The Issue The issue presented is whether Petitioner should receive additional credit for his answers to certain questions on the October 1991 Certified General Contractor Examination.
Findings Of Fact Petitioner failed to achieve the minimum passing score on Part I of the Certified General Contractor Examination administered in October 1991. He filed a challenge to nine of the questions contained in Part I. Petitioner challenged questions numbered 2, 3, 4, 6, 9, 10, 14, 25, and 34. During the final hearing, Petitioner agreed that the Department's chosen answers to questions numbered 2, 3, 6, 10, 25, and 34 were the correct answers to those questions. During the final hearing, the Department agreed that Petitioner's chosen answer to question numbered 4 was correct and that Petitioner should be given additional credit for his correct answer. The Department thereupon re- computed Petitioner's score and determined that, with the additional credit for that answer, Petitioner's score on the examination is now 68, still less than the required minimum passing score. Petitioner chose answer "D" to question numbered 9. The Department's chosen answer of "A" is the only correct answer to that question. The question itself is neither vague nor ambiguous. Petitioner chose answer "C" to question numbered 14. The Department's chosen answer of "B" is the only correct answer to that question. The question itself is neither vague nor ambiguous.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding that Petitioner failed to achieve a passing score on Part I of the October 1991 Certified General Contractor Examination. DONE and ENTERED this 7th day of August, 1992, at Tallahassee, Florida. LINDA M. RIGOT 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 7th day of August, 1992. APPENDIX TO RECOMMENDED ORDER Petitioner's six unnumbered paragraphs in his post-hearing submittal have been rejected as not constituting findings of fact, but rather as constituting argument. Respondent's proposed findings of fact numbered 1 and 4-7 have been adopted in substance in this Recommended Order. Respondent's proposed findings of fact numbered 2 and 3 have been rejected as not being supported by any competent evidence in this cause. Copies furnished: Vytas J. Urba, Assistant General Counsel Department of Professional Regulation Suite 60 1940 North Monroe Street Tallahassee, FL 32399-0792 Mr. James George Suite 201 17325 Northwest 27th Avenue Miami, Florida 33056 Daniel O'Brien Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
The Issue Whether Royal Roofing and Restoration, Inc. (Respondent or Royal Roofing), failed to secure workers’ compensation insurance coverage for its employees; and, if so, whether the Department of Financial Services, Division of Workers’ Compensation (Petitioner or Department), correctly calculated the penalty to be assessed against Respondent.
Findings Of Fact Petitioner is the state agency charged with enforcing the requirement of chapter 440, that Florida employers secure workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent is a Florida for-profit corporation organized on July 28, 2015, and engaged in the business of roofing and storm damage restoration. The company was formed, and initially conducted business, in Tallahassee, Florida, but expanded to the Panama City area in 2016. Traci Fisher is Respondent’s President and Registered Agent, with a mailing address of 1004 Kenilworth, Tallahassee, Florida 32312. DOAH Case No. 17-0879 On May 4, 2016, Department Compliance Investigator Jesse Holman, conducted a routine workers’ compensation compliance inspection at 374 Brown Place in Crestview, Florida. Mr. Holman observed four men removing shingles from the roof of a residential structure at that address. Mr. Holman first interviewed a worker who identified himself as Dustin Hansel and reported that he and the other three workers on site were a new crew for Respondent, the permit for the job had not yet been pulled, and the workers were not aware of the rate of pay for the job. Mr. Hansel telephoned Respondent’s sales manager, Dillon Robinson, who then spoke directly with Mr. Holman via telephone. Mr. Robinson informed Mr. Holman that Respondent obtained workers’ compensation coverage through Payroll Management Inc. (PMI), an employee-leasing company. Mr. Holman identified the three remaining workers at the jobsite as Milton Trice, Winston Perrotta, and Kerrigan Ireland. Mr. Holman contacted PMI and secured a copy of Respondent’s then-active employee roster. None of the workers at the jobsite, including Mr. Hansel, were included on Respondent’s employee roster. Upon inquiry, Mr. Holman was informed that PMI had no pending employee applications for Respondent. Mr. Holman consulted the Department’s Coverage Compliance Automated System (CCAS) and found Respondent had no workers’ compensation insurance policy and no active exemptions. During Mr. Holman’s onsite investigation, the workers left the jobsite. Mr. Holman could not immediately reach Ms. Fisher, but did speak with her husband, Tim Fisher. Mr. Fisher informed Mr. Holman that the crew was on their way to the PMI Fort Walton office to be enrolled on Respondent’s employee roster. On May 5, 2016, based on his investigation, and after consultation with his supervisor, Mr. Holman issued Respondent Stop-Work Order (SWO) 16-148-1A, along with a Business Records Request (BRR) for records covering the audit period of July 27, 2015 through May 4, 2016. Later that day, Mr. Holman spoke to Ms. Fisher, who informed him the crew did not have permission to begin the work on that date, as she had not yet pulled the permit for the reroof. Ms. Fisher further explained that the crewmembers had been instructed to complete applications with PMI prior to departing Tallahassee for Crestview. Ms. Fisher confirmed the crewmembers were completing applications at PMI Fort Walton that same day. Mr. Holman met with Ms. Fisher the following day and personally served SWO 16-148-1A. Ms. Fisher delivered to Mr. Holman an updated employee roster from PMI which included Mr. Hansel, Mr. Perrotta, and Mr. Ireland; a letter documenting Mr. Trice was not employed by Respondent; and a $1000 check as downpayment on the penalty. Respondent initially submitted business records in response to the BRR on May 23 and 25, 2017. DOAH Case No. 17-1558 On June 8, 2016, Mr. Holman conducted a random workers’ compensation compliance inspection at 532 Rising Star Drive in Crestview. The single-family home at that address was undergoing renovations and Mr. Holman observed three men on the roof removing shingles. None of the men on the roof spoke English, but a fourth man, who identified himself as Jose Manuel Mejia, appeared and stated he worked for Respondent, and that all the workers onsite were paid through PMI at a rate of $10.00 per hour. Mr. Mejia admitted that one of the worker’s onsite, Emelio Lopez, was not enrolled with PMI and explained that Mr. Mejia brought him to the worksite that day because he knew Mr. Lopez to be a good worker. The remaining workers onsite were identified as Juan Mencho and Ramon Gonzalez, both from Atlanta, Georgia. Mr. Mejia produced some PMI paystubs for himself and Mr. Mencho. Mr. Mejia stated that he and his crews also received reimbursement checks directly from Respondent for gas, rentals, materials, and the like. Mr. Holman contacted PMI, who produced Respondent’s then-active employee roster. Mr. Mejia and Mr. Mencho were on the roster, but neither Mr. Gonzalez nor Mr. Lopez was included. Mr. Holman next contacted Ms. Fisher, who identified Mr. Mejia as a subcontractor, but was not familiar with any of the other men Mr. Holman encountered at the worksite. Mr. Holman consulted via telephone with his supervisor, who instructed him to issue an SWO to Respondent for failing to secure workers’ compensation coverage for its employees. Mr. Holman issued SWO 16-198-1A by posting the worksite on June 8, 2016. Department Facilitator Don Hurst, personally served Ms. Fisher with SWO 16-198-1A in Tallahassee that same day. SWO 16-148-1A Penalty Calculation1/ Department Penalty Auditor Eunika Jackson, was assigned to calculate the penalties associated with the SWOs issued to Respondent. On June 8, 2016, Ms. Jackson began calculating the penalty associated with SWO 16-148-1A. Ms. Jackson reviewed the documents submitted by Respondent in response to the BRR. The documents included Respondent’s Wells Fargo bank statements, check images, and PMI payroll register for the audit period.2/ Based on a review of the records, Ms. Jackson identified the following individuals as Respondent’s employees because they received direct payment from Respondent at times during the audit period: David Rosinsky, Dylan Robinson, Jarod Bell, Tommy Miller, and David Shields. Ms. Jackson determined periods of non-compliance for these employees based on the dates they received payments from Respondent and were not covered for workers’ compensation via PMI employment roster, separate policy, or corporate officer exemption. Ms. Jackson deemed payments to each of the individuals as gross payroll for purposes of calculating the penalty. Based upon Ms. Fisher’s deposition testimony, Ms. Jackson assigned National Council on Compensation Insurance (NCCI) class code 5551, Roofing, to Mr. Miller; NCCI class code 5474, Painting, to Mr. Rosinsky; NCCI class code 8742, Sales, to Mr. Bell and Mr. Robinson; and NCCI class code 8810, clerical office employee, to Mr. Shields. Utilizing the statutory formula for penalty calculation, Ms. Jackson calculated a total penalty of $191.28 associated with these five “employees.” Ms. Jackson next calculated the penalty for Dustin Hansel, Kerrigan Ireland, Milton Trice, and Winston Perrotta, the workers identified at the jobsite as employees on May 4, 2016. The Department maintains that the business records submitted by Respondent were insufficient to determine Respondent’s payroll to these “employees,” thus, Ms. Jackson used the statutory formula to impute payroll to these workers. Ms. Jackson calculated a penalty of $14,970.12 against Respondent for failure to secure payment of workers’ compensation insurance for each of these four “employees” during the audit period. The total penalty associated with these four “employees” is $59,880.48. Ms. Jackson calculated a total penalty of $60,072.96 to be imposed against Respondent in connection with SWO 16-148- 1A. Business Records In compliance with the Department’s BRR, Respondent submitted additional business records on several occasions-- March 21, May 3 and 31, June 7, and August 15 and 24, 2017--in order to establish its complete payroll for the audit period. While the Department admits that the final documents submitted do establish Respondent’s complete payroll, the Department did not issue amended penalty assessment based on those records in either case. The Department maintains Respondent did not timely submit records, pursuant to Florida Administrative Code Rule 69L-6.028(4), which allows an employer 20 business days after service of the first amended order of penalty assessment to submit sufficient records to establish payroll. All business records submitted by Respondent were admitted in evidence and included as part of the record. The undersigned is not limited to the record before the Department at the time the amended penalty assessments were imposed, but must determine a recommendation in a de novo proceeding. The undersigned has relied upon the complete record in arriving at the decision in this case. Penalty Calculation for Ireland, Trice, and Perrotta For purposes of workers’ compensation insurance coverage, an “employee” is “any person who receives remuneration from an employer” for work or services performed under a contract. § 440.02(15)(a), Fla. Stat. Respondent did not issue a single check to Mr. Ireland, Mr. Trice, or Mr. Perrotta during the audit period. Mr. Ireland, Mr. Trice, and Mr. Perrotta are not included on any PMI leasing roster included in the record for the audit period. The uncontroverted evidence, including the credible and unrefuted testimony of each person with knowledge, established that Mr. Ireland, Mr. Trice, and Mr. Perrotta were newly hired for the job in Crestview on May 4, 2016, and began working that day prior to submitting applications at PMI, despite Ms. Fisher’s directions otherwise. Petitioner did not prove that either Mr. Ireland, Mr. Trice, or Mr. Perrotta was Respondent’s employee at any time during the audit period. Petitioner did not correctly calculate the penalty of $44,911.26 against Respondent for failure to secure workers’ compensation insurance for Mr. Ireland, Mr. Trice, and Mr. Perrotta during the audit period. Penalty Calculation for Hansel Ms. Fisher testified that Mr. Hansel has owned several businesses with which Respondent has conducted business over the years. Originally, Mr. Hansel owned a dumpster rental business, now owned by his father. Mr. Hansel also owned an independent landscaping company with which Respondent occasionally transacted business. When Respondent expanded business into the Panama City area, Ms. Fisher hired Mr. Hansel as a crew chief to supervise new crews in the area. The job on May 4, 2016, was his first roofing job. A review of Respondent’s records reveals Respondent issued the following checks to Mr. Hansel during the audit period: December 4, 2015, in the amount of $360, $300 of which was for “dumpster rental” and the remaining $60 for “sod”; May 4, 2016, in the amount of $200 for “sod repair”; May 6, 2016, in the amount of $925 as reimbursement for travel expenses; May 9, 2016, in the amount of $1,011.50 (with no memo); and May 21, 2016, in the amount of $100 for “7845 Preservation.” Mr. Hansel was included on Respondent’s PMI leasing roster beginning on May 13, 2016. Petitioner proved that Mr. Hansel was Respondent’s employee at times during the audit period. Petitioner did not prove that Respondent’s records were insufficient to determine payroll to Mr. Hansel during the audit period, which would have required an imputed penalty. Petitioner did not correctly calculate the penalty of $14,970.42 against Respondent for failure to secure workers’ compensation insurance coverage for Mr. Hansel during the audit period. Sod repair by Mr. Hansel is a service performed for Respondent during the audit period. Reimbursement of travel expenses is specifically included in the definition of payroll for purposes of calculating the penalty. See Fla. Admin. Code R. 69L- 6.035(1)(f) (“Expense reimbursements, including reimbursements for travel” are included as remuneration to employees “to the extent that the employer’s business records and receipts do not confirm that the expense incurred as a valid business expense.”). Dumpster rental is neither work performed on behalf of, nor service provided to, Respondent during the audit period. The correct uninsured payroll amount attributable to Mr. Hansel is $2,296.50. Petitioner correctly applied NCCI class code 5551, Roofing, to work performed by Mr. Hansel based on the observation of Mr. Holman at the worksite on May 4, 2016. With respect to Mr. Hansel’s services for sod and sod repair, Petitioner did not correctly apply NCCI class code 5551. Petitioner did not introduce competent substantial evidence of the applicable NCCI class code and premium amount for landscaping services performed during the audit period.3/ Uninsured payroll attributable to Mr. Hansel for roofing services during the audit period is $2,036.50. The approved manual rate for workers’ compensation insurance for NCCI class code 5551 during the period of non- compliance--May 9 and 21, 2016--is $18.60. The premium amount Respondent would have paid to provide workers’ compensation insurance for Mr. Hansel is $378.79 (One percent of Mr. Hansel’s gross payroll during the non-compliance period--$20.36--multiplied by $18.60). The penalty for Respondent’s failure to secure worker’s compensation coverage insurance for Mr. Hansel during the period of non-compliance is calculated as two times the amount Respondent would have paid in premium for the non- compliance period. The correct penalty for Respondent’s failure to maintain workers’ compensation coverage for Mr. Hansel during the period of non-compliance is $757.58. Penalty Calculation for Salesmen Independent contractors not engaged in the construction industry are not employees for purposes of enforcing workers’ compensation insurance requirements. See § 440.02(15)(d)1., Fla. Stat. Sales is a non-construction industry occupation. The Department calculated a penalty associated with payroll attributable to the following persons identified by Ms. Fisher as independent salesmen: Dylan Robinson, Kevin Miller, Marc Medley, Mike Rucker, Colby Fisher, David Jones, Jarod Bell, Matt Flynn, and Todd Zulauf. Section 440.02(15)(d)1. provides that an individual may be an independent contractor, rather than an employee, as follows: In order to meet the definition of independent contractor, at least four of the following criteria must be met: The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations; The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations; The independent contractor receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual; The independent contractor holds one or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation; The independent contractor performs work or is able to perform work for any entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process; or The independent contractor receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a contractual agreement, unless such contractual agreement expressly states that an employment relationship exists. If four of the criteria listed in sub- subparagraph a. do not exist, an individual may still be presumed to be an independent contractor and not an employee based on full consideration of the nature of the individual situation with regard to satisfying any of the following conditions: The independent contractor performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work. The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform. The independent contractor is responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform. The independent contractor receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis. The independent contractor may realize a profit or suffer a loss in connection with performing work or services. The independent contractor has continuing or recurring business liabilities or obligations. The success or failure of the independent contractor’s business depends on the relationship of business receipts to expenditures. Ms. Fisher testified that each of the above-named salesmen sold roofing jobs for her at various times during the audit period on a commission-only basis. The contractors inspect homeowner roofs, draft schematics, use their own equipment (e.g., drones), incur all of their own expenses, and handle the insurance filing for the homeowner’s insurance to pay on the claim. Ms. Fisher further testified that each of the salesmen also sells for other roofing contractors in the Tallahassee area. She pays the salesmen on a per-job basis. Ms. Fisher does not compensate the salesmen for the time involved in inspecting a roof, preparing schematics, or making the sale. Nor does Ms. Fisher reimburse the salesmen for travel to sales jobsites. Ms. Fisher’s testimony was credible, persuasive, and uncontroverted. Respondent introduced in evidence four “Independent Contractor Checklists” allegedly completed by Mr. Robinson, Mr. Medley, Mr. Fisher, and Mr. Flynn. Each form checklist follows the format of section 440.02(15)(d)1., listing the criteria set forth in subparagraphs a. and b. The forms indicate that they each meet all the criteria listed in subparagraph b.: they perform, or agree to perform services for a specific amount of money and control the means of performing the service; they incur the principal expenses related to the service performed; they are responsible for satisfactory completion of the services performed; they receive compensation for the services performed on a per-job or commission basis; they may realize a profit or suffer a loss in connection with performing the services; they have continuing and recurring business liabilities or obligations; and the success or failure of their business depends on the relationship of business receipts to expenditures.4/ In its Proposed Recommended Order, Petitioner conceded the nine men identified by Respondent as independent sales contractors “would not be considered employees of Respondent” because the “salesmen would seem to meet the majority of [the] requirements [of section 440.02(15)(d)1.b.].” Respondent issued Dylan Robinson, Mark Medley, Colby Fisher, Matt Flynn, Kevin Miller, Mike Rucker, Jarod Bell, David Jones, and Todd Zulauf an IRS FORM 1099-MISC for income paid during the 2016 tax year. Respondent did not prove by clear and convincing evidence that the above-named salesmen were Respondent’s employees during the audit period. For SWO 16-148-1A, Respondent did not correctly calculate the penalty because Respondent included a penalty associated with Petitioner’s failure to provide workers’ compensation insurance coverage for Dylan Robinson and Jarod Bell. Penalty in the amount of $20.70 associated with Dylan Robinson and Jarod Bell should not be included in the total penalty. The correct penalty amount for SWO 16-148-1A, based on records submitted by Respondent on or before March 20, 2016, is $929.16. Draft Revised Second Amended Order of Penalty Assessment The additional records submitted by Respondent revealed payments made to persons during the audit period who were not included in the Department’s Second Amended Order of Penalty Assessment. The Department and Respondent disagreed at hearing whether the payments qualified as payroll. At hearing, Petitioner submitted a draft revised second amended penalty calculation for SWO 16-148-1A based on all records received from Respondent. The revised penalty is in the amount of $61,453.50. Ms. Jackson populated the spreadsheet with the name of every individual to whom a check was written on Respondent’s business bank account during the audit period, removing only those payments to individuals and entities which, to Petitioner’s knowledge, were not Respondent’s employees. Respondent’s calculations in the revised penalty suffer from some of the same errors as in the second amended penalty calculation--they include individuals Petitioner did not prove were Respondent’s employees, as well as payments which were not uninsured payroll. For the reasons explained herein, Petitioner did not prove that salesmen David Jones, Dylan Robinson, Jarod Bell, Kevin Miller, Mark Medley, Matt Flynn, Mike Rucker, Tim Fischer, and Colby Fisher were Respondent’s employees during the audit period. Respondent did not accurately calculate the penalty associated with those persons. Respondent made payments to David Shields during the audit period, which the Department argues should be included as payroll. The Department included payments to Mr. Shields in its draft revised second amended order of penalty assessment and assigned NCCI class code “8810” for clerical work. Mr. Shields is a licensed professional roofing contractor who acts as “qualifier” for Respondent’s business. A qualifier is a licensed professional who certifies plans for permit applications submitted by another business. Respondent pays Mr. Shields a flat fee per permit application qualified by him. The record evidence does not support a finding that Mr. Shields provides clerical services to Respondent. Mr. Shields provides some sort of professional services to Respondent, and is likely an independent contractor providing his own materials and supplies, maintaining his own business accounts, and liable for his own business success. Assuming Mr. Shields were Respondent’s employee, the Department introduced no evidence of an appropriate NCCI class code for Mr. Shields’ services. The Department did not prove that payments to Mr. Shields should be included as Respondent’s uninsured payroll during the audit period. Respondent paid Susan Swain a total of $258 during the audit period for clerical work. Ms. Fisher maintained Ms. Swain’s work was casual at first, and the payments reflect a time when she worked on-again, off-again, handling the paperwork for restoration insurance claims. Later, Ms. Swain came to work for Respondent full-time and was added to the PMI leasing roster. Section 440.02(15)(d)5. provides that a person “whose employment is both casual and not in the course of the trade, business, profession or occupation of the employer” is not an employee. The statute defines “casual” employment as work that is anticipated to be completed in 10 working days or less and at a total labor cost of less than $500. See § 440.02(5), Fla. Stat. In its Proposed Recommended Order, the Department argues Ms. Swain’s wages should be included as payroll because the “testimony regarding Ms. Swain does not suggest that she was employed for less than 10 days[.]” However, it was the Department’s burden to prove that Ms. Swain was a statutory employee. The Department did not prove that Ms. Swain’s wages should be included within Respondent’s uninsured payroll. The largest portion of the penalty assessed by the Department, as well as in the draft revised second amended penalty assessment, against Respondent is in connection with various roofers who were employed by Respondent at times during the audit period. Each of the roofers was included on Respondent’s PMI leasing roster, but received checks directly from Respondent in addition to PMI payroll checks. The Department included all the direct payments to those roofers as payroll for purposes of calculating a penalty in this case. As Ms. Fisher explained, the company bids a reroof on a per job basis--usually a per square foot price. Ms. Fisher adds each roofing contractor’s name to the PMI leasing roster to ensure that each roofer is covered by workers’ compensation insurance for the duration of the job. When the job is completed (which is a matter of just a few days), the contractor reports to Ms. Fisher what amount of the contract price was spent on materials, supplies, or other non-labor costs. Ms. Fisher cuts a check to the contractor for that amount and authorizes PMI to issue payroll checks for the “labor cost” (the difference between the contract price and the non-labor costs). Ms. Fisher refers to this process as “back-charging” the contractors for their materials, maintenance, tools, and other non-labor costs. The Department is correct that the direct payments are payroll to the roofing contractors. See Fla. Admin. Code R. 69L-6.035(1)(b) and (h) (remuneration includes “payments, including cash payments, made to employees by or on behalf of the employer” and “payments or allowances made by or on behalf of the employer for tools or equipment used by employees in their work or operations for the employer.”). The Department would be correct to include these payments in the penalty calculation if they represented uninsured payroll. However, the evidence supports a finding that the direct payments to the roofing contractors were made for the same jobs on which Respondent secured workers’ compensation coverage through PMI. The roofing contractors were covered for workers’ compensation throughout the job, even though they may have received partial payment for the job outside of the PMI payroll checks.5/ The direct payments were not for separate reroofs on which the roofers were not otherwise insured. The Department did not correctly calculate penalties associated with the following roofing contractors: Donald Tontigh, Joseph Howard, Keith Mills, Aaron Kilpatrick, Gustavo Tobias, Jose Mejia, and Tommy Miller. Ms. Fisher also received cash payments from Respondent during the audit period. These payments were made in addition to her payroll through PMI. Ms. Fisher described these payments as “cash tickets,” which were paid outside of her PMI payroll to reimburse her for investments made in the company. For purposes of calculating the penalty in this case, these “cash tickets” are clearly payroll, as that term is to be calculated pursuant to rule 69L-6.035. Similar to the issue with the roofing contractors, the question is whether the payments represent uninsured payroll. Ms. Fisher did not hold a corporate officer exemption at any time relevant hereto. Ms. Fisher testified that she was covered through PMI payroll leasing. In contrast to the roofing contractors, Ms. Fisher’s direct payments do not directly coincide with any particular job or specific time frame during which Ms. Fisher was covered for workers’ compensation insurance through PMI. The evidence was insufficient to determine that the amounts were insured payroll. The Department properly calculated a penalty associated with payroll attributable to Ms. Fisher. Respondent made one payment of $75 to Donald Martin during the audit period. The Department calculated a penalty of $27.90 associated with this payment to Mr. Martin. Ms. Fisher explained that Mr. Martin was a down-on-his-luck guy who came by the office one day complaining that Mr. Hansel owed him some money. Ms. Fisher offered to put him on a roofing crew and wrote him the $75 check to help him out. Ms. Fisher’s testimony was both credible and unrefuted. Mr. Martin was never hired by Respondent, put on any roofing crew, or added to the PMI leasing roster. Mr. Martin was not Respondent’s employee because he did not receive remuneration for the “performance of any work or service while engaged in any employment under any appointment or contract for hire” with Respondent. § 440.02(15)(a), Fla. Stat. Cale Dierking works for Respondent full-time in a clerical position. During the audit period, Respondent paid Mr. Dierking directly by check for $1,306.14. This payment was made outside of Mr. Dierking’s PMI payroll checks. Ms. Fisher testified that she paid Mr. Dierking directly on one occasion when “PMI’s payroll got stuck in Memphis, I believe it was a snow-in situation where payroll checks didn’t come.” Rather than ask her employee to go without a timely paycheck, she advanced his payroll. Ms. Fisher’s testimony was both credible and unrefuted. The payment to Mr. Dierking is clearly payroll. However, Mr. Dierking was covered for workers’ compensation through PMI for the period during which the check was issued. Thus, there is no evidence that it was uninsured payroll. The Department did not correctly calculate a penalty associated with payments to Mr. Dierking. The correct penalty to be assessed against Respondent for failure to secure workers’ compensation coverage for its employees during the audit period in connection with SWO 16-148- 1A is $770.60. Penalty Calculation for SWO 16-198-1A Ms. Jackson calculated a total penalty against Respondent in connection with SWO 16-198-1A in the amount of $19,115.84, as reflected in the Second Amended Order of Penalty Assessment. The Department correctly imputed penalty against Respondent in the amount of $91.68 each for uninsured payroll to Mr. Gonzalez and Mr. Lopez. The evidence supported a finding that these workers were Respondent’s statutory employees on June 8, 2016, and were not enrolled on the PMI leasing roster. The Department did not correctly calculate the penalty associated with salesmen Dylan Robinson, Jarod Bell, Kevin Miller, Mark Medley, Matt Flynn, and Todd Zulauf. The Department did not correctly calculate the penalty associated with roofing contractors Abraham Martinez- Antonio, Edwin Kinsey, Dustin Hansel, Efrian Molina-Agustin, Jose Mejia, Joseph Howard, Keith Mills, Samuel Pedro, and Tommy Miller. The Department did not correctly calculate the penalty against Respondent associated with Mr. Shields, Respondent’s qualifier. Based on a review of Respondent’s complete “untimely” records, the Department discovered direct payments made to additional employees not included on the Second Amended Order of Penalty Assessment. Respondent made a direct payment to Ethan Burch in the amount of $602.50 during the audit period. Ethan Burch is one of Respondent’s full-time clerical employees. The evidence is insufficient to determine whether the payment of $602.50 was insured or uninsured payroll. As such, the Department did not prove it correctly calculated the penalty associated with Mr. Burch. Respondent also made a direct payment to Chelsea Hansel in the amount of $965 during the audit period. Ms. Hansel is another clerical employee. Ms. Hansel’s PMI enrollment was delayed due to some background investigation. Respondent paid Ms. Hansel for work she completed prior to enrollment. The direct payment to Ms. Hansel constitutes uninsured payroll. The Department correctly calculated the penalty associated with the payment to Chelsea Hansel. The correct penalty amount to be imposed against Respondent for failure to secure payment of workers’ compensation coverage for its employees (Gonzalez, Lopez, and Chelsea Hansel) during the audit period in connection with SWO 16-198-1A is $187.80.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers’ Compensation, finding that Royal Roofing and Restoration, Inc., violated the workers’ compensation insurance law and, in DOAH Case No. 17-0879, assessing a penalty of $770.60; and in DOAH Case No. 17-1558, assessing a penalty of $187.80. DONE AND ENTERED this 24th day of January, 2018, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 2018.
