Findings Of Fact Background On March 12, 1991, the Department of Lottery (Department) issued Request for Proposal No. 91-007-LOT/TEN/P entitled "Request for Proposal for the Provision of Advertising and Related Services to the Florida Lottery" (hereafter "the RFP"). The deadline for submitting sealed proposals in response to the RFP was established as April 22, 1991, but extended to April 29, 1991, by Amendment 3 to the RFP. At the time of the deadline, ten proposals had been filed, including those of petitioner, Bozell, Inc. (Bozell), and intervenors, Earle Palmer Brown (EPB) and BBDO South (BBDO). By "Notice of Selection of Finalists," dated May 1, 1991, and posted at the Department's headquarters, the Department advised all bidders that: After review of written proposals submitted in response to the subject RFP, the Florida Department of the Lottery's Evaluation Committee has ranked the responsive proposals in the following order of preference: Ogilvy & Mather Earle Palmer Brown BBDO South Bozell W.B. Doner Fahlgren Martin Benito West & Company Beber Silverstein LMPM The Ad Team In accordance with Section 5.3 of the RFP, the Department intends to conduct oral presentations with the following firms for the purpose of determining final rankings: Ogilvy & Mather Earle Palmer Brown BBDO South Bozell W.B. Doner Pursuant to Florida Statute and Rule 53ER87-16, failure to file a formal written protest and the bond required by Section 287.042(2)(c), Fla. Stat., with the Secretary within 72 hours shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. Here, there was no showing that any protest was timely filed to contest the Department's selection of the five finalists. The five finalists made oral presentations to the evaluation committee on May 7 and 8, 1991, and their cost proposals were opened and scored on May 8, 1991. At the conclusion of its work, the committee awarded EPB an average total score of 174.550 and Bozell an average total score of 171.150; 200 points was the maximum total possible. By notice dated Wednesday, May 8, 1991, at 8:07 p.m., the Department issued its "Notice of Intent to Negotiate a Contract" ranking the top five firms in the following order of preference: (1) EPB, (2) Bozell, (3) Ogilvy & Mather; BBDO; and (5) W.B. Doner. Bozell filed its formal written protest and petition for formal administrative hearing with the Department of Monday, May 13, 1991, at 4:29 p.m. The Request for Proposals The RFP consists of the original RFP issued by the Department, three amendments, and the Department's response to various written questions submitted by potential bidders. Pertinent to this case, the RFP provided: SECTION 1: GENERAL INFORMATION Introduction. This Request for Proposal ("RFP") has been issued by the Florida Department of Lottery ("Lottery") to obtain sealed proposals from qualified firms for the provision of advertising and related services to the Florida Lottery. This RFP, and all other activities leading toward the execution of a contract per this RFP, are conducted under the Lottery policies set forth in Rules 53ER87-10 through 53ER87-19, Florida Administrative Code, and Chapter 24, Fla. Stat. The Lottery considers it in the best interest of the State of Florida to procure the commodities/services described herein through a competitive process. All responding firms should read and be familiar with the Florida Public Education Lottery Act [Chapter 24, Fla. Stat.] to ascertain an understanding of the purposes and requirements placed on the Lottery. A copy of Chapter 24, Fla. Stat., is attached to this RFP. This proposed purchase is a Major Procurement as defined in Section 24.103, Fla. Stat. (1989). Glossary of Terms. * * * Responsive Proposal - Refers to a proposal which contains, in the manner required by this RFP, all documentation, drawings, information, plans, materials, certifications and affirmations, regardless of which section of the RFP sets forth the particular requirements. * * * Questions About This RFP. * * * If revisions to this RFP are necessary after the closing date for submitting proposals, the revisions will be provided to only those Respondents who have submitted Responsive Proposals and have met the basic requirements of this RFP. Such Respondents will then have the opportunity to modify their proposals in conformance with the revisions. Timetable The following timetable will be strictly adhered to in all actions relative to this procurement. * * * All proposals will be opened by Lottery employees at 2:00 p.m. on April 22, 1991 [extended to April 29, 1991, by Amendment 3] in the Purchasing Office at the aforesaid Lottery Headquarters. The public may attend the opening but may not review any proposals submitted. The evaluation process will begin immediately following the proposal opening. The Evaluation Committee will rank the proposals in order of preference based on the evaluation of the technical proposals in accordance with the criteria specified herein. Notice of selection of finalists shall be posted at the Lottery's headquarters. If more than five Responsive Proposals are submitted, at least the five top firms which have submitted Responsive Proposals will be selected for oral presentations to be made in Tallahassee, Florida, at the Lottery's Headquarters. Oral presentations are tentatively scheduled for the week of April 29, 1991 [extended to the week of May 6, 1991, by Amendment 3] . . . . The Evaluation Committee will score the oral presentations and then open and score the cost proposal. The final rankings will be determined based on the evaluation of the technical proposals, oral presentations and cost proposals. Notice of Intent to negotiate with the highest ranked firm will be posted at the Lottery's headquarters. If negotiations with the highest ranked firm are not successful, the Lottery may negotiate with the other listed firms in descending order of rank. Upon successful conclusion of negotiations with a Respondent, a Notice of Award of Contract will be posted at the Lottery's headquarters. * * * 1.12. Proposal Submission. It is the Respondent's responsibility to ensure that its proposal is delivered by the proper time at the place of the proposal opening.... * * * 1.14 Correction or Withdrawal of Proposal. A correction to, or withdrawal of, a proposal may be requested within 72 hours after the proposal opening time and date. Requests received in accordance with this provision may be granted by the Lottery upon proof of the impossibility to perform based upon an obvious error. The Lottery, in its sole discretion, will determine whether a bid may be corrected or withdrawn. Interpretations/Disputes. Any questions concerning conditions and specifications of this RFP shall be directed in writing to the Issuing Officer in the manner provided in Sections 1.8 and 1.9 of this RFP. Inquiries must reference the bid number and the date of proposal opening. No interpretation shall be considered binding unless provided in writing by the Lottery. Any prospective Respondent who disputes the reasonableness or appropriateness of the terms, conditions, and specifications of this RFP shall file a formal written protest in appropriate form within 72 hours of the availability of answers to questions as provided in Section 1.9 of this RFP. Any Respondent who disputes the Lottery's Notice of Selection of Finalists, Notice of Intent to Negotiate, or Notice of Award of Contract, shall file a formal written protest in appropriate form within 72 hours of the notices. Any person who files a formal written protest shall, at the time of filing the formal written protest, post a bond as set forth in Section 287.042(2)(c), Fla. Stat. Failure to file both a protest and bond within the time prescribed in Rule No. 53ER87-16, Florida Administrative Code, shall constitute a waiver of proceedings under Chapter 120, Fla. Stat. Legal Requirements. Applicable provisions of all federal, state, county, and local laws and administrative procedures, regulations, or rules shall govern the development, submittal and evaluation of all proposals received in response hereto and shall govern any and all claims and disputes which may arise between persons submitting a proposal hereto and the Lottery. Lack of knowledge of the law or applicable administrative procedures, regulations or rules by any Respondent shall not constitute a cognizable defense against their effect. * * * Purpose and Overview. A. In accordance with Chapter 24, Fla. Stat., the Florida Department of the Lottery has been charged with the responsibility "to operate the state lottery . . . so as to maximize revenues in a manner consonant with the dignity of the state and the welfare of its citizens." The Contractor will support the Lottery in its mission by providing the advertising services set forth in Section 2.2. The goal of these services is to maximize the sale of tickets, enhance the public image and visibility of the Lottery, and assist in communicating the intent that Lottery proceeds enhance education . . . . Scope of Services. The Contractor shall be the principal advisor and provider to the Lottery for the following advertising and services: Development of strategic advertising plan; Creative strategy, creation and production of all advertising (including television, radio, print, transit and outdoor); Placement of all print, radio, television, transit and outdoor advertising at the lowest competitive rate; Coordination of and contracting for televised broadcasts of lottery drawings; Ticket design; Creation and production of point-of- sales material; Media plans; Educational, promotional and other related activities as directed. The Technical Proposal. The objective of the technical proposal is to demonstrate the Respondent's understanding and proposed method of rendering the requested services. Each Respondent shall provide a written statement of the firm's understanding of the services requested herein as well as a detailed written plan outlining how the firm proposes to go about providing the services set forth in Section 2.2. At a minimum, the technical proposal shall consist of the following information and materials: * * * E. Firm Qualifications. At a minimum, each Respondent must provide the following information which demonstrates the Respondent's ability to provide the services requested: * * * 4. Resumes not to exceed one page each in length of all personnel who would be assigned major roles in the fulfillment of the work obligation outlined in Section 2.2, with a statement identifying the percentage of time, calculated annually, of each person who will work on the Lottery account. * * * 12. Certified financial statements in customary form for the last three (3) fiscal years including an auditor's report. Certified financial statements must be the result of an audit of the Respondent's records in accordance with generally accepted auditing standards by a certified public accountant . . . . * * * 18. List of type and number of additional employees that may be needed if awarded contract. * * * 33. Disclosure information required by and listed in Section 24.111, Fla. Stat. * * * Section 3: INFORMATION REQUIRED FROM RESPONDENT 3.1. GENERAL INSTRUCTIONS. * * * D. Technical proposals must include the following information, be limited to not more than 100 pages (not including cover sheet, table of contents, divider pages, creative materials or resumes) and be presented in the following sequence: * * * Vendor Information Form (Attachment B). * * * Performance bond commitment letter required by Section 6.6. All material or information required to be submitted as part of the technical proposal required by Section 2.3. * * * 13. Any other material or information required by this RFP. * * * 3.4 Use of Subcontractors. If a Respondent proposes to use one or more subcontractors, the proposal must identify the contemplated subcontractor(s) and the scope of the subcontractor's services, and must include evidence of each subcontractor's ability to fulfill its respective duties on behalf of the Respondent. Respondent must also provide the information required by Section 24.111(2), Fla. Stat., for each subcontractor as if the subcontractor were itself a vendor. * * * 3.6 Additional Information and Comments. Respondent shall not submit with their written proposals material beyond that which is covered in the 100-page technical proposal (not including cover sheet, table of contents, divider pages, creative materials or resumes), plus creative comps and samples, resumes of key personnel and the separate cost proposals. The Lottery reserves the right to request additional information from a Respondent in order to make a thorough review and fair comparison of all proposals submitted.... Section 4: MANDATORY REQUIREMENTS Terms. The Lottery has established certain mandatory requirements which must be included as part of any proposal. The use of the terms "shall," "must" or "will" (except to indicate simple futurity) in this RFP indicate a mandatory requirement or condition. The words "should" or "may" in this RFP indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature will not by itself cause rejection of a proposal. 4.2 Non-responsive Proposals. Proposals which do not meet all material requirements of the RFP or which fail to provide all required information, documents, or materials will be rejected as non- responsive. Material requirements of the RFP are those set forth in Section 3.1 and without which an adequate analysis and comparison of proposals is impossible. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP and to accept proposals which deviate from the requirements of the RFP in a minor or technical fashion as determined by the Lottery. SECTION 5: PROPOSAL REVIEW AND CRITERIA FOR SELECTION 5.1. Proposal Submission. Only proposals submitted in the time frame stated herein and with the content required above will be reviewed and considered by the Lottery. A copy of Chapter 24, Florida Statutes, was attached to the RFP, and Section 24.111, Florida Statutes, was specifically referenced in Sections 2.3.E.33 and 3.4 of the RFP. The vendor information form itself referenced the requirements of Section 24.111(2), Florida Statutes. In accordance with RFP Section 1.8, EPB submitted the following question, among others, to the Department: "Does Attachment B [Vendor Information Form] need to be completed by all company officers?" The Department answered "Yes, see question #8, BBDO Atlanta, letter dated March 26, 1991." The referenced answer to BBDO Atlanta emphasized that "a vendor information form must be completed by each person listed in the instructions on the form [all officers, all directors, all owners, all partners, all trustees, all stockholders holding five percent or more, executive director and chairman of the board]." Even section 1.27 of the RFP required that vendor information forms be submitted to the Department prior to or at the time of submitting the proposal. Responsiveness of proposals Under the terms of the RFP, Sections 5.1 and 5.2, the Department was not to consider and evaluate non-responsive proposals. Non-responsive proposals are defined by Section 4.2 of the RFP as follows: Proposals which do not meet all material requirements of this RFP or which fail to provide all required information, documents, or materials will be rejected as non- responsive. Material requirements of the RFP are those set forth in Section 3.1 and without which an adequate analysis and comparison of proposals is impossible. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP and to accept proposals which deviate from the requirements of the RFP in a minor or technical fashion as determined by the Lottery. At the time it submitted its proposal, EPB did not submit the vendor information forms required by subsections 2.3E33, 3.1 and 3.4 of the RFP and by Section 24.111(2), Florida Statutes, for at least three of its corporate officers or directors (Sally Brown, Louise Smoak, and Robert Morse), and did not submit any vendor information forms for its designated subcontractor, Premier Maldonado & Associates. The Department, through its counsel, first requested submission of these forms from EPB on May 8, 1991, the date on which the Notice of Intent to Negotiate was posted. EPB did not supply the missing forms for Premier Maldonado & Associates until May 14, 1991, and for the three corporate officers or directors until on or about May 29, 1991. The RFP required that the vendor information forms be submitted with the proposal, and Section 24.111(2), Florida Statutes, provided in mandatory language that: The Department shall investigate the financial responsibility, security, and integrity of any person who submits a bid proposal or offer as part of a major procurement. Any person who submits a bid proposal or offer as part of a major procurement must, at the time of submitting such bid proposal or offer, provide the following: A disclosure of the vendor's name and address and, as applicable, the name and address of the following: If the vendor is a corporation, the officers, directors, and each stockholder in such corporation, except that in the case of owners of equity securities of a publicly traded corporation, only the names and addresses of those known to the corporation to own beneficially 5 percent or more of such securities need be disclosed. If the vendor is a trust, the trustee and all persons entitled to receive income or benefit from the trust. If the vendor is an association, the members, officers, and directors. If the vendor is a partnership or joint venture, all of the general partners, limited partners, or joint ventures. If the vendor subcontracts any substantial portion of the work to be preformed to a subcontractor, the vendor shall disclose all of the information required by this paragraph to the subcontractor as if the subcontractor were itself a vendor. (Emphasis added) The Department, at hearing offered proof that it did not consider the language of the RFP or Section 24.111(2), Florida Statutes, to require that all such forms be submitted at the time the proposal is submitted, and that it had been the Department's policy to allow bidders to submit additional forms after bid submission. The articulated rationale for such policy is that based solely on the proposals or, stated differently, absent investigation, the Department is unable to assure itself that forms for all required individuals are submitted with any proposal. Accordingly, the Department considers the omission of such forms a technical deficiency that can be cured up to the point of contracting, and limits its investigation to the successful bidder. While the Department may find it difficult, absent investigation, to assure itself that the vendor information mandated by section 24.111(2) is submitted with the proposal, the mandate of section 24.111(2) and the RFP is clear and unequivocal: such information "must" be submitted with the proposal. Notably, under the provisions of the statute and RFP, the onus is on the bidder, the party privy to such information, to assure that its disclosure is complete and where, as here, its disclosure is not complete its bid is non-responsive, since it is at variance with the mandate of section 24.111(2) and the RFP. Importantly, under the requirements of section 24.111(2), the Department is precluded from contracting with any bidder who fails to submit the required vendor information. Accordingly, a successful bidder who, wittingly or unwittingly, failed to make the required disclosure (such as EPB in the instant case) could subsequently decline to provide the Department with the information and thereby effectively withdraw its bid, contrary to the provisions of section 1.14 of the RFP. Such renders the failure to submit the required information at the time of bid submittal a material defect, since it accords such bidder an advantage not enjoyed by other bidders that submitted the required information. In accordance with subsection 3.1D9 of the RFP, each bidder was required to submit with its technical proposal the performance bond commitment letter required by section 6.6 of the RFP. Section 6.6, as amended by Amendments 1 and 3, provided, in pertinent part: The successful Respondent shall be required, at the time of executing the Contract with the Lottery, to post an appropriate performance bond or other security acceptable to the Lottery in the amount of $2.5 million . . . The other acceptable forms of security are: irrevocable letter of credit; Certificate of Deposit assigned to the Lottery (which must be obtained from a financial institution having its principal place of business in the State of Florida) . . . . Respondents must submit with their proposal evidence that they will be able to provide the performance bond or other security. Such evidence may include, but is not limited to, a letter from an authorized agent of a bonding company committing to provide the performance bond or indicating that the bond underwriter is processing a request to provide the bond and stating unequivocally that the bond will be available upon execution of the Contract. At the time it submitted its proposal, EPB submitted an April 25, 1991, letter addressed to it from Sovran Bank as evidence of its ability to provide the required security. That letter provided: As follow up to our conversation yesterday, the company can restrict its revolving line of credit by $2,500,000 (Two Million Five Hundred Thousand Dollars) for a Letter of Credit of the same amount. The alternative is to apply for the Letter of Credit as a separate facility. The particular terms and conditions of the Letter of Credit would be worked out at the time of application . . . . While of the opinion that the Sovran letter evidenced EPB's ability to provide the required security, the Department likewise felt that the letter failed to evidence any commitment on EPB's part to restrict its line of credit to secure the subject letter of credit. Accordingly, it requested additional information from EPB, and by letter of May 1, 1991, EPB responded: This is to clarify the language in the Sovran Bank letter of April 25, 1991, included as Page 9 in Earle Palmer Brown's Proposal . . . Should Earle Palmer Brown be a successful respondent we will, at the time of executing the contract with the Lottery, either restrict our revolving line of credit with Sovran Bank by $2,500,000.00 for an irrevocable letter of credit, or will provide the Lottery with a surety bond for a like amount. The letter of May 1, 1991, adds more confusion than enlightenment regarding EPB's commitment to provide a letter of credit. Clearly, under the provisions of subsection 6.6 of the RFP, EPB's bare assurance that it would, alternatively, provide the Department with a surety bond was not acceptable evidence of its ability to provide such bond. As importantly, by phrasing its proposal as an alternative, to be exercised at its discretion, EPB lent confusion to the issue of what form of security it would provide. Notwithstanding, the requirement of the RFP was that the bidders "submit with their proposals evidence that they will be able to provide the . . . security," and the letter of April 25, 1991, while perhaps sparse, is facially adequate in that regard. Notably, the