN, has established certain proposal requirements and reserves the right, in its sole discretion, to waive minor irregularities in proposals . . . . If the Division determines that a proposal contains a minor irregularity . . . the proposer will be notified of the irregularity . . . . This provision will not . . . provide one proposer any advantage over any other proposer. Furthermore, this provision applies only to the submission and evaluation of the written proposal . . . . (Id., at page 11). Section 2.19, entitled "Rejection of Proposals" provides in pertinent part: The Division will reject proposals that do not conform or that are not in substantial accord with the requirements of this ITN. Proposals may be rejected for reasons that include, but are not limited, to the following: The proposal is received after the submission deadline; * * * g. The proposal is incomplete, or contains irregularities which make the proposal indefinite or ambiguous and which cannot be waived in accordance with Section 2.19, Minor Irregularities and Clarification; (Id., at p. 12) Section 3.0 governs the "organization and submisson of proposals." Section 3.1, entitled "Proposal Submission Requirements", provides in pertinent part, * * * The original and duplicate copies of the proposal must be received by the issuing officer at the address provided in Section 1.6, Issuing Officer, no later than the time and date specified in Section 2.2, ITN Calendar of Events. (Id. at page 14) The section ends with the following statement in bold: PROPOSALS RECEIVED AFTER THE SPECIFIED TIME AND DATE WILL BE RETURNED UNOPENED." (Id.). Section 4.0 of the ITN governs "proposal evaluation." Subsection 4.2 is denominated "Mandatory Requirements." It states, in pertinent part: Determining compliance with the mandatory requirements will occur at the proposal opening. The Issuing Officer will observe the proposal opening and verify compliance with the mandatory requirements Only those proposals meeting the mandatory requirements will continue in the evaluation process. The mandatory requirements include: The Division received the proposal no later than the deadline specified in Section 2.2, ITN Calendar of Events. * * * (Id., at page 17.) There is no statement anywhere within the body of the ITN as to why an ITN was selected as the procurement method instead of an RFP or an ITB. Nor is there any statement in the ITN, itself, that provides a point of entry to parties who would choose to contest the decision to select the ITN. There is, however, such a point of entry provided in the "Acknowledgement" mailed to those who were selected by the agency to receive the ITN or parties who, like MedImpact, as discussed below, requested the agency to send them an ITN. The "Acknowledgement" is on a purchasing form used by the agency, "PUR 7105." PUR 7105 Revised as of June 1, 1998, PUR 7105 was sent to every company that received an ITN. In the General Conditions section of the form, potential responders to the ITN are informed as to what to do if they intend to accept the invitation to negotiate. (See Joint Exhibit 2a [renumbered after the final hearing], General Conditions, 1. NEGOTIATION). On the other hand, if a party who receives the invitation decides not to submit a response, the party is asked to return the "acknowledgement form, marking it "NO RESPONSE" and explain the reason . . ." (Joint Exhibit 2a, General Condition, 3., NO RESPONSE). Failure to respond to the procurement solicitation without giving reasonable justification is cause for removal of the supplier's name from the Agency's supplier list. PUR 7105 also contained "point of entry" language as follows: Any person who is adversely affected by an Agency decision or intended decision concerning a procurement solicitation or contract award and who wants to protest such decision or intended decisions shall file a protest in compliance with Chapter 28-110, Florida Administrative Code. Failure to file a protest within the time prescribed in Section 120.57(3), F.S. or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120 F.S. (Joint Exhibit. 2a, General Conditions, 5. INTERPRETATIONS/DISPUTES). The Acknowledgement Form also under the heading of "General Conditions" contains a paragraph entitled "NOTICE OF NEGOTIATION PROTEST BONDING REQUIREMENT." The paragraph details the requirements for posting a bond (or cashier's check or money order) with the state whenever a party files a protest pursuant to Section 120.57(3), Florida Statutes. The paragraph concludes, "FAILURE TO FILE THE PROPER BOND AT THE REQUIRED TIME WILL RESULT IN A DENIAL OF THE PROTEST." (Joint Exhibit 2a). EHS and Mr. Francis EHS is a joint venture between Eckerd Corporation and the petitioner in this case, MedImpact. In 1996, it won the contract for pharmacy benefits management in conjunction with the PPO Plan after it had made a proposal in response to an RFP. EHS' proposal was submitted by William Francis, an employee of Eckerd Corporation. At Eckerd, Mr. Francis' main duties were related to pharmacy benefits management. In fact, he had been "brought down to start [Eckerd Corporation's] PBM ["pharmacy benefits management"] . . ." (Tr. 131). EHS was the highest-ranked proposer, and EHS and the state were able to reach an agreement memorialized by a written contract. The contract was signed by Roger Davis, the vice president of Eckerd Corporation of Florida, Inc., as one of the general partners of the joint venture that together with MedImpact comprised EHS. It was also signed by the Deputy Secretary of the DMS on behalf of the state of Florida. In August of 1998, Mr. Francis left Eckerd Corporation to become an employee of MedImpact Healthcare Systems in California (the other venturer in the joint venture that with Eckerd Corporation comprised EHS). Today, he is the manager of business development for MedImpact. It is his job to "network in the managed care community, to develop relationships there, to get [the company] on vendors' bidders lists and so forth with different public sector entities . . ." (Tr. 130). His duties extend to many public sector entities. Among them is the state of Florida and with regard to the state, consistent with his experience, he is responsible in particular in the arena of pharmacy benefits management. Dissatisfaction with EHS The contract entered into by DMS with EHS in 1996 allowed for renewal after a term of four years. The decision not to renew but to enter a new procurement process was explained in testimony by Dr. Phillips: Q . . . What were the reasons that you chose to initiate this procurement if there was a renewal on the EHS contract? A We chose to initiate a new procurement because we were not completely satisfied with the services being delivered under the current contract and, because PBM