The Issue The issue presented is whether the Respondent committed the offenses alleged in the Administrative Complaint, and, if so, what penalty should be imposed.
Findings Of Fact At all times material hereto, Respondent, Manuel Cabanas was licensed as an electrical contractor and held license number ER 0006946 issued by Petitioner, the Electrical Contractors' Licensing Board. On or around December 13, 1988, the Construction Trades Qualifying Board of Dade County, Florida (Board) charged Respondent with the misrepresentation of material facts concerning his employment or work status on documents submitted with his application to obtain a business certificate of competency. A hearing on the charge was held before the Board on January 3, 1989. At the hearing, Respondent initially pled not guilty, but changed his plea to no contest sometime after a Board member advised Respondent that his testimony indicated that he was actually guilty of the charge. On January 6, 1989, Respondent was notified by the Board that after hearing all the testimony, a determination had been made that Respondent was guilty of the charge. As discipline for his act, the Board revoked Respondent's certificate of competency.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered suspending Respondent's license number ER 0006946, conditioned upon reinstatement of the local license as long as Respondent intends to practice in the jurisdiction of the Construction Trades Qualifying Board of Dade County, Florida. As to any other jurisdiction, the appropriate penalty is suspension of Respondent's license number ER 0006946 for a period of six months. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of December 1989. JANE C. HAYMAN 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 Administrative Hearings this 21st day of December 1989.
Findings Of Fact Petitioner received a score of 69 on the business administration portion of the February, 1988, Certified General Contractor's Examination. If he had correctly answered one additional question on that portion of the Examination, he would have achieved a passing grade. Petitioner selected answer "A" to question numbered 14 of the Examination. Respondent had selected "B" as the correct answer for that question. Answer "B" is the only correct answer to question numbered 14 of the business administration portion of the February, 1988, Certified General Contractor's Examination.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is Recommended that a Final Order be entered finding that Petitioner failed to achieve a passing grade on the February, 1988, Certified General Contractor's Examination. DONE AND RECOMMENDED this 8th day of August, 1989, in Tallahassee, Leon County, Florida. LINDA M. RIGOT 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 8th day of August, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-3856 Respondent's proposed finding of fact numbered 1 has been adopted in substance in this Recommended Order. Respondent's proposed findings of fact numbered 2 and 3 have been rejected as being unnecessary for determination of the issues in dispute in this cause. Respondent's proposed findings of fact numbered 4-6 have been rejected as not constituting findings of fact but rather as constituting recitations of the testimony. COPIES FURNISHED: Donald F. Driscoll 1379 Savoyard Way Royal Palm Beach, Florida 33411 G. W. Harrell, Esquire Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Kenneth E. Easley, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Fred Seely, Executive Director Department of Professional Regulation Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202
The Issue The issue is whether, in connection with a procurement of vendors of tax-sheltered annuity programs for Respondent's employees, Respondent's failure to select Petitioner's proposal instead of, or in addition to, the proposals of ten offerors that were accepted is contrary to the agency's governing statutes, the agency's rules or policies, or the solicitation specifications, in violation of Section 120.57(3)(f), Florida Statutes.
Findings Of Fact On October 7, 2002, Respondent issued RFP 23-089V--Tax Sheltered Annuity Program for School Board Employees (RFP). The purpose of the procurement is to select multiple vendors to sell tax-sheltered annuities to Respondent's 26,000 fulltime employees through a payroll-deduction plan. In general, Respondent sought to improve its existing tax-sheltered annuity program that it offered its employees by selecting vendors whose products would improve the quality of investment products, decrease expenses, establish service standards, increase participation, improve the dissemination of program information, maintain consistent communications, and ensure compliance with the applicable provisions of the Internal Revenue Code of 1986, as amended (IRC). Under the existing tax-sheltered annuity program, 31 percent of Respondent's eligible employees make payroll deductions totalling about $36 million annually to 21 vendors. If Respondent does not select an existing vendor in the procurement that is the subject of this case, the vendor's enrollment will be frozen, and the vendor may not enroll new members. RFP Section 2.0 seeks annuities and mutual funds, under IRC Sections 403(b)(1) and 403(b)(7), respectively (collectively, TSAs), but not life insurance unless directly connected to an annuity. Section 2.0 states that Respondent will not contract with "independent agents or brokers," but will contract "directly with one or more financial organizations independently or . . . with multiple financial organizations from the same vendor(s)." Section 2.0 explains that it will be the "carrier's/company's responsibility to appoint, supervise, and maintain properly licensed and trained agents to offer these products." Respondent imposed this requirement on vendors so that they would be directly responsible for the persons who undertook the marketing of TSAs to Respondent's employees. RFP Section 1.0 includes a certification from the offeror. Part of the Required Response Form, the certification states: I hereby certify that: I am submitting the following information as my firm's (proposer) proposal and am authorized by proposer to do so; proposer agrees to complete and unconditional acceptance of the contents of Pages 1 through 19 inclusive of this Request for Proposals, and all appendices and the contents of any Addenda released hereto; proposer agrees to be bound to any and all specifications, terms and conditions contained in the Request for Proposals, and any released Addenda and understand [sic] that the following are requirements of this RFP and failure to comply will result in disqualification of proposal submitted; proposer has not divulged, discussed, or compared the proposal with other proposers and has not colluded with any other proposer or party to any other proposal; proposer acknowledges that all information contained herein is part of the public domain as defined by the State of Florida Sunshine and Public Records Laws; all responses, data and information contained in this proposal are true and accurate. RFP Section 3.4 warns: "Any modifications or alterations to this form shall not be accepted and proposal will be rejected. The enclosed original Required Response Form will be the only acceptable form." RFP Section 3.7 sets forth the "minimum eligibility" criteria, which an offeror must meet "[i]n order to be considered for award . . .." The criteria are: Insurance carriers must be licensed in the State of Florida and provide a copy of your license and/or certificate. Insurance carriers must have, and maintain, a minimum size category of VI and a financial rating of A- from A.M. Best. If proposer is proposing a fixed or variable annuity program, the proposer must be licensed as a life insurance carrier within the State of Florida. If the proposer is not an insurance carrier, it shall represent and warrant that it is a broker-dealer registered with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934 and with any applicable State securities commission, and also is a member of the National Association of Securities Dealers, Inc. Proposer must be a direct provider of the product(s) offered versus a marketing unit for the product(s) offered. RFP Section 3.8 requires each offeror to complete the 14-page questionnaire attached as Attachment A. Section 3.8 states: "If you are unable to answer a question, indicate why. If you are unable or unwilling to disclose particular information asked in a question, indicate why." Question 3 of the "Company Information" part of the questionnaire asks: "How long has your company (not parent company) been licensed to do business?" Question 4 of the "Company Information" part of the questionnaire asks: "How long has your company been licensed to do business in the State of Florida?" Question 5 of the "Company Information" part of the questionnaire asks: "In how many states is your company licensed to do business?" Question 6 of the "Company Information" part of the questionnaire asks: "Do you currently have all the necessary licenses and registration to perform the activities proposed?" Question 7 of the "Company Information" part of the questionnaire asks: "What is your company's (not parent company) total assets under management for 403(b) Programs including the number of plans and number of participants as of December 31, 2001?" Question 8 of the "Company Information" part of the questionnaire asks: "If applicable, what was your company's ratings during each of the most recent three years?" This question contains a matrix with the years 2000-2002 and four sources of ratings: ”A.M. Best," "Moody's," "S&P," and "Duff & Phelps.” Question 13 of the "Company Information" part of the questionnaire asks: "Provide the name, address, and telephone number of three public entities (preferably public schools) 403(b) clients we may contact as references." Questions 1 and 2 of the "Contract Overview" part of the questionnaire ask the offeror to identify its investment options. Questions 7-19 of the "Contract Overview" part of the questionnaire ask the offeror detailed questions about the expenses associated with its TSA programs. Question 16 of the "Variable Annuity" part of the questionnaire asks the offeror to identify each variable-annuity fund, by name, that it offers participants. Question 19 of this part asks for the rate of return for each investment option for the period ending June 30, 2002. Question 21 of the "Mutual Fund" part of the questionnaire asks the offeror to identify each mutual fund, by name, that it offers participants. Question 25 of this part asks for the total cumulative rate of return for each investment option for the period ending June 30, 2002. Question 26 of this part asks for the Morningstar Rating for each investment option, as of June 30, 2002, if applicable. Question 29 of the "Contract Overview" part of the questionnaire asks if the offeror will provide a toll-free and local number for participants to conduct specified financial transactions, including changing investment mixes and beneficiaries. Question 30 of the "Contract Overview" part of the questionnaire asks the same question regarding internet access for participants. Question 22 of the "Administration" part of the questionnaire asks: "Do you offer electronic investment advice to program participants? . . ." Question 23 of the "Administration" part of the questionnaire asks: "Do you offer an asset allocation program? . . ." Question 10 of the "Enrollment Procedures and Services" part of the questionnaire asks: "Do you provide any communications to participants on a regular basis (e.g., newsletters)? Please provide examples." Question 11 of the "Enrollment Procedures and Services" part of the questionnaire asks: "How will you restrict your representatives from selling other products to [Respondent's] employees?" Question 12 of the "Enrollment Procedures and Services" part of the questionnaire asks: "Has your organization had a SAS 70 internal controls review? Please attach." RFP Section 3.10 states that the "following services are requested by" Respondent and asks each offeror to "[c]learly describe how [it] can accomplish each of the following[.]" Section 3.10.1 provides a matrix with three columns: "Yes, Can Comply," "Yes, Can Comply But With Deviations," and "No, Cannot Comply." The rows describe specific services, such as providing customer service telephone numbers that are local calls, a toll- free telephone number for employees who reside outside the local area codes, and videotapes or websites educating participants about TSAs. RFP Section 3.11 requires each offeror to complete Attachment C, which is a Financial Response form. This document requires each proposal to list the "annual participant account charge," "wrap fees," "mortality, expense, [and] administrative charges," "total fund management or separate account charges for each fund offered," "front loads," "CDSC or surrender charges & terms," "other fees & expenses," and "4th quarter interest rate." Section 3.11 also requires each offeror to calculate the "cumulative account balance," "average compound annual net rate of return," and "cash surrender value" for a specified sum over a specified period. RFP Section 3.12 requires each offeror to provide the following information to receive points for minority or women business enterprises: Proposers must provide information regarding diversity of proposer's company. Complete and submit Attachment F. Proposer must provide information regarding diversity of the proposer's local . . . agents and/or representatives. Complete and submit Attachment G. Proposer must provide information and[/]or documentation of the Proposing Company's outreach program for employment and/or contracting of local agents. Proposer shall submit information of its involvement in the minority community. Such evidence may include, but not be limited to, minority sponsored events, and purchases made from minority companies funds targeting minority students, financial considerations and/or providing other corporate resources for minority community projects. Attachment G provides a chart to be completed by the offeror. The chart lists "Broker/Agents" and "% of Total Workforce" and requests the following data for each category: total, non-Hispanic white males, non-Hispanic white females, non-Hispanic black males, non-Hispanic black females, Hispanic males, Hispanic females, Asian males, Asian females, American Indian/Alaskan Native males, and American Indian/Alaskan Native females. RFP Section 5.0 requires offerors to submit their proposals by 2:00 p.m. on November 20, 2002. The events calendar states that, on January 13, 2003, the Evaluation Committee will review proposals and recommends awards, and, on January 21, 2003, Respondent will post the recommendation. RFP Section 6.1 states: The Superintendent's Insurance Advisory Committee (hereinafter referred to as "Committee"), [Respondent], or both reserve the right to ask questions of a clarifying nature once proposals have been opened, interview any or all proposers that respond to the RFP, or make their recommendations based solely on the information contained in the proposals submitted. RFP Section 6.2 states: The Committee shall evaluate all proposals received, which meet or exceed Section 3.7, Minimum Eligibility Requirements. The Committee reserves the right to ask questions of a clarifying nature and interview any or all proposers that meet or exceed Section 3.7. RFP Section 6.3 states that the Insurance Advisory Committee (Committee) shall evaluate "[p]roposals that meet or exceed Section 3.7," pursuant to the following criteria (with maximum points indicated in parentheses): "Experience and Qualifications" (30 points), "Scope of Services Provided" (30 points), "Minority/Women Business Enterprise--Diversity of Proposer's Company" (5 points), "Documentation of the Proposing Company's Minority/Women Business Enterprise Outreach Programs" (5 points), and "Cost of Services Provided" (30 points). RFP 6.3 warns: "Except for those requirements stated in Section 3.7 and Section 9.0, the failure to respond, provide detailed information or to provide requested proposal elements may result in the reduction of points in the evaluation process." RFP Section 6.4 states: Based upon the results of Section 6.3, the Committee, at its sole discretion, may: interview; recommend award to the top ranked proposer; may recommend award to more than one top ranked proposer; may short-list the top ranked proposers (short-list number to be determined by the Committee) for further consideration or, may reject all proposals received. RFP Section 6.5 states: In the event that the Committee chooses to short-list proposers, the list of short- listed proposers may be further considered by the Committee, [Respondent], or both. The Committee, [Respondent], or both may re- interview the short-listed proposers in order to make an award recommendation (by the Committee) or an award by [Respondent]. During the interview process, no submissions made, after the proposal due date, amending or supplementing the proposal shall be considered. RFP Section 6.6 states: In the event that an Agreement between the Committee, [Respondent] or both, and the selected proposer(s) is deemed necessary, at the sole discretion of the Committee, [Respondent] or both, the Committee will begin negotiations with the selected proposer(s). The Committee reserves the right to negotiate any term, condition, specification or price with the selected proposer(s). . . . RFP Section 7.4 provides that the term of the contract will extend through December 31, 2010, plus possible renewals through December 31, 2015. RFP Section 8.11 states: The award of this RFP is subject to the provisions of Chapter 112, Florida Statutes, as currently enacted or amended from time to time. All proposers must disclose with their proposal the name of any officer, director or agent who is also an employee of [Respondent]. In addition, Gallagher Benefit Services, Inc. will be providing consulting services to [Respondent] in relation to this RFP. All proposers must disclose with their proposal the name of any officer, director or agent, who is also an employee of Gallagher Benefit Services, Inc. or any subsidiaries of Gallagher Benefit Services, Inc. RFP Section 8.13 provides that, in the event of a conflict among documents, the order of priority is as follows: the agreement between offeror and Respondent, RFP addenda (the latest receiving the highest priority), RFP, and offeror's proposal. RFP Section 8.22 specifies the procedure under which a person may protest the specifications of the RFP and warns that the failure to timely protest the RFP specifications "shall constitute a waiver of proceedings " RFP Section 8.23 provides that Respondent will post the Committee's recommendations and tabulations on January 21, 2003. Section 8.23 provides that any person seeking to protest the "decision or intended decision" shall file a notice of protest and formal written protest within certain time limits. Citing School Board Policy 3320 and Chapter 120, Florida Statutes, Section 8.23 warns that the failure to timely protest the Committee's recommendations "shall constitute a waiver of proceedings " RFP Section 8.24 states that Respondent "reserves the right . . . to directly negotiate/purchase per School Board policy and/or State Board Rule 6A-1.012, as currently enacted or as amended from time to time, in lieu of any offer received or award made as a result of this RFP if it is in its best interest to do so." RFP Section 8.28 states: By [Respondent]: [Respondent] agrees to be fully responsible for its acts of negligence, or its agents' acts or negligence when acting within the scope of their employment and agrees to be liable for any damages resulting from said negligence. Nothing herein is intended to serve as a waiver of sovereign immunity by [Respondent]. Nothing herein shall be construed as consent by [Respondent] to be sued by third parties in any manner arising out of any contract. By VENDOR: VENDOR agrees to indemnify, hold harmless and defend [Respondent], its agents, servants and employees from any and all claims, judgments, costs and expenses including, but not limited to, reasonable attorney's fees, reasonable investigative and discovery costs, court costs and all other sums which [Respondent], its agents, servants and employees may pay or become obligated to pay on account of any, all and every claim or demand, or assertion of liability, or any claim or action founded thereon, arising or alleged to have arisen out of the products, goods or services furnished by the VENDOR, its agents, servants or employees; the equipment of the VENDOR, its agents, servants or employees while such equipment is on premises owned or controlled by [Respondent]; or the negligence of VENDOR or the negligence of VENDOR's agents when acting within the scope of their employment, whether such claims, judgments, costs and expenses be for damages, damage to property including [Respondent]'s property, and injury or death of any person whether employed by the VENDOR, [Respondent] or otherwise. RFP Section 8.35.1 provides that Respondent "reserves the right to request additional information [or] reject any or all proposals that do not meet mandatory requirements " RFP Section 8.35.2 provides that Respondent "reserves the right to waive minor irregularities in any proposal," although "such a waiver shall in no way modify the RFP requirements or excuse the proposer from full compliance with the RFP specification and other contract requirements if the proposer is awarded the contract." RFP Section 8.35.3 states that Respondent "may" reject a proposal "if it does not conform to the rules or requirements contained in this RFP." Section 8.35.3 cites as "[e]xamples for rejection" such nonconformities as the failure to file the proposal by the deadline, the failure to execute and return the Required Response Form described in RFP Section 1.0, the failure to respond to all subsections of the RFP, or the addition of provisions by an offeror that reserve the right to accept or reject an award or to enter into a contract or add provisions contrary to those in the RFP. RFP Section 8.42 states: "No submissions made after the proposal opening, amending or supplementing the proposal shall be considered." RFP Section 8.43 states: "The Committee and/or [Respondent] reserves the right to waive minor irregularities or technicalities in proposals received." RFP Section 9.0 states: Proposer agrees, by submission of their [sic] proposal, that any Agreement resulting from this RFP will include the following provisions, which are not subject to negotiation. Proposer agrees to the following: --Obtain and maintain insurance with coverage limits in Special Conditions 7.6 for the term of any Agreement. * * * Twenty-three offerors timely submitted offers in response to the RFP. In addition to Petitioner, the offerors were: American Express Financial Advisors (American Express), Americo Financial Life and Annuity Insurance Company (Americo), CitiStreet Associates LLC (CitiStreet), Equitable Life Assurance Society of the United States and AXA Advisors LLC (Equitable), First Investors Corporation (First Investors), Horace Mann Life Insurance Company (Horace Mann), ING, Life Insurance Company of the Southwest (Southwest), Lincoln Financial Group (Lincoln), MassMutual, MetLife, Inc. (MetLife), Nationwide Life Insurance Company (Nationwide), New York Life Insurance & Annuity Corp. (New York Life), PFS Investments, Inc. (PFS), Pioneer Funds Distributor, Inc. (Pioneer), Putnam Investments (Putnam), Security Benefit Group of Companies (Security Benefit), The Hartford (Hartford), The Legend Group (Legend Group), The Variable Annuity Life Insurance Company (VALIC), TIAA-CREF, and Veritrust Financial, LLC (Veritrust). The responsibility of the Committee is to score the proposals, adopt a scoring threshold, negotiate agreements with offerors scoring at and above the threshold, and recommend to the Superintendent those offerors with which the Committee successfully negotiates agreements. The responsibility of the Superintendent is to recommend to the School Board the offerors that it should accept as vendors of TSAs to its eligible employees. The Committee comprises 15 members, who represent administrators and nonmanagerial employees of Respondent, as well as three of Respondent's nine members of the School Board. The purpose of the Committee is to provide the Superintendent with advice regarding insurance matters. The Superintendent rarely overrides the recommendations of the Committee. In the present procurement, Respondent makes no financial contributions to any vendors, so Respondent's sole interest is the satisfaction of its employees. Thus, it is highly unlikely that the Superintendent or even the School Board would override the recommendations of the Committee. However, as authorized by RFP Section 8.23, Petitioner has protested the recommendations of the Committee. Neither the Superintendent nor the School Board has yet considered the Committee's recommendations, which are the sole subject of this bid protest. Members of the Committee received copies of the proposals shortly after they were submitted. At the same time, the Committee chair assigned to Respondent's insurance consultant, Gallagher Benefit Services, Inc. (Gallagher), the task of examining and evaluating the proposals. Ultimately owned by Arthur J. Gallagher & Company, Gallagher is part of a large family of corporations involved in the financial-services industry. Arthur J. Gallagher's annual revenues exceed $1 billion. Gallagher is the third largest insurance broker in the United States and the fourth largest in the world. A fee-based consultant, Gallagher employs 1000 persons, and the Gallagher family of corporations employs over 7000 persons. GBS Retirement Services, Inc., which is a broker- dealer and part of the Gallagher family of corporations, manages over $3 billion in retirement plan assets. In examining and evaluating the proposals, Gallagher prepared an Analysis of Proposals, which it supplied to each member of the Committee one week prior to its meeting on January 13, 2003. The Analysis of Proposals contains a useful glossary of terms, a "Summary of Returns," an "Individual Fund Expenses Handout," as well as 507 pages of materials consisting almost exclusively of analysis of offers by way of matrices reflecting various provisions of the RFP. The Analysis of Proposals comprises four parts: "Minimum Eligibility," "Experience & Qualifications," "Scope of Services," and "Cost." The first part corresponds to the Minimum Eligibility criteria set forth in RFP Section 3.7. The second, third, and fourth parts correspond to the three 30-point scoring categories set forth in RFP Section 6.3--omitting only the two five-point categories for minority or women business enterprises, which Gallagher did not consider or analyze. As discussed below, Gallagher prepared scoring sheets for the parts of the Analysis of Proposals corresponding to the three 30-point scoring categories. Except for the area of references, as discussed below, these scoring sheets were derived from the more extensive information contained in the Analysis of Proposals. However, Gallagher did not prepare any synopsis of the Minimum Eligibility analysis contained in the Analysis of Proposals. Gallagher did not analyze the proposals of New York Life and Putnam, which submitted proposals, but failed to sign the Required Response Form. Respondent's Purchasing Department determined that these unsigned proposals were nonresponsive and did not forward them to Gallagher for evaluation. Gallagher determined that each of the 21 remaining proposals met the Minimum Eligibility criteria. However, as stated in the Executive Summary of the Analysis of Proposals, Gallagher relayed the doubts of Respondent's Purchasing Department that the proposal of Mass Mutual was signed by an authorized representative and deferred for the Committee's determination whether the proposals of PFS, Legend Group, and Veritrust complied with RFP Section 3.7.5. In general, Gallagher treated the Minimum Eligibility criteria as requirements of substance, not form. Thus, if an offeror neglected to provide the specified documentation in its proposal, Gallagher researched readily available sources to determine if the offeror satisfied the criterion. For RFP Section 3.7.1, which requires that offerors that are insurers must be licensed in Florida and provide a copy of their license, Gallagher checked online with the Florida Department of Financial Services, a publicly available website, to determine whether each such offeror was licensed in Florida. Gallagher determined that each such offeror was properly licensed. Gallagher did not recommend the disqualification of vendors that failed to provide a copy of their current insurance licenses. By these means, Gallagher insured that no unlicensed offeror would be deemed compliant merely by providing an apparent copy of a license and that no properly licensed offeror would be deemed noncompliant merely for omitting a copy of its license or including a copy of an old license. For RFP Section 3.7.2, which requires that offerors that are insurers have an A.M. Best minimum size category of VI and financial rating of A-, Gallagher again checked online with A.M. Best, a subscriber-available website, to determine whether each such offeror was so rated by A.M. Best. Gallagher determined that each such offeror met the minimum A.M. Best ratings. For RFP Section 3.7.3, which requires that offerors that are proposing fixed or variable annuity programs must be licensed in Florida as life insurers, Gallagher relied on its verification under RFP Section 3.7.1. Gallagher reasoned that Section 3.7.3 was redundant because the sale of such programs requires licensure only as an insurer, not as a life insurer. For RFP Section 3.7.4, which requires that offerors that are not insurers must warrant that they are registered broker-dealers, Gallagher