proof in this case confirms that EPB does have an adequate credit line with Sovran Bank which could be so restricted for a $2.5 million irrevocable letter of credit. In accordance with section 2.3E12 of the RFP, each bidder was required to submit with its technical proposal "certified financial statements in customary form for the last three (3) fiscal years including an auditor's report." In response to a question submitted pursuant to section 1.8 of the RFP, which asked: "If a company does not have certified financial statements for the last three years as required by Section 2.3.E.12 of the RFP, will it be disqualified from submitting a proposal?", the Department answered: "No. Although the absence of certified financial statements would render the proposal nonresponsive." At the time EPB submitted its proposal, it submitted certified financial statements for fiscal years 1986, 1987, 1988 and 1989. As EPB's fiscal year is the calendar year, its auditors had not yet completed their audit for fiscal 1990 by the response deadline. When EPB's certified financial statement for its fiscal 1990 became available on May 14, 1991, it promptly delivered a copy to the Department. While the RFP required financial statements for the last three fiscal years, the Department understood that a bidder's ability to provide such statements would depend on when its fiscal year closed. In this regard, it is common for an independent audit to require up to six months following the close of a fiscal year. Here, EPB was faced with exactly such a dilemma, specifically disclosed such dilemma in its proposal, and provided the financial statements for the last four fiscal years that were available to it. Under such circumstances, it cannot be concluded that the Department departed from the essential requirements of law when it declined to declare EPB's proposal non- responsive for its failure to include a certified financial statement for fiscal 1990, and accepted, as satisfying the requirements of the RFP, financial statements for the last three fiscal years that were reasonably available to EPB. In accordance with the RFP, each bidder was to identify all personnel who would be assigned major roles in the fulfillment of work under the contract. Pertinent to this case, subsection 2.3E provided: At a minimum, each Respondent must provide the following information which demonstrates the Respondent's ability to provide the services requested: * * * 4. Resumes not to exceed one page each in length of all personnel who would be assigned major roles in the fulfillment of the work obligation outlined in Section 2.2, with a statement identifying the percentage of time, calculated annually, of each person who will work on the Lottery account. * * * 18. List of type and number of additional employees that may be needed if awarded contract. At the time EPB submitted its proposal, it identified twenty-four key positions in account service, creative, media and several other categories. As to the management supervisor, the employee is identified as "selected," and as to an account executive and public relations supervisor, the employee is identified as "TBD" (To Be Determined). All other positions were identified with specific individuals and resumes were included for each. Here, Bozell contends that EPB's proposal is non-responsive because EPB did not name and include resumes for the foregoing three positions. Such contention is, however, unpersuasive. Section 2.3E18 clearly contemplated that some bidders would have to hire additional personnel if awarded the contract, and EPB complied with that section of the EPB by identifying such positions. Accordingly, EPB's proposal was not at material variance from the RFP in this regard. Although the Department's "Notice of Selection of Finalists," dated May 1, 1991, discussed supra, purported to rank the "responsive proposals" in order of preference, the proof demonstrates that the evaluation committee, who was charged with such responsibility, did not, by consensus or otherwise, ever determine the responsiveness of any proposal. Here, for the reasons heretofore set forth, EPB's proposal was non-responsive to the RFP, and the committee's failure to address the issue of responsiveness prior to scoring the proposals, for reasons discussed infra, materially affected the fairness of the evaluation process. Bozell's proposal was, however, responsive to the RFP. 2/ The evaluation committee Pursuant to Rule 53ER87-13(5)(i)(2), Florida Administrative Code, and Section 5.3 of the RFP, the Secretary of the Department appointed an evaluation committee, consisting of six members, to evaluate the proposals which were received from interested firms. Regarding the composition of such committee, the Department advised all prospective bidders, in response to a question posed pursuant to Section 1.8 of the RFP, that: The Evaluation Committee will be comprised of Lottery staff and volunteers from a cross- section of Florida business and academic communities. Subsequently, by notice of April 16, 1991, the Department advised all prospective bidders that the members of the evaluation committee would be as follows: Bernard Edwards Deputy Secretary Marketing Department of the Lottery Tallahassee, Florida Ben Johnson Newspaper Columnist Homles Beach, Florida Robert W. McKnight Assistant Secretary Department of Lottery Tallahassee, Florida Richard Mizerski Professor Tallahassee, Florida John Ruchalski Retired Businessman Jupiter, Florida Alan Sawyer Professor Gainesville, Florida Of the six committee members, only two, Bernard Edwards and Robert W. McKnight, were employees of the Department. No objection to the composition of the committee was lodged until the filing of the subject protest; however, there was likewise no point of entry provided by the Department to challenge the composition of the committee. Robert W. McKnight, who chaired the committee, has been employed by the Department as Assistant Secretary since March 4, 1991, and in such capacity has been responsible for the day-to-day operations of the Department. Mr. McKnight holds a B.S. and M.B.A. degree in business administration, with concentrations in advertising, and has in excess of fifteen years experience in marketing. Throughout the course of such employments, as well as his tenure as a Florida legislator, he has had the opportunity to monitor or supervise the work of advertising agencies employed to advance his products or person. Bernard Edwards, currently Deputy Secretary for Marketing of the Department, has been with the Department since 1988. During that tenure, he has filled, at various times, all three deputy secretary positions (operations, administration and marketing), and has participated in the advertising operations of the Florida lottery. Prior to his employment with the Department, Mr. Edwards was Executive Director of the Washington, D.C., lottery, and from 1983 to 1987 Deputy Executive Director of the Pennsylvania State lottery. During the course of such employments, Mr. Edwards has acquired significant experience in the marketing of lottery products, and the advertising incident thereto. Alan Sawyer is a Professor of Marketing and Chairman of the Department of Marketing of the University of Florida in Gainesville, and holds a Ph.D. from Stanford University in marketing. In addition to his teaching and research, Dr. Sawyer has worked with the Federal Trade Commission, as well as numerous other clients, on advertising matters, including matters of advertising deception, and is a recognized expert in advertising and marketing. Ben Johnson is a Doctoral Teaching Associate and Adjunct Professor at the University of South Florida where he teaches upper division and graduate College of Education courses in methods of teaching English, reading, and learning skills. In addition to teaching, Mr. Johnson has, for some years, been researching the lottery operations of various states. As a consequence of the knowledge he has gained concerning those operations he has written a book, The Lottery Book, scheduled for publication in September 1991, which provides general information for players of various state lotteries, and has a nationally syndicated newspaper column called "The Lottery Column" wherein he answers readers' questions regarding lottery operations. From such experience, Mr. Johnson has developed a knowledge of lottery operations, as well as an appreciation for effective lottery marketing and advertising. John Ruchalski, currently retired, holds a degree in business and marketing, and has 35 years of retail management experience. Of those years, 17 were spent as Senior Vice President of Burdines, three as Chief Executive Officer of Bullock's, and two as president of Bloomingdale's. Mr. Ruchalski's past activities have also included service as president of the Florida Chamber of Commerce and chairman of the board of the Florida Retail Federation. In all, the proof shows that Mr. Ruchalski has a strong marketing background, and a familiarity with the advertising needs incident to such operations. The final member of the committee, Richard Mizerski, is a Professor of Marketing at Florida State University, and holds a Ph.D. from the University of Florida in Economics and Business Administration, with a major concentration in marketing and a minor concentration in advertising. Dr. Mizerski, like Dr. Sawyer, has, in addition to his teaching and research, extensive consulting experience in marketing and advertising, and is a recognized expert in the field. Overall, the proof demonstrates that the composition of the evaluation committee was appropriate for the work it was tasked to do, and that it had adequate time to perform an appropriate evaluation. Each committee member had experience and knowledge in marketing, and advertizing incident thereto, and lent to the evaluation process common and diverse experiences in such areas which helped provide a balanced consideration of the proposals. As importantly, each was shown to be committed to the integrity of the process, and complied with the provisions of Section 286.011, Florida Statutes, by assuring that all committee meetings at which official acts were to be taken were conducted publicly, and by not discussing any matter pertaining to their evaluations with any other member except during meetings that had been properly noticed. Market research data Prior to reviewing the proposals, one or more of the committee members requested information from the Department that would accord them insight into the program area. In response to such request, the Department provided each committee member with the market research data it had available. Such data provided demographic insight into Florida lottery marketing operations. At hearing, Bozell complained that it was never informed that the market research data had been provided to the committee, and offered proof, if credited, that had it known such fact it would have drafted its proposal differently. Such proof was not, however, persuasive, nor was the provision of such information to the committee inappropriate. Here, the proof demonstrates that the data provided by the Department was a matter of public record, and many of the committee members, through their research and training, were already familiar with it prior to their appointment. Bozell, as the current provider of advertising services to the lottery, was very familiar with the data, its subcontractor had complied it, and Bozell used it extensively in its proposal. In sum, Bozell was not disadvantaged by the provision of such data to the committee, and it was not treated any differently than any other bidder in this regard. As importantly, the provision of such information to the committee to lend insight into the program area for which services were being sought was quite appropriate to the evaluation process. Technical proposed evaluation Section 2.3 of the RFP describes the items required to be submitted with a firm's technical proposal, and was designed to assess a firm's understanding and proposed method of rendering the services requested by section 2.2 of the RFP. It provides that, "at a minimum," the proposal shall contain the information and materials requested by subsections 2.3A through 2.3E. Subsection 2.3A required submittal of a proposed advertising approach for the Florida lottery which addresses a three-year summary outline advertising plan, to include recommendations for advertising and promotion, and a proposed one-year timetable for advertising, showing development of creative, production, approval, placement and run-time. Subsection 2.3B required comprehensive artistic representations consisting of a detailed media plan for an eight-week Florida lottery instant game within a $1,250,000 budget; a name, ticket design and prize structure for the instant game; a 30-second radio spot for the instant game; a print ad for newspaper or magazine placement for the game; and a point- of-sale example for the game. Subsection 2.3C required one complete advertising campaign representative of the firm's work, including budget, creative strategy, positioning, media strategy and execution, and post-buy analysis. Subsection 2.3D required creative samples previously produced by key members of the proposed creative team consisting of TV ads, radio ads, print ads, outdoor campaigns, and point-of-sale samples. Finally, subsection 2.3E, entitled "firm qualifications," required, "at a minimum," information concerning 33 specific items, "which demonstrates the [firm's] ability to provide the services requested." Among the items for which information was required were the following: 3. Brief and concise statement of Respondent's advertising philosophy, taking into consideration the following points and others that you may feel are appropriate: Method the Respondent uses for developing advertising. How the Respondent currently measures the effectiveness of its advertising. * * * Evidence of any work done for a state, multi-state, national or provincial lottery. Information regarding any advertising or other experience with state agencies and other governmental entities. * * * 12. Certified financial statements in customary form for the last three (3) fiscal years including an auditor's report . . . . * * * 29. Discussion of contributions that your firm could make toward the growth of the Lottery. Section 5.4 of the RFP set forth the general criteria by which a firm's response to subsections 2.3A-E would be evaluated. Such general criteria were the overall qualifications, experience and abilities of the firm, its staff, and contractors to provide timely and professional advertising and related services, determined by evaluating the information contained in subsection 2.3E; and, the relative creativity, approach, quality and thoroughness of the firm's proposed plans directed toward subsections 2.3A-D of the RFP. Such section concluded: "The evaluation worksheet for the technical proposal is attached as Attachment F." Attachment F to the RFP set forth the specific criteria by which a firm's response would be evaluated. That attachment provided as follows: This evaluation considers information submitted in the technical proposal. Emphasis is placed on the firm's qualifications and ability to do the work, which is addressed in the Technical Proposal. A total of 80 points is obtainable. The Technical Proposal shall be evaluated in accordance with the following criteria: Overall Ability - 40 points maximum Do the resumes of the account team support the Respondent's competency to provide the services required by Section 2.2? Proposed Account Team: Is the team make-up appropriate for the work? Do the team members have experience with comparable work? Are there any sub-contracted firms involved? Are minority sub-contractors utilized? Are the hours assigned to the various team members for each task appropriate? Has the Respondent provided advertising services of the scope required in the past? Experience of the Respondent and staff providing advertising service within the State of Florida. Experience of the Respondent and staff in providing Lottery, pari- mutuel, or other gaming related advertising. Financial stability of the firm and financial capability to provide the entire scope of services. Experience of the firm in providing advertising services to accounts in excess of $10 million. Experience of the firm in placing large volumes of electronic media in all media markets in Florida. Based on 1-3, award points, as follows: 20-30 points for exceptional experience 10-20 points for average experience 0-10 points for minimal experience Has the Respondent provided advertising services to other state or governmental entities? If the work was acceptable, award up to 3 points. If the firm has not done such work, award zero points. Does the Respondent possess unique abilities which would make a noticeable (positive) impact on the project? If the answer is yes, award up to points and note reasons. If the answer is no, award zero points. Does the team composition and each member's percentage of involvement, the use of subcontractors (if any), office location, and/or information contained in the proposal indicate that the Respondent will meet time and budget requirements? If the answer is yes, award up to points and note reasons. If the answer is no, award zero points. Does the Respondent's current workload make it likely the Respondent can provide timely and complete service? If the answer is yes, award up to 2 points and note reasons. If the answer is no, award zero points. Advertising approach and creative samples required by Sections 2.3A-D = 40 points The relative creativity, approach, quality and thoroughness of the firm's proposed plan for providing the requested services required by Section 2.3(A). Value: 10 points The relative creativity, approach, quality and thoroughness of the comprehensive artistic representations required by Section 2.3(B). Value: 10 points The relative creativity, approach, quality and thoroughness of the advertising campaign required by Section 2.3(C). Value: 5 points The relative creativity, approach, quality and thoroughness of samples required by Section 2.3(D). Value: 15 points The criteria for evaluating the creativity, approach, quality and thoroughness of above items B-1 through B-4 are as follows: Creativity Were the ideas and approach exciting and interesting? Did the samples evoke positive and appropriate emotions? Did the samples capture and hold attention? Did the samples demonstrate fresh and original thought or were they banal and mundane? Approach Was the approach germane and appropriate? Was the approach unified and integrated? Was the approach clear, direct and unambiguous? Quality Were images crisp, sharp, and distinct except where the intention is clearly otherwise? Was the production professional? Was sound free of distortion and visual free of unnecessary clutter? Thoroughness Did the advertising show an appropriate consideration for all facets of the market? Was the advertising comprehensive and balanced? Did the advertising use a full range of tools and techniques to ensure maximum penetration and retention? By memo to all committee members, entitled "Instructions and Timetable for Evaluation Committee Members," and again at the commencement of their deliberations, all committee members were advised that they must evaluate the proposals based on the criteria set forth in the RFP, and to utilize their own individual expertise in applying the criteria. In this regard, the proof demonstrates that the members of the committee abided such directive, and scored the proposals based on the established criteria, except as hereinafter discussed, as applied through their own background and experience. 3/ At the commencement of their deliberations, the committee members agreed that the format they would follow in evaluating the technical proposals would be to first review all the proposals, and then score the proposals individually. This procedure was followed although, not unexpectedly, some members made preliminary assessments as they progressed through the various proposals. Upon completion of their review, the members then scored each proposal and, as appropriate, made adjustments to preliminary assessments they had made based on the perspective they had acquired after their review of all the proposals. Here, Bozell complains that the RFP did not permit the scoring of proposals relative to each other but, rather, required that the proposals be evaluated and scored solely by applying the criteria independently to each proposal, and that the failure of all committee members to so evaluate the proposals is a fundamental flaw in the evaluation process. Bozell's complaint is not, however, persuasive. Here, the RFP required, among other things, a determination of the relative creativity, approach, quality and thoroughness of a firm's plans for providing the services requested by subsections 2.3A-D of the RFP. Under such circumstances, considering the subjective nature of the evaluation, it would not be unreasonable to assign points based on relative merit. And, considering the fact that the proposals were not scored until all proposals had been reviewed that, more likely than not, is what was done by each committee member, consciously or subconsciously. As importantly, each member of the committee scored the proposals independent of any other member of the committee, and was consistent with the approach he took as to each firm's proposal. 4/ Accordingly, it cannot be concluded, based on the proof in this case, that the evaluation process was fundamentally flawed because of the manner in which points were awarded. However, because points were awarded on a relative basis, the inclusions of non-responsive proposals in the evaluation process could have materially affected the scoring of proposals and the Department's failure to exclude non-responsive proposals from the scoring process, as required by section 5.1 of the RFP, was a material departure from the requirements of the RFP. Bozell also complains that Mr. Johnson evaluated the technical proposals in light of his knowledge about the success of other states' lottery advertising. The application of such expertise to the criteria contained in the RFP was, however, appropriate, as discussed supra. As noted by Mr. Johnson: . . . That's my frame of reference against which I measured all of the companies. I could tell that some of the companies really didn't know what they were talking about, because they were suggesting things that were failing in other states. And I was aware of that from my general information background. [Tr. 471] As heretofore noted, selection of committee members with knowledge of the program area, and the exercise of that expertise in applying the criteria, is most appropriate to a reasoned evaluation of a proposal. Finally, with regard to the evaluation of the technical proposals, Bozell offered proof that some committee members failed to apply specific criteria mandated by the RFP, or otherwise scored the proposals in a manner at variance with that called for by the RFP. In this regard, the proof demonstrates that while proposals were to be evaluated, at least in part, based on the different games and formats that were presented in the technical proposals (see subsection 2.3B of the RFP), Mr. Ruchalski did not do so because he had no knowledge upon which to base a decision. Regarding subsections A5-8 of Attachment F (the scoring criteria), Mr. Johnson did not award points in the manner mandated by each subsection. Finally, notwithstanding that an evaluation of the overall ability of the applicant, as set forth in section A of Attachment F to the RFP, required an examination of the "financial stability of the firm and financial capability to provide the entire scope of services," no evaluation of the financial integrity and responsibility of any of the firms was made, and such criteria were not applied in the evaluation process. 