services had evolved very quickly over a number of years, we believed that we could get better service, better clinical programs for a better price. Q And can you give me an idea of what kind of changes you had noted in the pharmacy management services area? A One of the biggest areas would be clinical management, specifically disease management. Q Does the current contract meet those needs and those changing needs of the State? A We do not believe so, no. (Tr. 159, 160). Events Between the Issuance of the ITN and MedImpact's Rejection From the time he left Eckerd Corporation, Mr. Francis remained cognizant of the EHS pharmacy benefits management contract with DMS. He knew that the contract was set to expire and that a new contract would be "going up for bid this year." (Tr. 134). Mr. Francis was very interested in submitting on behalf of MedImpact a negotiation pursuant to the ITN. He made his interest known in several ways, ways that could not have been overlooked by personnel at DMS. He attended the proposer's conference on April 28, 2000. As the representative of MedImpact, an active partner in the incumbent provider, everyone at the conference, including DSGI, had to have been aware that MedImipact intended to submit a "negotiation" package in response to the ITN. When an ITN had not been received in the time in which Mr. Francis expected it, he called Mike McCaskill, his "contact person with the state" (Tr. 134) to inquire "where the RFP process was . . ." (Id.) In the conversation, Mr. McCaskill corrected him. An RFP was not being issued; rather the procurement method selected by the state was an ITN. Mr. McCaskill further informed Mr. Francis that the ITN had been issued "the day before." Mr. Francis' response was "that's great, we should expect it soon." (Id.). But the ITN was not delivered to MedImpact. Mr. Francis inquired of Mr. McCaskill again. In the follow-up conversation, Mr. Francis learned that MedImpact was "not on the [supplier's] list to receive an invitation." No explanation for this omission was offered at hearing by way of document or testimony except by Mr. Francis. The following colloquy occurred after counsel asked Mr. Francis the question of whether he had learned how the suppliers' list was generated: A Yes, he said that his [Mike McCaskill's] management team had made the decision to inquire with a company called Pharmacy Benefit Management Institute out of Scottsdale, Arizona, and get a listing from them of the top five PBMs in the country. Q And was MedImpact included among the top five PBMs in the list? A It depends on really where -- you know, on where you look for your resources. Sometimes we're listed fifth, sometimes sixth. Q And would MedImpact be listed in any position on the list generated by that company? A No. Q Why not? A We don't subscribe to their research services. (Tr. 134, 135). In response to the follow-up conversation, however, Mr. McCaskill promised to send the ITN to MedImpact. In fact, Mr. Francis testified, Mr. McCaskill "very promptly Fed Ex'd it to us. I think we received it toward the end of the week." Exactly what week Mr. Francis was referring to between the early part of April when the ITN was issued and May 12, 2000, when the response was due, is not disclosed by the record. Nor is it clear from the record in this case precisely when Mr. Francis' conversations took place with Mr. McCaskill. It may be that they took place prior to the April 28 conference. When is immaterial aside from the fact that the conversations took place after the ITN was actually issued and mailed to suppliers other than MedImpact. The point is that Mr. Francis made it abundantly clear to the agency that MedImpact was very interested in submitting a negotiation in response to the ITN. For MedImpact, and presumably for the others who responded to the ITN in this case, it is a time-consuming and costly process to prepare and submit a response. Once the ITN was received, it took MedImpact at least 150 man hours among its upper level professional to prepare its response to the ITN. The delay caused by the Agency in getting the ITN to MedImpact must have been at least a contributing factor if not the determinative factor in the preparation of MedImpact's "negotiation" not being finished until Thursday, May 11, 2000. Since there was only one day left in which to make delivery in Tallahassee, MedImpact took the response to the Fed Ex office in San Diego. Indeed, the FedEx Airbill, with a FedEx tracking number of 8116 8522 0322 and dated "5/11" shows that a package was sent by "Bill Francis" of MedImpact in San Diego, California, to Susan Phillips, "State of Florida, Department of Management, Bureau of Policy Development" at the DMS address in Tallahassee by "FedEx Priority Overnight" for delivery "next business morning." (Petitioner's Exhibit 7). Instructions given by MedImpact to FedEx were that "the box was to be delivered by 10:30 the following morning in Tallahassee" (Tr. 138), the following morning, of course, being the morning of Friday, May 12, 2000. The package containing the response was not delivered on Friday, May 12, 2000, as FedEx had promised. The delivery was delayed in air transit by "one of the worst thunderstorms of the year" (Joint Exhibit 4) over Memphis, Tennessee, a critical hub in FedEx's delivery and sorting system. Delivery of MedImpact's negotiation occurred at 1:33 p.m. the afternoon of Monday, May 15, 2000. The moment of delivery was approximately three and one-half hours after the Agency commenced opening six negotiations submitted in response to the ITN. By the time MedImpact's submission was received, all six had been opened. The six parties whose negotiation packages were opened were: Caremark, Eckerd Health Services, Merck-Medco, PCS Health System, Advance Paradigm and Express Scripts. The Rejection Dr. Phillips, as the Issuing Officer of the ITN, was responsible for making the decision as to whether to accept or reject MedImpact's late negotiation package. Despite the clarity with which portions of the ITN describe the consequences of failure to deliver a negotiation on time to DSGI, Dr. Phillips believed on May 15 that she had discretion to accept or reject the proposal. Dr. Phillips continued to maintain that she had such discretion throughout this proceeding. No witness from DMS or produced by any party disputed that such discretion exists. As Dr. Phillips testified in her deposition read, in part, into the record at hearing, "I had the authority to determine if the proposal were going to be accepted or rejected." (Tr. 95). There are several sources from which Dr. Phillips' authority to exercise discretion in the decision might be derived. One is the ITN, itself. In the "Minor Irregularities and Clarification" subsection (Subsection 2.18), DSGI reserved