checked other online resources to verify the status of noninsurer offerors as registered broker- dealers. For RFP Section 3.7.5, which requires that offerors must be "direct provider[s] of the product(s) offered," Gallagher largely deferred to the Committee because this criterion is not an industry standard. Finding some doubt as to two offerors, Gallagher required them to provide letters clarifying their status as direct providers, but did not analyze any of the proposals for compliance with this criterion. Gallagher's treatment of the Minimum Eligibility criteria as requirements imposed upon an offeror's actual status, and not merely formal requirements imposed upon an offeror's proposal, is the correct interpretation of RFP Sections 3.7.1, 3.7.2, and 3.7.3. These sections require that an offeror, in fact, meet certain requirements. The additional provision in Section 3.7.1 concerning a copy of an insurance certificate serves the convenience of Respondent and does not transform the requirement from one of fact to one of fact and clerical competence in assembling a proposal. RFP Section 3.7.4 seems to require only a representation by noninsurer offerors that they are registered broker dealers. These types of provisions often raise issues in bid challenges when the procuring agency attempts to verify a bidder's response. The issue is somewhat simpler in this case, though, because only four offerors were not insurers: Pioneer, PFS, Legend Group, and Veritrust. None of these offerors scored sufficient points to be designated for negotiations. Also, these four offerors did not compete with Petitioner, which, as an insurer, was not required to comply with Section 3.7.4, so that Gallagher's interpretation of Section 3.7.4, which effectively recommended that these four offerors proceed to scoring, was not especially significant to Petitioner. Under the circumstances, Gallagher's interpretation of Section 3.7.4, which is a reasonable interpretation, if not the better interpretation, is moot. RFP Section 3.7.5, which requires that the offeror be a direct provider, was designed by Respondent to ensure accountability among vendors of TSAs. Gallagher's determination, in effect, to defer to the Committee any close determinations concerning an offeror's compliance with this unusual criterion was entirely reasonable. This decision was preferable to Gallagher's attempting to construe this requirement, with which it had no experience, and possibly recommend the exclusion of an offeror that Respondent would not have excluded. Gallagher also prepared "GBS Scoring Sheets" for each proposal and an overall "Gallagher Benefit Services TSA Evaluation." Although based on the RFP, the GBS Scoring Sheets are products of Gallagher's design and are not a comprehensive restatement of all of the RFP provisions applicable to each category. The GBS Scoring Sheets identify five scoring items for Experience and Qualifications, nine scoring items for Scope of Services Provided, and four scoring items for Cost of Services Provided. The GBS Scoring Sheets assign a maximum of ten points for each of the three categories and deduct a specific number of points from a proposal's score if the proposal fails to satisfy certain items. For ease of reference, at the suggestion of Mr. Weintraub, Gallagher tripled its raw scores, so that the maximum possible scores for each of the three categories are 30 points, which is the maximum possible scores of each of these categories in the RFP. The GBS Scoring Sheets gave each offeror two raw points in Experience and Qualifications, one raw point in Scope of Services Provided, and two raw points in Cost of Services. Petitioner correctly contends in its proposed recommended order that this feature of the scoring in the GBS Scoring Sheets is unexplained, but it is also harmless. For each of the three categories, Gallagher identified items for scoring based in part on the variability of the proposals concerning their responses to such items. It appears that Gallagher also drew on its financial expertise in identifying critical features of the RFP. For Experience and Qualifications, the scoring items are: "403(b) Assets," "Number of Participants," "Rating," "Years," and "References." For "403(b) Assets," the GBS Scoring Sheets reduce a score by two points if the value is under $1 billion, by one point if over $1 billion but not over $10 billion, and by zero points if over $10 billion. For "Number of Participants," the GBS Scoring Sheets reduce the score by two points if less then 100,000 participants or the proposal did not provide the information, by one point if over 100,000 participants but not over 1,000,000 participants, and by zero points if over 1,000,000 participants. For "Rating," the GBS Scoring Sheets reduce the score by one point if the A.M. Best Rating is A or A- and by zero points if the A.M. Best Rating is A+. For "Years," the GBS Scoring Sheets reduce the score by one point if less than 10 years. For "References," the GBS Scoring Sheets reduce the score by two points for "Negative Comments." For Scope of Services Provided, the scoring items are: "VRS" [Voice Response System], "Internet," "Routine Communication," "Electronic Investment Advice," "Allocation Program," "SAS 70," "Restrict Sale of Other Products," "954 Area Code," and "Video or Website." For "VRS" and "Internet," the GBS Scoring Sheets reduce the score by one point each for a limited, rather than full, voice recognition system or Internet access in terms of the ability of a participant to use this medium to change his or her beneficiary. For the remainder of the items, the GBS Scoring Sheets reduce the score by one point if the proposal fails to comply with the item. For Cost of Services Provided, the scoring items are: "Fees," "Investment Performance," "Morningstar Ratings," and "Morningstar Category Rank." For "Fees," the GBS Scoring Sheets reduce a score by two points if "poor," by one point if "reasonable expenses relative to universe," and by zero points if "no front/back end [charge] and competitive total." For "Investment Performance," the GBS Scoring Sheets reduce a score by two points if the proposal did not report performance, by one point if "wrong date or data," and by zero points if "as requested." For "Morningstar Ratings," the GBS Scoring Sheets reduce the score by two points if the average rating is less than three stars, by one point if the average rating is three stars, and by zero points if the average rating is four or five stars. For "Morningstar Category Rank," the GBS Scoring Sheets reduce the score by two points if less than 20 percent of the funds are in the top half, by one point if more than 20 percent but not more than 40 percent of the funds are in the top half, and by zero points if more than 40 percent of the funds are in the top half. Although the GBS Scoring Sheets obviously produced scores for the Committee, a preliminary statement about Experience and Qualifications in the Executive Summary underscores Gallagher's intention not to usurp the Committee's scoring function. Gallagher stated that it was assuming that Respondent would select multiple vendors to sell TSAs to its employees; if so, "the experience and qualifications of all vendors was considered sufficient." If Respondent selected only one or a more limited number of vendors, Gallagher warned: "size and experience would become more critical and should be revisited." In these statements, Gallagher implicitly invited the Committee to concentrate its scores for Experience and Qualifications, even though Gallagher's GBS Scoring Sheets did not do so. The five scoring items for Experience and Qualifications in the GBS Scoring Sheets are fair issues on which to differentiate proposals. These five scoring items are derived from provisions of the RFP, and, although other important provisions are omitted, the included items are significant. Although perhaps not of direct interest to Petitioner, which is an insurer, a potential problem existed with the use of the A.M. Best rating, which is unavailable to noninsurers. However, Gallagher did not reduce the score of any of the four noninsurers for lacking a specific A.M. Best rating. Section 403(b) assets and numbers of plan participants are the subjects of question 7 of the "Company Information" part of the questionnaire. The A.M. Best rating is a Minimum Eligibility criterion set forth in RFP Section 3.7.2. Duration of experience is the subject of questions 3 and 4 of the "Company Information" part of the questionnaire. References are requested in question 13 of the "Company Information" part of the questionnaire. Gallagher's scoring of Experience and Qualifications ranged from a low of 9 points for Americo to a high of 30 points for Legend Group and TIAA-CREF. Petitioner received a 15, which is the third lowest score for this section on the GBS Scoring Sheets. In its proposed recommended order, Petitioner complains primarily about two aspects of its scoring. First, Petitioner contends that Gallagher incorrectly deducted two points for the alleged failure of Petitioner's proposal to state the number of participants. This contention is correct. Petitioner's proposal contained information from which Gallagher should have determined that the proper score for Petitioner on this item was -1 point, not -2 points, which Gallagher assigned to Petitioner. When tripled, this deficiency amounts to three points. However, this scoring anomaly invites consideration of the relationship of Gallagher's scoring to the Committee's scoring. As already noted, Gallagher did not attempt to preempt the Committee's responsibility for scoring. The GBS Scoring Sheets assigned Petitioner 15 points for Experience and Qualifications, but the Committee average score for Petitioner on Experience and Qualifications was a 19. This was the largest difference in scoring between the GBS Scoring Sheets and the Committee average score in Experience and Qualifications. For only one other offeror, Southwest, did the Committee average score in this category differ from the GBS Scoring Sheet score by four points and again the Committee raised Gallagher's score by this amount. Overall, though, the average scores that the Committee assigned each offeror in Experience and Qualifications tracked the GBS Scoring Sheets scores. Cumulatively, the differences amounted to only 18 points, so the increases assigned to Petitioner and Southwest amount to nearly half of the total difference between Gallagher and the Committee members. This fact suggests that the Committee members exercised independence and may have generated a more reliable score than Gallagher did for Petitioner's proposal for the category of Experience and Qualifications. Second, Petitioner contends that Gallagher incorrectly deducted one raw point for references. References was the only item among the three main scoring categories for which Respondent's employees collected the data. One of Respondent's employees in the Benefits Department contacted references for all the offerors and carefully noted their responses to three basic questions. The employee consistently applied a simple, but fair, test for the question at issue, so that an offeror received credit only if the reference answered, "yes" in response to a question regarding its satisfaction with the offeror. One reference of Petitioner answered, "somewhat," and Petitioner lost credit. Gallagher merely applied this data to its scoring matrix when it deducted one raw point from Petitioner's score for this item in Experience and Qualifications. Petitioner argues that other offerors would have suffered a reduction in points, if Gallagher had used another feature to measure customer satisfaction, such as exclusive reliance on 1-800 telephone numbers for service. However, Petitioner has not demonstrated that reducing credit for the absence of an affirmative response to a reference check, even in isolation, is unreasonable, especially when service issues, apart from overall customer satisfaction, receive considerable attention in the items cited in the GBS Scoring Sheets for the category of Scope of Services Provided. In conjunction with its attack on the reference item in the GBS Scoring Sheet, Petitioner argues in its proposed recommended order that investment performance was already covered in three of four items in the category of Cost of Services Provided in the GBS Scoring Sheets. However, Gallagher's decision to emphasize performance in its evaluation of TSAs to be sold to Respondent's employees is entirely reasonable. The nine scoring items for Scope of Services Provided in the GBS Scoring Sheets are fair issues on which to differentiate proposals. Telephone and voice response systems and Internet, as means to change beneficiaries or perform other transactions, are the subjects of Questions 29 and 30 of the "Contract Overview" part of the questionnaire. Electronic investment advice and an asset allocation program are set forth in Questions 22 and 23 of the "Administration" part of the questionnaire. Routine communications with participants, the means by which sales representatives will be restricted from selling other products, and SAS internal controls review are stated in Questions 10, 11, and 12, respectively, in the "Enrollment Procedures and Services" part of the questionnaire. The availability of a local area code and educational video or website are cited in RFP Section 3.10.1. Gallagher's scoring of the Scope of Services Provided ranged from a low of 9 points for Americo to a high of 30 points for Hartford and TIAA-CREF. The next highest score was 27, which was assigned to CitiStreet, MetLife, Security Benefit, and VALIC. The next highest score was 24, which was assigned to five offerors, including Petitioner. Petitioner challenges Gallagher's selection of criteria, but, for the reasons already noted, they fairly reflect important features of the RFP concerning Scope of Service Provided. Petitioner identifies some scoring anomalies where other offerors received no point reductions for omissions or Petitioner received a point reduction when another offeror did not, although Petitioner handled an item in the same way. However, at best, Petitioner showed minor imperfections in Gallagher's scoring, but did not prove that any such minor imperfections misinformed the actual scoring by the Committee. Although the average score assigned by the Committee for Petitioner in Scope of Services Provided was the same as that assigned by Gallagher, the difference between the Committee's average scores and Gallagher's scores was 30 points, as compared to merely 18 points separating them in Experience and Qualifications. Also, the difference in Experience and Qualifications between the Committee and Gallagher was the result of nine increases and one decrease by the Committee. In Scope of Services Provided, the difference between them was the result of 12 increases and 4 decreases. Of the five offerors cited in Petitioner's proposed recommended order as improperly failing to receive reductions in the GBS Scoring Sheets, the Committee reduced the score of one offeror by one point, did not change the scores of two offerors, increased the score of one offeror by one point, and increased the score of one offeror by two points. As Petitioner argued in its proposed recommended order, Gallagher culled a limited number of items from the RFP for scoring Scope of Services Provided in the GBS Scoring Sheets. It is as likely as not that the Committee members, many of whom would be using these vendor services, independently scrutinized a wider range of services than the nine items included in the GBS Scoring Sheets. The four scoring items for Cost of Services Provided in the GBS Scoring Sheets are fair issues on which to differentiate proposals. "Cost--Fees" is specified in Questions 7-19 of the "Contract Overview" part of the questionnaire and Attachment C. "Investment Performance" is covered in Question 19 of the "Variable Annuity" part of the questionnaire and Question 25 of the "Mutual Fund" part of the questionnaire. The "Morningstar Ratings" is the subject of Question 26 of the "Mutual Fund" part of the questionnaire. Although the RFP did not request any Morningstar Ratings information about variable annuities or any Morningstar Category Ranks about any mutual or variable annuity funds, these sources of information about such investments are readily available and reliable. Gallagher's use of such information as scoring items was reasonable. For "Investment Performance," Gallagher deviated from its general approach of evaluating actual facts and instead evaluated formal compliance with the RFP. Points for this item reflect the extent to which an offeror reported the information requested, not the actual performance of the funds. Although Petitioner argues for a more formal approach elsewhere, it contends that Gallagher overemphasized form over substance by making this formal item one of only four items that it scored for Cost of Services. Petitioner's argument is not without its appeal. However, the RFP amply warned that Respondent might award points based on formal compliance with the RFP provisions. Misstated or omitted data in financial performance is especially pernicious and, from Gallagher's perspective, probably vexing, because it impedes analysis of one of the more important features of the proposed TSAs--their rates of return. Also, the record does not suggest that the Committee members reduced their scoring exercise to the items used by Gallagher. The three attachments to the Analysis of Proposals all address cost and performance issues and provide the Committee members with ample bases on which to score the proposals in terms of cost and performance, without regard to the four items selected by Gallagher. The glossary explains common terms, nearly all of which involve cost and performance. The Individual Fund Expenses Handout comprises a series of tables setting forth specific expenses of specific funds offered by the offerors. The Summary of Returns lists each fund identified by each offeror and provides one-, three-, five-, and ten-year returns. Evidencing perhaps a keen interest in the cost and performance of the TSAs in which many Committee members would be investing, the Committee assigned average scores in Cost of Services Provided that varied from Gallagher's scores by the largest amount--a total of 44 points. The Committee increased the scores of 15 offerors in Cost of Services and decreased no scores. Two offerors, TIAA-CREF and Veritrust, received increases of five points, one offeror, Nationwide, received an increase of four points, and six offerors, including Petitioner, received increases of three points. Still, though, Petitioner received an average Committee score of only 15 points for Cost of Services Provided. One offeror received the same score, and one offeror received 11 points; the rest of the offerors received more points, with the highest score being 26 points. The extensive record on the cost and performance of the TSAs that offerors proposed to sell to Respondent's employees provides a rational basis for the low score that Petitioner received in Cost of Services Provided. The Individual Fund Expenses Handout reveals that the range of Petitioner's total fees was from 1.72 percent to 2.69 percent, with all but three of the funds bearing fees of at least 2.0 percent. Security Benefit, which received the highest score for Cost of Services, imposed fees ranging from 0.50 percent to 1.94 percent. TIAA-CREF, which received the second highest score for Cost of Services, imposed fees ranging from 0.34 percent to 0.63 percent. Horace Mann, which received the same score as Petitioner, imposed fees ranging from 1.30 percent to 3.14 percent--in general, comparable to Petitioner's fees. Likewise, Petitioner imposes the highest back-end load or surrender charge--14 percent--on its fixed annuity product, tapering off to 4 percent in the seventh year that the policy has been in effect. Only three offerors had longer periods during which they imposed surrender charges. The Summary of Returns reveals the performance among Petitioner's funds over the last ten years. A scorer might reasonably decide that the high cost of Petitioner's TSAs is not offset sufficiently by their performance, so as to warrant more than 15 points. The Summary of Returns lists 33 funds of Petitioner with total returns for the past ten years. In percentages, these cumulative returns, over ten years, are: -18.17, -12.11, -10.35, -7.54, -4.82, -3.85, -2.64, -0.24, 0.41, 1.28, 1.4, 1.54, 4.12, 4.38, 5.2, 5.36, 5.63, 5.92, 5.94, 6.06, 6.37, 6.73, 7.1, 7.87, 8.01, 9.05, 9.21, 9.96, 9.99, 10.56, 10.6, 10.87, and 13.48. Gallagher did not provide the individual GBS Scoring Sheets to the Committee. At a Committee meeting on January 13, 2003, Gallagher discussed these individual scoring sheets with the Committee and presented the Committee with a two-page synopsis of the overall scores of each of the 21 offerors that it scored for each of the three categories. The two-page scoring synopsis concludes with the following warning: This information represents Gallagher Benefit Services summary comparison of the proposals and is provided solely to assist in the evaluation and scoring process. It is not intended nor should it be construed as direct guidance as to how these firms should be scored. As a committee member, it is within your pervue [sic] to score the proposals as you deem appropriate using all of the information and guidance provided to you. Should you feel based on the information provided that someone deserves a significantly greater or lesser score than might be indicated through our process, you should rely on your own judgment. Our ranking was based on a 10 point system. For illustrative purposes we have multiplied our rankings by three to more closely reflect the range on a 30 point system. Overall, given the presence of School Board members and Respondent's management, as well as the personal attention that a procurement of this type would generate among Respondent's nonmanagement employees on the Committee, it is highly unlikely that Committee members would give undue weight by the GBS Scoring Sheets or two-page evaluation. It is far more likely, given the nature of the procurement and membership of the Committee, that individual members scored these proposals based on their independent examinations of the proposals. These factors also undermine Petitioner's argument concerning undisclosed conflicts of interest. As Petitioner states in its proposed recommended order, no offeror disclosed the name of any of its officers, directors, or agents were employees of Gallagher or its subsidiaries. Employees of Gallagher serve as agents for many financial service providers, including some of the offerors in this case. One of Gallagher's employees is an agent of Petitioner. In its proposed recommended order, Respondent states that the last two sentences of RFP Section 8.11, which impose the relevant conflict-of-interest provisions, are "ineffectual and appear to be misplaced." The use of "agent" was ill-advised because it extends the reach of the conflict-of-interest provision to a vast number of employees of Gallagher, which is part of a very large organization, and thus captures mostly persons who would be unaware of, and uninvolved in, this procurement. Petitioner argues in its proposed recommended order that Gallagher failed to disclose the conflicts. RFP Section 8.11 imposes the responsibility to disclose on the offerors, not Gallagher, and Gallagher was under no responsibility to discharge an obligation of the financial service providers which it represents. Nondisclosing offerors risked the displeasure of the Committee, but the failure of the Committee to penalize such offerors is consistent with the immateriality of these conflicts, which are the product of an overly broad definition. As already noted, Gallagher had no part in the evaluation of the Minority/Women Business Enterprise--Diversity of Proposer's Company (Diversity) and Documentation of the Proposing Company's Minority/Women Business Enterprise Outreach Programs (Outreach). Respondent's Minority and Business Enterprise Contract Compliance Administrator, Michelle-Bryant Wilcox, initially evaluated the proposals under the Diversity and Outreach categories. In its proposed recommended order, Petitioner notes that the Diversity and Outreach provisions do not reflect School Board Policy 7007, which was incorporated by reference into the RFP. However, no prospective offeror challenged the specifications of the RFP, which clearly identified the Diversity and Outreach scoring categories. However, other challenges of Petitioner concerning Ms. Wilcox's scoring of the proposals for Diversity and Outreach are more meritorious. RFP Section 3.12.1 requires offerors to provide diversity information and outreach information. Section 3.12.2 requires offerors to provide information of their involvement in the minority community. Respondent's contention in its proposed recommended order that the flush language on outreach beneath Section 3.12.1, but above Section 3.12.2, is somehow part of Section 3.12.2 is incorrect. Thus, the scoring categories identified in RFP Section 6.3 clearly draw upon the two elements of RFP Section 3.12.1, and not upon any part of Section 3.12.2. Most likely, the language about involvement in the minority community was borrowed from another procurement. In any event, Ms. Wilcox decided to count outreach twice, under both categories, and to count involvement in the minority community under the Outreach category. These decisions cannot be characterized as refinements of the relevant provisions of the RFP, which already suffered from poor draftsmanship, but these decisions do not distort or undermine the procurement process. Outreach is obviously important in maintaining and increasing the diversity of a workforce, and involvement in the minority community may assist in this important effort. Ms. Wilcox fared more poorly in her construction of outreach, for which she unduly emphasized internal recruitment efforts and, thus, the mere existence of antidiscrimination and affirmative action statements of policy. Also, her counting of women was unreliable, leaving the impression that, for example, at times, female blacks might generate double credit and, at other times, female blacks might generate single credit, or white females might not generate any credit at all. Notwithstanding the shortcomings in Ms. Wilcox's work, again, the Committee was able to evaluate the proposals independently when it met on January 13, 2003. At that meeting, the Committee understood that Ms. Wilcox's analysis was merely staff analysis. Given the membership of the Committee, each of the 15 members undoubtedly understood his or her duties to examine the proposals, not merely Ms. Wilcox's analysis, for scoring under the Diversity and Outreach categories. Eventually, the Committee assigned Petitioner 3.5 points for Diversity and 3.7 points for Outreach. These were, respectively, the sixth- and fourth-highest score for these two categories. The higher scores for Diversity were 4.5 for VALIC, 4.3 for TIAA-CREF, 4.1 for MetLife, 3.9 for Southwest, and 3.7 for CitiStreet. The higher scores for Outreach were 4.4 for MetLife, 4.2 for VALIC, and 3.9 for CitiStreet and ING. Even if Petitioner had received the maximum scores for Diversity and Outreach, its total score would have increased by only 2.8 points, which would still leave it under the 70- point threshold. Petitioner has not demonstrated scoring irregularities of such a magnitude for itself or other vendors with respect to these two categories to require such an adjustment. Given the resolution of Petitioner's challenge to the three main scoring categories, Petitioner's challenge to the Diversity and Outreach categories is therefore immaterial. On January 6, 2003, Respondent sent a letter to all offerors that the Committee would meet, as disclosed in RFP Section 5.0, on January 13, 2003, to review proposals and recommend awards. The letter states that Committee decided to interview offerors, so each offeror should have an authorized representative to speak with the Committee. At the January 13 meeting, the Committee decided to reject the MassMutual proposal because its Required Response Form had not been executed by an authorized representative. With the prior elimination of New York Life and Putnam, the Committee proceeded to score the remaining 20 proposals. The Committee's average scores were as follows: TIAA-CREF: 90 VALIC: 88 ING: 86 MetLife: 86 CitiStreet: 82 Security Benefit: 80 Lincoln: 78 Hartford: 75 Equitable: 75 Southwest: 70 Petitioner: 65 Legend Group: 65 American Express: 64 Nationwide: 64 Horace Mann: 63 PFS: 61 First Investors: 60 Pioneer: 56 Veritrust: 51 Americo: 42 After examining the scores, the Committee decided to negotiate contracts with the ten offerors that received at least 70 points. Three days later, the Committee successfully completed negotiations with all ten offerors, and it recommended that the Superintendent approve these negotiated agreements and refer them to the School Board for final approval. Pursuant to the provisions of the RFP, which provided a point of entry to protest these actions of the Committee, Petitioner timely filed a notice of intent to protest and formal written protest. Pursuant to Respondent's policy, Respondent and Petitioner presented their dispute to Respondent's Bid Protest Committee on February 13, 2003. By a two-to-one vote, the Bid Protest Committee initially decided to lower the scoring threshold to 65 points, which would include Petitioner and Legend Group. However, after receiving advice of Respondent's counsel concerning the ability of this committee to lower the scoring threshold set by the Committee, the Bid Protest Committee rescinded its earlier vote and unanimously voted to reject Petitioner's protest. The earlier vote was designed entirely to mollify Petitioner and was not based on any determination of a deficiency in the procurement found by the Bid Protest Committee.