5/ In its proposed recommended order, the Department suggests that it would be unnecessarily burdensome to require a detailed financial review by the agency at the initial bid analysis stage since, ultimately, only one firm will be awarded the contract, and because security and financial investigations will be done before a contract is awarded. While such may be the case, it was the Department's election to provide for an analysis of financial stability and capability as part of the review criteria. Oral presentation evaluation The second phase of the evaluation process was the scoring of the oral presentations. Pertinent to this case, section 5.3 of the RFP provided: . . . The oral presentations must be made by the account service, creative and media personnel who would work on the account. There will be no limitation on the information and materials pertinent to this RFP which may be utilized . . . . Section 5.5 of the RFP provided that presentations would be scored based on the following general criteria: Understanding of services requested -- up to 20 points, account team -- up to 25 points, responsiveness to questions -- up to 15 points, and overall impression -- up to 20 points. Finally, Attachment G to the RFP provided that the evaluation relative to the account team would be scored as follows: Account Team = 25 points maximum Did the proposed account team participate? Creativity, quality, uniqueness demonstrated by account team? Respondent's advertising philosophy demonstrated, long term image building? Did account team members prepare samples submitted? EPB's oral presentation was made by Jeb Brown, the chief executive officer of EPB; Craig Davis, the president of EPB's Florida operations; Mike Knaisch, account group head; Kandi Kirkland, account supervisor; Bruce Ayers, media director; Scott Mackey, associate creative director; Pat Hanlon, creative director; Tom Hall, chairman of EPB; and Jeff Tucker, president of public relations. Each of the presenters were identified by EPB as key personnel to be assigned to the Florida lottery account, except Jeb Brown and Tom Hall. As part of its oral presentation, EPB utilized a video tape, which presented favorable comments by the head of the Virginia lottery concerning EPB's performance for it. Addition-ally, EPB included in such video a character it utilizes for the Virginia lottery, "Lady Luck," who also said "nice things" about EPB. Here, Bozell complains that the participation of Jeb Brown and Tom Hall, in the oral presentation, as well as the use of the video which included comments by the head of the Virginia lottery and "Lady Luck," was improper under the provisions of the RFP because they were not members of the account team. Such compliant is, however, unpersuasive. While section 5.3 of the RFP did require that the oral presentation be made by the account, creative, and media personnel who would work on the account, it did not expressly preclude others from participating, and the RFP placed no restrictions on the information and materials pertinent to the RFP that could be utilized. Accordingly, EPB's oral presentation was not at variance from the RFP and, if it were, it was not shown to be a significant deviation. As heretofore noted, the evaluation relative to the account team allowed an award of up to 25 points, and required, among other things, a determination of whether the account team participated; the creativity, quality and uniqueness demonstrated by the account team; and whether the account team members prepared the samples that were submitted. The committee members did not, however, make any specific inquiry regarding whether the account team participated or prepared the samples, although the bidders generally made it a practice to introduce the account team members, but assumed such to be the case for purposes of scoring the presentations. Here, Bozell contends that the committee's failure to expressly inform itself as to whether the account team participated and prepared the samples, as opposed to indulging the assumption that they did, constitutes a significant failing in the evaluation process. However, Bozell failed to demonstrate, at hearing, that the committee's assumption was misplaced. Finally, Bozell offered proof that Dr. Sawyer awarded Bozell 21 points and EPB 22 points for "overall impression," when 20 points were the maximum contemplated by the RFP. Such error was, however, inadvertent, it simply being the intention of Dr. Sawyer to award EPB one more point than Bozell, and was harmless since it did not affect the overall outcome. Cost proposal evaluation Section 5.6 of the RFP provided the criteria for evaluation of the cost proposals and provided that: Finalists' cost proposals will be given points based on an evaluation of the proposed compensation and the experience and qualifications of the proposed staff. A maximum value of 40 points was established for this part of the evaluation. The cost proposals, which the committee members were to evaluate, were contained in a "sealed cost proposal envelope" and were, pursuant to subsection 2.4B of the RFP, to contain: The cost proposal shall include a calculation of the Respondent's proposed compensation for undertaking and completing all phases of the services requested and outlined in this RFP. The cost proposal shall be prepared in the same format as illustrated on Attachment "E" and shall be completed as follows: The Respondent shall provide an aggregate gross salary by work category and position classification for all personnel who will work on the Lottery's account. The aggregate gross salary shall include only that portion of each individual staff member's time that will be attributable to the Lottery account. The portion of time proposed in the cost proposal shall match the labor hour percentages proposed for each individual as required in Section 2.3(E)(4). The Respondent shall also include a proposed multiplier of the type described in paragraph A above. The Respondent shall multiply the aggregate gross salary by the multiplier and the product shall be included in the cost proposal. The Respondent shall also include, in the sealed cost proposal envelope, resumes for all personnel whose salary, or portion thereof, was included in the calculation of the proposed aggregate gross salary resumes shall be included regardless of whether the resumes have also been included in the technical proposal envelope. While the RFP contemplated that all three sections of the proposal (technical, oral presentation, and cost) would be evaluated and scored independent of each other, and that the evaluation of the cost proposal would be limited to an evaluation of the information contained in the "sealed cost proposal envelope," not all committee members so limited their evaluation. Rather, some committee members utilized the knowledge they had gleaned from evaluating the technical proposals and oral presentations, as well as the scores they had assigned during the course of those evaluations, to assist them in assessing the qualifications and experience of the proposed personnel and weighing the firms' proposed compensation. Indeed, it is difficult to imagine how any committee member could ignore the knowledge he had acquired during the course of his evaluations that was reflective of the quality and experience of the proposed staff, any more than he could ignore the expertise he had acquired through his life experiences, in evaluating the cost proposal. Notably, the RFP, as it related to the cost proposals, provided that "the portion of time proposed in the cost proposal shall match the labor hour percentages proposed for each individual as required by section 2.3(E)(4)" of the RFP [the key personnel], and the committee had, as part of their evaluation of the technical proposal, previously evaluated the proposed account team, as well as the relative creativity, approach, quality and thoroughness of their proposals relative to subsections 2.3A-D of the RFP. At the oral presentation, the committee had an opportunity to put faces with names, and broaden their knowledge of the individuals involved. Accordingly, when it came time to evaluate the cost proposals, which involved a consideration of staffing and salary, the members of the committee had certainly formulated opinions regarding the quality of the staff proposed by the respective firms, and balanced that opinion against the proposed compensation to derive the most cost effective proposal. While it may seem unreasonable to restrict the committee to the bare resumes and costs set forth in the cost proposal, as the basis for their evaluation, the reasonableness of the provisions the Department formulated are not at issue in this proceeding. Accordingly, it is concluded that by going beyond the information contained within the cost proposal, the members of the committee materially deviated from the requirements of the RFP. This conclusion prevails, since those bidders who were favored in the evaluation of the technical proposals or oral presentation were, by the consideration of the opinions derived from such evaluations, accorded an unfair advantage over other bidders.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered which rejects all bids, and that a new invitation to bid be extended. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 25th day of July 1991. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of July 1991.
Findings Of Fact THE RFP On April 25, 1991 the Department issued RFP No. 91-1011-LOT/TEN/P soliciting sealed proposals from qualified vendors to provide Instant Game Ticket printing and related services. In accordance with Section 1.8 of the RFP questions that were pertinent to an understanding of the RFP or that would be needed to clarify its terms could be addressed in writing to the Issuing Officer for the Department. Per Section 1.9 questions must have been received by 12:00 noon on May 1, 1991 for the prospective proposer to be entitled to answers to the questions. That section to the RFP obligated the Department to give written responses to any questions timely received. There were timely questions. The answers to questions that had been posed by the prospective vendors which included Dittler, Scientific, Webcraft and British American Banknote (BABN) were provided by the deadline of May 3, 1991 which is set forth in Section 1.9 to the RFP. Those questions and answers led to the amendments number 1 and 2 to the RFP issued on May 6 and 9, 1991, respectively. The RFP as amended and questions and answers formed the basis for the prospective proposers' understanding of the RFP and its terms, conditions and specifications. For purposes here, the relevant change in amendment number 1 was associated with the paper weight of recyclable ticket stock in categories of ticket samples to be submitted with the proposals. The second amendment deleted the category of sample known as recyclable coated ticket stock. None of the questions during the opportunity presented to improve the understanding or clarify the terms, conditions and specifications, found in the RFP were directed to the procedures set forth in the RFP describing the process of evaluation of proposals and entry into a contract with the best responsive vendor. Nor did any vendor take advantage of the opportunity within 72 hours of the availability of answers to questions that had been posed by the respective vendors and is provided in Section 1.9 to the RFP to challenge the terms, conditions and specifications of the RFP, especially as they would relate to the process of evaluation of responses to the RFP leading to the selection of the best responsive vendor and entry into a contract. As contemplated by Section 1.9 to the RFP sealed proposals were received from the four vendors by the deadline of 2:00 p.m., May 13, 1991. Section 1.9 called for technical proposals within the responses to the RFP to be opened by 2:00 p.m. on May 13, 1991 with the evaluation of those proposals to begin immediately following the opening. The cost proposals were to be separately opened following completion of the evaluation of technical proposals. The submissions by the vendors were to be ranked in order of preference based upon the evaluation of the technical and cost proposals in accordance with criteria set out in the RFP, followed by Notice of Intent to Negotiate with the higher ranked vendor posted at the Department's headquarters in Tallahassee, Florida. If the negotiations with the higher ranked or best responsive vendor did not prove successful, Section 1.9 called for the Department to negotiate with the other listed firms in descending order of their rank. Following the successful conclusion of negotiations with a responding vendor, a Notice of Award of Contract would be posted at the Department headquarters. The contract would be awarded and executed as soon as lawfully possible after the posting of the Notice of Award of Contract. On May 13, 1991, the ticket samples that were part of the submissions by the vendors were turned over to the Department's security employees and kept in a secure place pending forensic testing called for in the RFP. The members of the evaluation committee who were selected to exercise the evaluation criteria were not afforded immediate access to those tickets pending the forensic testing and a presentation concerning the test results which was to be made to the Evaluation Committee by Department employees who were familiar with test procedures. This presentation of the test results was made on May 16, 1991. Of the vendors who submitted proposals, Dittler had not been qualified by the Secretary of State to do business in Florida at the time it submitted its proposal on May 13, 1991, however, no mention was made of this when the Department made its preliminary agency decision finding Dittler a responsive vendor and ranking its proposal. Concerning the work to be done by the Evaluation Committee, Section 5.3 sets out the Proposal Evaluation criteria where it states: Proposals will be evaluated based on the following criteria: The overall qualifications, experience, abilities of the firm, its participating staff members, and subcontractors, if any, to timely provide the requested commodities and services, and the extent of minority participation. This includes the relative thoroughness and overall professional quality of the firm's proposed plan for providing the requested commodities and services. Value: Not to exceed 20 points The quality and appropriateness of the marketing plan. Value: Not to Exceed 15 points The quality and appropriateness of the Quality Control Plan. Value: Not to Exceed 15 points The overall security plan, including facility and procedures, with respect to whether the production of the game, manufacture of tickets, operation of the game, prize validation, etc., meet the security needs of the Florida Lottery and offer minimum possibilities of fraud, tampering, theft, counterfeiting, ticket alteration, or other security compromises. Value: Not to Exceed 25 points Proposed Compensation. Value: Not to Exceed 25 The proposed compensation for providing the goods and services requested herein shall be evaluated as follows: Column C of Attachment E of the prices bid for aluminized uncoated white ticket stock (10 point or heavier) will be totaled and divided by 200,000 to give an average cost per thousand tickets for this ticket stock. The average cost per thousand tickets for aluminized un-coated white ticket stock will be the price used in the cost comparison. The maximum number of cost evaluation points (M in the formulas below) shall be one-third of the highest cumulative score (H in the formula below) awarded to a Respondent for the criteria set forth in A through D. The lowest average cost per thousand tickets (L in the formula below) as derived in paragraph 1 above shall be awarded the maximum number of cost evaluation points as determined in paragraph 2 above. All other Respondents shall be awarded points based on the ratio of their average cost per thousand tickets (R in the formula) to the lowest average cost per thousand tickets. Maximum Cost Evaluation Points (M) = 1/3 x H Cost Evaluation Points = L/R x M The total value of points is equal to 100. These criteria are associated with the overall Evaluation Review Process identified at Section 5.4 where it states: The Secretary shall appoint an Evaluation Committee which shall prepare technical scores for all Responsive Proposals. The cost proposal will thereafter be publicly opened and evaluated in accordance with the formula set forth in Section 5.3 E above. Based on the technical and cost proposals, the Evaluation Committee shall rank, in order of preference, the Respondents deemed to be most highly qualified to perform the requested services. The Department reserves the right to make site visits at its own expense to the Respondent's facilities before or after the proposals have been ranked in order of preference. Thereafter, the Secretary shall commence negotiations with the most highly ranked firm. Should the Lottery be unable to negotiate a satisfactory Contract with that firm at a price the Lottery deems to be fair, competitive, and reasonable, negotiations with that firm shall be terminated. The Lottery shall then undertake negotiations with the second most highly ranked firm. Failing accord with that firm, the Lottery shall undertake negotiations with the third most highly ranked firm. Should the Lottery be unable to negotiate a satisfactory Contract with that firm, additional firms may be selected to participate in this negotiation process or negotiations may be reinstated following the original order or priority. Negotiations shall continue until an agreement is reached or all proposals are rejected. The Lottery reserves the right to reject all proposals at any time during negotiations. An initial review was made of the responses to the RFP to determine facial compliance or responsiveness. This was done on May 13 and 14, 1991 by Cristina Brochin, counsel to the Department. She discussed her findings with Louisa Warren, a more senior attorney for the Department. In the mind of Ms. Brochin the Dittler proposal was sufficient, while the Scientific proposal had a potential problem in that it did not set forth the amount of bond to be provided to insure performance under the contract called for in the RFP. This refers to the requirement in Section 6.5 of the RFP to give adequate evidence of the ability to post a performance bond. Ms. Brochin thought Scientific had failed to provide a notice on public entity crimes for its subcontractors. This was not a requirement of the RFP. Ms. Brochin found that Webcraft had failed to list its subcontractors, and likewise had failed to provide public entity crime affidavits for its subcontractors and had failed to provide a time line for limiting the ability to compromise its tickets. The Evaluation Committee was convened at the Department on the morning of May 15, 1991. It consisted of Robert McKnight, Assistant Secretary of the Department; Bernie Edwards, Deputy Secretary of Marketing; Don Pribbenow, Questions and Document Examiner for the Florida Department of Law Enforcement; Dr. Arvid Mukes, Assistant Director of Graphic Arts at the Florida A & M University; Frank Carter, Director of Security for the Department and Brian Woods, Vice President of Marketing of Blockbuster Video. Mr. Woods withdrew from the Committee based upon a concern of a potential conflict of interest associated with a business relationship with one of the vendors. No contest was offered to the make up of the Evaluation Committee. On this date the remaining members of the Evaluation Committee were given general instructions by the Department's staff that they were not to talk to other committee members except in public meetings, that they were to read the proposals, to keep notes about the proposals, to make their own individual evaluations and to not score the proposals until the Evaluation Committee public meeting had been completed. An explanation was made concerning the scoring criteria set forth in the RFP and an overview given of the schedule of events associated with the review process. The evaluators were then given the opportunity to review the responses alone. The best part of May 15, 1991 into the evening was devoted to that task. The evaluators took notes as they went forward with that process. On May 16, 1991 the Evaluation Committee met at the Department headquarters and undertook a discussion in a public setting relating to the marketing and overall qualification sections of the proposals. This was followed by a confidential review outside public scrutiny concerning quality control and security measures set forth in the proposals. Although the evaluators had reviewed the BABN materials on May 15, 1991, the BABN proposal was found nonresponsive by the evaluators in the public meeting of May 16, 1991 and did not undergo further consideration. BABN did not challenge the decision finding it nonresponsive. The reason why the BABN proposal was declared nonresponsive was the failure to submit samples of 10 point uncoated aluminized ticket stock. By contrast the Evaluation Committee found the proposals of Dittler, Scientific and Webcraft to be responsive. In doing so, with the knowledge of the impression of counsel Louisa Warren concerning deficiencies found in each proposal, the Evaluation Committee did not deem the Webcraft omission of a statement of time necessary to compromise its tickets; the Dittler omission of its ink product numbers, and Scientific's omission of the bond dollar amount in its bond commitment letter to be material deviations from the terms of the RFP and as such not subject to correction. Deeming these items to be minor irregularities the Department's staff contacted the vendors to clarify that information and the vendors cooperated in that endeavor. There is a Section 4 to the RFP pertaining to Mandatory Requirements in which 4.1 to that Section is entitled Terms and states: the Lottery has established certain mandatory requirements which must be included as part of any proposal. The use of the term "shall" "must" or "will" (except to indicate simple futurity) in this RFP indicate a mandatory requirement or condition. The words "should" or "may" in this RFP indicate desirable attributes or conditions but are permissive in nature. Deviation from, or omission of, such a desirable feature will not by itself cause rejection of a proposal. In Section 1.2 of the Glossary of Terms a responsive proposal is defined as, "means a proposal submitted by a responsive and responsible, or qualified offerer which conforms in all material respects to the Request for Proposals." Section 4 goes on at 4.2 to describe what is meant by nonresponsive proposal where it states: Proposals which do not meet all material requirements of the RFP or which fail to provide all required information, documents, or materials will be rejected as non- responsive. Material requirements of the RFP are those set forth in Section 3.1 and without which an adequate analysis and comparisons of proposals is impossible. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP and to accept proposals which deviate from the requirements of the RFP in a minor or technical fashion as determined by the Lottery. Section 3, within which is found 3.1 entitled General Instructions, identifies information required by the vendors Respondent where it states: General Instructions. Respondents must reference their proposals to the section numbers in this RFP. Respondents must state their agreement with the contractual requirements contained in this RFP. Any additional terms and conditions proposed by a Respondent will be viewed by the Lottery as an exception to the RFP and may cause rejection of the proposal without further evaluation or consideration. Proposals must include the following information and be presented in the following sequence: Identification of Respondent per Section of RFP. Respondent's Affidavit (Attachment A). Sworn Statement on Public Entity Crime (Attachment B). Vendor Information Form (Attachment C). Vendor Information Addendum (Attachment D). List of sub-contractors (if applicable). Statement from vendor saying they will abide by the Code of Ethics Rule 53ER88-79(3), F.A.C. The statement required by Section 1.24. Evidence of ability to provide a performance bond or other security required by Section 6.5. All of the items required in Section 2. All material or information required to be submitted as part of the Cost Proposal enclosed in a separate sealed envelope per Section 1.10 of the RFP. Any other material or information required by this RFP which is not specifically enumerated above. Any other information the Respondent desires to submit to further substantiate its qualifications for providing the goods and services. Another reminder concerning requirements is set forth in Section 5.2, entitled REVIEW CRITERIA which says in relevant part: Any proposal which does not meet all the mandatory material requirements set forth in Section 3.1 will be rejected by the Lottery as non-responsive. As alluded to before, Lawrence Herb, the Department's forensic document examiner and Colin Benton, Chief of Investigations presented the Evaluation Committee with sample tickets that had been tested and the results of those tests. Following this presentation the individual Committee members assigned scores for each vendor in all categories other than the cost proposal, referred to at Section 5.3 as proposed compensation. It was the impression of the committee members that Scientific was the highest ranked responsive vendor in the technical proposal phase. Consequently, by averaging the aggregate scores unrelated to cost proposals Scientific received the most points while Dittler was second and Webcraft third. On the next day, May 17, 1991, the cost proposals were opened by Department staff and the cost scoring accomplished by use of the mathematical formula contemplated by the RFP. The cost formula was based on the prices quoted for aluminized uncoated white ticket stock of 10 points or heavier weight. The technical and cost scores were then added together to determine the final ranking of the vendors. The compiled scores for the vendors were: Dittler: Technical 56.80 Cost 23.13 Total 79.93 Scientific: Technical 69.40 Cost 19.12 Total 88.52 Webcraft: Technical 53.00 Cost 19.55 Total 72.55 Based upon the results achieved in the scoring the Department on May 17, 1991, posted a Notice of Intent to Negotiate with Scientific, being the highest ranked proposer, and identifying that Dittler was running second and Webcraft third. The formal written protest of Dittler mentioned in the Preliminary Statement ensued. THE RESPONSIVENESS OF SCIENTIFIC'S PROPOSAL BOND COMMITMENT LETTER According to Section 3.1(d)9. evidence of the ability of the vendor to provide a performance bond or other security as described in Section 6.5 is a mandatory material requirement. Section 6.5 states: The successful Respondent shall be required, at the time of executing the Contract with the Lottery, to post an appropriate performance bond or other security acceptable to the Lottery in the amount of $1,000,000. The other acceptable forms of security are: irrevocable letter of credit; Certificate of Deposit assigned to the Lottery (which must be obtained from a financial institution having its principal place of business in the State of Florida); U.S. savings bonds, notes and bills; general obligation bonds and notes of any political subdivision of the State of Florida; or corporate bonds of any corporation that is not an affiliate or subsidiary of the Contractor. The aggregate fair market value of securities pursuant to this clause must always exceed the amount stated above. Failure to post an additional bond or security within seven (7) days after notice of an increased Contract value, or notice that the market value of the securities is inadequate, shall be grounds for immediate termination for cause. Respondents must submit with their proposal evidence that they will be able to provide the performance bond or other acceptable security. Such evidence may include, but is not limited to, a letter from an authorized agent of a bonding company or other entity committing to provide the performance bond or other acceptable security or indicating that the bond underwriter or other entity is processing a request to provide the bond or security and stating unequivocally that the bond or security will be available upon execution of the contract. In response to this requirement Scientific submitted a letter from Rollins Burdick Hunter of Illinois, Inc. together with a power of attorney for an amount of up to $20,000,000 bond coverage. This letter from Rollins Burdick Hunter is dated May 13, 1991, the date upon which Scientific submitted its proposal with the letter. In pertinent part the letter states: "RE: THE PRINTING OF INSTANT LOTTERY GAME TICKETS AND RELATED SERVICES FOR THE FLORIDA LOTTERY- Florida Instant RFP (Bid No. 91-011-LOT/TEN/P BID DATE: MAY 13, 1991 OBLIGEE: FLORIDA DEPARTMENT OF THE LOTTERY Letter of Intent We understand that bids are to be taken May 13, 1991 for this project. Please be advised that, subject to our underwriting requirements being met, if Scientific Games, Inc. is the successful bidder on this project and is awarded a contract and enters into said contract, we as surety will write an annual bond for the prosecution of the contract. This Letter of Intent is valid for one hundred eighty (180) days from the bid date, May 13, 1991, and we assume no liability to you if we decide not to issue the referenced bonds beyond this one hundred eighty (180) day period. You understand of course that the relationship between Scientific Games, Inc. and Continental Insurance Company is private, and we assume no liability to you if for any reason we decide not to issue the referenced bond(s). On May 8, 1991 Ken Taylor of Scientific sent the RFP to Rollins Burdick Hunter, the bond broker for Scientific, in the interest of obtaining the letter of May 13, 1991 which letter has been described. The power of attorney for $20,000,000 that was submitted with the proposal by Scientific was from Continental Insurance Company and counsel to Continental Insurance Company James E. Lee signed the Letter of Intent of May 13, 1991 together with William G. Malloy, President and CEO of Scientific. Having considered the evidence presented concerning the adequacy of the bond commitment, the Letter of Intent complies with the requirements stated in Section 6.5 pertaining to a performance bond as the ability to provide that performance bond. The Letter of Intent is not perceived as equivocal. It is not only consistent with the requirement set forth in Section 6.5 to the RFP, it coincides with what the Department has found to be acceptable in a previous RFP related to advertising which had a similar requirement for a statement of commitment to provide a performance bond at the appropriate juncture. In the instance of the advertising RFP certain bond letters by vendors who responded to the advertising RFP failed to state the dollar amount of the bond in the letter of commitment and those vendors were given permission to submit clarifying letters as to the exact amount without a declaration that those vendors were non-responsive. The letter clarifying the bond amount which was submitted by Scientific on May 16, 1991 with permission from the Department is consistent with the prior practice by the Department. This clarification by vendors in the advertising RFP solicitation and in the present solicitation is a minor correction. It is a minor correction which does not afford unfair advantage to Scientific and does not inconvenience the Department. Moreover a strict reading does not lead to the conclusion that the bond commitment letter needed to restate the bond amount of one million dollars. It must only make it evident that the bond commitment letter is addressing the requirement for a one million dollar performance bond. The Scientific Letter of Intent provides ample evidence on that point. The language set forth in the Letter of Intent reminding the reader that the commitment is subject to underwriting requirements being met and the further comment that the commitment does not create liability to the Department if the bond contract is not completed between the private entities does not undermine the fundamental promise to write the bond. It is an adequate response because the RFP did not contemplate a bid bond being provided with the submission of a proposal. It contemplated a commitment to write a performance bond in the future to be available at the place in time where a contract was executed between the vendor and the Department. LOBBYIST DISCLOSURE According to Section 3.1(d)8., which refers to the need to include information concerning Section 1.24, that latter section pertaining to conflict of interest and disclosure and more particularly to the revelation of the affiliation of executive branch lobbyists, as defined by statute or activities by the lobbyist designed to influence the actions of the Department in connection with the RFP, the failure to disclose an executive branch lobbyist would be considered a breach of a mandatory material requirement to the RFP. The consequence would be to cause the submission by a vendor to be declared non- responsive. Dittler alleges that Scientific failed to reveal the name of Barry Horenbein when filling out its proposal in response to Section 1.24 to the RFP. According to Dittler, Barry Horenbein was an executive branch lobbyist for Scientific in the relevant timeframe. That perception is incorrect. The language is Section 1.24 concerning Conflict of Interest and Disclosure states: The award hereunder is subject to the provisions of Chapters 24 and 112, Fla. Stat. Respondents must disclose with their proposals whether any officers, directors, employees or agents are also an officer or an employee of the Lottery, State of Florida, or any of its agencies. All firms must disclose the name of any state officer or employee who owns, directly or indirectly, an interest of five percent (5%) or more in the Respondent's firm or any of its branches or affiliates. All Respondents must also disclose the name of any employee, agent, lobbyist, or other person who has received or in the future will receive compensation of any kind for services related to this RFP, who is a previous employee of the Lottery, or who has or is required to register under Section 112.3215, Fla. Stat., in seeking to influence the actions of the Lottery in connection with this procurement. Respondents must also disclose the amount of compensation paid or to be paid in the future to any person who seeks to influence the actions of the Lottery in connection with this procurement. Respondents must also disclose the existence of any contingency agreements whereby any person will be compensated in any amount or form and the compensation is in any respect dependent on the outcome of this procurement. Each Respondent which has no disclosure to make under Section 1.24 must state affirmatively in its Proposal that it has no such disclosures to make. Failure to make any of the disclosure required by this section, or to make the affirmation required above, will result in rejection of the Proposal. Scientific met the disclosure requirements by listing David Bausch, a former Department employee. Barry Horenbein owns Florida Consultants, Inc. which provides lobbying services. Scientific at relevant times was his client. From December 10, 1986 until November 30, 1990 Horenbein had served as a legislative and executive branch lobbyist for Scientific under a yearly contract. This arrangement was pursuant to the proposal by Horenbein of November 25, 1986 on behalf of his company, Florida Consultants, Inc. in which he offered the services to Scientific in the area of legislative and administrative representation of Scientific as a lobbyist. On December 10, 1986 Gray Bethea, General Counsel to Scientific, confirmed the understanding between Horenbein and Scientific as to services that had been described in the offer of Horenbein dated November 25, 1986. For his work Horenbein received compensation of $5,000.00 per month for the period beginning in 1988 and as recent as November 1, 1991, and, consistently used the same invoice identification of his services as being related to "governmental consulting and lobbying in the State of Florida". Although there was no written documentation which would state any modification or termination of the business relationship between Horenbein and Scientific, there was a change in the position by oral agreement after November 30, 1990. The contract was for month to month to handle legislative lobbying matters for Scientific but not executive branch lobbying. The change in status for Horenbein came about after a November 29, 1990, letter from Horenbein to the president of Scientific explaining that the consulting contract would expire on November 30, 1990. In the course of that correspondence Horenbein pointed out the expected changes that he perceived given the outcome of the gubernatorial elections in which the incumbent lost and a new governor came in. This correspondence of November 29, 1990 expressed the desire by Horenbein to continue on the basis of $5,000.00 a month fee as outlined in Gray Bethea's letter of January 5, 1990, which letter from Bethea spoke of a relationship on the same terms and conditions as the original suggestion of the relationship between the two parties which had been set out on December 10, 1986 by Gray Bethea. The response to this November 29, 1990 letter was the oral agreement to allow representation in the area of legislative branch lobbying. The agreement between Scientific and Horenbein was not renewed in its entirety to include executive branch activities. The reason that Scientific decided to change the duties of Horenbein in representing its interests was based upon the perception that the close association which Horenbein had with the outgoing Governor Martinez and his administration might be harmful to Scientific in the future in that the new administration of Governor Chiles was coming in and Scientific did not wish to have Horenbein continue contact with the Department or the executive branch in connection with Scientific's business in Florida. In 1991, Horenbein registered in Florida as a legislative lobbyist but not as an executive branch lobbyist. Horenbein did provide some services concerning lottery activities to the extent of sending newspaper clippings to Bethea about activities within the Department during the year 1991. This was a continuation of information to include Horenbein's speculation as to the possibility of the change of the head of the Department and the name of a potential candidate to be the Department head discussed in his correspondence of November 29, 1990. On December 24, 1990 the Chairman of the Board of Scientific wrote to Dr. Marcia Mann, the new Department head, expressing, among other things, the common interest which Dr. Mann and the Chairman had in the University of South Florida. A copy of that letter was provided to Horenbein. Related to the letter from the Chairman to Dr. Mann, that letter was prepared based in part on information that had been provided by Horenbein to Scientific. The correspondence from the Chairman to Dr. Mann was prepared not only on newspaper clippings which Horenbein had submitted but on conversations which Horenbein had with his client Scientific. Horenbein provided information to Scientific about the new leadership at the Department with the advent of the Chiles administration to include remarks about Secretary Marcia Mann and Assistant Secretary McKnight. Horenbein considered provision of information as part of consulting services for which he was paid a fee. Although Horenbein had not seen the details of the subject RFP he advised Scientific that Scientific should "sharpen its pencils" and come in with a bid as low as they felt they could to get the contract. Horenbein told top officials within Scientific that he thought that the pricing in the RFP was going to be very important. He related this information in the same manner as he would have to any client under similar circumstances. This was considered by Horenbein to be part of his consulting relationship with his client Scientific. Horenbein was made aware that certain representatives from Scientific were to come to Tallahassee for a meeting with Senator McKnight or Dr. Mann. Horenbein did not attend a meeting between those persons. Horenbein saw Senator McKnight in a Tallahassee restaurant and welcomed him to Tallahassee and chatted with him. He also spoke to Senator McKnight the day the bid in this came out in this procurement. On April 3, 1991 Horenbein attended a Lottery Commission Meeting at the Department headquarters. He was there for his own curiosity to see the new Department administration of Dr. Mann function but acknowledges that it was also an attendance associated with his work for Scientific. Scientific had not asked him to attend this meeting. The topic of the meeting was not related to the present RFP. At the meeting he met Dr. Mann for the first time. Horenbein also saw Senator McKnight at the meeting and spoke with him. The topic of the RFP was not discussed with Dr. Mann or Senator McKnight on this occasion. In fact, Horenbein never discussed the subject RFP with any Department official or employee, nor sought to influence them in connection with the procurement for the advantage of his client Scientific. In his conversation with Senator McKnight on April 3, 1991 Horenbein complemented Senator McKnight concerning the Senator's legislative service in saying that he was "happy to see somebody of my integrity in the administration", referring to Senator McKnight's service in the Department. Following the technical evaluation Scientific asked Horenbein to attend the cost bid opening on May 17, 1991, a session that all vendors were invited to attend. The reason Scientific asked Horenbein to attend was because of the short notice of the cost bid opening and having no other personnel available to Scientific to attend that session. The vendors had been advised of the cost bid opening by one day notice. All evaluations on the technical aspects had been scored prior to the cost bid opening and the scores in the cost bid opening were pursuant to a formula. As part of his attendance at the cost bid opening Horenbein picked up copies of Webcraft and Dittler's proposals and looked at them concerning the bottom line financial quotations by those vendors. He considered this part of his function as a lobbyist for Scientific. Because the petition by Dittler alluded to Horenbein and his activities, Horenbein was provided a copy of material that Scientific had obtained from the Department under a public records request on or about May 24, 1991. The material also included the cost quotes which Horenbein spoke of and evaluators score sheets and the evaluation summary. The decision to send the materials that had been obtained by a request for public information was made by counsel to Scientific, Bethea. In addition to Senator McKnight, one of the other evaluators, Edwards, knew Horenbein before the advent of the RFP, but as stated before, had not discussed the RFP with him. Neither did Edwards nor McKnight know that Horenbein was a lobbyist for Scientific at the time of the RFP. Horenbein did not know the other evaluators Dr. Mukes, Carter or Pribbenow. Horenbein had a conversation with Jack Peeples, an independent contractor to the Governor's office while at a restaurant in Tallahassee. This conversation was not at the instigation of the client Scientific. Peeples held a contract with the Governor's office from February 1, 1991 to June 30, 1991 as advisor to the governor. He was not a state employee as such. In this conversation Horenbein stated that he thought it was, "sinful for Sonny Holtzman to be representing a lottery company in the position he was in" to which Peeples is said to have replied "You're probably right Barry, it shouldn't happen". Sonny Holtzman is mentioned as having an affiliation with Webcraft. Horenbein further stated to Peeples that the RFP disclosure requirement associated with the present case and that of the advertising RFP, as Horenbein stated, "I thought it was ridiculous because I had heard in the RFP that they were supposed to name the lobbyist and how much they made and I told Jack Peeples, I said 'Jack, you know you're going to be in business very shortly, would you want everybody in the world to know how much you were making on a particular client?'" The knowledge which Horenbein had of the disclosure requirements in the advertising and subject RFP came to him through comments from other lobbyists. Horenbein also discussed with Peeples the possibility of the two of them getting together and doing some lobbying. The reason which Horenbein had in mind for opposing the disclosure requirements, especially related to the revelation of compensation was for his own purpose and not that of the client Scientific. Horenbein's specific objection to the RFP disclosure requirement was that he did not want clients to find out how much he was billing each of his clients and that he didn't think it was proper to put such a requirement in a RFP. He told Peeples that the disclosure provision should be changed. This remark was made in the Spring of 1991. When he made the comment Horenbein thought that Peeples was one of the close campaign people to Governor Chiles. He commented to Peeples because he thought that Peeples had substantial