the right, in its sole discretion, to waive minor irregularities. These irregularities expressly include irregularities in both "the submission and the evaluation of the written proposal." (Joint Exhibit 2, p. 11). There is also a "Minor Irregularity" Rule of the DMS. The Minor Irregularity Rule Rule 60A-1.002(10), Florida Administrative Code, states: (10) Right to Waive Minor Irregularities for Commodities or Contractual Services -- The agency shall reserve the right to waive any minor irregularities in an otherwise valid bid or proposal or offer to negotiate. Variations which are not minor can be waived. (See Joint Exhibit 1, DMS Rule Chapter 60A, F.A.C. [as amended from 1996 to present, V. 17, p. 55, R.1/00]). The term "minor irregularity" is defined in Rule 60A- 1.001(17), Florida Administrative Code: (17) Minor irregularity -- A variation from the invitation to bid or invitation to negotiate or request for proposal terms and conditions which does not affect the price of the commodities or services, or give the bidder or offeror an advantage or benefit not enjoyed by other bidders or offerors, and does not adversely impact the interests of the agency. In considering how to exercise the Agency's discretion, Dr. Phillips wisely sought the advice of counsel first. Counsel advised her that she was free to reject the submission. Dr. Phillips then decided that MedImpact's late negotiation should be rejected. At hearing, Dr. Phillips explained some of the circumstances to be taken into consideration in the discretionary decision-making process in situations of late-filed bids, proposals, and negotiations. In every case, Dr. Phillips would seek the advice of counsel before making a decision. She would be more comfortable in accepting a late-filed submission in a case in which there was an Act of God (as in this case) but in which many submitters were late (unlike this case). From her testimony, it is apparent, as is to be expected in decision calling for the exercise of discretion, that there is not a bright line as to when a late-filed submission should be accepted and when not. Dr. Phillips explained further, however, her decision in this case. Critical to her decision were two facts: 1) there was only one late-filed submission, and 2) there were six timely submissions. In light of ample timely competitive submissions, the purpose of competitive procurement was served by going forward, in her view, without MedImpact's submission being in the mix. Dr. Phillips reasoned that the interest of the state and the public was protected by the number of accepted submissions. In light of this protection and in light of the clear language of the ITN requiring submission on time, Dr. Phillips rejected the submission of MedImpact. Application of the Minor Irregularity Rule or the "minor irregularity" portion of the ITN in light of the definition of minor irregularity in Rule 60A-1.001(17), Florida Administrative Code, should have led to a different result. The late submission of MedImpact's negotiation constituted a variation from the ITN. The variation did not affect the price of the services. It did not give MedImpact an advantage not enjoyed by the other negotiators since the negotiation left MedImpact's control once handed over to FedEx and remains unopened to this day. It did not adversely affect the interests of the Agency save the possibility of exposing it to a protest from one of the other negotiators, a possibility that could not be more adverse to the Agency than what has ensued in the wake of its decision to reject, namely this case and Case No. 00-3553RU. Events Post-Rejection DSGI returned MedImpact's response unopened under cover of a letter from Dr. Phillips to Mr. Francis dated May 17, 2000. Dr. Phillips wrote: Thank you for your response to our Invitation to Negotiate for Pharmacy Benefits Management Services. Unfortunately, the Department received your proposal at 1:33 p.m. on Monday, May 15, 2000. The deadline for submission of your proposal was 5:00 p.m., Friday, May 12, 2000 as outlined in Section , Calendar of Events. Therefore, in accordance with Section 2.19, Rejection of Proposals, paragraph a, your proposal has been rejected. We are returning your unopened proposal via Federal Express. (Joint Exhibit 3). Shortly thereafter, FedEx described the cause of the late delivery as a FedEx error. In a letter dated May 18, 2000, to Ms. Julie Smith of MedImpact, Theresa E. Ledbetter of FedEx's Customer Relations Department wrote: According to our records, the above referenced priority package was tendered to us for carriage with delivery scheduled by 10:30 AM on Friday, May 12. Unfortunately, due to our error, your package was delayed in our sorting network and did not arrive in our Tallahassee FedEx office until Monday, May 15. I note final delivery was completed on Monday at 1:33 p.m. Petitioner's Exhibit 9. The letter from FedEx did not sway DSGI from its rejection of MedImpact's negotiation. Challenge to the Rejection, Posting, a Contract and Referral On June 30, 2000, MedImpact filed a petition for formal administrative hearing. The case was treated by DMS as one without disputed issues of fact and so it kept jurisdiction of the case and assigned it to Hearing Officer Strickland for informal hearing. On July 17, 2000, the results of the evaluation of the submitted negotiations and the scoring of the submissions were posted. Express Scripts received a "TOTAL Weighted Score" of 70; Advance Paradigm, 72; PCS Health System, 73; MMMC and EHS tied at 75; and, Caremark received a total weighted score of 77. On August 25, 2000, MedImpact filed an amended petition by which it hoped to convince the hearing officer that the case contained disputed issues of material fact. While the informal proceeding pended at DMS, Caremark and DSGI conducted negotiations. They were successful. Caremark and DMS entered a contract on August 28, 2000. Three weeks later, on September 20, 2000, when Hearing Officer Strickland found that there were indeed disputed issues of material fact (born out abundantly by the record in this case) he referred the case to DOAH. In his letter of referral he called the case a "bid protest." DOAH Proceedings During the pendency of the "bid protest" at DMS, MedImpact discovered two statements by DSGI it believed constituted unpromulgated rules. MedImpact filed a proceeding challenging the two statements pursuant to Section 120.56(4), Florida Statutes. Its petition was assigned Case No. 00-3553RU. When the challenge to the rejection reached the Division of Administrative Hearings via Hearing Officer Strickland's order, the two cases were consolidated. Bond or a Substitute As of the day of hearing, MedImpact had not filed any bond or substitute therefor with DSGI. Intervention by MMMC At hearing, Connie Martin, MMMC's Vice President for National and Special Accounts testified that if MedImpact's negotiation is ultimately accepted by DMS and scored higher than MMMC's, she would recommend that MMMC file a protest. (See Tr. 57). Jurisdiction