Recommendation It is RECOMMENDED that, on behalf of the Insurance Advisory Committee, Respondent enter a final order dismissing the protest of Great American Financial Resources, Inc., and directing the Insurance Advisory Committee to proceed to recommend to the Superintendent the ten offerors of tax-sheltered annuity programs with which it has negotiated tentative contracts. DONE AND ENTERED this 2nd day of October, 2003, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 2nd day of October, 2003. COPIES FURNISHED: Dr. Franklin L. Till, Jr. Superintendent Broward County School Board 600 Southeast Third Avenue Fort Lauderdale, Florida 33301-3125 Daniel J. Woodring, General Counsel Department of Education 325 West Gaines Street 1244 Turlington Building Tallahassee, Florida 32399-0400 William G. Salim, Jr. Michael W. Moskowitz Moskowitz, Mandell, Salim & Simowitz, P.A. 800 Corporate Drive, Suite 510 Fort Lauderdale, Florida 33334 Robert Paul Vignola Assistant General Counsel Office of the School Board Attorney Kathleen C. Wright Administration Building 600 Southeast Third Avenue, 11th Floor Fort Lauderdale, Florida 33301
Findings Of Fact Donald A. Moyant, Petitioner, operates a contractors' exam school in Brandon, Florida, at which he preps builders to take the CILB exam for licensure as contractors. Petitioner took the exam given in June 1985 and received a score of 58.60. A score of 70.00 is required to pass this examination. The only answer that Petitioner questions is the answer he supplied to question No. 2, which related to the number of reinforcing bars required in a concrete slab of given dimensions and spacings of the bars. In Petitioner's solution to the problem he dropped the fractional bar that resulted from dividing the length of the slab by the spacing between bars. The correct solution requires the addition of a bar for this fractional spare. Petitioner's purpose in pursuing this proceeding is to obtain information to use in his Contractors Exam School, Inc. Since he would not have passed the examination even if his solution to question No. 2 had been marked correct, Petitioner is without standing to bring this action because he is doing so on behalf of the school he runs and not to allow him to receive a passing grade.
The Issue Whether A-Z Roofing, Inc. (“Respondent”), failed to secure the payment of workers’ compensation insurance coverage for its employees; and, if so, whether the Department of Financial Services, Division of Workers’ Compensation (“Petitioner” or “Department”), correctly calculated the penalty to be assessed against Respondent.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440, Florida Statutes, that employers in Florida secure workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent is a Florida for-profit corporation engaged in the construction industry with headquarters in Jacksonville, Florida. Ethelyn Roseboro is Respondent’s President. On September 23, 2016, the Department’s Compliance Investigator, Ann Johnson, inspected a jobsite at 1229 Blue Eagle Drive in Jacksonville, Florida. Ms. Johnson observed three men at the jobsite performing roofing work on a home undergoing renovations. Two of the men were on the roof stripping off old shingles and tarpaper, while a third was on the ground retrieving the discarded materials. Ms. Johnson interviewed the men she observed working at the jobsite. The man working on the ground originally identified himself as Tony Brown, but later admitted that his name was actually Allen Roberts. In response to Ms. Johnson’s inquiry as to who was Mr. Roberts’ employer, Mr. Roberts stated that he did not know and directed Ms. Johnson to his co-worker Donald Purdy. Mr. Purdy disclosed, after initially misleading Ms. Johnson, that he was a friend of the homeowner, Jessica Longo. A third worker at the site identified himself as Marvin Gainer. Initial Investigation and Stop-Work Order Ms. Johnson reviewed the local building department’s permit records and determined that Bracy Building Contractors, Inc. (“Bracy Builders”),1/ had pulled a permit to replace the siding on the structure for the owner, Ms. Longo. No permit was pulled for a re-roof. Ms. Johnson contacted Brad Bracey at Bracy Builders, who indicated that he had subcontracted the roofing work to Respondent, A-Z Roofing, Inc. Ms. Johnson next contacted Ms. Roseboro at A-Z Roofing, Inc. Ms. Roseboro informed Ms. Johnson that Respondent had, in turn, subcontracted the roofing job to JR Home Repairs, Inc. (“JR Home”) and directed Ms. Johnson to Cary Spires as the contact. Prior to contacting Mr. Spires, Ms. Johnson reviewed information in the Coverage and Compliance Automated System, or CCAS, the Department’s internal database, for JR Home. Ms. Johnson determined that JR Home did not have workers’ compensation insurance coverage for its employees. Ms. Johnson then contacted Cary Spires, who indicated he provided workers’ compensation insurance through a contract with Staff Force. Ms. Johnson spoke with Brent Abdula at Staff Force, who confirmed that JR Home was not a client, and thus does not have workers’ compensation insurance coverage through Staff Force. However, Mr. Abdula confirmed that Respondent is a client with workers’ compensation insurance coverage through Staff Force. Unfortunately, the employee roster maintained by Staff Force did not include Mr. Roberts, Mr. Purdy, or Mr. Gainer. Ms. Johnson followed up with Mr. Spires and informed him that JR Home was not a client of record with Staff Force, and further that none of the three workers at the jobsite in question were covered under Respondent’s contract with Staff Force. At that time, Mr. Spires admitted that he did not have workers’ compensation insurance coverage for his employees. Ms. Johnson next reviewed the Department of State, Division of Corporations’ information on A-Z Roofing, Inc., and determined it was an active Florida corporation with Ms. Roseboro listed as its President. Ms. Johnson researched A-Z Roofing, Inc., in the CCAS database and determined that Respondent did not have independent workers’ compensation insurance coverage. Finally, Ms. Johnson issued the Site Specific Stop- Work Order which is the subject of the case at hand. Unable to reach Ms. Roseboro, Ms. Johnson initially served the Stop-Work Order by posting it at the jobsite on September 23, 2016. After several failed attempts to reach Ms. Roseboro, Ms. Johnson hand-delivered the Stop-Work Order to Ms. Roseboro at her office on September 29, 2016. Along with the Stop-Work Order, Petitioner served Respondent with a Request for Production of Business Records (“BRR”) to facilitate calculating the penalty for the failure to secure workers’ compensation insurance. In response to the BRR, Respondent provided to the Department some bank statements and its 2014 and 2015 federal income tax returns. Respondent’s Responsibility for the Job Ms. Roseboro testified that, although the work at the jobsite had been “brought to her” by Mr. Spires, her company did not perform the work, and did not subcontract with JR Home to perform the work. Ms. Roseboro testified that she was in the process of getting “everything in place for the job to start,” but was not aware that work had begun when Ms. Johnson contacted her about the work being performed at the jobsite. Ms. Roseboro first testified that she had not pulled a permit for the job, and had not activated the permit for the job. Later she testified that once she found out the “job was being worked on without my knowledge, I voided the permit and the guys were not paid and they did not go back to the job site.” Her testimony was confusing and unreliable. In Respondent’s defense, Ms. Roseboro offered into evidence a copy of the building permit and certificate of completion issued by the Jacksonville Building Department to Justin Larsen Construction, Inc., for a re-roof of the dwelling at 1229 Blue Eagle Trail in Jacksonville. The permit was pulled on September 28, 2016, and the certificate of completion was issued on October 12, 2016. Ms. Roseboro offered the documents to prove that Respondent “did not complete the roofing job.” Those documents only prove that on a date subsequent to Ms. Johnson’s investigation of the jobsite, another roofing company pulled a permit and completed a re-roof of the subject property. It does not establish that Respondent was not responsible for the job on the date of the inspection, or that Respondent did not subcontract the job to JR Home, which did not have workers’ compensation insurance coverage for its employees (and which may have begun the work without a permit). Ms. Roseboro maintained at hearing that JR Home subcontracted the re-roofing job at the subject property to Respondent, not vice-versa. Ms. Roseboro’s testimony conflicted with Ms. Johnson’s testimony that Mr. Roseboro informed her via telephone on September 23, 2016, that Respondent had hired JR Home to perform the work. Ms. Johnson’s testimony on this point was more credible and is accepted as true. The Department proved that Respondent subcontracted the re-roof job to JR Home, which did not provide workers’ compensation insurance coverage for its employees. Penalty Calculation Department Penalty Auditor, Phillip Sley, was assigned to calculate the penalty to be assessed against Respondent. Pursuant to section 440.107(7)(d), Florida Statutes, the Department’s audit period is the two-year period preceding the date of the Stop-Work Order. The audit period in this case is from September 24, 2014 through September 23, 2016. Based upon Ms. Johnson’s observations of the work being performed at the jobsite, as well as review of records submitted by Respondent, Mr. Sley determined that the type of construction work performed was roofing. Mr. Sley consulted the Scopes Manual published by the National Council on Compensation Insurance (NCCI) and assigned classification code 5551 (Roofing - All Kinds & Drivers) for purposes of calculating the penalty. Mr. Sley then applied the corresponding approved manual rates for classification code 5551 for the related periods of non-compliance. Mr. Sley applied the correct approved manual rates and correctly utilized the methodology specified in section 440.107(7)(d)1. and Florida Administrative Code Rules 69L-6.027 and 69L-6.028 to determine the penalty to be imposed. Because Respondent did not provide records sufficient to determine its payroll during the audit period, Mr. Sley correctly assigned the statewide average weekly wage (AWW) to those employees identified on the jobsite on the date in question. § 440.107(7)(e), Fla. Stat. Mr. Sley likewise correctly utilized the AWW multiplied by two when applying the statutory formula for calculating the penalty to be assessed. See § 440.107(7)(d)1., Fla. Stat. On January 18, 2016, the Department served Respondent with an Amended Order of Penalty Assessment assessing a penalty of $267,278.36, which was fully imputed. Respondent provided additional records subsequent to issuance of the Amended Order of Penalty Assessment which allowed the Department to determine Respondent’s actual payroll for 2014 and 2015, rather than relying on imputed numbers. Based on this additional information, the Department issued a Second Amended Order of Penalty Assessment on April 3, 2016, in the amount of $82,094.68.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers’ Compensation, finding that A-Z Roofing, Inc., violated the workers’ compensation insurance law and assessing a penalty of $82,094.68. DONE AND ENTERED this 26th day of May, 2017, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of May, 2017.
The Issue The issue for determination in this proceeding is whether Petitioner should receive credit for any of the 15 challenged questions in two parts of the certified general contractors examination given in June, 1993.
Findings Of Fact Petitioner took the general contractors examination given on June 29- 30, 1993. The examination consisted of three parts. The minimum score required to pass each part was 70. Petitioner passed the Business and Finance part of the examination with a score of 70. Petitioner failed the other two parts of the examination. He received a score of 61 on the Contract Administration part of the examination and a score of 67 on the Project Management part of the examination. Petitioner challenged eight questions on the Contract Administration part of the examination and seven questions on the Project Management part of the examination. The part of the examination on which each question appeared, the question number, the correct answer, and the answer chosen by Petitioner are as follows: EXAM PART QUESTION CORRECT ANSWER PETITIONER'S ANSWER Contract Admin. 2 B C Contract Admin. 5 D A Contract Admin. 10 D C Contract Admin. 11 C D Contract Admin. 13 C B Contract Admin. 20 C D Contract Admin. 22 C D Contract Admin. 37 B D Project Mgmt. 7 C D Project Mgmt. 9 D C Project Mgmt. 10 C A Project Mgmt. 11 B C Project Mgmt. 13 B A Project Mgmt. 23 D A Project Mgmt. 37 A D For each of the foregoing questions, the correct answer was the answer identified by Respondent and not the answer chosen by Petitioner. Petitioner presented no competent and substantial evidence to support his answers. The challenged questions were clearly and unambiguously worded. The challenged questions contained enough correct information to allow the candidate to select the correct response. The correct response for each of the challenged questions was supported by approved reference materials. The correct response did not require knowledge which was beyond the scope of knowledge that reasonably could be expected from a candidate for licensure. All current techniques were taken in account when the correct response was determined by Respondent. The examination was open book. Petitioner was allowed to refer to the Standard Building Code.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order and therein DENY Petitioner's challenge to the questions at issue in this proceeding. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 27th day of April, 1994. DANIEL MANRY 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 27th day of April, 1994. COPIES FURNISHED: Richard Hickok Executive Director Department of Business and Professional Regulation 1940 North Monroe, Suite 60 Tallahassee, FL 32399-0792 Jack McRay, Esquire General Counsel Department of Business and Professional Regulation 1940 North Monroe, Suite 60 Tallahassee, FL 32399-0792 Vytas J. Urba, Esquire William M. Woodyard, Esquire Department of Business and Professional Regulation 1940 North Monroe, Suite 60 Tallahassee, FL 32399-0792 Mr. Behzad Khazraee 142 Tollgate Trail Longwood, FL 32750
The Issue The issue to determine in this bid protest matter is whether the Department’s intended award of state term contracts for information technology staff augmentation services was contrary to its governing statutes, rules, or the solicitation specifications.
Findings Of Fact The Department is the state agency responsible for procuring state term contracts. See §§ 287.012(28), 287.042(2)(a), 287.056-057, Fla. Stat. A “state term contract” is a term contract that is competitively procured by the Department. § 287.012(28), Fla. Stat. A “term contract” means an indefinite quantity contract to furnish commodities or contractual services during a defined period. § 287.012(29), Fla. Stat. The Department initiated this competitive procurement to establish a state term contract for information technology (“IT”) staff augmentation services. The procurement’s objective is to enable state agencies and other eligible users (“Customers”) to supplement their IT staff. The solicitation at the center of these protests is Request for Proposals for Information Technology Staff Augmentation Services – 3rd Bid, RFP 15- 80101507-SA-D (the “RFP”). The RFP is intended to replace an existing state term contract for IT staff augmentation services. The current contract has an estimated annual spending volume of approximately $66,800,000. As described in the RFP, the Department intends to award up to approximately 200 vendors with the ability to provide (temporary) IT staff services per specific position. Thereafter, a Customer who desires IT staff assistance will issue a Request for Quote, which is available for review by all vendors awarded with the state term contract (the “Contractors”). A Contractor who desires to fulfill the request responds to the Customer’s Request for Quote agreeing to provide IT staff who possess the technical skills needed. A Request for Quote also allows Customers to obtain pricing and service information from interested Contractors. See § 287.056(2), Fla. Stat. If selected, the Contractor will then charge the Customer for the assigned personnel on an hourly basis.6/ In other words, the Department will competitively procure IT staffing services from multiple vendors/Contractors. A vendor who is awarded a contract under the RFP is not given an actual IT job, but rather is included on a list of Contractors as a potential source to fill an IT position in the future. Thereafter, Customers may obtain IT staff assistance, through a Request for Quote, without having to conduct a separate, independent solicitation. The Department issued the RFP on February 5, 2019.7/ On February 11, 2019, the Department posted Addendum No. 1 to the RFP. Addendum No. 1 notified vendors that the RFP was a “new solicitation,” and that the previous solicitation had been cancelled and rebid. The Department subsequently posted Addendum No. 2 to the RFP revising and clarifying the bid specifications. The Department posted Addendum No. 3 to the RFP on May 20, 2019.8/ Addendum No. 3 instructed vendors that all proposals were due by March 19, 2019. On or before March 19, 2019, the Department received proposals from 378 vendors,9/ including ArnAmy and Seva. Under the RFP’s evaluation methodology, vendors’ proposals were scored in four Evaluation Criteria, as follows: Evaluation Criteria Maximum Possible Points IT Experience Certification (Attachment B) 100 Staffing Resource Management Plan 300 IT Staff Augmentation Contract Experience 200 Price (Attachment C) 400 per Job Title Total Score Possible Per Job Title 1000 Regarding the IT Experience Certification criteria, vendors submitted information on an IT Experience Certification Form which was included in the RFP. The form was scored based on the number of years the vendor had been in the IT business. The Procurement Officer identified in the RFP, Joel Atkinson, scored this criteria. (Both ArnAmy and Seva received the maximum 100 points in this category.) Regarding the Staffing Resource Management Plan (the “Management Plan”) and the IT Staff Augmentation Contract Experience (“IT Staff Contract Experience”) categories, the Department appointed three individuals (the “Evaluators”) to independently score these sections of each proposal. (The three Evaluators are referred to as the “Scoring Team”.) The Scoring Team consisted of Stephanie Reaves, Denise Roberts, and Heather Shoup. For the Management Plans, the Evaluators were to assign point values based on whether the vendors demonstrated “exceptional ability” (300 points); “intermediate ability” (200 points); “minimal ability” (100 points); or “fails to demonstrate ability” (0 points). For the IT Staff Contract Experience category, the Evaluators were to assess a point value based on whether the vendor demonstrated “extensive” experience (200 points); “intermediate” experience (150 points); “minimal” experience (100 points); or “fails to demonstrate experience” (0 points). Regarding the Price criteria, each vendor was required to complete a price sheet wherein the vendor quoted an hourly rate for each specific IT staff service for which the vendor desired to contract. The price sheet divided each staff service into “Job Families.” Within each Job Family, the RFP listed multiple “Job Titles.” The RFP included a total of 130 different Job Titles for which vendors could submit proposals. In addition, the price sheet further divided the majority of Job Titles into “Scope Variants,” which are degrees of experience within an individual Job Title (typically up to three Scope Variants per Job Title). For example, in the Job Family of Applications Development, the Job Title of Systems Analyst was broken out into Scope Variant levels of Entry, Intermediate, and Advanced.10/ Further, the RFP attached a “Ceiling Rate” to each Scope Variant. The RFP explained that the Department would not consider or evaluate a vendor’s proposal for a particular Job Title if the hourly rate the vendor quoted was higher than the Ceiling Rate. Finally, the price per hour the vendor quoted for the Job Title was considered a “not to exceed” price. In other words, after the state term contract was awarded, when a Contractor received a Request for Quote from a Customer, the Contractor could not charge a higher hourly rate than the price listed in its proposal. However, the RFP permitted Contractors to respond with a (competitively) lower hourly rate for the IT staffing services it would agree to provide. RFP, section 5.2.4 set forth a formula to calculate the score for the prices the vendors quoted for the specific Job Titles. The Department designed the formula to establish a base line with which to compare proposals. Using the formula, the vendor with the lowest price per Job Title or Scope Variant11/ was awarded 400 points (the maximum). Thereafter, every other vendor received points for price per Job Title using the following calculation: (X) x 400 = Z (N) Where: X = lowest price of all Proposals submitted per Job Title N = Respondent's submitted total price per Job Title Z = points awarded The Procurement Officer, Mr. Atkinson, (not the Scoring Team) calculated and assigned the points for price. The Vendors’ scores for IT Experience Certification and Price (from the Procurement Officer) were added to the Evaluators’ scores for the Management Plan and Staff Contract Experience for a total score for each proposal. Upon winning a contract, Contractors are only permitted to provide services for the specific IT positions awarded through the solicitation. As explained in RFP, Exhibit A, STATEMENT OF WORK, the Contractors agree to provide IT staffing services described in a document entitled “Job Families Descriptions.” The Contractors will be responsible for the following activities: The Contractor shall possess the professional and technical staff necessary to allocate, outsource, and manage qualified information technology staff to perform the services requested by the Customer. The Contractor shall provide Customers with staff who must have sufficient skill and experience to perform the services assigned to them. All of the information technology staff augmentation services to be furnished by the Contractor under the Contract shall meet the professional standards and quality that prevails among information technology professionals in the same discipline and of similar knowledge and skill engaged in related work throughout Florida under the same or similar circumstances. The Contractor shall provide, at its own expense, training necessary for keeping Contractor's staff abreast of industry advances and for maintaining proficiency in equipment and systems that are available on the commercial market. The Contractor shall be responsible for the administration and maintenance of all employment and payroll records, payroll processing, remittance of payroll and taxes, and all administrative tasks required by state and federal law associated with payment of staff. The Contractor shall, at its own expense, be responsible for adhering to the Contract background screening requirements, testing, evaluations, advertising, recruitment, and disciplinary actions of Contractor’s information technology staff. The Contractor shall maintain during the term of the Contract all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the information technology staff augmentation services. In short, the Contractors are responsible for finding, hiring, and recruiting qualified IT personnel. Thereafter, the Contractors must provide and manage their IT staff pursuant to the terms of the Request for Quote. Awards under the RFP were made by Job Title. RFP, section 5.3, explained the Basis for Award as follows: The Department intends to make multiple awards from this solicitation and anticipates awarding 200 contracts per Job Title. Contracts will be awarded to the responsible and responsive Vendors that are determined to be the most advantageous to the state based on, per Job Title, the highest total evaluation criteria scores, which includes price, IT Experience Certification, Staffing Resource Management Plan, and IT Staff Augmentation Contract Experience scores. The maximum possible total score per Job Title is 1000. * * * For those Job Titles where, in determining the 200th awarded Vendor, there are multiple responsible and responsive Respondents with the same numeric score, the Department reserves the right to award more than 200 contracts per Job Title to those responsive and responsible Respondents who are tied for the 200th contract award. Awards will be made per Job Title. A vendor was not required to submit a response for every Job Title. Instead, vendors were free to bid for only those Job Titles for which they desired to provide IT Staffing services. However, if a vendor did respond to a specific Job Title, the vendor was required to provide a price per hour for every Scope Variant within that Job Title. On June 5, 2019, the Department held a public meeting during which the three Evaluators, as well as the Procurement Officer, confirmed their scores. On June 24, 2019, the Department posted its Revised Notice to the Vendor Bid System listing all vendors to whom the Department intended to award IT staffing contracts. The Department awarded contracts to the top 200 vendors (plus ties) for each of the 130 Job Titles. ArnAmy bid for all 130 Job Titles. The Department awarded ArnAmy 21 out of 130 Job Titles. In other words, ArnAmy finished in the top 200 for 21 of 130 Job Titles. Seva bid for all 130 Job Titles. The Department did not award Seva any Job Titles. In other words, Seva did not finish in the top 200 for any of the Job Titles. ARNAMY’S PROTEST: ArnAmy protests the Department’s decision to award it a state term contract for only 21 of 130 Job Titles offered through the RFP. Mr. Datta Kadam testified on behalf of ArnAmy. Mr. Kadam is the founder and chief executive officer of ArnAmy. Mr. Kadam prepared and submitted ArnAmy’s response to the RFP. Mr. Kadam initially relayed that ArnAmy was formed in 2007 as an IT consulting and software development company. He further expressed that ArnAmy has extensive experience under the current (2016) state term contract, for which it is authorized to support all 130 IT staff positions. Approximately 85-90 percent of ArnAmy’s IT consulting practice is dedicated to providing IT staff augmentation services through contracts such as the Department’s state term contract. ArnAmy also services staffing contracts for Maryland and Texas. ArnAmy (through Mr. Kadam) presented three primary arguments protesting the Department’s award. The Scoring Team Failed to Evaluate ArnAmy’s Final Management Plan: ArnAmy argues that the Scoring Team was not provided with the final version of its Management Plan. Instead, the three Evaluators scored an incomplete, preliminary draft. Mr. Kadam believes ArnAmy would have received higher scores for Job Titles had the Evaluators scored the correct version of its Management Plan. ArnAmy attributes this mistake to a possible error in the MyFloridaMarketPlace (“MarketPlace”) program that interfered with or prevented Mr. Kadam from uploading, saving, and/or submitting the final version of ArnAmy’s Management Plan for scoring. MarketPlace is the State of Florida online procurement system. MarketPlace served as the “web portal” for vendors to access the Department’s procurement documents, as well as a guide to assist them through the purchase process. The RFP required vendors to submit proposals through MarketPlace. The main software component of MarketPlace is a program called “Ariba,” which is a suite of programs or tools. MarketPlace (through Ariba) allowed vendors to electronically submit their responses to the RFP. A vendor may take three distinct actions within MarketPlace/Ariba: (1) upload documents; (2) save documents; and (3) submit documents to the Department. Mr. Kadam maintained that the version of ArnAmy’s Management Plan that the Evaluators scored was an “intermediate working copy” that he had saved “locally” to MarketPlace. Mr. Kadam testified that he uploaded and saved at least three versions of ArnAmy’s Management Plan to MarketPlace. He intended the Department to score the last version of the Management Plan that he saved and submitted on March 18, 2019. Mr. Kadam explained that he was not aware that the Department did not score the appropriate version of ArnAmy’s Management Plan until after the Department posted its Revised Notice on July 24, 2019. Upon learning that ArnAmy was only awarded 21 Job Titles, Mr. Kadam conducted a “root cause analysis” to determine the reason. He initially reviewed the scores of several other proposals “to obtain a baseline of comparison.” He soon discovered that the Management Plan the Evaluators scored for ArnAmy was not the last (and correct) version he believes he uploaded to MarketPlace. Mr. Kadam suggests that a glitch occurred within the MarketPlace program that replaced or substituted an earlier version of ArnAmy’s Management Plan for the final version. At the final hearing, Mr. Kadam relayed that he did not find any error at the “front” or “user’s” (ArnAmy’s) end of the system. Nor did he receive any error messages after submitting ArnAmy’s Management Plan. He did, however, offer several possible, “logical” causes for the inconsistency. His theories included “deadlock,” or a situation that occurs on the system when one document is in use on the server that prevents another document (i.e., ArnAmy’s Management Plan) from being properly uploaded. Mr. Kadam explained that the