influence in the Governor's office. When he had this conversation Horenbein did not know whether the lobbyist disclosure provision was going to be placed in the advertising RFP or the present RFP. He did not know the details of Peeples' payment by the Governor's office as an independent contractor. Horenbein did not discuss the present RFP per se in his conversation with Peeples. Peeples' affiliation with the Governor's office under the terms of his contract was not that of representative of the Governor's office or other department's of state government. Peeples was special counsel to the Governor for legal services. His duties included legal advise to the Governor, working in conjunction with designated staff, agency heads and other persons making available Peeples' full professional knowledge and opinions. He reported to the Governor in this capacity. Senator McKnight established that when he was hired as the Assistant Secretary of the Department by Governor Chiles he had conversation with the Governor's Chief of Staff concerning Senator McKnight's duties as Assistant Secretary. Senator McKnight identified one occasion in which he had a meeting in the Governor's office to discuss the administration's views of the Department. His recollection is that this was held in the office of the Chief of Staff Mr. Krog, with Peeples in attendance. Senator McKnight only knew of Mr. Peeples as being a close, personal friend and advisor to the Governor, to Senator McKnight's understanding of that association. During this meeting in the Governor's office the issue of lobbyist disclosure was emphasized by the Governor's office to Senator McKnight and he was advised that it would mean no contact whatsoever between lobbyists and members of this lottery staff from the point of view of the Governor. Senator McKnight was told that the Lottery operation had to be "squeaky clean". The Governor's office did not discuss the RFP nor influence the drafting of the RFP beyond this conversation with Senator McKnight. Notwithstanding the protestation by Horenbein to Peeples, Section 1.24 to the present RFP contained the disclosure requirements that Horenbein had complained about. FINANCIAL DISCLOSURE AND PENDING LITIGATION As identified in Section 1.1, the project in question is a major procurement as defined in Section 24.103, Florida Statutes. As such, the requirements set forth in Section 24.111(2), Florida Statutes, were incumbent upon the vendors. The RFP also speaks to the matters of financial disclosure at Section 3.1(d). Scientific did the things necessary to comply with those requirements when it submitted its proposal on May 13, 1991. (In this connection Section 1.19 pertaining to the assignment of the contract, if one is entered into, and Section 1.34 pertaining to change of financial conditions which are material adverse circumstances which occur between the time of the submission of the proposal and the award of a contract and continuing during the life of the contract are not items to be considered in this dispute. They are issues which potentially might have to be resolved between the vendor that the Department attempts to contract with and the Department.) Scientific when it submitted its proposal on May 13, 1991, by cover letter, alerted the Department to a potential change in its financial condition and ownership when it alluded to an asset purchase agreement between Scientific and a company formed by members of Scientific's senior management and the firm Centre Capital Investors L.P., an affiliate of Lazard Freres & Co. That asset purchase agreement date is from April 30, 1991. Scientific had this to say about that agreement in its transmittal letter: "On April 30, 1991, a company formed by members of Scientific Games' senior management and Centre Capital Investors L.P., an affiliate of Lazard Freres & Co., entered into an Asset Purchase Agreement with Bally Manufacturing Corporation, Scientific Games, In., and Scientific Games of California, Inc., for the purchase of the instant ticket and video lottery business of Scientific Games. The closing of the transaction is anticipated to take place within several months and is subject to the consents of various state governments and other customary closing conditions. No change in the operation or name of Scientific Games is expected and no interruption of services to customers will occur. As further details become available, Scientific Games will provide information to the Florida Lottery. Notwithstanding the pending asset purchase agreement, it is the Scientific group that submitted the proposal who must comply with the financial disclosure requirements. That is the respondent referred to in the definitional section of the RFP at 1.2 under Glossary of Terms. It is the vendor that is defined in Section 24.104, Florida Statutes. It is the group that submitted the proposal as defined in Section 24.111(2), Florida Statutes. Scientific was not expected under the terms of the RFP and associated requirements of law to submit vendor information forms on the purchasing group. That purchase was not consummated until a closing held on October 1, 1991. At the time that the proposal was submitted by Scientific the purchasers did not control by direct or indirect means the entity Scientific which submitted the proposal. Scientific and the purchaser had different boards of directors. Scientific was controlled by Bally Manufacturing Corporation and the purchasing group was controlled by Centre Capital Investors, L.P. Section 24.111(2), Florida Statutes, requires the Department to investigate the financial responsibility of the vendors who responded. That financial investigation took place to a degree not especially evident when examining the record. Details are sketchy. However, the requirement was responded to. More significantly Section 24.111(2), Florida Statutes, and the RFP present the necessary opportunity to evaluate the implications of the asset purchase before contracting with Scientific. Section 24.111(2)(f), Florida Statutes, makes it necessary for a vendor to provide: a disclosure of the details of any bankruptcy, insolvency, reorganization, or any pending litigation of the vendor. The asset purchase agreement is not such an event. In particular it does not constitute the form of reorganization spoken to in that section. Concerning pending litigation, Scientific did not reveal the existence of the case of Toon Construction Company v. Scientific Games Inc. On May 7, 1991 the parties dismissed an interlocutory appeal before the Supreme Court of the State of Georgia involving that litigation. The litigation had been settled by the parties as of May 13, 1991 when the proposal by Scientific was submitted in response to the RFP. The attorneys for the parties had not dismissed the associated case between those litigants in the Superior Court of the State of Georgia. That dismissal took place on May 14, 1991. Under the circumstances Scientific has not failed to comply with the provision in Section 24.111(2)(f), Florida Statutes, for revealing pending litigation. It did make the Department aware of two other pieces of pending litigation. EVALUATION COMMITTEE AND PROCESS Other than the reference in Section 5.4 to the RFP wherein the Secretary of the Department is required to appoint an Evaluation Committee, no requirement is stated concerning the composition of the Committee or the credentials of its members. The Evaluation Committee was chaired by Robert McKnight, Assistant Secretary of the Department. Committee Member Edwards had been the person most responsible for policy decisions in the development of the RFP document, with assistance in the drafting and in the processing of proposals given by the attorneys Louisa Warren and Cristina Brochin and with assistance by Robert Fiero, then Director of Administrative Services for the Department. In preparing for their participation in the full Committee activities involved in the evaluation process, having considered the criticisms of the amount of time available spoken to by witnesses for Dittler and the remarks of the Committee members concerning the opportunity to review the materials in preparation to carry out the assignment of scores, the evaluators are found to have had an adequate opportunity to prepare themselves to carry forth their duties as Committee members. The committee members indicated that they had sufficient time to evaluate the proposals to the RFP. In this connection Committee Chairman, Senator McKnight, made it clear that the committee members could take as much time as they needed to conclude the evaluation session which all members attended on May 16, 1991. He also asked the committee members during that meeting if they had had enough time for review. Other committee members did not ask the Chairman for additional time to review the materials found within the proposals. ORAL PRESENTATIONS Section 1.1 to the RFP explains that the RFP in the activities which lead to the execution of a contract are associated with the Department policies set out in Rules 53ER87-10 through 53ER87-11, 53ER87-13 through 53ER87-19 and 53ER91-10, Florida Administrative Code together with Chapter 24, Florida Statutes. The vendors were provided copies of those materials. Dittler contends that the RFP by its term required compliance with Rule 53ER87-13(5)(i), Florida Administrative Code. That Section states: (i) When it is considered in the best interest of the State, the Department can acquire goods and services, including major procurement through a competitive negotiation process. A Formal Request for Proposal will be let stating general requirements to be met and that award of the contract will be through a competitive negotiation process. A selection committee appointed by the Secretary or a designee will review all of the proposals and shall select no less than three proposals as finalists deemed to be most highly qualified to perform the required services. The finalists will be notified that they are expected to make a formal presentation to the committee. Based on the presentations, the committee shall select no less than three, whenever possible, proposals in order of preference deemed to be the most highly qualified to perform the requested services. The Secretary or a designee shall negotiate a contract with the most highly qualified firm. Should the Secretary or a designee be unable to negotiate a satisfactory contract with the firm considered to be the most qualified at a price the Department determines to be fair, competitive, and reasonable, negotiations with that firm shall be terminated. The Secretary or a designee shall then undertake negotiations with the second-most qualified firm, the Secretary or a designee shall terminate negotiations with that firm and shall then undertake negotiations with the third-most qualified firm. Should the Secretary or a designee be unable to negotiate a satisfactory contract with any of the selected firms, additional firms may be selected in accordance with this rule, or negotiations may be reinstated following the original order of priority. Negotiations shall continue in accordance with this rule until an agreement is reached or all proposals are rejected. It is this formal presentation which Dittler equates with the need to have an oral presentation. While the RFP through its terms concerning the procedures for selecting a vendor appears to incorporate features under Section 53ER87- 13(5)(i), Florida Administrative Code especially the aforementioned subsections 4 and 5, it also tends to incorporate the alternative procedures for gaining a contract which are set forth in Rule 53ER87-13(5)(b)(c)(d) and (e), Florida Administrative Code, which describe a request for proposal evaluation process where a bid price is quoted when the proposal is submitted. This is as contrasted with subsection (i) where the price is arrived at through negotiations following the ranking of vendors based upon the presentation made to the Evaluation Committee wherein three finalist are selected. The process in this RFP, generally stated, calls for a price quotation, a ranking of vendors based upon a point system that includes points assigned for pricing together with other factors. It does not contemplate under sub (i) a formal presentation to the Evaluation Committee, also referred to as an oral presentation, before entering into a second phase in the process associated with an attempt to negotiate with the best responsive vendor at a price that the Department is satisfied with. Failing the ability to find an acceptable price from the best responsive vendor the Department then attempts to negotiate with the second ranked vendor and then if need be, the third. That corresponds in the hierarchy of rankings to negotiations first with Scientific and then with Dittler and Webcraft if necessary. This hybrid approach to the use of both alternative methods for arriving at a contract as set forth in Rule 53 ER 87-13(5), Florida Administrative Code, is spoken to in Sections 1.1, 1.9, 2.5, 3.1, 4.2, 5.2, 5.3 and 5.4 to the RFP. As stated before, the vendors did not take issue with the blending of concepts set forth in the various provisions of Rule 53 ER 87-13(5), Florida Administrative Code, which deleted any reference to the expectation of the formal presentation to the Committee called for in sub (i). By failing to challenge the procedures for assessment or evaluation within the time allowed in Section 1.25, the parties acquiesced in this arrangement. The process of evaluation described in the RFP is not ambiguous. It does not call for a formal presentation and that requirement may not be inferred. By not reminding the Department that the approach for evaluation employed selected portions from separate alternatives for conducting the process, an approach which the vender might consider contrary to the structure set forth in the rule, within the time frame available for filling a formal written protest, the vendor waived the right to direct the criticism in its petition. That protest should have been filed within 72 hours of the availability of the answers to questions propounded by the vendors to the Department under Section 1.9 to the RFP. That was not done and Dittler and the other vendors must accept the arrangement where formal presentations are not called for and need not be allowed. Concerning the request to present, James Cooney, the Dittler consultant/lobbyist, was aware of the requirements of the RFP when he attended the public session of the evaluation process which took place on May 16, 1991. He requested the opportunity to make an oral presentation from a staff member who was not part of the Evaluation Committee. Cooney was principally interested in being able to respond to the questionable provisions within the response by Dittler to the RFP brought up in discussion by the Evaluation Committee. He did not intend by that request to provide the type formal presentation contemplated by sub (i) to Rule 53 ER 87-13(5), Florida Administrative Code. Neither was Dittler in a position to make that formal presentation on May 16, 1991. Nor did the other vendors come to the evaluation session prepared to make a formal presentation, although Scientific in its cover letter transmitting its proposal stated its willingness to make an oral presentation if requested. Cooney was not allowed to advance his explanations concerning questions about the Dittler proposal. It would have been inappropriate to allow him to do so. The result would have been to give Dittler a competitive advantage. The appropriate arrangement for clarifying minor irregularities technical oversights was upon the impetus by the Department, not the vendors. In any event, these concerns which Cooney intended to address were not disqualifying items in the response to the RFP by Dittler. CONTACTS BETWEEN THE DEPARTMENT AND SCIENTIFIC OUTSIDE THE RFP WHICH MAY HAVE AFFECTED THE DEPARTMENT'S PERCEPTION OF THE RESPONSE BY SCIENTIFIC TO THE RFP. In its proposed fact finding Dittler argues that certain contacts set forth in its Paragraphs 88 through 91 constituted communications outside the RFP process which were improper and intended to disparage the impartiality of the procurement process at issue. That suggestion is not accepted. The contacts which were made did not impair the impartiality of the procurement process. REVIEW STANDARDS USED BY THE EVALUATION COMMITTEE In Paragraphs 92 through 104 of the Dittler proposed fact finding it is suggested that the method of assessment employed by the evaluators, to include the willingness by the Committee to allow the cost formula to be exercised independent of their participation, was not done in a manner consistent with the RFP and was thus unacceptable. The approaches taken were not illegal, dishonest, fraudulent, arbitrary, unreasonable, capricious or done in a manner which is designed to subvert or undermine the purposes and objectives of competitive bidding. Related to the cost proposal, that formula was a mechanical exercise. When the cost results were completed by staff they needed only to be added to the scores which had been assigned by the evaluators for features in the proposal outside the price quotations. The decision by the Committee to rely upon the staff to exercise the formula on cost and add in those scores with the scores arrived at by the evaluators on items other than cost did not violate the spirit and intent set forth in the RFP for assigning overall scores to include the cost component. In this connection the staff that served to support the Evaluation Committee in its activities acted appropriately. CLAIM OF THE USE OF UNARTICULATED CRITERIA PERTAINING TO THE "TIE-IN" OF THE EMPHASIS ON EDUCATION AS PART OF THE MARKETING PLAN Dittler claims that the evaluators acted arbitrarily and in a capricious manner in placing emphasis on an educational "tie-in" in the marketing plan. Dittler complains about giving credit to Scientific for such emphasis in a setting where the RFP did not contemplate the relationship between the educational purposes for which the Florida Lottery was created and the marketing plan prepared by the respective vendors. Dittler goes so far as to assert that this unspoken requirement to promote education in the marketing statement constitutes the use of unarticulated criteria in the evaluation process, in that those criteria concerning education are not found in the RFP. Under Section 2: SPECIFICATIONS, is found the statement of PURPOSE AND OVERVIEW. At Section 2.1 it states: In accordance with Chapter 24, Fla. Stat., the Florida Department of the Lottery has been charged with the responsibility "to operate the state lottery . . . so as to maximize revenues in a manner consonant with the dignity of the state and the welfare of its citizens." The Contractor will support the Lottery in its mission by providing the requisite services identified in Section 2 of the RFP for the Lottery's instant ticket games. The lottery's objective for issuing the RFP is to enter into a Contract with the most highly qualified Respondent who will provide secure gaming products, maximize the sale of instant tickets, and develop game support services which are efficient and assure product knowledge and availability to all lottery retailers and lottery players of Florida. * * * The Lottery is committed to an aggressive marketing plan for instant tickets. It is essential that throughout the Contract period innovative game concepts be developed to assure the growth of instant ticket sales. Further explanations concerning the marketing plan are set forth in Section 2.4.B which states: Between July 1, 1990 and April 1, 1991, the Lottery has released the instant ticket games outlined in Attachment F. Using this information as guidance, Respondents shall provide a detailed strategy and plan for the production of tickets for the fiscal year ending June 30, 1992. This strategy must include projected revenues, game names, ticket quantities, duration, game play, prize structures, and a rationale and plans for advertising, promotion and market research. Respondents shall provide at least five (5) alternative game names for each game included in the plan. The game design and rationale proposed must be creative and directed toward meeting the Lottery's sales goal of $12 million per week with a prize structure of 50%. The plans must include specified methodology for determining game selection, the game break schedule, and supporting market research. The quality and the experience of the Respondent's marketing representative who will be assigned to the Lottery, and the Respondent's marketing, design, advertising and promotional experience with other state lotteries shall be clearly stated. Any offering or proposed feature that is considered by the Respondent as an extra cost item must be fully described as such in the proposal as such. The price for such extra cost items shall be provided separately in the sealed Cost Proposal under "Other Options". As described at 5.3.B the marketing plans were graded on their quality and appropriateness. While the requirement to "tie in" the educational purposes for which the lottery was created is not stated in exact terms, it was not inappropriate for Scientific to place that emphasis and for the evaluators to credit Scientific for its marketing idea. Nor was it inappropriate for the Dittler proposal to be less well received by the absence of such emphasis upon education in its marketing statement. Section 1.1 to the RFP made the vendors aware of that activities involved in the pursuit of a contract are conducted in accordance with Chapter 24, Florida Statutes, among other controlling legal requirements. Section 24.111(1), Florida Statutes, states in part: In all procurement decisions, the department shall take into account the particularly sensitive nature of the state lottery and shall consider the competence, quality of product, experience, and timely performance of the vendors in order to promote and ensure security, honesty, fairness, and integrity in the operation and administration of the lottery and the objective of raising net revenues for the benefit of the public purpose described in this act. Sections 24.102, 24.121 and 24.1215, Florida Statutes, also emphasize the public education purposes of the lottery. Scientific offered its marketing emphasis on education based upon the knowledge of Chapter 24, Florida Statutes, newspaper clippings commenting on the lottery's emphasis on education and past speeches of the Secretary of the Department which placed that emphasis. REQUIREMENTS FOR A MINORITY PROGRAM Section 2.4 A.2. describes the requirements for minority participation expected of vendors responding to the RFP. It states: The Lottery is committed to participation by minorities among its vendors and retailers. The Lottery encourages the use of Minority Business Enterprises as subcontractors whenever the use of such firms is reasonably feasible. Each Respondent should include with its proposal its plans for the use of Minority Business Enterprises as subcontractors, and should set forth any other plans which it has which will positively impact the minority business community. Respondents will receive consideration in the evaluation based on their