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Department of Management Services give MedImpact a reasonable amount of time to post a bond or provide a substitute for a bond as required by Section 120.57(3), Florida Statutes, in order to continue to pursue this protest related to competitive procurement; The Division of State Group Insurance accept MedImpact's negotiation, open it, and subject it to its process for evaluation applicable to negotiations under ITN Number DSGI 00- 001; and, Post the results of the evaluation of all the negotiations submitted to the ITN; and Provide the seven negotiators to the ITN rights to protest the results of the posting that have not been waived when the results of the posting in July 2000 were not protested. DONE AND ENTERED this 21st day of November, 2000, in Tallahassee, Leon County, Florida. DAVID M. MALONEY 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 21st day of November, 2000. COPIES FURNISHED: Thomas D. McGurk, Secretary Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Bruce Hoffmann, General Counsel Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Julia P. Forrester, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Robert P. Smith, Esquire Timothy G. Schoenwalder, Esquire Hopping, Green, Sams & Smith, P.A. 123 South Calhoun Street Post Office Box 6526 Tallahassee, Florida 32302-6526 Fred McCormack, Esquire Landers & Parson, P.A. 310 West College Avenue Tallahassee, Florida 32301 Thomas J. Maida, Esquire Austin B. Neal, Esquire Foley & Lardner 300 East Park Avenue Tallahassee, Florida 32301 Donna H. Stinson, Esquire Broad & Cassel 215 South Monroe Street, Suite 400 Tallahassee, Florida 32301
Findings Of Fact On March 16, 1989, Respondent sent invitations to bid to actuaries who had been listed by the State of Florida, Department of General Services and with whom Respondent had some familiarity. These invitations pertained to two projects. The first project was one in which Respondent sought the services of qualified actuaries for the rendering of expert services in the area of rating requirements and procedures and the review of rate filings for health maintenance organizations and long term care insurance, Bid 119. The second invitation to bid was associated with the attempt to gain services from qualified actuaries pertaining to the review of health insurance filings, Bid 120. Respondent also gave public notice of the invitations to bid in the two projects that have been described. This notice was given in the Florida Administrative Weekly in its publication of March 17, 1989. On March 17, 1989, Petitioner obtained a copy of the bid materials in Bid 119. On March 20, 1989, he obtained a copy of the bid materials associated with Bid 120. In both Bid 119 and Bid 120 there are set out general conditions which are the same for both invitations. Within the general conditions is found paragraph 5 which states: INTERPRETATIONS/DISPUTES: Any questions concerning conditions and specifications shall be directed in writing to this office for receipt no later than ten (10) days prior to the bid opening. Inquiries must reference the date of bid opening and bid number. No interpretation shall be considered binding unless provided in writing by the State of Florida in response to requests in full compliance with this provision. Any actual or prospective bidder who disputes the reasonableness, necessity or competitiveness of the terms and conditions of the Invitation to Bid, bid selection or contract award recommendation shall file such protest in form of a petition in compliance with Rule 13A-1.006, Florida Administrative Code. Failure to file a protest within the time prescribed in Section 120.53(5), Florida Statutes shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. In furtherance of the opportunity to ask questions concerning the conditions and specifications set forth in the two bid instruments Petitioner, by correspondence received by Respondent on March 20, 1989, submitted a separate list of questions for the two projects, Bid 119 and Bid 120. On March 21, 1989, Respondent offered its answers to the Petitioner. Copies of these questions and answers may be found as Petitioner's composite Exhibit No. 5, pertaining to Bid 120 and Petitioner's composite Exhibit No. 6, pertaining to Bid 119, admitted into evidence. No one took advantage of the opportunity set out in paragraph 5 to the general conditions in each invitation to bid, to dispute the reasonableness, necessity or competitiveness of the terms and conditions of the invitations to bid within the prescribed time frame which is set out in Section 120.53(5), Florida Statutes. That time requirement is to make known objections within 72 hours of becoming apprised of the terms and conditions in the invitation to bid. It was only at the point in time at which Petitioner had been found unresponsive in the two bid circumstances and offered his formal written protest on April 11, 1989, that he attempted to advance claims associated with the reasonableness, necessity or competitiveness of the terms and conditions of the invitation to bid. He made further attempts to criticize those terms within the invitation to bid through presentation at hearing and in the course of the proposed recommended orders. All these efforts were untimely. The significance of Petitioner's failure to timely challenge the terms within the invitations to bid, that is the conditions and specifications, means that the facts in dispute are considered on the basis of whether the Petitioner and others who offered their responses to the invitations to bid have complied with those conditions and specifications as written, not as Petitioner would have them be. Bid 119 was responded to by the Petitioner and Touche Ross & Company. Petitioner's response was timely. By committee review of the responses to the invitation to bid performed by the Respondent and approved by the Assistant Director of Administration, Department of Insurance and Treasurer, one Bruce Brown, a decision was reached to reject all bids. Petitioner and Touche Ross were made aware of this rejection. Petitioner made a timely challenge to the rejection of his bid in accordance with Section 120.53(5), Florida Statutes, leading to the present hearing. Touche Ross did not challenge that decision and did not seek to participate in this hearing, although it was noticed of the pendency of these proceedings. Petitioner and Wakely timely responded to the invitation in Bid 120. The review committee with the concurrence of Mr. Brown found Wakely