difference between the early version and the final version of ArnAmy’s Management Plan was significant. RFP, section 5.2.2, instructed vendors to recite how they proposed to recruit, staff, and manage requests for IT services. The intermediate version of ArnAmy’s Management Plan did not include the information referenced in RFP, section 5.2.2.B, which specifically directed vendors to identify and describe the roles and expertise of their Principal Personnel.12/ Mr. Kadam represented that the final version of ArnAmy’s Management Plan did contain this information. ArnAmy argues that if the MarketPlace error had not occurred, its proposal would have received a much more favorable score. Mr. Kadam specifically pointed to the score from one Evaluator, Stephanie Reaves, who only awarded ArnAmy’s Management Plan 100 out of 300 points. Mr. Kadam contends that if Ms. Reaves had just increased her score to the next level (200), ArnAmy would have been awarded most, if not all, of the 130 Job Titles. As more fully discussed below, despite Mr. Kadam’s detailed analytical investigation into the MarketPlace program, ArnAmy did not produce conclusive or direct evidence to support his theory that an error within MarketPlace was responsible for the submission of an intermediate version of ArnAmy’s Management Plan to the Department, instead of Mr. Kadam’s final version. During his testimony, Mr. Kadam stated that “a lot could have happened” to the documents he uploaded. However, he conceded that he did not know exactly what that might have been. The Scoring Team was Not Qualified to Score the Proposals: ArnAmy also charges that the Department failed to properly train the three Evaluators or provide them adequate guidance on how to effectively score the vendors’ proposals. Specifically, ArnAmy asserts that the Department failed to select Evaluators with the requisite background, experience, and knowledge in the subject matter of the RFP, i.e., information technology. Consequently, the Evaluators could not have conducted a comprehensive or sound review of the IT staffing services listed in the RFP. In other words, the Department could not have competently or fairly decided that ArnAmy should not be awarded an IT staff augmentation contract because the Evaluators did not know how to properly score its proposal. To support its argument, ArnAmy points out that not a single Evaluator possessed IT experience. ArnAmy contends that the technical details involved in evaluating proposals for IT staff services require direct experience in the IT field or in acquiring and/or utilizing IT staffing services. Because the Evaluators were unqualified, as well as the fact that the Evaluators were under time pressure to evaluate all 374 proposals, ArnAmy alleges that they inconsistently applied the RFP’s evaluation criteria, and, in some cases, failed to apply it altogether. As discussed below, the facts adduced at the final hearing support a finding that the Evaluators were suitably qualified to score the vendors’ proposals. Therefore, the undersigned finds this argument insufficient to reverse the Department’s award. Evaluator Stephanie Reaves Incorrectly Scored ArnAmy’s IT Staff Contract Experience: Finally, as a direct result of the Scoring Team’s inexperience, ArnAmy asserts that one of the three Evaluators, Stephanie Reaves, failed to properly score its IT Staff Contract Experience. ArnAmy specifically alleges that, in her haste to review ArnAmy’s proposal, Ms. Reaves overlooked key information included in its IT Staff Contract Experience submission. RFP, section 5.2.3, advised that a vendor “will be scored” based on “the best representation of its experience in providing IT Staff Augmentation.” Section 5.2.3 specifically asked vendors to include information regarding: Total number of IT Staff Augmentation contract/purchase orders. Total combined dollar amount of IT Staff Augmentation contracts/purchase orders. At page 19 of its response to section 5.2.3, ArnAmy reported on its IT Staff Contract Experience document that ArnAmy had 11 years of IT staffing experience with the State of Florida involving 147 total contracts worth over $19,600,000. As discussed in paragraphs 93, 146, and 147 below, ArnAmy’s argument on this point has merit. Ms. Reaves awarded ArnAmy’s IT Staff Contract Experience 150 out of 200 points. At the final hearing, Ms. Reaves admitted that she did not see this information in ArnAmy’s proposal prior to formulating her score. SEVA’S PROTEST: Seva was not awarded any of the 130 Job Titles for which it bid. Seva protests the Department’s award arguing that the RFP’s scoring formula was built on an arbitrary evaluation system and a mathematically deficient price scoring system. Consequently, the evaluation process resulted in unfair and unreliable awards that should not have excluded Seva’s proposal. Danny O'Donnell spoke on behalf of Seva. Mr. O’Donnell prepared and submitted Seva’s proposal to the RFP. In addition, at the final hearing, Mr. O’Donnell was accepted as an expert in statistics, data presentation, and pattern analysis. Mr. O’Donnell explained that he is very competent at extracting and compiling data from spreadsheets and reports and presenting that information in a form that is more easily understood. Mr. O’Donnell testified that Seva is an IT consulting and software development services firm headquartered in Tallahassee, Florida. He further represented that Seva has extensive experience providing IT staffing services to the State of Florida. Seva has provided temporary IT staff for state agencies since 2009, and has participated in a total of 120 IT staffing contracts with the state worth over $19,800,000. Further, Seva is an active vendor supporting 129 of the 130 IT jobs awarded in the 2016 state term contract. Mr. O’Donnell also commented that Seva’s 2019 proposal was substantially the same as its 2016 submission. Further, the 2019 RFP criteria was very similar to the 2016 procurement terms. In 2016, Seva received good (and winning) scores for its Management Plan. Consequently, Mr. O’Donnell was puzzled why Seva received such low scores under this RFP. To understand the reason the Department did not award Seva any Job Titles, Mr. O’Donnell culled through reams of Department data, charts, and spreadsheets. Based on his statistical analysis, Mr. O’Donnell reached two primary conclusions why the Department’s scores for the 2019 RFP are unsound. The RFP’s Price Scoring System: Initially, Mr. O’Donnell argued that the RFP’s “extremely flawed” price scoring formula set forth in RFP, section 5.2.4, produced arbitrary and unreliable scoring results. Specifically, the formula allowed vendors to propose “low-ball,” “unrealistic,” and “unsustainable” prices that are excessively below the market value for IT staffing services in order to procure higher scores for their proposals. Consequently, vendors who submitted these “unbalanced” bids received an unfair competitive advantage over vendors who presented realistic prices (i.e., ArnAmy and Seva) for their IT staffing services. Mr. O’Donnell further urged that the formula caused a very narrow “band compression of price points,” which gave rise to “price neutralization.” In other words, vendors who offered legitimately low, but realistic, prices for Job Titles received no corresponding benefit because the unbalanced bids “caused the relative value of the pricing criteria to be neutralized in value.” Concomitantly, the two subjectively scored criteria graded by the Scoring Team (Management Plan and IT Staff Contract Experience) took on much greater significance in determining whether a particular vendor was awarded a state term contract. A vendor could lose more points on pricing than it could earn for its Management Plan and IT Staff Contract Experience. As a result, vendors who tendered “unbalanced” bids (with unreasonably low prices) obtained an inequitable and unwarranted benefit. Mr. O’Donnell asserted that there is no correlation between winning vendors having the best price, and the responsible and responsive vendors who can provide the best IT staffing service to Customers. Mr. O'Donnell testified to his belief that the Department did not account for or prevent these artificially low, “unbalanced,” bids. Consequently, it was his opinion that the Scoring Team did not select vendors whose proposals will be the most advantageous to the State of Florida (i.e., Seva). Therefore, the Department’s decision not to award the IT staffing contract to Seva must be overturned. Mr. O’Donnell alleged that his extensive statistical analysis reveals that the three Evaluators used markedly different standards to review, then score, vendors’ proposals. To support his argument, Seva produced a chart showing that Ms. Reaves awarded 161 of the 374 Management Plans a top score of 300. Ms. Shoup awarded 116 Management Plans with 300 points. Ms. Roberts awarded only 66 Management Plans the maximum 300 points. Mr. O’Donnell stressed that these diverse scores indicate an arbitrariness that is outside any zone of reasonable results. Consequently, as a matter of fairness, all proposals must be reevaluated. Mr. O’Donnell further argued that the inequity is compounded by the fact that the Department limited state term contracts for each Job Title to 200 vendors (and ties). Not only is restricting the available Contractors to 200 arbitrary, but the 200 Contractor cap impacts whether legitimate vendors were awarded IT staffing contracts. In addition to Mr. O’Donnell’s analysis and conclusions, Seva presented expert testimony from Dr. Wei Wu. Dr. Wu is a professor in the Department of Statistics at Florida State University. Dr. Wu was accepted as an expert in statistics, including the chi-square correlation test, as well as the “p value” as applied to the solicitation scoring. To formulate his opinion, Dr. Wu applied basic statistical methods and tools. He explained that he conducted a “standard chi-square test” to determine whether the three Evaluators produced the same scoring distribution. Dr. Wu then analyzed the data, reviewed the intuitive results, and formulated his conclusion. He rechecked his data to ensure that it was mathematically correct. Based on his statistical analysis, Dr. Wu announced, with “very high confidence,” that the three Evaluators did not apply the same methodology when scoring Management Plans. Dr. Wu specifically opined that he was “99.99 percent confident that, of the three evaluators; they don’t have the same standard to give the score.” In other words, his research indicated that the Evaluators did not have the same, common understanding of the RFP’s scoring criteria. On the contrary, the Evaluator’s scoring distributions were arbitrarily and unreasonably different. Further, Dr. Wu expressed that the scores awarded for price were “crunched” in the final results, thereby reducing their importance in the proposals’ total scores. Dr. Wu testified that, if the Evaluators had followed the same scoring standard, the score distributions across the 374 proposals would not have been so varied. Dr. Wu acknowledged that some deviation between Evaluators is expected, but not this much. Based on Mr. O’Donnell’s analysis, as supported by Dr. Wu, Seva asserts that statistical data confirms that each Evaluator applied dissimilar grading scales, which manifested itself into erratic scoring. Each Evaluator appears to have a different understanding of what a vendors’ proposal would have to show in order to earn a top-ranked score. Despite his conclusions, however, Mr. O’Donnell conceded that he has no previous experience forming statistical inferences from procurement criteria. Neither does he feel qualified to explain the meaning of his statistical analysis of the scores. Consequently, he could not testify “why” the data shows what it shows. Similarly, Dr. Wu acknowledged that he has never researched procurement scoring formulas, scoring of requests for proposals criteria, or the scoring behavior of procurement evaluators. Nor did his opinion take into account the subjective opinions of the three Evaluators. The Scoring Team was Not Qualified to Score the Proposals: Secondly, similar to ArnAmy, Seva asserts that the wide-ranging scores show that the Department failed to select Evaluators with the requisite experience and knowledge in IT. Seva further charges that the Department neglected to effectively train the Scoring Team. The Department only provided the three Evaluators poorly defined guidelines explaining how to evaluate the vendors’ Management Plans. In addition, Seva argues that amount of time the Department allotted for scoring (eight weeks) was too short to reasonably evaluate 374 separate proposals. DEPARTMENT RESPONSE TO THE TWO PROTESTS: In response to ArnAmy and Seva’s challenges, the Department asserts that it properly acted within its legal authority, as well as the RFP specifications, to award the RFP to qualified responsive and responsible vendors. The Scoring Team Selection/Qualifications: Initially, the Department rejects ArnAmy and Seva’s allegations that the Scoring Team members lacked the requisite experience and knowledge to evaluate the vendors’ proposals. To score a procurement in a request for proposals solicitation, section 287.057(16)(a)1 directed the Department to appoint: At least three persons to evaluate proposals and replies who collectively have experience and knowledge in the program areas and service requirements for which commodities or contractual services are sought. In accordance with section 287.057(16)(a)1, the Department appointed three individuals (Ms. Reaves, Ms. Roberts, and Ms. Shoup) to serve on the Scoring Team. The three Evaluators were selected by Cliff Nilson (Deputy Director of the Division of State Purchasing), and Joel Atkinson (the Department’s Procurement Officer). Thereafter, the Evaluators were approved by the Department’s Secretary. At the final hearing, Mr. Nilson testified as the Department’s corporate representative. In his role as Deputy Director of State Purchasing, Mr. Nilson oversees the Department’s procurement process, as well as the state term contracts awarded under the RFP. Initially, Mr. Nilson discussed how the Department selected the three Evaluators. Mr. Nilson explained that the state term contract in this solicitation is fundamentally a “staffing” contract. Mr. Nilson characterized the procurement as “essentially . . . a human resource function that’s outsourced to a vendor to recruit, employ, and manage those people.” Mr. Nilson explained that the RFP’s purpose is to solicit vendors who will find, recruit, and manage IT personnel; then effectively provide those employees to Customers to use on an hourly basis to perform IT work. Vendors awarded with a state term contract are only responsible for providing “a person,” not directing or overseeing an IT project. Accordingly, the Department sought evaluators who had experience in human resources and staff management. Further, Mr. Nilson did not believe that a working knowledge of IT services was necessary for a fair and reasonable evaluation of the vendors’ proposals. Mr. Nilson relayed that, because the RFP’s purpose was to identify staffing companies, extensive knowledge of the IT tasks and responsibilities listed in the 130 Job Titles was not necessary when reviewing the vendors’ Management Plans and IT Staff Contract Experience. At the final hearing, the Department elicited testimony from Mr. Kadam (for ArnAmy) and Mr. O’Donnell (for Seva) admitting that the “deliverable” under this state term contract is people and their time and expense, not the various vendors’ IT prowess. During the hearing, both Mr. Kadam and Mr. O’Donnell acknowledged that their primary responsibilities would be to find, recruit, and place suitable IT staff with a state agency. Regarding training the Evaluators, Mr. Nilson conveyed that the Department anticipated that scoring would be fairly straightforward. Therefore, the Department did not plan a lengthy training regime for the Evaluators. Mr. Nilson further commented that the grading criteria described in the RFP did not require specific knowledge of IT services. The Evaluators were to review how each vendor proposed to hire, manage, and retain persons with IT skills. The Evaluators were not scoring the specialized knowledge of the vendors or their employees. Before starting their reviews, the Department arranged for each Evaluator to receive a copy of each proposals’ Management Plan and IT Staff Contract Experience section. The Evaluators also received an Evaluators Guide, as well as Instructions for the Evaluator Score Sheet. Each Evaluator also received and signed a document entitled Evaluator Instructions for Ethics, Sunshine Law, and Conflict of Interest. Finally, the Procurement Officer, Mr. Atkinson, contacted each Evaluator separately to explain their role and answer any questions. The RFP gave the three Evaluators eight weeks to review and score every proposal. Mr. Nilson envisioned the Evaluators spending approximately 30 minutes on each proposal. Mr. Nilson recognized that the scoring would entail hard work, but he was comfortable that the Evaluators would have enough time to perform their responsibilities. The Evaluators scored Petitioners’ proposals as follows: ArnAmy: Management Plan (out of 300 points): Ms. Reaves: 100 points Ms. Roberts: 200 points Ms. Shoup: 200 points IT Staff Contract Experience (out of 200 points): Ms. Reaves: 150 points Ms. Roberts: 200 points (maximum) Ms. Shoup: 200 points (maximum) Seva: Management Plan (out of 300 points): Ms. Reaves: 100 points Ms. Roberts: 0 points Ms. Shoup: 100 points IT Staff Contract Experience (out of 200 points): Ms. Reaves: 150 points Ms. Roberts: 200 points (maximum) Ms. Shoup: 200 points (maximum) Mr. Nilson testified that he was not concerned that the Evaluators’ scores were slightly different. He commented that in his experience, a one-step difference in the scoring spread between evaluators was “not unusual at all.” At the final hearing, each of the Evaluators testified about their background and experience in state procurements and IT staffing contracts as follows: Stephanie Reaves: Ms. Reaves testified that she has worked in the field of human resources for her entire career. She has hired, managed, recruited, and trained employees. At the time Ms. Reaves was selected as an evaluator, she was employed as the Director of Human Resources for the Department of Children and Families. During the RFP process, she transferred to the Department of Environmental Protection where she works as an Employee Relations Specialist. In addition, Ms. Reaves was previously employed with the Florida Housing Finance Corporation, where she reviewed and scored proposals submitted in response to requests for proposals for public contracts. Ms. Reaves also holds a Bachelor of Science degree in Business Administration, as well as a Masters in Human Resource Development. Prior to this RFP, however, she has never been involved in procuring IT staff services. Ms. Reaves declared that she had a firm grasp of her responsibilities as an evaluator. Before she scored the proposals, she reviewed and understood the scoring criteria described in RFP, section 5. She also read the Evaluators Guide, as well as the score sheet instructions. She further relayed that she spoke with the Procurement Officer, Mr. Atkinson, who provided general guidance. Ms. Reaves expressed that she felt adequately trained to evaluate the vendors’ proposals. She also believed that she had the necessary human resources experience to discern whether vendors sufficiently described their staffing abilities in their proposals. Ms. Reaves explained that, when evaluating a proposal, she read the vendor’s submission twice, as well as reviewed the applicable RFP sections. She then compared the proposal to the RFP evaluation criteria. At that point, she scored accordingly and submitted her scores electronically to the Department. Ms. Reaves spent approximately 20-30 minutes per proposal. Ms. Reaves rejected any concerns that her lack of IT knowledge affected her evaluation. She relayed that she did not find scoring difficult. She did not encounter terms in the RFP or the various vendors’ proposals that she did not understand. Ms. Reaves asserted that she worked fairly and independently. Further, she testified that she used the criteria set forth in the RFP and applied the scoring criteria consistently to each proposal. She relayed that she held vendors to the same standard and used the same method when evaluating each proposal. Finally, despite the large amount of commitment and work this evaluation required, Ms. Reaves firmly asserted that she had sufficient guidance and time to review and score each proposal. Regarding her specific scores, Ms. Reaves testified that she awarded ArnAmy 100 out of 300 points for its Management Plan. She explained that, for a perfect score of 300, a proposal would have to “demonstrate exceptional ability.” This score meant that she thoroughly understood how a vendor would provide prospective IT staff to Customers, and the vendor did an excellent job in describing how it would identify potential IT staff that would respond to a Customer’s Request for Quote. ArnAmy’s Management Plan, however, only showed minimal ability to meet the RFP’s objectives. Specifically, ArnAmy did not explain “how” it intended to accomplish or implement a plan to provide IT staff to Customers. In addition, ArnAmy failed to include information regarding the experience of its Principal Personnel to manage IT staff. Regarding ArnAmy’s IT Staff Contract Experience, Ms. Reaves awarded ArnAmy 150 out of 200 points. Ms. Reaves explained that she did not find in ArnAmy’s proposal responses to two specific requests for information: 1) the total number of IT Staff Augmentation contracts/purchase orders; and 2) the total combined dollar amount of IT Staff Augmentation contracts/purchase orders. However, as became apparent during the final hearing, ArnAmy’s proposal did, in fact, include information on these two specific points. What appears to have happened is that Ms. Reaves missed this information because ArnAmy presented these numbers at the very end (page 14) of its IT Staff Contract Experience section (and in tiny print).13/ In RFP, section 5.2.3, the total number of IT contracts and their combined dollar amount are the first two bullet points listed in the IT Staff Contract Experience criteria section.14/ Accordingly, Ms. Reaves looked for this information in the order set forth in the RFP, i.e., at the beginning of each vendors’ response to this section. (For example, Seva inserted its contract history in the first two lines of its IT Staff Contract Experience submission.) The RFP did not contain any specific instructions on how a vendor was to format its response to this section. At the final hearing, Ms. Reaves testified that she would still have given ArnAmy’s IT Staff Contract Experience a score of 150, even if she had found the entry for total IT contracts. It does appear, however, that Ms. Reaves plainly overlooked this information when evaluating ArnAmy’s proposal. Regarding Seva, Ms. Reaves awarded it 100 points (out of 300) for its Management Plan. She explained that she did not believe Seva adequately explained “how” it was going to accomplish “what was critical” to performing the IT staffing contract. On the contrary, Seva’s proposal lacked specifics, which left Ms. Reaves questioning Seva’s ability to provide quality IT staff for potential Customers. Ms. Reaves awarded Seva 150 out of 200 points for IT Staff Contract Experience. She testified that she could not determine the level or type of Seva’s staffing experience from its proposal. Denise Roberts: Ms. Roberts has spent her entire public service career working in the procurements field for various state agencies. When she was selected to serve as an evaluator, Ms. Roberts was employed as a Purchasing Agent for the Agency for State Technology. During her evaluation, Ms. Roberts moved to the Department of Lottery where she processed procurements, solicitations, and purchase orders. Notably, Ms. Roberts has previously procured IT staff augmentation services, as well as obtained quotes for IT staff assistance for the Agency for State Technology, the Department of Corrections, as well as the Department of Transportation. Additionally, Ms. Roberts is a Certified Public Professional Buyer and a Florida Certified Contract Manager. She does not, however, have any IT experience or training. Nor did she have knowledge of what the IT Job Titles listed in the RFP specifically entailed. Ms. Roberts testified that, before she scored the proposals, she reviewed and understood the RFP, as well as the documents she was to score. In addition, she spoke with the Department’s Procurement Officer (Mr. Atkinson) who provided general guidance on how to score the proposals. Ms. Roberts expressed that she followed the instructions the Department gave her and felt sufficiently trained to evaluate the vendors’ proposals. She also believed that she had enough experience to evaluate proposals regarding IT staffing services. Ms. Roberts explained that she generally conducted the following evaluation process: Initially, she read the vendor’s proposal, followed by a review of the RFP’s requirements. She then reviewed the proposal again to determine how the vendor complied with the RFP criteria. At that point, she scored the proposal. When scoring, Ms. Roberts handwrote all scores onto the RFP’s scoresheet. Thereafter, she input her scores online and submitted them electronically to the Department. Ms. Roberts spent about 30 to 45 minutes evaluating each proposal. Regarding her specific scores, Ms. Roberts testified that she awarded ArnAmy 200 out of 300 points for its Management Plan. She explained that, for a perfect score of 300, a proposal had to meet every aspect the RFP requested in great detail, as well as describe how the vendor was going to accomplish the RFP’s tasks. ArnAmy’s Management Plan, however, was missing information and provided less detail than she expected. Specifically, Ms. Roberts did not find a response to the RFP’s requirements that ArnAmy list the “Respondent’s Principal Personnel who will make management decisions concerning staff placement for services under the contract(s),” or the “role each Principal Personnel” would have in the contract. Regarding ArnAmy’s IT Staff Contract Experience, Ms. Roberts awarded ArnAmy the maximum 200 points. She found that ArnAmy provided “quite a bit” of information regarding its prior experience. Regarding Seva, Ms. Roberts awarded it 0 points for its Management Plan. She explained that she did not believe Seva’s proposal provided the information the RFP requested. Specifically, Seva did not explain “how” it was going to accomplish “any” of the RFP’s staffing requirements. Seva simply offered general comments with no details or step-by-step processes describing how it would acquire, then manage, IT personnel for potential Customers. Neither did Seva include the role its principals would play in its Management Plan. Conversely, Ms. Roberts awarded Seva with the maximum 200 points for IT Staff Contract Experience. She found that Seva provided all the information requested regarding its prior contract experience. Ms. Roberts asserted that she worked independently and did not communicate with the other Evaluators. Further, she testified that she conscientiously used the criteria set forth in the RFP and gave each proposal consistent and fair consideration. Despite the large amount of proposals, Ms. Roberts confidently voiced that she had adequate time to consider, then score, each proposal. Heather Shoup: Ms. Shoup currently serves as the Director of Human Resources for the Department. In this position, she oversees all human resource activities for the Department, including recruitment and retention, benefit administration, classifications, compensation, employee relations issues, orientation, and retirement coordination. Ms. Shoup testified that her professional experience has been primarily in the areas of financial and human resources. In addition, she has experience hiring and managing individuals who provide IT services. However, she has no prior experience in public procurements. In preparing for her evaluations, Ms. Shoup met with the RFP’s Procurement Officer (Mr. Atkinson), as well as reviewed the RFP criteria, the Evaluators Guide, and the Instructions for the Evaluator Score Sheet. Ms. Shoup expressed that she understood her responsibilities and had sufficient training and time to evaluate each proposal. When evaluating, Ms. Shoup relayed that she worked independently through each proposal and scored as best as she could. For a perfect score, she was looking for answers to all RFP criteria. She wanted to see clear, precise responses that provided all information the RFP requested. She specifically reviewed “how” the vendor intended to deliver IT staff support for Customers. Ms. Shoup testified that she spent approximately ten minutes per evaluation. Regarding her specific scores, Ms. Shoup awarded ArnAmy 200 out of 300 points for its Management Plan. She explained that ArnAmy’s Management Plan was missing information regarding its Principal Personnel who would make management decisions under a potential staffing contract. On the other hand, Ms. Shoup awarded ArnAmy the maximum 200 points for IT Staff Contract Experience. She found that ArnAmy’s proposal reflected extensive IT staffing experience. Regarding Seva, Ms. Shoup awarded it 100 out of 300 points for its Management Plan. She explained that Seva’s proposal was “too broad.” Specifically, Seva did not answer the “how” questions in multiple categories. Conversely, Ms. Shoup awarded Seva with the maximum 200 points for IT Staff Contract Experience. She found that Seva’s proposal clearly showed its prior IT contract experience. Finally, Ms. Shoup testified that she fairly scored each proposal she evaluated. She did not have difficulties reviewing the various submissions. Ms. Shoup also expressed that she had adequate time to consider, then score, each