meaningful use of Minority Business Enterprises. When the RFP calls for the inclusion of a plan for the use of a Minority Business Enterprises as subcontractors, it contemplates a more detailed explanation than was provided by Dittler in its proposal where it said: "As discussed above, Dittler has specific plans to include minority participation if awarded the contract." Dittler also stated concerning minority participation: Dittler is committed to and encourages minority participation in its contracts using Minority Female Loan and Small Businesses. We are proud of out track record and, if awarded this contract, intend to include MBE/WBE participants whereever possible. Concerning the exact intentions in this RFP it was stated: Dittler does not anticipate the use of a subcontractor for any of the date generation, production or support services by the Lottery. As Dittler concedes it did not have a detailed minority participation plan referring to the names of subcontractors it would use with minority ownership certification. Scientific Games and Webcraft's proposals did contain a listing of subcontractors who are minority certified who were proposed to be used if the contract was awarded to one of those vendors. Under the circumstances it was appropriate for the evaluators to mark down Dittler concerning its minority participation. Contrary to Dittler's assertion it was not enough to state the intention to use minority certification without a more detailed statement. Having failed to give a more detailed statement it was not arbitrary and capricious for the evaluators to deduct points from Dittler concerning the requirement for a minority participation plan in that the minority participation plan was part of the evaluation criteria set out at Section 5.3.A. STATEMENTS ON TICKET COMPROMISEABILITY Dittler in its fact proposals at Paragraphs 116 through 119 places emphasis on the misunderstanding by committee member Pribbenow as to distinctions between compromiseability and alterability concerning a statement on compromiseability contained in the Dittler proposal. Dittler also questions a willingness by the Committee to allow Webcraft to amend its proposal to include a statement on the length of time that the Webcraft tickets would withstand compromiseability while not allowing Dittler a chance to explain the statement in the Dittler proposal concerning compromiseability that concerned Pribbenow. Although these criticisms are legitimate they do not pertain to items of such magnitude to demonstrate illegality, dishonestly, fraudulent practice, arbitrariness, unreasonableness, capriciousness or that the actions were done in such a manner as to subvert or undermine the purposes and objectives in competitive bidding. ACCOUNT REPRESENTATIVE At Section 2.4A.1. concerning the vendors organization and credentials, in pertinent part it has this to say about the account representative: The Respondent shall identify the actual persons who will be assigned major roles in the fulfillment of the work obligations outlined on Section 2 herein. The responding firm shall state that each person is available to perform the work if the responding firm is awarded the Contract. In accessing information concerning the account representative that assessment is performed under the criteria set forth at Sections 5.3.A. and 5.4. In carrying out the evaluations concerning the account representative, the evaluators expressed concern that the Dittler account representative had duties in other jurisdictions which would unduly interfere with her ability to meet the needs of the Florida Lottery in servicing the account. It did not appear to have a similar concern about Scientific and its account representative. The Committee also commented on the amount of experience by the designated account representative as an item of concern. There were remarks about the relative placement of the account representative in her organizational hierarchy, that is to say the number of persons in the organizational chain between the account representative and the Chief Executive Officer. The action taken by the evaluation committee concerning the account representatives was not inappropriate. TICKET TESTING Section 2.2B. to the RFP, as amended, called for the submission of the following ticket samples: Aluminized uncoated white card stock, minimum the 10 point or heavier. Aluminized coated white card stock, minimum 10 point or heavier. Recyclable ticket stock, minimum 8 point or heavier. Pursuant to Section 2.4.D.4. . . . each respondent must submit one book of tickets of each type of ticket stock proposed. The tickets will be subjected to testing by the Evaluation Committee to determine whether they meet the criteria set forth in Section 2.3.A5(c). . . . In the question and answer phase of the process BABN had asked the question if the vendors sample tickets could deviate from the requirements for submission of samples and if the Department would extend the time for submitting samples. The answer alluded to the requirements as to types of tickets which were called for up to that point which included categories 1 and 2 under Section 2.2B. BABN was told that they would not be given additional time to submit samples. All vendors were made aware of the question and answer. Prior to the receipt of the proposals on May 13, 1991, a decision was made by the Department, by Evaluation Committee member Carter and one or more other persons employed by the Department to only test 10 point uncoated ticket stock samples. That decision was reached because that was the type of ticket stock currently in use by the Department and the Department was not intending to change the type of ticket stock in this procurement. Dittler submitted four samples of tickets. It had this to say about its uncoated 10 point ticket: A game produced over three years ago for the Vermont Lottery on uncoated 10 point foil. Since the time this game was produced, all of Dittler's customers have requested coded stock. The bar code on this ticket was the first use of a variable bar code for validation of instant tickets in the United States. We submit this particular sample to confirm for the Lottery that Dittler can produce instant tickets on uncoated stock, and not for security evaluations. Dittler made this choice to submit this 10 point uncoated ticket stock realizing that the tickets submitted would be subject to testing. Dittler was not entitled to condition the submission by stating that it was not offered for security evaluations. It was the only aluminized uncoated 10 point stock it submitted. Therefore it had to be offered for all purposes to include security testing. Having failed to meet the requirement to submit a ticket for security testing it was not in compliance with the technical requirements of the RFP. It constituted a failure to meet the requirements set out in Section 3.1(d)10 for providing all items required in Section 2. The failure to comply with the requirement for submission of the ticket for testing made the proposal not responsive under Sections 4.2 and 5.2A in that it failed to meet a mandatory material requirement. The Dittler lack of compliance was similar to the problem with BABN which failed to offer the category of required tickets for testing. Notwithstanding the fact that the RFP called for all categories of tickets submitted to be subjected for testing and only one category was tested, this does not excuse the noncompliance with the requirements of the RFP by Dittler. Under the facts here the decision to test only one category of tickets did not constitute an arbitrary and capricious act on the part of the Department where the RFP calls for the testing of all categories. Lawrence Herb a forensic specialist for the Department with considerable experience as a document examiner tested the tickets which he received on May 13, 1991. He tested only the one category ticket at the instruction of Carter. When Herb tested the one category of ticket he was unaware of the disclaimer in the Dittler proposal concerning its tickets where it was stated that the tickets were not for security purposes. After the decision was reached to test only one category of ticket, Carter did not make persons other than Herb and Colen Benton who were involved with ticket testing aware of that choice. In addition to having been told on May 13, 1991 to only test the 10 point uncoated ticket stock, Carter had told Herb Thursday or Friday the week before the Monday that the proposals were received that only the 10 point uncoated aluminized ticket stock would be tested. Carter did not receive the Dittler proposal for review as an evaluator until May 15, 1991. Consequently, he did not know of the disclaimer in the Dittler proposal concerning the 10 point uncoated ticket stock that Dittler submitted when Carter made the decision to only test that category of ticket and communicated that decision to the testors. None of the vendors were made aware that only the 10 point uncoated ticket stock would be tested before submitting their proposals. In conducting his tests on the 10 point uncoated ticket stock Herb utilized testing methods used by the Department, testing methods that he had seen employed by the current vendor Scientific in its California printing plant and other tests that were not required by the Department standards or the California operation of Scientific. The choice of testing methods, generally described, was not inappropriate nor designed to give advantage to Scientific. Although not in compliance with the requirement to provide tickets for security testing, Dittler's tickets were tested and scores assigned to the test results. The consequence was to treat the Dittler position on security testing of its tickets as being responsive. This was more advantageous treatment than Dittler was entitled to. The ticket testing began on 4:00 p.m. until approximately 10:00 or 11:00 p.m. on May 13, 1991. Work was done from 8:00 a.m. until approximately 11:00 p.m. on May 14, 1991, and on May 15, 1991, work was done from 8:00 a.m. until 11:00 p.m. Some of this time was devoted to generating written reports which were offered to the Evaluation Committee. No test took longer than 24 hours to conclude. Deference need not be paid to the criticisms by Dittler concerning the possibility of a more lengthy testing session. The same test were performed on each vendor's ticket samples. A detailed forensic report based upon the test results, together with a summary of that report commenting on the categories of marketability, compromisability, and alterability and general comments constituted the reporting. Each member received copies of the report and the summary to that report and the actual tickets were made available for examination by the committee members. Under general comments there was a discussion of the appearance of the tickets and other factors. Whether these comments concerning the appearance and associated factors are matters within the parameters of forensic ticket testing, this did not cause any significant disadvantage to Dittler in the criticisms directed under general comments concerned content of construction and security features, matters which Dittler had conceded in its disclaimer. On balance, as Dittler apparently had anticipated, its 10 point uncoated ticket did not perform well when subjected to testing. The other vendors' tickets in this category were acceptable. The presentation by the forensic examiner Herb did not include recommendations as to ranking or scoring and did not promote undue influence in the decision making by the committee members in dealing with security issues. It was appropriate for the evaluators to assign scores under Sections 5.3C and 5.3D of the RFP when taking into account the results of the forensic testing.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED: That a Final Order be entered which finds that the Scientific proposal is responsive; That Scientific is the best responsive vendor in the hierarchy of ranking, followed by Dittler and Webcraft; That allows the process to proceed to the negotiation phase; and That dismisses the Dittler administrative petition. DONE and ENTERED this 9th day of March, 1992, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 1992. APPENDIX Case No. 91-3481BID The following discussion is given concerning the proposed fact finding by the parties. Dittler's Facts: Paragraph 1 is subordinate to facts found. Paragraph 2 is not necessary to the resolution of the dispute. Paragraphs 3 and 4 are subordinate to facts found with the exception of suggesting that Horbein has been an executive branch lobbyist continuously. Paragraphs 5 through 9 are subordinate to facts found. Paragraph 10 is contrary to facts found. Paragraph 11 is recitation of legal argument. Paragraph 12 is subordinate to facts found. Paragraph 13 is a accurate portrayal of the testimony but does not lead to the conclusion that the activities by Hornbein beyond November 19, 1990 constituted any lobbying activities which required disclosure of his name nor did the facts suggested in Paragraphs 14 through 19 fall into that category. Paragraph 20 is subordinate to facts found. Paragraphs 21 and 22, see discussion of Paragraph 13. Paragraph 23, the reference to April 4 is corrected to be April 3, 1991. The second sentence is contrary to facts found. The remaining portion of Paragraph 23 is subordinate to facts found. Paragraphs 24 through 34 are subordinate to facts found. Paragraphs 35 and 36 are contrary to facts found. Paragraphs 37 and 38 are subordinate to facts found. Paragraph 39 is not necessary to the resolution of the dispute. Paragraph 40 is contrary to facts found as is Paragraph 41. Paragraphs 42 through 44 are not necessary to the resolution of the dispute. The first two sentences of Paragraph 45 are subordinate to facts found. The remaining sentences in Paragraph 45 and Paragraph 46 are contrary to facts found. Paragraphs 47 through 49 are subordinate to facts found. Paragraph 50 is subordinate to facts found with the exception of its suggestion that Scientific was undergoing a reorganization. Paragraphs 51 and 52 concerning the buy out as discussed by the evaluators is not considered to have influenced the decision on responsiveness of Scientific nor inappropriately influence the scores assigned to Scientific. Paragraph 53 is not relevant. Paragraph 54 constitutes legal argument. Paragraph 55 is contrary to facts found with the exception of the remarks attributable to evaluation committee members. Their impression did not influence the outcome and to the extent that they believe that the asset purchase was an adverse change, their opinion did not comport with the legal requirement for disclosure. Paragraph 56 is contrary to facts found. Paragraph 57 is not relevant information. Paragraphs 58 through 60 are contrary to facts found. Paragraph 61 is subordinate to facts found. Paragraphs 61 and 62 are subordinate to facts found. The discussion in Paragraphs 63 through 67 concerning the Webcraft proposal is not relevant to the extent that it was not plead and Webcraft has not offered a petition speaking to the relative merits of its proposal. Paragraphs 68 through 71 in its first two sentences are subordinate to facts found. The remainder of Paragraphs 71 through 72 are not necessary to the resolution of the dispute. Paragraphs 73 through 75 are subordinate to facts found. Paragraph 76 is rejected in that the process of review by the trier of fact does not call for an assessment in substitution of the witnesses who testified as to the length of time necessary to read the material. Paragraph 77 is contrary to facts found. Paragraph 78 constitutes recitation of legal argument. Paragraphs 79 and 80 are subordinate to facts found. Paragraph 81 is contrary to facts found in that there are other pertinent provisions of the administrative rule that play a role. Paragraphs 82 and 83 are subordinate to facts found. Paragraphs 84 and 85 are contrary to facts found. Paragraph 86 is subordinate to facts found. Paragraph 87 is contrary to facts found. Paragraphs 88 through 91 in the suggestion of impropriety in the contacts by Scientific with the Department is rejected. Paragraphs 92 through 104 in the suggestion that the evaluators acted inappropriately in their review standard is rejected. Paragraphs 105 through 109 are subordinate to facts found. Paragraph 110 is contrary to facts found. Paragraphs 111 and 112 are subordinate to facts found. Paragraph 113 is an incorrect portrayal by Dittler of the requirements of the RFP. Paragraph 114 is subordinate to facts found. Paragraph 115 is contrary to facts found. Paragraphs 116 through 124 are subordinate to facts found. Concerning paragraphs 125 and 126 the facts do tend to show that criticism was not directed to Scientific about its account representative as contrasted with criticisms of Dittler but this doesn't change the case outcome. Paragraphs 127 through the first sentence of Paragraph 130 are subordinate to facts found. The latter sentence to Paragraph 130 constitutes legal argument. Paragraph 131 is subordinate to facts found. The first sentence of Paragraph 132 is contrary to facts found. The latter sentence is subordinate to facts found. Paragraphs 133 and 134 are not necessary to the resolution of the dispute. Paragraphs 135 through the first sentence of Paragraph 139 are subordinate to facts found. The last sentence in Paragraph 139 and Paragraphs 140 through all sentences save the last sentence in Paragraph 141 are not necessary to the resolution of the dispute. Paragraph 141 in the last sentence is contrary to facts found. Paragraphs 142 through 144 are not necessary to the resolution of the dispute. As to Paragraph 145 it is not incumbent that those matters be attended that are suggested in the first sentence. The second sentence is contrary to facts found. Paragraph 146 is not necessary to the resolution of the dispute. Paragraphs 147 through 149 are subordinate to facts found. Paragraphs 150 through 153 with the exception of the last sentence of Paragraph 153 are not necessary to the resolution of the dispute. The last sentence in Paragraph 153 is contrary to facts found. Paragraphs 154 and 155 are subordinate to facts found as is Paragraph 156 in its first sentence. The last sentence in Paragraph 156 is contrary to facts found. Paragraph 157 is subordinate to facts found as is Paragraph 158 in its first sentence. The last two sentences in Paragraph 158 are rejected in that the vendors are not able to substitute their judgment as to appropriate testing. Paragraph 159 is subordinate to facts found. Paragraphs 160 through 162 are not necessary to the resolution of the dispute. Paragraph 163 is subordinate to facts found. Department's Facts: Paragraphs 1 through 21 are subordinate to facts found. Paragraph 22 is not relevant. Paragraphs 23 through all sentences in Paragraph 28 with the exception of the last sentence are subordinate to facts found. The last sentence in Paragraph 28 is not necessary to the resolution of the dispute. Paragraphs 29 through 34 are subordinate to facts found. Paragraph 35 is not necessary to the resolution of the dispute. Paragraphs 36 through all sentences in Paragraph 51 with the exception of the last sentence are subordinate to facts found. The last sentence is not necessary to the resolution of the dispute. Paragraphs 52 through first sentence in Paragraph 55 are subordinate to facts found. The last sentence in Paragraph 55 is not necessary to the resolution of the dispute. Paragraphs 56 through the first sentence in Paragraph 57 are subordinate to facts found. The last sentence in that Paragraph is not necessary to the resolution of the dispute nor is Paragraph 58 nor the first two sentences of Paragraph 59. The remaining sentences in Paragraph 59 are subordinate to facts found. Paragraph 60 is not necessary to the resolution of the dispute. Paragraph 61 through 66 are subordinate to facts found. NOTE: Scientific employees were not involved in the appropriation of the RFP nor did not make attempts to influence the outcome of the appropriation. Paragraph 67 is not necessary to the resolution of the dispute. Paragraphs 68 through 70 are subordinate to facts found. Scientific's Facts: Paragraph 1 is not necessary to the resolution of the dispute. Paragraphs 2 through 19 are subordinate to facts found. Paragraphs 20 and 21 are not necessary to the resolution of the dispute. Paragraphs 22 through the first two sentences in Paragraph 39 are subordinate to facts found. The last sentence in Paragraph 39 is not necessary to the resolution of the dispute. The first sentence in Paragraph 40 is subordinate to facts found. The last sentence in Paragraph 40 constitutes legal argument. Paragraphs 41 through 48 are subordinate to facts found. Paragraph 49 is not necessary to the resolution of the dispute. Paragraphs 50 through 78 are subordinate to facts found. Paragraph 79 is not necessary to the resolution of the dispute. Paragraph 80 through all sentences in Paragraph 113 are subordinate to facts found with the exception of the last sentence which is not relevant in that it is not part of the proposal. Paragraphs 114 through 116 are subordinate to facts found. Paragraph 117 is not necessary to the resolution of the dispute. Paragraphs 118 through 122 are subordinate to facts found. Paragraph 123 is not relevant in that it was not set out in the proposal concerning use of minorities in other states. Paragraphs 124 through the first sentence in Paragraph 126 is subordinate to facts found. The last sentence in Paragraph 126 is not necessary to the resolution of the dispute. Paragraphs 127 through 135 are subordinate to facts found. Paragraphs 136 through 140 are not necessary to the resolution of the dispute. Paragraphs 141 through 143 are subordinate to facts found. Paragraphs 144 and 145 are contrary to facts found. Paragraph 146 is rejected in that it is not the opinion of the evaluator that matters but the language in the Section. Paragraphs 147 through 152 are subordinate to facts found. Paragraph 153 is not necessary to the resolution of the dispute. Paragraph 154 overlooks the unwillingness of the Department to allow additional time to produce a ticket given the response they made to BABN. Paragraph 155 is not necessary to the resolution of the dispute nor are Paragraphs 156 and 157. Paragraph 158 is subordinate to facts found. COPIES FURNISHED: Marcia Mann, Secretary Department of Lottery 250 Mariot Drive Tallahassee, FL 32301 Betty Steffens, Esquire Frank P. Ranier, Esquire McFarlin, Sternstein, Wiley & Cassedy Post Office Box 2174 Tallahassee, FL 32316-2174 Robert Scanlon, Esquire Department of Legal Affairs The Capitol Tallahassee, FL 32399-1050 Thomas K. Equels, Esquire Holtzman, Krinzman & Equels 1500 San Remo Avenue, Suite 200 Coral Gables, FL 33146 Clifford A. Schulman, Esquire Adrian L. Friesner, Esquire Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel 1221 Brickell Avenue Miami, FL 33131 Jim Trucks BABN Technologies Corporation 129 White Oak Drive Newnan, GA 30265
The Issue Whether Willie J. Thompson is entitled to the $5,000.00 prize for a winning lottery ticket presented by Mr. Thompson to the Department of the Lottery for collection?