to be responsive and Petitioner to be unresponsive to the terms of the invitation. Petitioner made a timely request to be heard on this decision by the agency leading to the present hearing. Wakely was noticed of the pendency of this hearing as well as the agency's choice to change from a position of accepting the Wakely bid to one of rejecting all bids and has not participated in the process. The reason why the Respondent has chosen to reject the Wakely bid is based upon its belief that to do so would expedite the process of gaining the actuarial services which it seeks under Bid 120 and based upon some concern that if it sought to contract with Wakely, whom it believes to be the only responsive bidder in Bid 120, it would be met with disapproval by the State of Florida, Department of General Services. This resistance by the sister agency is premised upon the opinion that to contract with Wakely would constitute the use of a sole source contract in a setting in which there are numerous choices of actuaries who might be able to perform the work, and General Services who controls sole source purchases would not allow this. Within Bid 119 are various special conditions. Among those is the stated purpose found in paragraph 1.0 and it says: The Division of Insurance Rating (hereinafter "Division") within the State of Florida's Department of Insurance (hereinafter "Department") is seeking one qualified actuary for the rendering of expert services in the area of rating requirements and procedures and review of the rate filings for Health Maintenance Organizations (hereinafter "HMO") and Long Term Care Insurance (hereinafter "LTC"). It is anticipated that the contract will be effective from April 1, 1989 to September 30, 1989, although the precise dates will be dependent upon the date the contract is signed and the schedules of department personnel. By this Invitation to Bid (hereinafter "ITB"), the Division is requesting interested actuaries (hereinafter "respondent") to review the general and specific criteria outlined in this ITB and to present a bid. Other instructions in Bid 119 at paragraph 3.0 state: Emphasis on each bid must be completeness and clarity of content. In order to expedite the evaluation of proposals, it is essential that bidders follow the instructions contained herein. * * * Bidder shall complete the attached Bid Sheet in its entirety. By affixing manual signature on this bid sheet the bidder states that he/she read all bid specifications and conditions and agree to all terms, conditions, provisions, and specifications. Respondent's Credentials and Capabilities Proposals must include substantial evidence of the ability of the respondent to undertake the work required within the parameters and time frames referenced in this ITB. The respondent must be a member of both the American Academy of Actuaries and the Society of Actuaries. Furthermore, the respondent must convincingly demonstrate his or her expertise in both the HMO and LTC areas. Such demonstration must include at least the following: HMO Significant consulting assignment or other work responsibility involving HMO ratemaking in 1988 or 1989. Particulars must be provided, including the specific work product requested, hours spent on the job, the results of the job, and the respondent's precise role. Convincing evidence of familiarity with the Health Maintenance Organization Amendments of 1988 to the Federal Health Maintenance Organization Act. Such evidence might include a completed or ongoing consulting assignment in which knowledge of the new legislation was critical, an article published on the new legislation, or a speech to a professional organization. Public demonstrations of the respondent's expertise in the HMO area, such as speeches, published articles, positions held in HMO professional organizations, or prior full-time employment by an HMO. Assistance in the preparation of HMO rate filings for review by the Department. Assistance in the preparation of rates for federally qualified HMOs. LTC Significant consulting assignments or other work responsibility involving LTC ratemaking in 1988 or 1989. Particulars must be provided, including the specific work product requested, hours spent on the job, the results of the job, and the respondent's precise role. Public demonstrations of the respondent's expertise, such as speeches, published articles, or positions held in professional organizations relative to LTC (i.e., committee assignments) OTHER The respondent should also include a description of prior work assignments involving consulting or other services to state insurance departments. This prior work need not be restricted to HMO or LTC. Note: Evidence of the respondent's expertise must be verifiable. Referenced consulting assignments must include the name, address, and telephone number of an employee of the client who can verify the nature of the assignment. Copies of published articles must be provided, along with the name and date of the periodical in which it was published. Also, copies of speeches must be provided, along with the name of the organization to which the speech was given, a contract person, and the date of the speech. * * * (f) Respondent's Bid In preparing a bid, the respondent should make sure that he or she has submitted at least the following information: A demonstration that all requirements in the "Respondent's Credentials and Capabilities" section are met; An explicit statement as to the proposed hourly rate; A clear statement that the respondent is able to perform the required tasks in the prescribed time frames, as described in "Specific Work Product Required". Such information must be provided together with the bid sheet provided in Section 11. A suggested format is shown in Section 10. In both bid invitations, at paragraph 4.0 of the special conditions, bidders are reminded that bids which do not meet the mandatory technical requirements set out in 3.0 and its sub-parts will not be considered for selection and that the bids that are deemed responsive will be evaluated on the basis of cost and the award made to the lowest responsive bidder at an hourly rate of charges. Both invitations at Paragraph 4.1 indicate that the state has reserved its opportunities to reject all bids if that is felt to be in its best interest. Paragraph 5.2 of the invitation is a further reminder to bidders that any bidder desiring to file a protest arising out of the invitation to bid shall do so in a setting in which Section 120.53(5), Florida Statutes controls. Another specification found in both invitations at paragraph 10.0 entitled, "Respondent's (referring to the bid respondents) Credentials and Capabilities." Under that category it is stated that it is recommended that the format found on that page in the bid specifications