proposal. Based on the testimony received, the Department persuasively demonstrated that the Scoring Team “collectively [had] the experience and knowledge” required to score the RFP. Each Evaluator convincingly conveyed her ability to ably participate in the Department’s solicitation process. Although, none of the Evaluators had prior experience in the IT profession, each possessed the acumen and ability to competently conduct a procurement for IT staffing services. Ms. Reaves and Ms. Shoup both had extensive experience in personnel and human resource functions, including hiring and managing employees. Further, Ms. Roberts had broad knowledge in procuring services, including IT staff augmentation services. Finally, upon reviewing their scores again at the final hearing, each Evaluator testified that they would not change their scores. They each credibly expressed that neither ArnAmy nor Seva adequately addressed some or all of the criterion set out in the RFP. Therefore, based on their various professional and educational backgrounds and vocational experience, the undersigned finds that the Scoring Team was fully capable and proficient to review and score all aspects of each of the 374 vendor proposals. The Evaluators were adequately knowledgeable of, and sufficiently experienced for, their task of understanding and evaluating the vendors’ IT staffing plans. Conversely, neither ArnAmy nor Seva established that the Department’s appointment of a Scoring Team consisting of Stephanie Reaves, Denise Roberts, and Heather Shoup was contrary to the governing authority in section 287.057(16)(a)1. The RFP was not Contrary to the Department’s Governing Statutes, Rules, Policies, or the Solicitation Specifications: In addition to describing the Evaluator selection process, Mr. Nilson explained why the RFP limited the number of awards to 200 Contractors per Job Title (plus ties).15/ Initially, Mr. Nilson conveyed that the Department desired that vendors continue to compete to provide staffing services. Two hundred potential Contractors for each Job Title would maintain active competition when Customers requested price quotes. This arrangement would help ensure that Customers would continue to receive fair and reasonable prices in response to a Request for Quote. Secondly, restricting the number of Contractors to 200 would enable the Department to more easily monitor the large pool of vendors. Finally, the Department hoped to keep the Request for Quote process as simple and straightforward as possible for the Customers. When seeking IT staff services, Customers would have a definite and finite list of prospective Contractors. Further, Mr. Nilson added that market research indicated that only about 90 vendors actually participated in the prior/currently existing state term contract. Consequently, the Department determined that economical and fair competition for IT staff services would reasonably end at approximately 200 Contractors. Finally, the Department called Kimberly Stiver to discuss the possibility that an error occurred in the MarketPlace online system that impeded ArnAmy’s attempt to submit the final version of its Management Plan to the Department. MarketPlace is operated by Accenture. Ms. Stiver is Accenture’s Program Manager for MarketPlace. Ms. Stiver testified that, after learning of ArnAmy’s allegations, she and her staff investigated the MarketPlace system to uncover any evidence that would justify ArnAmy’s claim. Ms. Stiver reviewed event logs, the attachment history log, and the system logs to determine whether an error took place within MarketPlace related to the uploading, saving, or transmitting of ArnAmy’s Management Plan. Initially, Ms. Stiver explained that responding to a solicitation takes two steps. First, the vendor uploads the document. Then, the vendor “submits” the document to the agency. After uploading the document, but prior to submitting it, MarketPlace allows vendors to replace, revise, or upload additional documents. After a vendor has “submitted” the document, the agency then accesses the last uploaded and successfully saved version of the document in MarketPlace. At the final hearing, Ms. Stiver declared that, following her detailed inquiry, she found no indication within MarketPlace that ArnAmy was not able to, was prevented from, or encountered any difficulties in properly submitting its Management Plan to the Department. Expanding on her assertion, Ms. Stiver explained that each procurement in MarketPlace is a unique and distinct “event” that tracks key activity from the vendor community. ArnAmy’s activity on MarketPlace relating to this RFP shows that ArnAmy submitted a Management Plan at approximately 1:41 p.m. on March 18, 2019. Based on the event log, Ms. Stiver stated that ArnAmy logged onto MarketPlace only one time on March 18, 2019, and that ArnAmy only uploaded one document identified as its Management Plan at that time. The event log does not support Mr. Kadam’s suggestion that he uploaded multiple versions of a Management Plan which may have resulted in an earlier version being submitted to the Department instead of ArnAmy’s final intended version. The attachment history log also shows that ArnAmy logged into MarketPlace only one time on March 18, 2019, to upload, save, and submit documents. Ms. Stiver testified that, like the event log, the attachment history log does not support Mr. Kadam’s assertion that he saved at least three versions of ArnAmy’s Management Plan in MarketPlace. If Mr. Kadam had uploaded and saved, but not submitted, multiple versions of a Management Plan, Ms. Stiver asserted that the attachment history log would document the entries as “not submitted.” The attachment history log for ArnAmy, however, records no entries or messages with a status of “not submitted.” Finally, Ms. Stiver reviewed ArnAmy’s system log for the period of March 12 through 19, 2019, the time period during which MarketPlace was open to receive vendors’ proposals. The system log shows no system errors occurred at any time while ArnAmy was logged into MarketPlace from March 12 through 19, 2019. Based on her comprehensive explanation, Ms. Stiver persuasively testified that no errors or inconsistencies occurred in the MarketPlace online system that caused an earlier (incomplete) version of ArnAmy’s Management Plan to be submitted to the Department or prevented ArnAmy from effectively and timely uploading its Management Plan in response to the RFP. The logical conclusion is that the discrepancy between the version of ArnAmy’s Management Plan that the Evaluators eventually scored and the final version that Mr. Kadam claims he submitted in MarketPlace was the result of ArnAmy’s unfortunate oversight. The Possibility of “Unbalanced” Bids: Regarding Seva’s (and ArnAmy’s) complaint that the Department failed to identify and reject “unbalanced bids,” Mr. Nilson expressed that the RFP did not prevent vendors from presenting “unbalanced” proposals. Moreover, no statute, rule, or solicitation specification required the Department to reject a vendor’s proposal simply because the hourly rate quoted might be lower than market value for a certain Job Title or Scope Variant. Further, nothing in the RFP directed the Department to conduct a statistical analysis of vendor prices prior to awarding the state term contract.16/ The RFP clearly informed all vendors of the scoring criteria the Department would apply for price. Every vendor was free to submit a hourly rate for each Job Title for which it would agree to abide. The Department uniformly applied the RFP’s price formula to every Job Title from every proposal. Finally, while Seva asserts that the price formula could have led to unfair and/or misleading scoring results, the RFP allowed all vendors (including ArnAmy and Seva) to present “low-ball” prices in their proposals. Further, even if certain vendors did include unrealistic prices for their IT staffing services, the RFP protects Customers by binding a Contractor to the maximum price per Job Title or Scope Variant listed in its proposal. (In fact, a Contractor could offer even lower prices for its IT staff services in response to a Request for Quote.) Finally, regarding Seva’s complaint that its proposal was substantially similar to its previous proposal (which received a higher score), Mr. Nilson commented that Seva’s 2019 proposal was materially different from its 2016 proposal. Seva presented fewer Principal Personnel in 2019 (two versus four individuals). Mr. Nilson surmised this factor may have reduced the amount of IT experience Seva represented. In addition, Mr. Nilson believed that Seva’s prior proposal presented a clearer description of how it intended to recruit, and then place, prospective IT personnel for Customers. In that regard, Mr. O’Donnell confirmed that Seva’s 2019 proposal contained several substantive differences from its 2016 proposal. To summarize the findings in this matter, neither ArnAmy nor Seva established, by a preponderance of the evidence, that the Department’s decision to award only 21 of 130 Job Titles to ArnAmy and 0 of 130 Job Titles to Seva was clearly erroneous, contrary to competition, arbitrary, or capricious. The evidence does not demonstrate that either ArnAmy or Seva were placed at a competitive disadvantage in this solicitation. Neither is there evidence that the Department conducted this procurement in a manner that was contrary to its governing statutes, rules or policies, or the provisions of the RFP. Regarding ArnAmy and Seva’s complaint that the Department did not assemble a qualified Scoring Team, the evidence establishes the contrary. Testimony at the final hearing demonstrated that the individuals the Department assigned to score the vendors’ proposals possessed the “experience and knowledge in the program areas and service requirements for which [the] contractual services [were] sought” as required by section 287.057(16)(a)1. The Evaluators’ scores for ArnAmy and Seva’s proposals were logical, reasonable, and based on a sound understanding of the criteria requested in the RFP.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services enter a final order dismissing the protests of ArnAmy and Seva, except that the Department should rescore ArnAmy’s IT Staff Contract Experience. Otherwise, the Department should award state term contracts under Request for Proposals for Information Technology Staff Augmentation Services – 3rd Bid, RFP 15-8010H07- SA-D as set forth in the Revised Notice of Intent to Award the RFP issued on June 24, 2019. DONE AND ENTERED this 5th day of February, 2020, in Tallahassee, Leon County, Florida. S J. BRUCE CULPEPPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 2020.
The Issue At issue in this proceeding is whether proposed Florida Administrative Code Rule 69O-125.005 is an invalid exercise of delegated legislative authority.
Findings Of Fact Petitioners AIA is a trade association made up of 40 groups of insurance companies. AIA member companies annually write $6 billion in property, casualty, and automobile insurance in Florida. AIA's primary purpose is to represent the interests of its member insurance groups in regulatory and legislative matters throughout the United States, including Florida. NAMIC is a trade association consisting of 1,430 members, mostly mutual insurance companies. NAMIC member companies annually write $10 billion in property, casualty, and automobile insurance in Florida. NAMIC represents the interests of its member insurance companies in regulatory and legislative matters throughout the United States, including Florida. PCI is a national trade association of property and casualty insurance companies consisting of 1,055 members. PCI members include mutual insurance companies, stock insurance companies, and reciprocal insurers that write property and casualty insurance in Florida. PCI members annually write approximately $15 billion in premiums in Florida. PCI participated in the OIR's workshops on the Proposed Rule. PCI's assistant vice president and regional manager, William Stander, testified that if the Proposed Rule is adopted, PCI's member companies would be required either to withdraw from the Florida market or drastically reorganize their business model. FIC is an insurance trade association made up of 39 insurance groups that represent approximately 250 insurance companies writing all lines of insurance. All of FIC's members are licensed in Florida and write approximately $27 billion in premiums in Florida. FIC has participated in rule challenges in the past, and participated in the workshop and public hearing process conducted by OIR for this Proposed Rule. FIC President Guy Marvin testified that FIC's property and casualty members use credit scoring and would be affected by the Proposed Rule. A substantial number of Petitioners' members are insurers writing property and casualty insurance and/or motor vehicle insurance coverage in Florida. These members use credit-based insurance scoring in their underwriting and rating processes. They would be directly regulated by the Proposed Rule in their underwriting and rating methods and in the rate filing processes set forth in Sections 627.062 and 627.0651, Florida Statutes. Fair Isaac originated credit-based insurance scoring and is a leading provider of credit-based insurance scoring information in the United States and Canada. Fair Isaac has invested millions of dollars in the development and maintenance of its credit-based insurance models. Fair Isaac concedes that it is not an insurer and, thus, would not be directly regulated by the Proposed Rule. However, Fair Isaac would be directly affected by any negative impact that the Proposed Rule would have in setting limits on the use of credit-based insurance score models in Florida. Lamont Boyd, a manager in Fair Isaac's global scoring division, testified that if the Proposed Rule goes into effect Fair Isaac would, at a minimum, lose all of the revenue it currently generates from insurance companies that use its scores in the State of Florida, because Fair Isaac's credit-based insurance scoring model cannot meet the requirements of the Proposed Rule regarding racial, ethnic, and religious categorization. Mr. Boyd also testified that enactment of the Proposed Rule could cause a "ripple effect" of similar regulations in other states, further impairing Fair Isaac's business. The Statute and Proposed Rule During the 1990s, insurance companies' use of consumer credit information for underwriting and rating automobile and residential property insurance policies greatly increased. Insurance regulators expressed concern that the use of consumer credit reports, credit histories and credit-based insurance scoring models could have a negative effect on consumers' ability to obtain and keep insurance at appropriate rates. Of particular concern was the possibility that the use of credit scoring would particularly hurt minorities, people with low incomes, and young people, because those persons would be more likely to have poor credit scores. On September 19, 2001, Insurance Commissioner Tom Gallagher appointed a task force to examine the use of credit reports and develop recommendations for the Legislature or for the promulgation of rules regarding the use of credit scoring by the insurance industry. The task force met on four separate occasions throughout the state in 2001, and issued its report on January 23, 2002. The task force report conceded that the evidence supporting the negative impact of the use of credit reports on specific groups is "primarily anecdotal," and that the insurance industry had submitted anecdotal evidence to the contrary. Among its nine recommendations, the task force recommended the following: A comprehensive and independent investigation of the relationship between insurers' use of consumer credit information and risk of loss including the impact by race, income, geographic location and age. A prohibition against the use of credit reports as the sole basis for making underwriting or rating decisions. That insurers using credit as an underwriting or rating factor be required to provide regulators with sufficient information to independently verify that use. That insurers be required to send a copy of the credit report to those consumers whose adverse insurance decision is a result of their consumer credit information and a simple explanation of the specific credit characteristics that caused the adverse decision. That insurers not be permitted to draw a negative inference from a bad credit score that is due to medical bills, little or no credit information, or other special circumstances that are clearly not related to an applicant's or policyholder's insurability. That the impact of credit reports be mitigated by imposing limits on the weight that insurers can give to them in the decision to write a policy and limits on the amount the premium can be increased due to credit information. No evidence was presented that the "comprehensive and independent investigation" of insurers' use of credit information was undertaken by the Legislature. However, the other recommendations of the task force were addressed in Senate Bills 40A and 42A, enacted by the Legislature and signed by the governor on June 26, 2003. These companion bills, each with an effective date of January 1, 2004, were codified as Sections 626.9741 and 626.97411, Florida Statutes, respectively. Chapters 2003-407 and 2003-408, Laws of Florida. Section 626.9741, Florida Statutes, provides: The purpose of this section is to regulate and limit the use of credit reports and credit scores by insurers for underwriting and rating purposes. This section applies only to personal lines motor vehicle insurance and personal lines residential insurance, which includes homeowners, mobile home owners' dwelling, tenants, condominium unit owners, cooperative unit owners, and similar types of insurance. As used in this section, the term: "Adverse decision" means a decision to refuse to issue or renew a policy of insurance; to issue a policy with exclusions or restrictions; to increase the rates or premium charged for a policy of insurance; to place an insured or applicant in a rating tier that does not have the lowest available rates for which that insured or applicant is otherwise eligible; or to place an applicant or insured with a company operating under common management, control, or ownership which does not offer the lowest rates available, within the affiliate group of insurance companies, for which that insured or applicant is otherwise eligible. "Credit report" means any written, oral, or other communication of any information by a consumer reporting agency, as defined in the federal Fair Credit Reporting Act, 15 U.S.C. ss. 1681 et seq., bearing on a consumer's credit worthiness, credit standing, or credit capacity, which is used or expected to be used or collected as a factor to establish a person's eligibility for credit or insurance, or any other purpose authorized pursuant to the applicable provision of such federal act. A credit score alone, as calculated by a credit reporting agency or by or for the insurer, may not be considered a credit report. "Credit score" means a score, grade, or value that is derived by using any or all data from a credit report in any type of model, method, or program, whether electronically, in an algorithm, computer software or program, or any other process, for the purpose of grading or ranking credit report data. "Tier" means a category within a single insurer into which insureds with substantially similar risk, exposure, or expense factors are placed for purposes of determining rate or premium. An insurer must inform an applicant or insured, in the same medium as the application is taken, that a credit report or score is being requested for underwriting or rating purposes. An insurer that makes an adverse decision based, in whole or in part, upon a credit report must provide at no charge, a copy of the credit report to the applicant or insured or provide the applicant or insured with the name, address, and telephone number of the consumer reporting agency from which the insured or applicant may obtain the credit report. The insurer must provide notification to the consumer explaining the reasons for the adverse decision. The reasons must be provided in sufficiently clear and specific language so that a person can identify the basis for the insurer's adverse decision. Such notification shall include a description of the four primary reasons, or such fewer number as existed, which were the primary influences of the adverse decision. The use of generalized terms such as "poor credit history," "poor credit rating," or "poor insurance score" does not meet the explanation requirements of this subsection. A credit score may not be used in underwriting or rating insurance unless the scoring process produces information in sufficient detail to permit compliance with the requirements of this subsection. It shall not be deemed an adverse decision if, due to the insured's credit report or credit score, the insured continues to receive a less favorable rate or placement in a less favorable tier or company at the time of renewal except for renewals or reunderwriting required by this section. (4)(a) An insurer may not request a credit report or score based upon the race, color, religion, marital status, age, gender, income, national origin, or place of residence of the applicant or insured. An insurer may not make an adverse decision solely because of information contained in a credit report or score without consideration of any other underwriting or rating factor. An insurer may not make an adverse decision or use a credit score that could lead to such a decision if based, in whole or in part, on: The absence of, or an insufficient, credit history, in which instance the insurer shall: Treat the consumer as otherwise approved by the Office of Insurance Regulation if the insurer presents information that such an absence or inability is related to the risk for the insurer; Treat the consumer as if the applicant or insured had neutral credit information, as defined by the insurer; Exclude the use of credit information as a factor and use only other underwriting criteria; Collection accounts with a medical industry code, if so identified on the consumer's credit report; Place of residence; or Any other circumstance that the Financial Services Commission determines, by rule, lacks sufficient statistical correlation and actuarial justification as a predictor of insurance risk. An insurer may use the number of credit inquiries requested or made regarding the applicant or insured except for: Credit inquiries not initiated by the consumer or inquiries requested by the consumer for his or her own credit information. Inquiries relating to insurance coverage, if so identified on a consumer's credit report. Collection accounts with a medical industry code, if so identified on the consumer's credit report Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the home mortgage industry and made within 30 days of one another, unless only one inquiry is considered. Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry and made within 30 days of one another, unless only one inquiry is considered. An insurer must, upon the request of an applicant or insured, provide a means of appeal for an applicant or insured whose credit report or credit score is unduly influenced by a dissolution of marriage, the death of a spouse, or temporary loss of employment. The insurer must complete its review within 10 business days after the request by the applicant or insured and receipt of reasonable documentation requested by the insurer, and, if the insurer determines that the credit report or credit score was unduly influenced by any of such factors, the insurer shall treat the applicant or insured as if the applicant or insured had neutral credit information or shall exclude the credit information, as defined by the insurer, whichever is more favorable to the applicant or insured. An insurer shall not be considered out of compliance with its underwriting rules or rates or forms filed with the Office of Insurance Regulation or out of compliance with any other state law or rule as a result of granting any exceptions pursuant to this subsection. A rate filing that uses credit reports or credit scores must comply with the requirements of s. 627.062 or s. 627.0651 to ensure that rates are not excessive, inadequate, or unfairly discriminatory. An insurer that requests or uses credit reports and credit scoring in its underwriting and rating methods shall maintain and adhere to established written procedures that reflect the restrictions set forth in the federal Fair Credit Reporting Act, this section, and all rules related thereto. (7)(a) An insurer shall establish procedures to review the credit history of an insured who was adversely affected by the use of the insured's credit history at the initial rating of the policy, or at a subsequent renewal thereof. This review must be performed at a minimum of once every 2 years or at the request of the insured, whichever is sooner, and the insurer shall adjust the premium of the insured to reflect any improvement in the credit history. The procedures must provide that, with respect to existing policyholders, the review of a credit report will not be used by the insurer to cancel, refuse to renew, or require a change in the method of payment or payment plan. (b) However, as an alternative to the requirements of paragraph (a), an insurer that used a credit report or credit score for an insured upon inception of a policy, who will not use a credit report or score for reunderwriting, shall reevaluate the insured within the first 3 years after inception, based on other allowable underwriting or rating factors, excluding credit information if the insurer does not increase the rates or premium charged to the insured based on the exclusion of credit reports or credit scores. The commission may adopt rules to administer this section. The rules may include, but need not be limited to: Information that must be included in filings to demonstrate compliance with subsection (3). Statistical detail that insurers using credit reports or scores under subsection (5) must retain and report annually to the Office of Insurance Regulation. Standards that ensure that rates or premiums associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. Standards for review of models, methods, programs, or any other process by which to grade or rank credit report data and which may produce credit scores in order to ensure that the insurer demonstrates that such grading, ranking, or scoring is valid in predicting insurance risk of an applicant or insured. Section 626.97411, Florida Statutes, provides: Credit scoring methodologies and related data and information that are trade secrets as defined in s. 688.002 and that are filed with the Office of Insurance Regulation pursuant to a rate filing or other filing required by law are confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution.3 Following extensive rule development workshops and industry comment, proposed Florida Administrative Code Rule 69O-125.005 was initially published in the Florida Administrative Weekly, on February 11, 2005.4 The Proposed Rule states, as follows: 69O-125.005 Use of Credit Reports and Credit Scores by Insurers. For the purpose of this rule, the following definitions apply: "Applicant", for purposes of Section 626.9741, F.S., means an individual whose credit report or score is requested for underwriting or rating purposes relating to personal lines motor vehicle or personal lines residential insurance and shall not include individuals who have merely requested a quote. "Credit scoring methodology" means any methodology that uses credit reports or credit scores, in whole or in part, for underwriting or rating purposes. "Data cleansing" means the correction or enhancement of presumed incomplete, incorrect, missing, or improperly formatted information. "Personal lines motor vehicle" insurance means insurance against loss or damage to any motorized land vehicle or any loss, liability, or expense resulting from or incidental to ownership, maintenance or use of such vehicle if the contract of insurance shows one or more natural persons as named insureds. The following are not included in this definition: Vehicles used as public livery or conveyance; Vehicles rented to others; Vehicles with more than four wheels; Vehicles used primarily for commercial purposes; and Vehicles with a net vehicle weight of more than 5,000 pounds designed or used for the carriage of goods (other than the personal effects of passengers) or drawing a trailer designed or used for the carriage of such goods. The following are specifically included, inter alia, in this definition: Motorcycles; Motor homes; Antique or classic automobiles; and Recreational vehicles. "Unfairly discriminatory" means that adverse decisions resulting from the use of a credit scoring methodology disproportionately affects persons belonging to any of the classes set forth in Section 626.9741(8)(c), F.S. Insurers may not use any credit scoring methodology that is unfairly discriminatory. The burden of demonstrating that the credit scoring methodology is not unfairly discriminatory is upon the insurer. An insurer may not request or use a credit report or credit score in its underwriting or rating method unless it maintains and adheres to established written procedures that reflect the restrictions set forth in the federal Fair Credit Reporting Act, Section 626.9741, F.S., and these rules. Upon initial use or any change in that use, insurers using credit reports or credit scores for underwriting or rating personal lines residential or personal lines motor vehicle insurance shall include the following information in filings submitted pursuant to Section 627.062 or 627.0651, F.S. A listing of the types of individuals whose credit reports or scores the company will use or attempt to use to underwrite or rate a given policy. For example: Person signing application; Named insured or spouse; and All