Findings Of Fact Horace Bell purchased lottery ticket number 04-202290-059 (hereinafter referred to as the "Ticket") on approximately December 11, 1988. The Ticket was an instant winning ticket in the amount of $5,000.00, in the Florida Lottery's Money Tree Instant game. Willie J. Thompson drove Mr. Bell, his wife and other family members to Tallahassee on December 12, 1988, to file a claim for the prize. Upon arriving at the Lottery's offices Mr. Bell found that he did not have proper identification. Therefore, he allowed Mr. Thompson to present the ticket for collection because Mr. Thompson had proper identification. On December 12, 1988, Mr. Thompson completed a Florida Lottery Winner Claim Form (hereinafter referred to as the "Form") and submitted the Form and the Ticket to the Lottery. On the back of the Ticket Mr. Thompson listed his name and address on the spaces provided for the person claiming the prize and signed the Ticket. Mr. Thompson listed his name, Social Security Number, address and phone number on the Form. Mr. Thompson signed the Form as the "Claimant." In a letter dated December 12, 1988, DHRS notified the Lottery that Mr. Thompson owed $4,026.40 in Title IV-D child support arrearages as of December 12, 1988. Mr. Thompson has been paying his child support arrearages by having $30.00 taken out of each of his pay checks. The $5,000.00 prize was forwarded from the Lottery to the Comptroller on December 12, 1988. By letter dated December 20, 1988, Mr. Thompson was notified that the $5,000.00 prize for the Ticket he submitted was being transmitted to the Comptroller for possible payment of his Title IV-D child support arrearages. Mr. Thompson was notified by the Comptroller by letter dated December 28, 1988, that the Comptroller intended to apply $4,026.40 of the $5,000.00 prize toward his unpaid obligation. Mr. Thompson was provided a state warrant for the $973.60 balance of the $5,000.00 prize. Mr. Thompson requested a formal administrative hearing to contest the proposed action of the Comptroller. Mr. Thompson's total obligation as of the date of the formal hearing had been reduced by the court-ordered $30.00 payments he has made since December, 1988. As of the date of the formal hearing, Mr. Thompson's total obligation was $3,335.60. His obligation will reduce further by payments made up until the date of the issuance of a Final Order in this matter. Mr. Thompson should be given credit for these additional payments.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it Is RECOMMENDED that a Final Order be issued providing for payment of the portion of the $5,000.00 prize attributable to the Ticket owed by Mr. Thompson as child support arrearages as of the date of the Final Order to DHRS. The balance of the $5,000.00 prize should be paid to Mr. Thompson. DONE and ENTERED this 21st day of June, 1989, in Tallahassee, Florida. LARRY J. SARTIN 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 21st day of June, 1989. APPENDIX Case Number 89-1102 The Petitioners have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioners' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1. 1. 2. 2-3. 3. 4 and 6. 4 7. 5 9. 6 11. 7 13. 8-9 Conclusions of law. COPIES FURNISHED: Jo Ann Levin Senior Attorney Office of Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Louisa E. Hargrett Senior Attorney Department of the Lottery 250 Marriott Drive Tallahassee, Florida 32301 Chriss Walker Senior Attorney Department of Health and Rehabilitative Services 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Willie J. Thompson Post Office Box 3655 Jacksonville, Florida 32206 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts General Counsel The Capitol, Plaza Level Tallahassee, Florida 32399-0350
The Issue The issue for consideration in this case is whether Petitioner, Raymond J. Holmes, is entitled to the entire $5,000.00 won by him in the Florida Lottery or whether a portion thereof should be withheld for reimbursement of public assistance payments previously paid for the support of his child.
Findings Of Fact On May 7, 1993, a Judge of the Circuit Court of the 20th Judicial Circuit In and For Collier County, Florida, entered, in case No. 93-1327, an Order Determining Obligation And Repayment of Public Assistance for the repayment of support and repayment of foster care payments, made on behalf of Petitioner's child, Allen J. Holmes, against Petitioner, "Ray" Holmes and his wife, Rachel Holmes, in the amount of $5,439.46 plus costs in the amount of $88.20 and attorneys fees of $176.40, This amount was to be paid at a rate of $80.00 plus $3.20 clerk's fee ($83.20) per month, beginning on June 1, 1993, payments to continue until "all prior public assistance has been completely repaid." This Order was acknowledged in writing by both Petitioner and his wife. The Order also provided: ... the State of Florida, or any political subdivision thereof, or the United States, is directed to deduct from all moneys due and payable to the Respondent [Petitioner, Holmes] the amount of child support ordered above. This income deduction shall be effective immediately, and shall become binding on ... [a] comptroller or disbursing officer, the State of Florida, ... two weeks after receipt of service of this order. None of the money called for under the Court's Order has been repaid. Petitioner's one-half of the joint obligation was $2,807.93. On or about August 2, 1993, Petitioner purchased a scratch-off lottery ticket which carried a prize of $5,000.00. Petitioner immediately submitted a claim form for the award of the prize. He listed his social security number as 144-53-7433 on the form. The social security account card issued in his name reflects the correct number to be 144-52-7433 but there is no doubt the Petitioner was the individual who purchased the winning ticket. The claim form was submitted for payment to Lottery headquarters in Tallahassee. In the course of routine coordination between agencies to determine if any obligations to the state were owing by a lottery winner, the above-noted Court Order was identified and when the Petitioner's winnings were transmitted to the Department of Banking and Finance for payment, his half of the obligation was withheld and only the net amount of $2,192.07 forwarded. Thereafter, by state warrant 4-02 909 875, dated August 20, 1993, this net amount was paid to Petitioner. This figure was arrived at by deducting the amount owed by Petitioner, ($2,807.93) from the gross winnings, ($5,000.00). Petitioner was notified by letter dated August 24, 1993 accompanying the warrant of the reason for the deduction. Petitioner thereafter demanded hearing and this hearing ensued.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered denying Petitioner, Raymond J. Holmes' request for payment of $2,807.93 withheld from his lottery prize of $5,000.00 by the Department of Banking and Finance. RECOMMENDED this 9th day of December, 1993, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of December, 1993. COPIES FURNISHED: Raymond J. Holmes 3397-2 Sacramento Way Naples, Florida 33942 Scott C. Wright, Esquire Department of Banking & Finance The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza level Tallahassee, Florida 32399-0350 William G. Reeves General Counsel Department of Banking & Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350 Louisa Warren, Esquire Department of Lottery 250 Marriot Drive Tallahassee, Florida 32301 Dr. Marcia Mann, Secretary Department of Lottery 250 Marriot Drive Tallahassee, Florida 32301 Ken Hart General Counsel Department of Lottery 250 Marriot Drive Tallahassee, Florida 32301 Chriss Walker, Esquire Department of Health and Rehabilitative Services 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Kim Tucker General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Whether Leroy Smith and/or Alice Longwood are entitled to the $5,000.00 prize for a winning lottery ticket presented by Leroy Smith to the Lottery for collection?
Findings Of Fact On March 7, 1988, Mr. Smith completed a Lottery Winner Claim Form (hereinafter referred to as the "Form") and submitted the Form and a Cool Million instant-winning lottery ticket (hereinafter referred to as the "Ticket"), number 02-114569-303, good for a prize of $5,000.00 for collection. On the back of the Ticket Mr. Smith listed his name and address on the spaces provided for the person claiming the prize and signed the Ticket. The space on the back of the Ticket where the first name of the person claiming the prize was to be listed had been covered with a "white-out" material and "Leroy" written in. At the bottom of the Form Mr. Smith indicates that this was done to replace his first name for a nickname that had previously been entered on the ticket. Mr. Smith also listed his name, Social Security Number, address and phone number on the Form. Mr. Smith signed the Form as the "Claimant." In a letter dated March 8, 1988, DHRS notified the Lottery that Mr. Smith owed $7,478.20 in Title IV-D child support arrearages and $150.00 in court-ordered costs, a total of $7,628.20, as of March 8, 1988. By letter dated March 18, 1988, Mr. Smith was notified that the $5,000.00 prize for the Ticket he submitted was being transferred to the Comptroller for possible payment of his Title IV-D child support arrearages and court costs. The $5,000.00 prize was forwarded from the Lottery to the Comptroller on March 22, 1988. Mr. Smith was notified by the Comptroller by letter dated March 23, 1988, that the Comptroller intended to apply the $5,000.00 prize toward his unpaid obligation. Mr. Smith requested a hearing to contest the proposed action of the Comptroller. The Title IV-D child support arrearages and court costs owed by Mr. Smith are related to two child support cases involving Mr. Smith. First, on December 1, 1981, Mr. Smith was ordered to pay child support to Deidah Brown in an Order of Dependency and Support issued by the Circuit Court, Seventh Judicial Circuit, in and for Flagler County, Florida. On November 6, 1984, Mr. Smith was ordered to pay child support to Patti Victoria Smith by the same court. Mr. Smith's total obligation as of the date of the formal hearing was $7,348.20: $3,578.20 in public assistance arrearage, $3,620.00 in non-public assistance arrearage and $150.00 in court-ordered costs.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, It is RECOMMENDED that a final order be Issued providing for payment of the $5,000.00 prize attributable to the Ticket to DHRS. DONE and ENTERED this 22nd day of November, 1988, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of November, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1743 The Petitioners have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioners' Proposed Findings of Fact Proposed Finding Paragraph number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1-2 1. 3 1-4. 4 5. 5 6. 6 7-8. 7 10. 8 Statement of law COPIES FURNISHED: Jo Ann Levin Senior Attorney Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Leroy Smith Post Office Box 1465 Bunnell, Florida 32010 Patrick Loebig, Esquire Department of Health and Rehabilitative Services 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Louisa Hargrett, Esquire Department of the Lottery 250 Marriott Drive Tallahassee, Florida 32301 Alice Longwood Post Office Box 1753 Bunnell, Florida 32010 Rebecca Paul, Secretary Department of the Lottery 250 Marriott Drive Tallahassee, Florida 32301 Tom Bell, General Counsel Department of the Lottery 250 Marriott Drive Tallahassee, Florida 32301
The Issue At issue in this proceeding is whether Petitioner's lottery prize is subject to an outstanding debt to a state agency.
Findings Of Fact By letter of June 9, 1997, the Department of Education, Office of Student Financial Assistance (Department), notified the Department of the Lottery (Lottery) that Petitioner owed the Department $26,356.28, as of June 9, 1997, as a consequence of outstanding defaulted student loans. Thereafter, pursuant to Section 24.115(4), Florida Statutes, the Lottery transmitted the prize amount ($24,781.66), less Federal income tax withheld ($6,938.86), to the Department. By letter of June 10, 1997, the Department notified Petitioner that it was in receipt of his prize money, less Federal income tax withheld, and that, since the amount owed the Department exceeded the amount of the prize, it planned to apply the entire sum it had received ($17,842.80) to the outstanding indebtedness. The Department's letter also advised Petitioner of his right to request a formal hearing pursuant to Section 120.57, Florida Statutes, to contest the Department's decision. Petitioner filed a timely request for a formal hearing to contest the Department's decision, and the matter was referred to the Division of Administrative Hearings for the assignment of an administrative law judge to conduct the formal hearing Petitioner had requested. At hearing, the proof demonstrated that Petitioner was the recipient of three student loans, each of which was funded by Centrust Savings Bank (Centrust) and guaranteed by the Department. The first loan (No. 7701) was in the amount of $3,000, which was disbursed on December 19, 1986. The second loan (No. 557720) was in the sum of $5,000, which was disbursed on January 29, 1987. The third loan (No. 631534) was for $5,000; however, only $2,500 was disbursed. That disbursement occurred on November 26, 1987. Petitioner defaulted on the student loans, and Centrust filed a claim with the Department. The Department, as guarantor, paid the lender the amounts due on the loans as follows: A.) On August 12, 1993, the Department paid the claim on Loan No. 557720. At the time, the principal due was $5,021.562 and interest due was $1,942.59, for a total of $6,964.15. B.) Also on August 12, 1993, the Department paid the claim on Loan No. 631534. At the time, the principal due was $2,510.78, and interest due was $971.29, for a total of $3,482.07. C.) Finally, on January 20, 1994, the Department paid the claim on Loan No. 7701. At the time, the principal due was $3,118.28, and interest due was $2,458.40, for a total of $5,576.68. As of June 9, 1997, the date the Department received the proceeds of Petitioner's lottery prize, the balance due on the defaulted loans, with accrued interest, was as follows: Loan No. 7701, $7,842.80; Loan No. 557720, $9,096.52; and Loan No. 631534, $4,548.25. In total, as of June 9, 1997, Petitioner owed the Department $21,487.57, as principal and accrued interest owing on the defaulted loans.3
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which approves the application of the $17,842.80 of Petitioner's lottery prize the Department received toward the partial satisfaction of the debt owing the Department. DONE AND ENTERED this 21st day of January, 1998, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK 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 Filed with the Clerk of the Division of Administrative Hearings this 21st day of January, 1998.
Findings Of Fact At all times pertinent to the issues considered at this hearing, Respondent, Dale's Package Store and Lounge, Inc., was issued 6-COP alcoholic beverage license No. 20-0012, which permits the on-premises consumption or sealed package sales of beer, wine, and liquor and the carry out sales of open malt or vinegar spirits, but not mixed drinks. On May 13, 1983, Investigator Robert W. Cunningham visited the licensed premises based on an anonymous phone call he had received at home to the effect that a lottery was being conducted there. When he entered the lounge, he saw a poster sitting on the first table inside the door. This poster contained a list of items of merchandise or services to be given as prizes and a notation of the prices for tickets. While he was looking at this display, he was approached by a patron, Edward Hanson, who asked if Cunningham wanted a ticket. When Cunningham said he did, Hanson went to the bar, where he spoke with Cindy, the bartender, and came back with a large roll of tickets, telling Cunningham to take as many as he wished. Cunningham took three and paid the $2 which the poster indicated was the price for the tickets. Half of each ticket was put in the box for the drawing. After the ticket transaction, Cunningham went up to Cindy and asked her who was in charge. When told it was Mickey (Naomi Hunt), he went into the back room, where he found her and told her it was an illegal lottery that had to stop. He also talked at that time with Susan Roberts, a representative of the local Multiple Sclerosis Foundation chapter for whom the lottery was being conducted. Ms. Roberts advised Cunningham she had discussed the matter with one of the local assistant state attorneys, who said it was all right, but she could not recall his name. Cunningham had advised Naomi Hunt to call Mr. Eggers initially, and Eggers said he would come down. Cunningham also called his district supervisor, Capt. Caplano, because, due to the size of the crowd in the bar at the time, between 200 and 250 people, he felt he needed a backup. Caplano agreed to come down to the lounge, as well. Caplano also advised Cunningham that the procedure was an unlawful lottery and the tickets and money should be seized. When Eggers got there, he told Cunningham that the entire activity was for the benefit of the Multiple Sclerosis Foundation and that his employees had been out soliciting the donation of the prizes for months. Respondent admits the conduct of the operation as the Roadhouse Inn's participation in the fund-raising campaign of the North Florida Chapter of the Multiple Sclerosis Foundation. Respondent has been approached by that agency with a kit of fund-raising activities and ideas. Before participating in the lottery, Mr. Eggers asked and was advised by both Ms. Hunt, his employee, and Ms. Roberts of the Foundation that they had inquired into and were advised of the project's legality. If the law was violated, it was done without criminal intent and without malice. A well-intentioned effort to do some good was in error. It should be noted, however, that in January 1977, this licensee was cited by Petitioner's Agent R. A. Boyd for operating a bowling machine on the premises. If the customer bowled a high score on the machine, he or she would win something, such as a drink or a snack. This was considered gambling by Petitioner, however; and upon issuance of the citation, Respondent immediately stopped the activity. No charge was laid against the licensee for that activity. Several days after Cunningham closed down the lottery, on May 19, 1983, Beverage Officer Reeves went to the licensed establishment based on a complaint received that alcoholic beverages were being served by the drink at the curb. He went to the drive-in window of the Inn and ordered a scotch and water from Naomi. She brought him a drink in a plastic cup. From his experience, he recognized the substance as scotch and water. After getting the drink, he parked the car and went inside, where he talked with Naomi and Eggers. They indicated they did not know it was illegal to sell a drink this way. Eggers indicated at the hearing that he thought that since he could sell open beer drinks out the drive-in window, he could do the same with mixed drinks. He does not have any copy of the beverage laws, thought he was operating legally, and has been doing it without objection since 1977. Since Reeves' visit, the sale of distilled spirits by the drink through the window has ceased.