be used in supplying the information needed to respond to paragraph 3.0 of the bid specifications for both invitations. Under that paragraph 10.0 there is a place for the respondent's name, the name of his employer, membership year in the AAA, membership designation in the 50A: FSA and ASA and year the 50A designation was awarded. In Bid 119, beyond paragraph 10.0 are found paragraphs 10.1, 10.2 and 10.3, these paragraphs recapitulate those items and the various sub-parts to paragraph 3.0 and provide space for answers to be given to those inquires concerning the Petitioner's credentials and capabilities. There is a paragraph 11.0 in both invitations entitled "Bid Sheet." It has lines related to the hourly rate, vendor name, name of actuary to render services, mailing address, city, state and zip code, authorized signature both manual and typed, telephone number, and the date of submission. This particular paragraph reminds the bidder that by affixing the signature, this is a verification that all bid specifications and conditions have been read and that the terms and conditions, provisions and specifications are agreed to and that certification is made that the services will be provided at the hourly rates stated. Otherwise the basic format for Bid 120 in terms of special conditions is the same as described for the pertinent paragraphs in Bid 119 that have been set out before with the exception of Paragraphs 1.0, and 3.0 (c). They state the following: 1.0 PURPOSE: The Division of Insurance Rating (hereinafter "Division") within the State of Florida's Department of Insurance (hereinafter "Department") is seeking one qualified actuary for the rendering of expert services pertaining to review of Health Insurance rate filings. It is anticipated that the contract will be effective from April 1, 1989 to September 30, 1989, although the precise dates will be dependent upon the date the contract is signed and the schedules of department personnel. * * * 3.0 (c) RESPONDENTS CREDENTIALS AND CAPABILITIES. Proposals must include substantial evidence of the ability of the respondent to undertake the work required within the parameters and time frames referenced in this ITB. The respondent must be a member of both the American Academy of Actuaries and the Society of Actuaries. Furthermore, the respondent must convincingly demonstrate his or her expertise in rating the filing with the Department the following products: Individual Major Medical Medicare Supplement Long Term care Other types of coverage depending upon the needs of the Department and skills of the respondent. Such demonstration must include at least the following: A high degree of familiarity with Chapter 4-58 of the Regulations of the Florida Department of Insurance. Such familiarity should be demonstrated by the respondent providing evidence that he or she submitted at least twenty- five Health Insurance rate filings to the Department which were approved between January 1, 1988 and February 28, 1989. The consultant should demonstrate familiarity with Individual Major Medical, Medicare Supplement, and Long Term Care policies. Such familiarity should be demonstrated by the consultant providing evidence that he or she submitted at least three filings to the Department in each of those areas which were approved between January 1, 1988 and February 28, 1989. NOTE: Only those filings actually certified by the actuary, as provided in 4-58, may be counted in meeting the above requirements. Bid 120 has paragraph 10.1 that refers back to sub-parts within paragraph 3.0(c) and provides space for answering the request for information concerning credentials and capabilities. In both bids Respondent is critical of the Petitioner for not using the format suggested in the various portions of paragraph 10, in essence filling out the specification sheet in the space provided for the answers which the petitioner would give. Having reviewed these materials associated with each bid invitation, the format idea is not a mandatory requirement, it is a suggested requirement. What is incumbent upon the Petitioner is to comply in substance with the requirements set out in the invitations to bid. In that respect the Petitioner is deficient in a material manner. A copy of the requirements Bid 119 may be found in Respondent's exhibit No. 1 admitted into evidence. Petitioner's response to the invitation to bid in Bid 119 is found within Respondent's No. 4 admitted into evidence. In his statement of credentials and capabilities, Petitioner has not utilized the spaces provided in paragraphs 10.1 through 10.3. Instead he has enclosed a letter that includes a statement of work history and professional experience. Under the category of health maintenance organization, the special conditions of paragraph 3.0(c), there is no statement of a consulting assignment or other work responsibility that would involve HMO rate making in the years 1988 or 1989. Furthermore, there is no convincing evidence of familiarity with the health maintenance organization amendments of 1988 to the Federal Health Maintenance Organization Act. There is no reference to public demonstrations of the Petitioner's expertise in the HMO area to include speeches, published articles, positions held in an HMO professional organization or prior full-time employment by an HMO. While there is an indication of experience in rate review from the regulatory point of view in Florida and Massachusetts, there is no indication as required by the specifications and conditions of the preparation of rate filings to be reviewed by a regulator. Finally, under the category of HMO there is no indication of assistance in the preparation of rates for federally qualified HMOs. In the long term care component of the credentials and capabilities portion of Bid 119, Petitioner has offered no explanation of his background. Under the category "other" Respondent has included a description of prior work assignments involving consulting or other services to state insurance departments. On the other hand he has failed to evidence in more specific terms as the note to paragraph 3.0(c) requires, names, addresses and telephone numbers. A copy of the requirements of Bid 120 may be found in Respondent's Exhibit No. 2 admitted into evidence. A copy of Respondent's reply to the invitation to bid may be found in Respondent's Exhibit No. 5 admitted into evidence. As with the previous Bid 119, in Bid 120 Petitioner did not utilize the space available in writing his answers in paragraph 10.1 which relates back to the requirements for credentials and capabilities as announced in paragraph 3.0(c). Instead Petitioner attached a letter in which he attempts to state his compliance with the requirements of the bid. He sets out comments about his work history and professional