listed operators. How those individual reports or scores will be combined if more than one is used. For example: Average score used; Highest score used. The name(s) of the consumer reporting agencies or any other third party vendors from which the company will obtain or attempt to obtain credit reports or scores. Precise identifying information specifying or describing the credit scoring methodology, if any, the company will use including: Common or trade name; Version, subtype, or intended segment of business the system was designed for; and Any other information needed to distinguish a particular credit scoring methodology from other similar ones, whether developed by the company or by a third party vendor. The effect of particular scores or ranges of scores (or, for companies not using scores, the effect of particular items appearing on a credit report) on any of the following as applicable: Rate or premium charged for a policy of insurance; Placement of an insured or applicant in a rating tier; Placement of an applicant or insured in a company within an affiliated group of insurance companies; Decision to refuse to issue or renew a policy of insurance or to issue a policy with exclusions or restrictions or limitations in payment plans. The effect of the absence or insufficiency of credit history (as referenced in Section 626.9741(4)(c)1., F.S.) on any items listed in paragraph (e) above. The manner in which collection accounts identified with a medical industry code (as referenced in Section 626.9741(4)(c)2., F.S.) on a consumer's credit report will be treated in the underwriting or rating process or within any credit scoring methodology used. The manner in which collection accounts that are not identified with a medical industry code, but which an applicant or insured demonstrates are the direct result of significant and extraordinary medical expenses, will be treated in the underwriting or rating process or within any credit scoring methodology used. The manner in which the following will be treated in the underwriting or rating process, or within any credit scoring methodology used: Credit inquiries not initiated by the consumer; Requests by the consumer for the consumer's own credit information; Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry or the home mortgage industry and made within 30 days of one another; Multiple lender inquiries that are not coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry or the home mortgage industry and made within 30 days of one another, but that an applicant or insured demonstrates are the direct result of such inquiries; Inquiries relating to insurance coverage, if so identified on a consumer's credit report; and Inquiries relating to insurance coverage that are not so identified on a consumer's credit report, but which an applicant or insured demonstrates are the direct result of such inquiries. The list of all clear and specific primary reasons that may be cited to the consumer as the basis or explanation for an adverse decision under Section 626.9741(3), F.S. and the criteria determining when each of those reasons will be so cited. A description of the process that the insurer will use to correct any error in premium charged the insured, or in underwriting decision made concerning the insured, if the basis of the premium charged or the decision made is a disputed item that is later removed from the credit report or corrected, provided that the insured first notifies the insurer that the item has been removed or corrected. A certification that no use of credit reports or scores in rating insurance will apply to any component of a rate or premium attributed to hurricane coverage for residential properties as separately identified in accordance with Section 627.0629, F.S. Insurers desiring to make adverse decisions for personal lines motor vehicle policies or personal lines residential policies based on the absence or insufficiency of credit history shall either: Treat such consumers or applicants as otherwise approved by the Office of Insurance Regulation if the insurer presents information that such an absence or inability is related to the risk for the insurer and does not result in a disparate impact on persons belonging to any of the classes set forth in Section 626.9741(8)(c), This information will be held as confidential if properly so identified by the insurer and eligible under Section 626.9711, F.S. The information shall include: Data comparing experience for each category of those with absent or insufficient credit history to each category of insureds separately treated with respect to credit and having sufficient credit history; A statistically credible method of analysis that concludes that the relationship between absence or insufficiency and the risk assumed is not due to chance; A statistically credible method of analysis that concludes that absence or insufficiency of credit history does not disparately impact persons belonging to any of the classes set forth in Section 626.9741(8)(c), F.S.; A statistically credible method of analysis that confirms that the treatment proposed by the insurer is quantitatively appropriate; and Statistical tests establishing that the treatment proposed by the insurer is warranted for the total of all consumers with absence or insufficiency of credit history and for at least two subsets of such consumers. Treat such consumers as if the applicant or insured had neutral credit information, as defined by the insurer. Should an insurer fail to specify a definition, neutral is defined as the average score that a stratified random sample of consumers or applicants having sufficient credit history would attain using the insurer's credit scoring methodology; or Exclude credit as a factor and use other criteria. These other criteria must be specified by the insurer and must not result in average treatment for the totality of consumers with an absence of or insufficiency of credit history any less favorable than the treatment of average consumers or applicants having sufficient credit history. Insurers desiring to make adverse decisions for personal lines motor vehicle or personal lines residential insurance based on information contained in a credit report or score shall file with the Office information establishing that the results of such decisions do not correlate so closely with the zip code of residence of the insured as to constitute a decision based on place of residence of the insured in violation of Section 626.9741(4)(c)(3), F.S. (7)(a) Insurers using credit reports or credit scores for underwriting or rating personal lines residential or personal lines motor vehicle insurance shall develop, maintain, and adhere to written procedures consistent with Section 626.9741(4)(e), F.S. providing appeals for applicants or insureds whose credit reports or scores are unduly influenced by dissolution of marriage, death of a spouse, or temporary loss of employment. (b) These procedures shall be subject to examination by the Office at any time. (8)(a)1. Insurers using credit reports or credit scoring in rating personal lines motor vehicle or personal lines residential insurance shall develop, maintain, and adhere to written procedures to review the credit history of an insured who was adversely affected by such use at initial rating of the policy or subsequent renewal thereof. These procedures shall be subject to examination by the Office at any time. The procedures shall comply with the following: A review shall be conducted: No later than 2 years following the date of any adverse decision, or Any time, at the request of the insured, but no more than once per policy period without insurer assent. The insurer shall notify the named insureds annually of their right to request the review in (II) above. Renewal notices issued 120 days or less after the effective date of this rule are not included in this requirement. The insurer shall adjust the premium to reflect any improvement in credit history no later than the first renewal date that follows a review of credit history. The renewal premium shall be subject to other rating factors lawfully used by the insurer. The review shall not be used by the insurer to cancel, refuse to renew, or require a change in the method of payment or payment plan based on credit history. (b)1. As an alternative to the requirements in paragraph (8)(a), insurers using credit reports or scores at the inception of a policy but not for re-underwriting shall develop, maintain, and adhere to written procedures. These procedures shall be subject to examination by the Office at any time. The procedures shall comply with the following: Insureds shall be reevaluated no later than 3 years following policy inception based on allowable underwriting or rating factors, excluding credit information. The rate or premium charged to an insured shall not be greater, solely as a result of the reevaluation, than the rate or premium charged for the immediately preceding policy term. This shall not be construed to prohibit an insurer from applying regular underwriting criteria (which may result in a greater premium) or general rate increases to the premium charged. For insureds that received an adverse decision notification at policy inception, no residual effects of that adverse decision shall survive the reevaluation. This means that the reevaluation must be complete enough to make it possible for insureds adversely impacted at inception to attain the lowest available rate for which comparable insureds are eligible, considering only allowable underwriting or rating factors (excluding credit information) at the time of the reevaluation. No credit scoring methodology shall be used for personal lines motor vehicle or personal lines residential property insurance unless that methodology has been demonstrated to be a valid predictor of the insurance risk to be assumed by an insurer for the applicable type of insurance. The demonstration of validity detailed below need only be provided with the first rate, rule, or underwriting guidelines filing following the effective date of this rule and at any time a change is made in the credit scoring methodology. Other such filings may instead refer to the most recent prior filing containing a demonstration. Information supplied in the context of a demonstration of validity will be held as confidential if properly so identified by the insurer and eligible under Section 626.9711, F.S. A demonstration of validity shall include: A listing of the persons that contributed substantially to the development of the most current version of the method, including resumes of the persons, if obtainable, indicating their qualifications and experience in similar endeavors. An enumeration of all data cleansing techniques that have been used in the development of the method, which shall include: The nature of each technique; Any biases the technique might introduce; and The prevalence of each type of invalid information prior to correction or enhancement. All data that was used by the model developers in the derivation and calibration of the model parameters. Data shall be in sufficient detail to permit the Office to conduct multiple regression testing for validation of the credit scoring methodology. Data, including field definitions, shall be supplied in electronic format compatible with the software used by the Office. Statistical results showing that the model and parameters are predictive and not overlapping or duplicative of any other variables used to rate an applicant to such a degree as to render their combined use actuarially unsound. Such results shall include the period of time for which each element from a credit report is used. A precise listing of all elements from a credit report that are used in scoring, and the formula used to compute the score, including the time period during which each element is used. Such listing is confidential if properly so identified by the insurer. An assessment by a qualified actuary, economist, or statistician (whether or not employed by the insurer) other than persons who contributed substantially to the development of the credit scoring methodology, concluding that there is a significant statistical correlation between the scores and frequency or severity of claims. The assessment shall: Identify the person performing the assessment and show his or her educational and professional experience qualifications; and Include a test of robustness of the model, showing that it performs well on a credible validation data set. The validation data set may not be the one from which the model was developed. Documentation consisting of statistical testing of the application of the credit scoring model to determine whether it results in a disproportionate impact on the classes set forth in Section 626.9741(8)(c), A model that disproportionately affects any such class of persons is presumed to have a disparate impact and is presumed to be unfairly discriminatory. Statistical analysis shall be performed on the current insureds of the insurer using the proposed credit scoring model, and shall include the raw data and detailed results on each classification set forth in Section 626.9741(8)(c), F.S. In lieu of such analysis insurers may use the alternative in 2. below. Alternatively, insurers may submit statistical studies and analyses that have been performed by educational institutions, independent professional associations, or other reputable entities recognized in the field, that indicate that there is no disproportionate impact on any of the classes set forth in Section 626.9741(8)(c), F.S. attributable to the use of credit reports or scores. Any such studies or analyses shall have been done concerning the specific credit scoring model proposed by the insurer. The Office will utilize generally accepted statistical analysis principles in reviewing studies submitted which support the insurer's analysis that the credit scoring model does not disproportionately impact any class based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. The Office will permit reliance on such studies only to the extent that they permit independent verification of the results. The testing or validation results obtained in the course of the assessment in paragraphs (d) and (f) above. Internal Insurer data that validates the premium differentials proposed based on the scores or ranges of scores. Industry or countrywide data may be used to the extent that the Florida insurer data lacks credibility based upon generally accepted actuarial standards. Insurers using industry or countrywide data for validation shall supply Florida insurer data and demonstrate that generally accepted actuarial standards would allow reliance on each set of data to the extent the insurer has done so. Validation data including claims on personal lines residential insurance policies that are the result of acts of God shall not be used unless such acts occurred prior to January 1, 2004. The mere copying of another company's system will not fulfill the requirement to validate proposed premium differentials unless the filer has used a method or system for less than 3 years and demonstrates that it is not cost effective to retrospectively analyze its own data. Companies under common ownership, management, and control may copy to fulfill the requirement to validate proposed premium differentials if they demonstrate that the characteristics of the business to be written by the affiliate doing the copying are sufficiently similar to the affiliate being copied to presume common differentials will be accurate. The credibility standards and any judgmental adjustments, including limitations on effects, that have been used in the process of deriving premium differentials proposed and validated in paragraph (i) above. An explanation of how the credit scoring methodology treats discrepancies in the information that could have been obtained from different consumer reporting agencies: Equifax, Experian, or TransUnion. This shall not be construed to require insurers to obtain multiple reports for each insured or applicant. 1. The date that each of the analyses, tests, and validations required in paragraphs (d) through (j) above was most recently performed, and a certification that the results continue to be applicable. 2. Any item not reviewed in the previous 5 years is unacceptable. Specific Authority 624.308(1), 626.9741(8) FS. Law Implemented 624.307(1), 626.9741 FS. History-- New . The Petition 1. Statutory Definitions of "Unfairly Discriminatory" The main issue raised by Petitioners is that the Proposed Rule's definition of "unfairly discriminatory," and those portions of the Proposed Rule that rely on this definition, are invalid because they are vague, and enlarge, modify, and contravene the provisions of the law implemented and other provisions of the insurance code. Section 626.9741, Florida Statutes, does not define "unfairly discriminatory." Subsection 626.9741(5), Florida Statutes, provides that a rate filing using credit reports or scores "must comply with the requirements of s. 627.062 or s. 627.0651 to ensure that rates are not excessive, inadequate, or unfairly discriminatory." Subsection 626.9741(8)(c), Florida Statutes, provides that the FSC may adopt rules, including standards to ensure that rates or premiums "associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence." Chapter 627, Part I, Florida Statutes, is referred to as the "Rating Law." § 627.011, Fla. Stat. The purpose of the Rating Law is to "promote the public welfare by regulating insurance rates . . . to the end that they shall not be excessive, inadequate, or unfairly discriminatory." § 627.031(1)(a), Fla. Stat. The Rating Law provisions referenced by Subsection 626.9741(5), Florida Statutes, in relation to ensuring that rates are not "unfairly discriminatory" are Sections 627.062 and 627.0651, Florida Statutes. Section 627.062, Florida Statutes, titled "Rate standards," provides that "[t]he rates for all classes of insurance to which the provisions of this part are applicable shall not be excessive, inadequate, or unfairly discriminatory." § 627.062(1), Fla. Stat. Subsection 627.062(2)(e)6., Florida Statutes, provides: A rate shall be deemed unfairly discriminatory as to a risk or group of risks if the application of premium discounts, credits, or surcharges among such risks does not bear a reasonable relationship to the expected loss and expense experience among the various risks. Section 627.0651, Florida Statutes, titled "Making and use of rates for motor vehicle insurance," provides, in relevant part: One rate shall be deemed unfairly discriminatory in relation to another in the same class if it clearly fails to reflect equitably the difference in expected losses and expenses. Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as rates reflect the differences with reasonable accuracy. Rates are not unfairly discriminatory if averaged broadly among members of a group; nor are rates unfairly discriminatory even though they are lower than rates for nonmembers of the group. However, such rates are unfairly discriminatory if they are not actuarially measurable and credible and sufficiently related to actual or expected loss and expense experience of the group so as to assure that nonmembers of the group are not unfairly discriminated against. Use of a single United States Postal Service zip code as a rating territory shall be deemed unfairly discriminatory. Petitioners point out that each of these statutory examples describing "unfairly discriminatory" rates has an actuarial basis, i.e., rates must be related to the actual or expected loss and expense factors for a given group or class, rather than any extraneous factors. If two risks have the same expected losses and expenses, the insurer must charge them the same rate. If the risks have different expected losses and expenses, the insurer must charge them different rates. Michael Miller, Petitioners' expert actuary, testified that the term "unfairly discriminatory" has been used in the insurance industry for well over 100 years and has always had this cost-based definition. Mr. Miller is a fellow of the Casualty Actuarial Society ("CAS"), a professional organization whose purpose is the advancement of the body of knowledge of actuarial science, including the promulgation of industry standards and a code of professional conduct. Mr. Miller was chair of the CAS ratemaking committee when it developed the CAS "Statement of Principles Regarding Property and Casualty Insurance Ratemaking," a guide for actuaries to follow when establishing rates.5 Principle 4 of the Statement of Principles provides: "A rate is reasonable and not excessive, inadequate, or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk." In layman's terms, Mr. Miller explained that different types of risks are reflected in a rate calculation. To calculate the expected cost of a given risk, and thus the rate to be charged, the insurer must determine the expected losses for that risk during the policy period. The loss portion reflects the risk associated with an occurrence and the severity of a claim. While the loss portion does not account for the entirety of the rate charged, it is the most important in terms of magnitude. Mr. Miller cautioned that the calculation of risk is a quantification of expected loss, but not an attempt to predict who is going to have an accident or make a claim. There is some likelihood that every insured will make a claim, though most never do, and this uncertainty is built into the incurred loss portion of the rate. No single risk factor is a complete measure of a person's likelihood of having an accident or of the severity of the ensuing claim. The prediction of losses is determined through a risk classification plan that take into consideration many risk factors (also called rating factors) to determine the likelihood of an accident and the extent of the claim. As to automobile insurance, Mr. Miller listed such risk factors as the age, gender, and marital status of the driver, the type, model and age of the car, the liability limits of the coverage, and the geographical location where the car is garaged. As to homeowners insurance, Mr. Miller listed such risk factors as the location of the home, its value and type of construction, the age of the utilities and electrical wiring, and the amount of insurance to be carried. 2. Credit Scoring as a Rating Factor In the current market, the credit score of the applicant or insured is a rating factor common to automobile and homeowners insurance. Subsection 626.9741(2)(c), Florida Statutes, defines "credit score" as follows: a score, grade, or value that is derived by using any or all data from a credit report in any type of model, method, or program, whether electronically, in an algorithm, computer software or program, or any other process, for the purpose of grading or ranking credit report data. "Credit scores" (more accurately termed "credit-based insurance scores") are derived from credit data that have been found to be predictive of a loss. Lamont Boyd, Fair Isaac's insurance market manager, explained the manner in which Fair Isaac produced its credit scoring model. The company obtained information from various insurance companies on millions of customers. This information included the customers' names, addresses, and the premiums earned by the companies on those policies as well as the losses incurred. Fair Isaac next requested the credit reporting agencies to review their archived files for the credit information on those insurance company customers. The credit agencies matched the credit files with the insurance customers, then "depersonalized" the files so that there was no way for Fair Isaac to know the identity of any particular customer. According to Mr. Lamont, the data were "color blind" and "income blind." Fair Isaac's analysts took these files from the credit reporting agencies and studied the data in an effort to find the most predictive characteristics of future loss propensity. The model was developed to account for all the predictive characteristics identified by Fair Isaac's analysts, and to give weight to those characteristics in accordance to their relative accuracy as predictors of loss. Fair Isaac does not directly sell its credit scores to insurance companies. Rather, Fair Isaac's models are implemented by the credit reporting agencies. When an insurance company wants Fair Isaac's credit score, it purchases access to the model's results from the credit reporting agency. Other vendors offer similar credit scoring models to insurance companies, and in recent years, some insurance companies have developed their own scoring models. Several academic studies of credit scoring were admitted and discussed at the final hearing in these cases. There appears to be no serious debate that credit scoring is a valid and important predictor of losses. The controversy over the use of credit scoring arises over its possible "unfairly discriminatory" impact "based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence." § 626.9741(8)(c), Fla. Stat. Mr. Miller was one of two principal authors of a June 2003 study titled, "The Relationship of Credit-Based Insurance Scores to Private Passenger Automobile Insurance Loss Propensity." This study was commissioned by several insurance industry trade organizations, including AIA and NAMIC. The study addressed three questions: whether credit-based insurance scores are related to the propensity for loss; whether credit- based insurance scores measure risk that is already measured by other risk factors; and what is the relative importance to accurate risk assessment of the use of credit-based insurance scores. The study was based on a nationwide random sample of private passenger automobile policy and claim records. Records from all 50 states were included in roughly the same proportion as each state's registered motor vehicles bear to total registered vehicles in the United States. The data samples were provided by seven insurers, and represented approximately 2.7 million automobiles, each insured for 12 months.6 The study examined all major automobile coverages: bodily injury liability, property damage liability, medical payments coverage, personal injury protection coverage, comprehensive coverage, and collision coverage. The study concluded that credit-based insurance scores were correlated with loss propensity. The study found that insurance scores overlap to some degree with other risk factors, but that after fully accounting for the overlaps, insurance scores significantly increase the accuracy of the risk assessment process. The study found that, for each of the six automobile coverages examined, insurance scores are among the three most important risk factors.7 Mr. Miller's study did not examine the question of causality, i.e., why credit-based insurance scores are predictive of loss propensity. Dr. Patrick Brockett testified for Petitioners as an expert in actuarial science, risk management and insurance, and statistics. Dr. Brockett is a professor in the departments of management science and information systems, finance, and mathematics at the University of Texas at Austin. He occupies the Gus S. Wortham Memorial Chair in Risk Management and Insurance, and is the director of the university's risk management and insurance program. Dr. Brockett is the former director of the University of Texas' actuarial science program and continues to direct the study of students seeking their doctoral degrees in actuarial science. His areas of academic research are actuarial science, risk management and insurance, statistics, and general quantitative methods in business. Dr. Brockett has written more than 130 publications, most of which relate to actuarial science and insurance. He has spent his entire career in academia, and has never been employed by an insurance company. In 2002, Lieutenant Governor Bill Ratliff of Texas asked the Bureau of Business Research ("BBR") of the University of Texas' McCombs School of Business to provide an independent, nonpartisan study to examine the relationship between credit history and insurance losses in automobile insurance. Dr. Brockett was one of four named authors of this BBR study, issued in March 2003 and titled, "A Statistical Analysis of the Relationship between Credit History and Insurance Losses." The BBR research team solicited data from insurance companies representing the top 70 percent of the automobile insurers in Texas, and compiled a database of more than 173,000 automobile insurance policies from the first quarter of 1998 that included the following 12 months' premium and loss history. ChoicePoint was then retained to match the named insureds with their credit histories and to supply a credit score for each insured person. The BBR research team then examined the credit score and its relationship with prospective losses for the insurance policy. The results were summarized in the study as follows: Using logistic and multiple regression analyses, the research team tested whether the credit score for the named insured on a policy was significantly related to incurred losses for that policy. It was determined that there was a significant relationship. In general, lower credit scores were associated with larger incurred losses. Next, logistic and multiple regression analyses examined whether the revealed relationship between credit score and incurred losses was explainable by existing underwriting variables, or whether the credit score added new information about losses not contained in the existing underwriting variables. It was determined that credit score did yield new information not contained in the existing underwriting variables. What the study does not attempt to explain is why credit scoring adds significantly to the insurer's ability to predict insurance losses. In other words, causality was not investigated. In addition, the research team did not examine such variables as race, ethnicity, and income in the study, and therefore this report does not speculate about the possible effects that credit scoring may have in raising or lowering premiums for specific groups of people. Such an assessment would require a different study and different data. At the hearing, Dr. Brockett testified that the BBR study demonstrated a "strong and significant relationship between credit scoring and incurred losses," and that credit scoring retained its predictive power even after the other risk variables were accounted for. Dr. Brockett further testified that credit scoring has a disproportionate effect on the classifications of age and marital status, because the very young tend to have credit scores that are lower than those of older people. If the question is simply whether the use of credit scores will have a greater impact on the young and the single, the answer would be in the affirmative. However, Dr. Brockett also noted that young, single people will also have higher losses than older, married people, and, thus, the use of credit scores is not "unfairly discriminatory" in the sense that term is employed in the insurance industry.8 Mr. Miller testified that nothing in the actuarial standards of practice requires that a risk factor be causally related to a loss. The Actuarial Standards Board's Standard of Practice 12,9 dealing with risk classification, states that a risk factor is appropriate for use if there is a demonstrated relationship between the risk factor and the insurance losses, and that this relationship may be established by statistical or other mathematical analysis of data. If the risk characteristic is shown to be related to an expected outcome, the actuary need not establish a cause-and-effect relationship between the risk characteristic and the expected outcome. As an example, Mr. Miller offered the fact that past automobile accidents do not cause future accidents, although past accidents are predictive of future risk. Past traffic violations, the age of the driver, the gender of the driver, and the geographical location are all risk factors in automobile insurance, though none of these factors can be said to cause future accidents. They help insurers predict the probability of a loss, but do not predict who will have an accident or why the accident will occur. Mr. Miller opined that credit scoring is a similar risk factor. It is demonstrably significant as a predictor of risk, though there is no causal relationship between credit scores and losses and only an incomplete understanding of why credit scoring works as a predictor of loss. At the hearing, Dr. Brockett discussed a study that he has co-authored with Linda Golden, a business professor at the University of Texas at Austin. Titled "Biological and Psychobehavioral Correlates of Risk Taking, Credit Scores, and Automobile Insurance Losses: Toward an Explication of Why Credit Scoring Works," the study has been peer-reviewed and at the time of the hearing had been accepted for publication in the Journal of Risk and Insurance. In this study, the authors conducted a detailed review of existing scientific literature concerning the biological, psychological, and behavioral attributes of risky automobile drivers and insured losses, and a similar review of literature concerning the biological, psychological, and behavioral attributes of financial risk takers. The study found that basic chemical and psychobehavioral characteristics, such as a sensation-seeking personality type, are common to individuals exhibiting both higher insured automobile losses and poorer credit scores. Dr. Brockett testified that this study provides a direction for future research into the reasons why credit scoring works as an insurance risk characteristic. 