The Issue The issue is whether Respondent accessed two slot machines without logging the purposes for opening the machines, in violation of Florida Administrative Code rule 61D-14.023(2), as in effect in March and April 2010.
Findings Of Fact At all material times, Respondent has been employed as a licensed slot machine technician with Isle of Capri. A slot machine technician maintains and repairs slot machines. Respondent holds a slot machine professional individual occupational license, bearing license number 7463121-1051. As relevant to this case, a locked main door provides access to the main compartment of the slot machine. Inside the main compartment of the slot machine is the MEAL book for logging all openings of the main compartment. Within the main compartment also is a locked logic compartment, which contains the computer chip that controls the operations of the slot machine. The logic compartment is also secured by a special tape that is broken whenever someone accesses the logic compartment. Within the main compartment also are a coin hopper, which holds coins that are available for payouts, as well as a locked drop box or billbox, which holds coins and bills that are collected periodically by the drop team. Although it is not entirely clear, a belly door apparently permits access to the drop box or billbox without going through the main compartment. Several times weekly, a drop team enters each slot machine, through the belly door, to empty the drop box or billbox. On March 28, 2010, and April 2, 2010, Respondent entered the main compartments of two slot machines in connection with his employment. The MEAL book for each machine was available inside the machine to log the activity. On these occasions, Respondent did not enter the logic compartments of these two slot machines. On each of these occasions, Respondent logged the times in and out of each slot machine, but failed to log the purpose for his entering each machine. For the March 28 activity, 24 other entries are shown on the same page of the MEAL book, and all 24 report the times in and out and the reasons why the persons entered the machines. For the April 2 activity, five other entries are shown on the same page of the MEAL book, and all five report the times in and out and the reasons why the persons entered the machines. Isle of Capri determined that Respondent's failure to log reasons for entering the slot machines on March 28 and April 2 violated Isle of Capri policies. The resulting "performance document" notes that Isle of Capri had previously counseled Respondent for similar failures to make the required entries in MEAL books. The "performance document" states that Isle of Capri will retrain Respondent, but a repeat of this conduct may result in termination. As required by the performance document, to reflect understanding of the issues discussed in the document, Respondent signed the document, but did so "under protest." On November 6, 2009, Petitioner sent Respondent a "warning letter." The letter explains that, on October 20, 2009, Respondent failed to complete the MEAL book with the time in and out of a specific slot machine. The letter states that this conduct violates rule 61D-14.024, which requires a log of logic compartment door openings and closings so as to include the time and reason for the opening. The letter warns that any future violations of slot machine laws or rules could result in an administrative fine or suspension or revocation of Respondent's slot machine occupational license. On February 5, 2010, Petitioner sent Respondent a "warning letter." The letter explains that, on November 26, 2009, Respondent failed to complete the MEAL book with the time in and out of a specific slot machine. The letter states that this conduct violates rule 61D-14.023(2). The letter warns that any future violations of slot machine laws or rules could result in an administrative fine or suspension or revocation of Respondent's slot machine occupational license. Respondent offered multiple defenses, including entrapment (never explained) and unfairness (the drop team is not required to log their openings of the belly door). The lone relevant defense was that Respondent had entered the main compartment, not the logic compartment, as Count I charged. It was apparent to the Administrative Law Judge, however, that Respondent recognized this to have been a pleading error by Petitioner, and Respondent was not prejudiced by the Administrative Law Judge's allowing Petitioner to amend the Administrative Complaint to substitute "main compartment" for "logic compartment." Two important mitigating factors apply. As testified by the Isle of Capri general manager, electronic monitoring of all entries into the slot machine has rendered the rule obsolete. Likely for this reason, the current version of rule 61D-14.023 no longer contains the requirement set forth in former rule 61D-14.023(2). On the other hand, nothing in the record suggests that Respondent relied on the proposed changes to rule 61D-14.012 when he failed to record the reasons for entering the main compartment on two occasions in the spring of 2010. After observing Respondent testify, the Administrative Law Judge finds that Respondent tends to view himself as the final arbiter of the rules that govern licensed slot machine technicians. Respondent's obstinacy, recent past problems in documenting the servicing of secured areas of slot machines, and commission of two violations (although in a single count) militate in favor of a fine that will refocus Respondent's attention on the critical, well-defined role that he plays within a sensitive, carefully regulated industry.
Recommendation It is RECOMMENDED that the Division of Pari-Mutuel Wagering enter a final order dismissing Count II of the Administrative Complaint, finding Respondent guilty of Count I of the Administrative Complaint, and imposing an administrative fine of $1000. DONE AND ENTERED this 9th day of November, 2011, 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 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of November, 2011. COPIES FURNISHED: Neil E. Waigand, Jr. 906 North Riverside Drive, Apartment 8 Pompano Beach, Florida 33062-4623 David Perry, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 40 Tallahassee, Florida 32399-2202 Milton Champion, Director Department of Business and Professional Regulation Pari-Mutuel Wagering 1940 North Monroe Street Tallahassee, Florida 32399-2202 Layne Smith, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street, Suite 40 Tallahassee, Florida 32399-2202
The Issue The central issue in this case is whether Respondents are guilty of the violations alleged in the Amended Notice to Show Cause; and, if so, what penalty should be imposed.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: At all times material to the allegations in the Amended Notice to Show Cause, Respondents, Julio and Lida Diaz, d/b/a Flor-Lidita Restaurant, held alcoholic beverage license number 23-4636. This license was a 2-COP license which authorized the sale of beer and wine for the premises known as Flor-Lidita Restaurant which is located at 4762 N. W. 183rd Street, Miami, Florida. In July, 1986, the FDLE began an investigation concerning an illegal gambling lottery commonly known as "bolita" which was believed to be operating in connection with the Flor-Lidita Restaurant. The investigation undertaken involved a surveillance of the restaurant together with undercover agents who were used to frequent the restaurant for the purposes of observing activities and placing bets with the restaurant personnel. An individual identified as Rafael Rosquete was determined to be a courier who would enter the restaurant, collect the gambling paraphernalia and returns, and deliver the items to a home located in Broward County. On July 9, 1986, a police officer, Hector Zeno, working undercover in connection with the FDLE, entered the Flor-Lidita Restaurant and observed customers writing numbers on bolita slips. Officer Zeno also observed individuals placing bets with the owner, Julio Diaz. In turn, Zeno filled out a bolita slip and placed a $5.00 bet with the owner Julio Diaz. On July 16, 1986, Joyce Dawley and Jacqueline Sirven entered the Flor- Lidita Restaurant and observed customers placing bolita bets with the Respondents, Lida and Julio Diaz. These agents also observed another employee known to them as "Rolando" (later identified as Rolando Nunez) taking bets. Agents Dawley and Sirven placed $5.00 bets with Julio Diaz on this date and received carbon copies of their bolita slips. On July 22, 1986, Zeno returned to the restaurant for the purpose of observing the customers and again placed a $5.00 bet by completing a bolita slip and tendering money to Julio Diaz. During this visit Zeno observed Nunez and Lida Diaz taking money and bolita slips from other customers within the restaurant. On July 23, 1986, Dawley and Sirven returned to the restaurant and again placed two $5.00 bets with Julio Diaz. During this visit the agents observed other individuals inside the licensed premises place bets with Rolando Nunez and Lida Diaz. On July 24, 1986, Dawley and Sirven returned to the Flor-Lidita Restaurant for the purpose of picking up $70.00 in winnings which Agent Dawley was entitled to as a result of the bet she had placed the previous evening. On July 30, 1986, Dawley and Sirven went to the Flor- Lidita Restaurant and again placed two $5.00 bets. This time Lida Diaz took their money and the original bolita slips and gave them carbon copies of their bets. On July 31, 1986, Sirven entered the Flor-Lidita Restaurant for the purpose of receiving $70.00 in winnings based on the prior day's bolita bet. On August 6, 1986, Dawley entered the Flor-Lidita Restaurant, received a bolita pad from Rolando Nunez and placed a $5.00 bet with Nunez in the present of Julio Diaz. On this visit Nunez showed Dawley a ledger which contained a list of dates together with numbers which indicated the winning numbers for the dates in question. On August 11, 1986, Dawley went to the Flor-Lidita Restaurant and observed Lida and Julio Diaz receiving bolita bets from persons within the restaurant. Dawley also observed Rolando Nunez taking bets. Dawley placed a $5.00 bet with Nunez on this date. After receiving a search warrant for the Flor-Lidita Restaurant, special agents of the FDLE entered the licensed premises on August 12, 1986 and searched the restaurant. During the search, agents took possession of various items of gambling paraphernalia which included bolita betting slips, Puerto Rican lottery tickets, blank bolita pads, currency and ledger books. Over $40,000 worth of U.S. currency and gambling paraphernalia was confiscated in connection with the police raid on the restaurant and the house in Broward County. In connection with the search of the licensed premises, Joseph Ogonowski seized an open bottle of scotch whiskey which was behind the counter at the restaurant. The scotch was not listed on the menu as a designated ingredient for any of the food items available for purchase at the restaurant. During the period of surveillance of the Flor-Lidita Restaurant, Rosquete was repeatedly observed by FDLE agents. Rosquete would routinely visit the restaurant, obtain items of gambling paraphernalia including betting slips and U.S. currency, and deliver the proceeds from the restaurant to a residence located in Broward County. The gambling activities conducted on the licensed premises were open, frequent, and included the active participation of the Respondents, Julio and Lida Diaz.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Business Regulation, Division of Alcoholic Beverages and Tobacco enter a Final Order revoking license number 23-4636, series 2-COP, held by Respondents, Julio and Lida Diaz, d/b/a Flor-Lidita Restaurant. DONE and RECOMMENDED this 15th day of July, 1988, in Tallahassee, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-4620 Rulings on Petitioner's proposed findings of fact: Paragraphs 1 and 2 are accepted. With the exception of the last sentence paragraph 3 is accepted. The last sentence is rejected as speculation. Paragraph 4 is accepted. Paragraph 5 is accepted. Paragraphs 6-20 are accepted. With the exception of the last sentence in paragraph 21, which is rejected as speculation, paragraph 21 is accepted. Paragraphs 22-23 are accepted. The last two sentences of paragraph 24 are accepted. The first sentence is rejected as argument or a conclusion of law. Rulings on Respondent's proposed findings of fact: Paragraphs 1-3 are accepted. Paragraphs 4 is rejected as contrary to the weight of the evidence. Mr. Ogonowski was qualified to and did identify the substance seized as scotch whiskey. Paragraph 5 is accepted but is unnecessary to the determinations reached by this Recommended Order. Paragraph 6 is rejected as irrelevant, immaterial and unsupported by the record in this cause having previously ruled the adjudications inadmissible. Paragraph 7 is rejected as unsupported by the record in this cause. COPIES FURNISHED: Katherine A. Emrich, Esquire Assistant General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Rene Valdes 1830 N. W. 7th Street Miami, Florida 33125 Daniel Bosanko, Director Department of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32399-1000
The Issue Whether proposed rules 61D-7.021(5)(f) and 61D-7.021(5)(g) are invalid exercises of legislative delegated authority pursuant to Subsection 120.52(8), Florida Statutes (2004),2 and, if so, whether Petitioner is entitled to an award of costs and attorney's fees pursuant to Subsection 120.595(2), Florida Statutes.
Findings Of Fact Calder is a Florida corporation and a pari-mutuel permitholder permitted and licensed by the Department pursuant to Chapter 550, Florida Statutes. Calder seeks to challenge proposed amendments to Florida Administrative Code Rule 61D-7.021. Specifically, Calder challenges Subsection (5)(f), as noticed in the Florida Administrative Weekly, Volume 30, Number 32, August 6, 2004, and Subsection (5)(g), as noticed in the Florida Administrative Weekly, Volume 30, Number 21, May 21, 2004.3 The challenged amendments shall be referred to as the "Proposed Rules." The Proposed Rules provide: For tickets cashed more than 30 days after the purchase of the ticket, the ticket may not be cashed at any type of patron- operated machine or terminal. The totalisator system must be configured to instruct patrons on how to cash the ticket. The totalisator system must have the ability to identify such tickets and indicate to a teller that the ticket falls within this category. Calder is a licensed and permitted pari-mutuel facility which sells tickets and uses totalisator machines, and the Proposed Rules would govern the operation of such facility. The Proposed Rules have the effect of directly regulating the operation of Calder's pari-mutuel facility, and, as such, Calder is substantially affected by the Proposed Rules. The parties have stipulated that Calder "may properly challenge both Proposed Rules 61D-7.021(5)(f) and 61D-7.021(5)(g)." A pari-mutuel ticket evidences participation in a pari-mutuel pool. A winning or refundable pari-mutuel ticket belongs to the purchaser and may be claimed by the purchaser for a period of one year after the date the pari-mutuel ticket was issued. An "outs" or "outs ticket" is a winning or refundable pari-mutuel ticket which is not redeemed. If a ticket remains unclaimed, uncashed, or abandoned after one year from the date of issuance, such uncashed ticket escheats to the state unless the ticket was for a live race held by a thoroughbred permitholder such as Calder, in which case the funds are retained by the permitholder conducting the race. A totalisator machine is "the computer system used to accumulate wagers, record sales, calculate payoffs, and display wagering data on a display device that is located at a pari- mutuel facility." § 550.002(36), Fla. Stat. The Department was prompted to begin the rulemaking process for the Proposed Rules by two major cases involving fraud, one Florida case and one national case. The Florida case involved two totalisator employees named Dubinsky and Thompson, who allegedly accessed outs ticket information in the totalisator's central computer system, counterfeited outs tickets based on the information, and cashed the tickets at self-service machines at two pari-mutuel wagering facilities. The fraudulent conduct involved approximately $13,000. In the Florida case the fraudulent tickets were cashed several months after the tickets were said to have been issued. The fraud came to light when the ticketholder who held the true ticket attempted to cash the ticket, but could not because the fraudulent ticket had been cashed. The national case also involved a totalisator employee who cashed fraudulent outs tickets. In the national case, the fraudulent tickets were cashed less than 30 days after the date the tickets were purportedly issued. The purpose of the Proposed Rules is to deter the cashing of fraudulent tickets. The Department received comments from AmTote International, a totalisator company, at the rule workshop held during the rulemaking process and received written comments submitted by AmTote International after the workshop, indicating that the majority of tickets are cashed within six to nine days after the date of issuance. The older a ticket gets the less likely it becomes that the ticket will be cashed, and the less likely that it becomes that the cashing of a fraudulent ticket would be revealed by the true owner attempting to cash the ticket. Staff of the Department felt that by requiring that outs tickets older than 30 days be cashed by a live person, a thief would be deterred because he would be dealing with a person rather than a machine. The only thing that the self- service machine requires to redeem a ticket is a bar code, so it would be possible to submit a ticket containing nothing but the bar code and receive a voucher which could be submitted to a teller for money.4 If the fraudulent ticket looks different in anyway from a valid ticket, a teller may be able to spot the difference and question the transaction. Calder argues that the way to deter the fraud which has occurred is to stop totalisator employees from being able to print fraudulent tickets. However, the Department is also concerned about computer hackers potentially getting into the computer system which contains the outs tickets numbers and copying the bar code which could be submitted to a self-service machine. By regulating the method of cashing outs tickets, the Department is attempting to deter fraud by totalisator employees and others who may be able to access outs tickets information which could be used in producing counterfeit tickets. During the rule making process, the Department held a workshop, received written comments from the public, and held a hearing to receive comments from the public after the Proposed Rules were first noticed. The Department considered the comments it received and modified the Proposed Rules as noticed in the Notice of Change published on August 6, 2004, to accommodate some of the comments. Calder did not submit a good faith, written proposal for a lower cost regulatory alternative within 21 days after the notice of the Proposed Rules was published in the Florida Administrative Weekly on May 21, 2004, or after the Notice of Change was published.