experience which do not pertain to rating and filing with the Respondent the products of individual major medical, Medicare Supplement, long term care and other types of coverage depending upon needs of the Respondent and skills of the Petitioner. Within Bid 120 in the requirement for familiarity with Chapter 4-58 Florida Administrative Code Petitioner has indicated some involvement with that regulation. However, he has not shown where he had submitted at least twenty- five health insurance rate filings to the Respondent which were approved between the January 1, 1988 and February 28, 1989. In Bid 120 on the topic of demonstration of familiarity with individual major medical, Medicare Supplement and long-term care policies, Petitioner did not demonstrate that he had submitted at least three filings with the Department in each of those areas which were approved between January 1, 1988, and February 28, 1989. By contrast the Wakely response to the invitation to bid, a copy of which is found in Respondent's Exhibit No. 9 admitted into evidence, has adequately responded to the requirements of the Bid 120 in the areas where the Petitioner has been deficient, as well as other areas. As alluded to before Petitioner has failed to make timely challenge to the conditions and specifications associated with the two invitations to bid. Moreover, while allegations in the formal written protest of April 11, 1989 and further remarks of April 20, 1989 addressed to the Insurance Commissioner, together with the proposed recommended order suggest problems with the conditions and specifications associated with the two invitations to bid, proof at hearing submitted by Petitioner did not confirm these allegations. Except in those areas preferred to in the factual discussion above Petitioner's bid responses are adequate to meet the terms of the invitations to bid.
Findings Of Fact In June 1987 The School Board of Lee County, Florida invited the submission of sealed bids for grading and drainage improvements at the new Multipurpose Building at Fort Myers High School. In addition to requiring grading, the project involves the erection or placement of structures in the nature of a drainage system consisting of culverts, pipes, and concrete inlets with grates, to be tied into the existing drainage system off School Board property across a county right-of-way into a culvert for discharge across the street, and which on School Board property attaches to and becomes a part of an existing building. Sealed bids were submitted by Systems Technologies Co. of Ft. Myers, Inc. (hereinafter "Systems Technologies") and by Ledo Lines, Inc. Respondent determined Systems Technologies to be the lowest responsible bidder and advised Ledo Lines, Inc., that it would be awarding the contract to Systems Technologies. Warren W. Hunt is the president and the qualifying agent of Systems Technologies. Hunt has an underground utilities contractor's license which has been inactive since it was obtained by him in March, 1986, being inactive therefore both at the time that Hunt submitted the bid on behalf of Systems Technologies and at the time of the final hearing in this cause. The inactive status results from Hunt's failure to complete the license process with the State of Florida. Since Hunt's license was inactive due to being incomplete at the times material to this cause, neither Hunt nor Systems Technologies was a licensed contractor and Systems Technologies was not a responsible bidder at the time that the bid was submitted. The contract specifications set forth the method by which the bids would be evaluated. Paragraph numbered 2.9 on page PD-4 provides as follows: Comparison of Proposals - Proposals will be compared on the basis of total computed price for each division of work. Total computed price equals the sum of the prices for the lump sum Contract Item, plus the sum of the total prices for the unit price Contract Items for each Division of work. The total price for each unit price Contract Item will be obtained by multiplying the estimated quantity of each item by the correspond- ing unit price set forth in the Proposal form[.] That provision, accordingly, requires that the bids be evaluated based upon the sum of all line items rather than based only upon their total or "bottom line" figure. Respondent's Director of Facilities Planning admitted that he failed to comply with this provision of the contract specifications in evaluating the two bids submitted to him and in determining that the bid should be awarded to Systems Technologies. In Systems Technologies' bid, the sum of the prices for the lump sum contract items plus the sum of the total prices for the unit price contract items amounts to $30,109.60. However, in submitting its bid Systems Technologies incorrectly added its column of figures and incorrectly computed its Total Contract Price (Estimated) to be $29,768. Since the contract specifications envision a unit price bid rather than a lump sum bid, the amount of the bid of Systems Technologies is in fact the amount of $30,109.60. The bid of Ledo Lines, Inc., is for $29,913.84. Ledo Lines, Inc., is, therefore, the low bidder on this project. The contract specifications when read in their entirety clearly require that the low bid be determined by adding the unit price and lump sum components rather than relying on the lump sum "bottom line" figure shown for Total Contract Price (Estimated). Employees of the consultant who Prepared the specifications testified that they expect to be able to hold the bidders to the unit prices but not to the Total Contract Price (Estimated) because the estimated quantities may change. Thus, the evidence is uncontroverted that the determination of low bidder pursuant to the contract specifications is based upon the total of the unit price provisions and not by the single figure at the bottom of the page which adds those individual prices and which was added erroneously in this case by Systems Technologies. In their Prehearing Stipulation, the parties stipulated that the School Board is subject to mandatory competitive bidding for this project. They further stipulated that where there is mandatory competitive bidding, the contract must be awarded to the lowest qualified, responsive bidder. Since Systems Technologies is neither a qualified, responsive bidder nor the lowest bidder, it is clear that Ledo Lines, Inc., is the lowest responsive bidder for the project in question.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered determining Ledo Lines, Inc., to be the lowest responsive bidder and awarding the contract for grading and drainage improvements to the Multi- purpose Building at Fort Myers High School to Ledo Lines, Inc. DONE and RECOMMENDED this 25th day of September, 1987, at Tallahassee, Florida. LINDA M. RIGOT, 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 25th day of September, 1987. COPIES FURNISHED: James E. Melvin, Superintendent School Board of Lee County 2055 Central Avenue Fort Myers, Florida 33901 E. G. Couse, Esquire Post office Drawer 1647 Fort Myers, Florida 33902 Harry A. Blair, Esquire Post Office Box 1467 Fort Myers, Florida 33902