3. The Proposed Rule's Definition of "Unfairly Discriminatory" Petitioners contend that the Proposed Rule's definition of the term "unfairly discriminatory" expands upon and is contrary to the statutory definition of the term discussed in section C.1. supra, and that this expanded definition operates to impose a ban on the use of credit scoring by insurance companies. As noted above, Section 626.9741, Florida Statutes, does not define the term "unfairly discriminatory." The provisions of the Rating Law10 define the term as it is generally understood by the insurance industry: a rate is deemed "unfairly discriminatory" if the premium charged does not equitably reflect the differences in expected losses and expenses between policyholders. Two provisions of Section 626.9741, Florida Statutes, employ the term "unfairly discriminatory": (5) A rate filing that uses credit reports or credit scores must comply with the requirements of s. 627.062 or s. 627.0651 to ensure that rates are not excessive, inadequate, or unfairly discriminatory. * * * (8) The commission may adopt rules to administer this section. The rules may include, but need not be limited to: * * * (c) Standards that ensure that rates or premiums associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. Petitioners contend that the statute's use of the term "unfairly discriminatory" is unexceptionable, that the Legislature simply intended the term to be used and understood in the traditional sense of actuarial soundness alone. Respondents agree that Subsection 626.9741(5), Florida Statutes, calls for the agency to apply the traditional definition of "unfairly discriminatory" as that term is employed in the statutes directly referenced, Sections 627.062 and 627.0651, Florida Statutes, the relevant texts of which are set forth in Findings of Fact 18 and 19 above. However, Respondents contend that Subsection 626.9741(8)(c), Florida Statutes, calls for more than the application of the Rating Law's definition of the term. Respondents assert that in the context of this provision, "unfairly discriminatory" contemplates not only the predictive function, but also "discrimination" in its more common sense, as the term is employed in state and federal civil rights law regarding race, color, religion, marital status, age, gender, income, national origin, or place of residence. At the hearing, OIR General Counsel Steven Parton testified as to the reasons why the agency chose the federal body of law using the term "disparate impact" as the test for unfair discrimination in the Proposed Rule: Well, first of all, what we were looking for is a workable definition that people would have some understanding as to what it meant when we talked about unfair discrimination. We were also looking for a test that did not require any willfulness, because it was not our concern that, in fact, insurance companies were engaging willfully in unfair discrimination. What we believed is going on, and we think all of the studies that are out there suggest, is that credit scoring is having a disparate impact upon various people, whether it be income, whether it be race. . . . Respondents' position is that Subsection 626.9741(8)(c), Florida Statutes, requires that a proposed rate or premium be rejected if it has a "disproportionately" negative effect on one of the named classes of persons, even though the rate or premium equitably reflects the differences in expected losses and expenses between policyholders. In the words of Mr. Parton, "This is not an actuarial rule." Mr. Parton explained the agency's rationale for employing a definition of "unfairly discriminatory" that is different from the actuarial usage employed in the Rating Law. Subsection 626.9741(5), Florida Statutes, already provides that an insurer's rate filings may not be "excessive, inadequate, or unfairly discriminatory" in the actuarial sense. To read Subsection 626.9741(8)(c), Florida Statutes, as simply a reiteration of the actuarial "unfair discrimination" rule would render the provision, "a nullity. There would be no force and effect with regards to that." Thus, the Proposed Rule defines "unfairly discriminatory" to mean "that adverse decisions resulting from the use of a credit scoring methodology disproportionately affects persons belonging to any of the classes set forth in Section 626.9741(8)(c), F.S." Proposed Florida Administrative Code Rule 69O-125.005(1)(e). OIR's actuary, Howard Eagelfeld, explained that "disproportionate effect" means "having a different effect on one group . . . causing it to pay more or less premium than its proportionate share in the general population or than it would have to pay based upon all other known considerations." Mr. Eagelfeld's explanation is not incorporated into the language of the Proposed Rule. Consistent with the actuarial definition of "unfairly discriminatory," the Proposed Rule requires that any credit scoring methodology must be "demonstrated to be a valid predictor of the insurance risk to be assumed by an insurer for the applicable type of insurance," and sets forth detailed criteria through which the insurer can make the required demonstration. Proposed Florida Administrative Code Rule 69O-125.005(9)(a)-(f) and (h)-(l). Proposed Florida Administrative Code Rule 69O-125.005(9)(g) sets forth Respondents' "civil rights" usage of the term "unfairly discriminatory." The insurer's demonstration of the validity of its credit scoring methodology must include: [d]ocumentation consisting of statistical testing of the application of the credit scoring model to determine whether it results in a disproportionate impact on the classes set forth in Section 626.9741(8)(c), F.S. A model that disproportionately affects any such class of persons is presumed to have a disparate impact and is presumed to be unfairly discriminatory.11 Mr. Parton, who testified in defense of the Proposed Rule as one of its chief draftsmen, stated that the agency was concerned that the use of credit scoring may be having a disproportionate effect on minorities. Respondents believe that credit scoring may simply be a surrogate measure for income, and that using income as a basis for setting rates would have an obviously disparate impact on lower-income persons, including the young and the elderly. Mr. Parton testified that "neither the insurance industry nor anyone else" has researched the theory that credit scoring may be a surrogate for income. Mr. Miller referenced a 1998 analysis performed by AIA indicating that the average credit scores do not vary significantly according to the income group. In fact, the lowest income group (persons making less than $15,000 per year) had the highest average credit score, and the average credit scores actually dropped as income levels rose until the income range reached $50,000 to $74,000 per year, when the credit scores began to rise. Mr. Miller testified that a credit score is no more predictive of income level than a coin flip. However, Respondents introduced a January 2003 report to the Washington State Legislature prepared by the Social & Economic Sciences Research Center of Washington State University, titled "Effect of Credit Scoring on Auto Insurance Underwriting and Pricing." The purpose of the study was to determine whether credit scoring has unequal impacts on specific demographic groups. For this study, the researchers received data from three insurance companies on several thousand randomly chosen customers, including the customers' age, gender, residential zip code, and their credit scores and/or rate classifications. The researchers contacted about 1,000 of each insurance company's customers and obtained information about their ethnicity, marital status, and income levels. The study's findings were summarized as follows: The demographic patterns discerned by the study are: Age is the most significant factor. In almost every analysis, older drivers have, on average, higher credit scores, lower credit-based rate assignments, and less likelihood of lacking a valid credit score. Income is also a significant factor. Credit scores and premium costs improve as income rises. People in the lowest income categories-- less than $20,000 per year and between $20,000 and $35,000 per year-- often experienced higher premiums and lower credit scores. More people in lower income categories also lacked sufficient credit history to have a credit score. Ethnicity was found to be significant in some cases, but because of differences among the three firms studied and the small number of ethnic minorities in the samples, the data are not broadly conclusive. In general, Asian/Pacific Islanders had credit scores more similar to whites than to other minorities. When other minority groups had significant differences from whites, the differences were in the direction of higher premiums. In the sample of cases where insurance was cancelled based on credit score, minorities who were not Asian/Pacific Islanders had greater difficulty finding replacement insurance, and were more likely to experience a lapse in insurance while they searched for a new policy. The analysis also considered gender, marital status and location, but for these factors, significant unequal effects were far less frequent. (emphasis added) The evidence appears equivocal on the question of whether credit scoring is a surrogate for income. The Washington study seems to indicate that ethnicity may be a significant factor in credit scoring, but that significant unequal effects are infrequent regarding gender and marital status. The evidence demonstrates that the use of credit scores by insurers would tend to have a negative impact on young people. Mr. Miller testified that persons between ages 25 and 30 have lower credit scores than older people. Petitioners argue that by defining "unfairly discriminatory" to mean "disproportionate effect," the Proposed Rule effectively prohibits insurers from using credit scores, if only because all the parties recognize that credit scores have a "disproportionate effect" on young people. Petitioners contend that this prohibition is in contravention of Section 626.9741(1), Florida Statutes, which states that the purpose of the statute is to "regulate and limit" the use of credit scores, not to ban them outright. Respondents counter that if the use of credit scores is "unfairly discriminatory" toward one of the listed classes of persons in contravention of Subsection 626.9741(8)(c), Florida Statutes, then the "limitation" allowed by the statute must include prohibition. This point is obviously true but sidesteps the real issues: whether the statute's undefined prohibition on "unfair discrimination" authorizes the agency to employ a "disparate impact" or "disproportionate effect" definition in the Proposed Rule, and, if so, whether the Proposed Rule sufficiently defines any of those terms to permit an insurer to comply with the rule's requirements. Proposed Florida Administrative Code Rule 69O-125.005(2) provides that the insurer bears the burden of demonstrating that its credit scoring methodology does not disproportionately affect persons based upon their race, color, religion, marital status, age, gender, income, national origin, or place of residence. Petitioners state that no insurer can demonstrate, consistent with the Proposed Rule, that its credit scoring methodology does not have a disproportionate effect on persons based upon their age. Therefore, no insurer will ever be permitted to use credit scores under the terms of the Proposed Rule. As discussed more fully in Findings of Fact 73 through 76 below, Petitioners also contend that the Proposed Rule provides no guidance as to what "disproportionate effect" and "disparate impact" mean, and that this lack of definitional guidance will permit the agency to reject any rate filing that uses credit scoring, based upon an arbitrary determination that it has a "disproportionate effect" on one of the classes named in Subsection 626.9741(8)(c), Florida Statutes. Petitioners also presented evidence that no insurer collects data on race, color, religion, or national origin from applicants or insureds. Mr. Miller testified that there is no reliable independent source for race, color, religious affiliation, or national origin data. Mr. Eagelfeld agreed that there is no independent source from which insurers can obtain credible data on race or religious affiliation. Mr. Parton testified that this lack of data can be remedied by the insurance companies commencing to request race, color, religion, and national origin information from their customers, because there is no legal impediment to their doing so. Mr. Miller testified that he would question the reliability of the method suggested by Mr. Parton because many persons will refuse to answer such sensitive questions or may not answer them correctly. Mr. Miller stated that, as an actuary, he would not certify the results of a study based on demographic data obtained in this manner and would qualify any resulting actuarial opinion due to the unreliability of the database. Petitioners also object to the vagueness of the broad categories of "race, color, religion and national origin." Mr. Miller testified that the Proposed Rule lacks "operational definitions" for those terms that would enable insurers to perform the required calculations. The Proposed Rule places the burden on the insurer to demonstrate no disproportionate effect on persons based on these categories, but offers no guidance as to how these demographic classes should be categorized by an insurer seeking to make such a demonstration. Petitioners point out that even if the insurer is able to ascertain the categories sought by the regulators, the Proposed Rule gives no guidance as to whether the "disproportionate effect" criterion mandates perfect proportionality among all races, colors, religions, and national origins, or whether some degree of difference is tolerable. Petitioners contend that this lack of guidance provides unbridled discretion to the regulator to reject any disproportionate effect study submitted by an insurer. At his deposition, Mr. Parton was asked how an insurer should break down racial classifications in order to show that there is no disproportionate effect on race. His answer was as follows: There is African-American, Cuban-American, Spanish-American, African-American, Haitian- American. Are you-- you know, whatever the make-up of your book of business is-- you're the one in control of it. You can ask these folks what their ethnic background is. At his deposition, Mr. Parton frankly admitted that he had no idea what "color" classifications an insurer should use, yet he also stated that an insurer must demonstrate no disproportionate effect on each and every listed category, including "color." At the final hearing, when asked to list the categories of "color," Mr. Parton responded, "I suppose Indian, African-American, Chinese, Japanese, all of those."12 At the final hearing, Mr. Parton was asked whether the Proposed Rule contemplates requiring insurers to demonstrate distinctions between such groups as "Latvian-Americans" and "Czech-Americans." Mr. Parton's reply was as follows: No. And I don't think it was contemplated by the Legislature. . . . The question is race by any other name, whether it be national origin, ethnicity, color, is something that they're concerned about in terms of an impact. What we would anticipate, and what we have always anticipated, is the industry would demonstrate whether or not there is an adverse effect against those folks who have traditionally in Florida been discriminated against, and that would be African-Americans and certain Hispanic groups. In our opinion, at least, if you could demonstrate that the credit scoring was not adversely impacting it, it may very well answer the questions to any other subgroup that you may want to name. At the hearing, Mr. Parton was also questioned as to distinctions between religions and testified as follows: The impact of credit scoring on religion is going to be in the area of what we call thin files, or no files. That is to say people who do not have enough credit history from which credit scores can be done, or they're going to be treated somehow differently because of that lack of history. A simple question that needs to be asked by the insurance company is: "Do you, as a result of your religious belief or whatever [sect] you are in, are you forbidden as a precept of your religious belief from engaging in the use of credit?" When cross-examined on the subject, Mr. Parton could not confidently identify any religious group that forbids the use of credit. He thought that Muslims and Quakers may be such groups. Mr. Parton concluded by stating, "I don't think it is necessary to identify those groups. The question is whether or not you have a religious group that you prescribe to that forbids it." Petitioners contend that, in addition to failing to define the statutory terms of race, color, religion, and national origin in a manner that permits insurer compliance, the Proposed Rule fails to provide an operational definition of "disproportionate effect." The following is a hypothetical question put to Mr. Parton at his deposition, and Mr. Parton's answer: Q: Let's assume that African-Americans make up 10 percent of the population. Let's just use two groups for the sake of clarity. Caucasians make up 90 percent. If the application of credit scoring in underwriting results in African-Americans paying 11 percent of the premium and Caucasians paying 89 percent of the premium, is that, in your mind, a disproportionate affect [sic]? A: It may be. I think it would give rise under this rule that perhaps there is a presumption that it is, but that presumption is not [an irrebuttable] one.[13] For instance, if you then had testimony that a 1 percent difference between the two was statistically insignificant, then I would suggest that that presumption would be overridden. This answer led to a lengthy discussion regarding a second hypothetical in which African-Americans made up 29 percent of the population, and also made up 35 percent of the lowest, or most unfavorable, tier of an insurance company's risk classifications. Mr. Parton ultimately opined that if the difference in the two numbers was found to be "statistically significant" and attributable only to the credit score, then he would conclude that the use of credit scoring unfairly discriminated against African-Americans. As to whether his answer would be the same if the hypothetical were adjusted to state that African-Americans made up 33 percent of the lowest tier, Mr. Parton responded: "That would be up to expert testimony to be provided on it. That's what trials are all about."14 Aside from expert testimony to demonstrate that the difference was "statistically insignificant," Mr. Parton could think of no way that an insurer could rebut the presumption that the difference was unfairly discriminatory under the "disproportionate effect" definition set forth in the proposed rule. He stated that, "I can't anticipate, nor does the rule propose to anticipate, doing the job of the insurer of demonstrating that its rates are not unfairly discriminatory." Mr. Parton testified that an insurer's showing that the credit score was a valid and important predictor of risk would not be sufficient to rebut the presumption of disproportionate effect. Summary Findings Credit-based insurance scoring is a valid and important predictor of risk, significantly increasing the accuracy of the risk assessment process. The evidence is still inconclusive as to why credit scoring is an effective predictor of risk, though a study co-authored by Dr. Brockett has found that basic chemical and psychobehavioral characteristics, such as a sensation-seeking personality type, are common to individuals exhibiting both higher insured automobile losses and poorer credit scores. Though the evidence was equivocal on the question of whether credit scoring is simply a surrogate for income, the evidence clearly demonstrated that the use of credit scores by insurance companies has a greater negative overall effect on young people, who tend to have lower credit scores than older people. Petitioners and Fair Isaac emphasized their contention that compliance with the Proposed Rule would be impossible, and thus the Proposed Rule in fact would operate as a prohibition on the use of credit scoring by insurance companies. At best, Petitioners demonstrated that compliance with the Proposed Rule would be impracticable at first, given the current business practices in the industry regarding the collection of customer data regarding race and religion. The evidence indicated no legal barriers to the collection of such data by the insurance companies. Questions as to the reliability of the data are speculative until a methodology for the collection of the data is devised. Subsection 626.9741(8)(c), Florida Statutes, authorizes the FSC to adopt rules that may include: Standards that ensure that rates or premiums associated with the use of a credit report or score are not unfairly discriminatory, based upon race, color, religion, marital status, age, gender, income, national origin, or place of residence. Petitioners' contention that the statute's use of "unfairly discriminatory" contemplates nothing more than the actuarial definition of the term as employed by the Rating Law is rejected. As Respondents pointed out, Subsection 626.9741(5), Florida Statutes, provides that a rate filing using credit scores must comply with the Rating Law's requirements that the rates not be "unfairly discriminatory" in the actuarial sense. If Subsection 626.9741(8)(c), Florida Statutes, merely reiterates the actuarial requirement, then it is, in Mr. Parton's words, "a nullity."15 Thus, it is found that the Legislature contemplated some level of scrutiny beyond actuarial soundness to determine whether the use of credit scores "unfairly discriminates" in the case of the classes listed in Subsection 626.9741(8)(c), Florida Statutes. It is found that the Legislature empowered FSC to adopt rules establishing standards to ensure that an insurer's rates or premiums associated with the use of credit scores meet this added level of scrutiny. However, it must be found that the term "unfairly discriminatory" as employed in the Proposed Rule is essentially undefined. FSC has not adopted a "standard" by which insurers can measure their rates and premiums, and the statutory term "unfairly discriminatory" is thus subject to arbitrary enforcement by the regulating agency. Proposed Florida Administrative Code Rule 69O-125.005(1)(e) defines "unfairly discriminatory" in terms of adverse decisions that "disproportionately affect" persons in the classes set forth in Subsection 626.9741(8)(c), Florida Statutes, but does not define what is a "disproportionate effect." At Subsection (9)(g), the Proposed Rule requires "statistical testing" of the credit scoring model to determine whether it results in a "disproportionate impact" on the listed classes. This subsection attempts to define its terms as follows: A model that disproportionately affects any such class of persons is presumed to have a disparate impact and is presumed to be unfairly discriminatory. Thus, the Proposed Rule provides that a "disproportionate effect" equals a "disparate impact" equals "unfairly discriminatory," without defining any of these terms in such a way that an insurer could have any clear notion, prior to the regulator's pronouncement on its rate filing, whether its credit scoring methodology was in compliance with the rule. Indeed, Mr. Parton's testimony evinced a disinclination on the part of the agency to offer guidance to insurers who attempt to understand this circular definition. The tenor of his testimony indicated that the agency itself is unsure of exactly what an insurer could submit to satisfy the "disproportionate effect" test, aside from perfect proportionality, which all parties concede is not possible at least as to young people, or a showing that any lack of perfect proportionality is "statistically insignificant," whatever that means. Mr. Parton seemed to say that OIR will know a valid use of credit scoring when it sees one, though it cannot describe such a use beforehand. Mr. Eagelfeld offered what might be a workable definition of "disproportionate effect," but his definition is not incorporated into the Proposed Rule. Mr. Parton attempted to assure the Petitioners that OIR would take a reasonable view of the endless racial and ethnic categories that could be subsumed under the literal language of the Proposed Rule, but again, Mr. Parton's assurances are not part of the Proposed Rule. Mr. Parton's testimony referenced federal and state civil rights laws as the source for the term "disparate impact." Federal case law under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2, has defined a "disparate impact" claim as "one that 'involves employment practices that are facially neutral in their treatment of different groups, but that in fact fall more harshly on one group than another and cannot be justified by business necessity.'" Adams v. Florida Power Corporation, 255 F.3d 1322, 1324 n.4 (11th Cir. 2001), quoting Hazen Paper Co. v. Biggins, 507 U.S. 604, 609, 113 S. Ct. 1701, 1705, 123 L. Ed. 2d 338 (1993). The Proposed Rule does not reference this definition, nor did Mr. Parton detail how OIR proposes to apply or modify this definition in enforcing the Proposed Rule. Without further definition, all three of the terms employed in this circular definition are conclusions, not "standards" that the insurer and the regulator can agree upon at the outset of the statistical and analytical process leading to approval or rejection of the insurer's rates. Absent some definitional guidance, a conclusory term such as "disparate impact" can mean anything the regulator wishes it to mean in a specific case. The confusion is compounded by the Proposed Rule's failure to refine the broad terms "race," "color," and "religion" in a manner that would allow an insurer to prepare a meaningful rate submission utilizing credit scoring. In his testimony, Mr. Parton attempted to limit the Proposed Rule's impact to those groups "who have traditionally in Florida been discriminated against," but the actual language of the Proposed Rule makes no such distinction. Mr. Parton also attempted to limit the reach of "religion" to groups whose beliefs forbid them from engaging in the use of credit, but the language of the Proposed Rule does not support Mr. Parton's distinction.