The Issue At issue in this proceeding is whether the decision of the respondent, Department of Administration (Department), to reject, as untimely, the proposals submitted by petitioner, Medco Containment Services, Inc. (Medco), and intervenor, Preferred Employee Pharmaceutical, Inc. (Preferred), comported with the essential requirements of law, and whether the Department should exercise its discretion to reject all proposals and extend a new request for proposals.
Findings Of Fact Background On June 14, 1991, the Department of Administration, Division of State Employees' Insurance (Department), issued Request for Proposal No. 91-15 for a mail order prescription drug program (hereafter the "RFP"). The deadline for submitting sealed proposals in response to the RFP, as amended, was established as 2:00 p.m., August 2, 1991, and the time for opening proposals was established as 2:01 p.m., August 2, 1991. Pertinent to the deadline for submitting proposals established by the RFP, the RFP provided, at General Condition 3 (DGS Form PUR 7033): PROPOSAL OPENING: Shall be public on the date, location and the time specified on the acknowledgment form. It is the proposers responsibility to assure that his proposal is delivered at the proper time and place of the proposal opening. Proposals which for any reason are not so delivered will not be considered. . . . The RFP further provided at Section III, subsection L: Proposals must be mailed or hand delivered to arrive at the time, date and address as shown in the Schedule of Events. ALL PROPOSALS WILL BE PUBLICLY OPENED ON THE TIME, DATE AND ADDRESS SHOWN IN THE SCHEDULE OF EVENTS. ANY PROPOSALS RECEIVED AFTER THIS SPECIFIED TIME AND DATE WILL BE RETURNED UNOPENED. At the time of the deadline, the Department had received a number of proposals, including that of intervenor, Revco D.S., Inc. (Revco). Thereafter, at 2:02 p.m. on the bid opening date, the Department received proposals from petitioner, Medco Containment Services, Inc. (Medco), and intervenor, Preferred Employee Pharmaceuticals, Inc. (Preferred). These late submittals were rejected by the Department as untimely. Medco and Preferred contest the propriety of the Department's rejection of their proposals as untimely, and contend that the late submission of their proposals was a minor irregularity that should be waived by the Department or, alternatively, that the Department should exercise its discretion to reject all proposals and extend a new request for proposal. Pertinent to the position advocated by Medco and Preferred, the RFP provided, at General Condition 6: AWARDS: As the best interest of the State may require, the right is reserved to reject any and all proposals or waive any irregularity or technicality in proposals received. . . . However, no persuasive proof was offered that it was in the best interest of the state to waive the late filing of such proposals or reject all proposals. 2/ The Department, contrary to the contentions of Medco and Preferred, has evidenced no intention during the course of these proceedings to waive, as a minor irregularity, the late submission of their proposals in light of the mandatory language of the RFP regarding the rejection of such late submittals, and has evidenced no intent or advanced any reason to exercise its discretion to reject all bids. The circumstances surrounding the late submittal of the Medco and Preferred proposals In response to the RFP, Medco prepared a proposal at its Montvale, New Jersey, offices. 3/ The proposal was enclosed in a box which was entrusted, along with a second box containing Medco's response to the Department's RFP No. 91-14 for a prescription drug card program, to a courier service in Montvale on the afternoon of August 1, 1991, for delivery to the Department prior to 2:00 p.m., August 2, 1991. While both boxes apparently arrived in Tallahassee, Florida, the morning of August 2, 1991, the local courier service only picked up one box, that containing Medco's proposal in response to RFP No. 91-14. Not until 1:00 p.m. that day was such oversight discovered by a second courier service, which then took possession of Medco's response to the subject RFP (RFP No. 91-15) and delivered it to the Department at 2:02 p.m. that day. Preferred, located in Davie, Florida, also prepared a response to the subject RFP. On the morning of August 2, 1991, Preferred entrusted its proposal to US Air's PDQ courier service for delivery to the Department prior to 2:00 p.m. that date. The courier service did not, however, deliver Preferred's proposal to the Department until 2:02 p.m. Following the receipt of the Medco and Preferred proposals, they were taken to the bid opening room, where the bid opening for the RFP had already commenced. At that time, only envelopes which contained "no bids" (a notice that the respondent did not wish to submit a proposal) had actually been opened. Notwithstanding, based on the untimeliness of their submittal, the Department rejected the Medco and Preferred proposals. 4/ During the course of the public opening of the proposals that had been timely submitted, the cost proposals of such potential vendors were announced and posted. However, the award process has been stopped pending resolution of this protest and all proposals that were timely submitted are currently in the custody of the Department's evaluation team. 5/ By letters of August 7, 1991, addressed to Medco and Preferred, the Department advised such parties that, under separate cover, it was returning their proposals since they had not been received until after the opening of proposals had commenced. Medco refused to accept delivery of its proposal from the United States Post Office and it was returned to the Department, where it currently remains. Regarding the integrity of such proposal, the proof demonstrates that at no time since it was originally entrusted to the courier service by Medco on August 1, 1991, until the present has such proposal been opened or in any other manner been tampered with. Regarding the Preferred proposal, the proof demonstrates that upon the return of such proposal it was opened, and remains in Preferred's possession.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered which dismisses the protests of Medco and Preferred. RECOMMENDED in Tallahassee, Leon County, Florida, this 23rd day of October, 1991. WILLIAM J. KENDRICK, 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, 1991.
