The Issue The State of Florida, Department of Lottery, (the Lottery), received responses to its request for proposals to provide for a gaming system and services for the Lottery, RFP No. 95/96-001/R (the RFP). GTECH Corporation (GTECH) and Automated Wagering International, Inc. (AWI) were respondents to the RFP. The respondents did not contest the Department's determination under Part I finding GTECH and AWI preliminarily responsible and responsive vendors in that the vendors had shown financial responsibility, security and integrity. The Lottery then considered the responses by GTECH and AWI to Part II, the technical proposals by the vendors. Part II also examined responsiveness, responsibility, financial responsibility, security, and integrity. Subsequently the Lottery determined to commence negotiations for the award of a contract to provide the gaming system and services called for in the RFP. AWI was the proposed awardee based upon higher scores it received in competition with GTech under Part II. GTECH opposes the decision to award a contract to AWI. In its challenge GTECH contests the proposed agency action to award to AWI based upon a claim that AWI is not a responsive or responsible bidder to Part II. GTECH also contests the manner in which the Lottery performed its evaluation to determine the proposed awardee based upon scores assigned for Part II, assuming that AWI was determined to be a responsive and responsible bidder. Finally, GTech challenges the Lottery proposed decision finding AWI financially responsible. The hearing de novo was conducted to determine whether the Department's proposed agency action was contrary to its governing statutes, rule or policies or specifications in Part II. This recommended order examines whether the proposed agency action as challenged by GTECH was clearly erroneous, contrary to competition, arbitrary or capricious. Section 120.57(3)(f), Florida Statutes (1996 Supp.).
Findings Of Fact The Lottery was created to implement the purposes of s. 15, Art. X of the Florida State Constitution to raise additional monies to provide for education through its operation of lottery games. The Lottery's responsibilities are described in Chapter 24, Florida Statutes. Included among its opportunities is the right to enter into contracts for the purchase, lease, or lease- purchase of goods or services necessary to carry out its function. Section 24.111, Florida Statutes (1996 Supp.). GTECH and AWI are foreign corporations authorized to do business in Florida. AWI is a wholly-owned subsidiary of Video Lottery Technologies, Inc., (VLT). The companies are engaged in the provision of goods and services as described in Section 24.111, Florida Statutes (1996 Supp.). AWI is the current provider of goods and services to the Lottery common to those sought by the RFP. OVERVIEW OF THE RFP The Lottery issued RFP No. 95/96-001/R entitled Request for Proposal for a Gaming System & Services for the Florida Lottery. GTECH and AWI submitted proposals. The RFP was divided into Parts I and II. Part I addressed the requirements that the proposers establish financial responsibility, security and integrity as contemplated by Section 24.111, Florida Statutes. Part II addressed management requirements, technical specifications, operations and security, marketing, Certified Minority Business Enterprise requirements (CMBE) and price proposals of the respective vendors. The Lottery issued Part II on September 29, 1995. GTECH and AWI submitted their proposals for Part II on December 15, 1995, together with supplemental information in response to Part I. On May 7, 1996, the Lottery issued its "Notice of Responsiveness and Notice of Responsible Respondents". The Lottery found both GTECH and AWI to be responsive and responsible offerors as contemplated by the requirements in Part I. No challenge was made to the agency decision related to Part I. There had been a challenge to the specifications set forth in Part I, which was later resolved. This intervening challenge caused a delay in opening of the responses to Sections 1 through 5 to Part II. The responses by GTECH and AWI were opened on August 23, 1996. But the cost proposals in response to Part II were sealed and not opened until all other responses to the remaining sections to Part II had been evaluated and scored. The vendors also submitted information in response to Part II, Section 6, calling for a commitment to provide services in accordance with the CMBE Program. That program calls for the commitment to use a percentage of services by CMBEs in delivering the goods and services through the principal contractor. On October 31, 1996, the Lottery issued its notice of award, responsiveness and responsibility declaring AWI to be the highest ranked vendor. Based upon this notice the Lottery intended to award a contract to AWI contingent upon the ability to successfully negotiate a contract with AWI to deliver the goods and services called for in the RFP. In arriving at its proposed decision the Lottery relied upon an evaluation committee to evaluate and score responses to Part II, Sections 2 through 5. Scoring for Part II, Sections 6 and 7 was performed by other persons employed by the Lottery not associated with the evaluation committee. Following receipt of notice of the proposed agency decision to award to its competitor, GTECH filed a formal written protest and petition for formal administrative hearing with the Lottery. The filing date was November 5, 1996. In its protest GTECH challenged the preliminary decision by the Lottery in many particulars. Eventually the case was referred to the Division of Administrative Hearings to conduct a hearing consistent with Section 120.57(1), Florida Statutes (1996 Supp.). While the case was pending before the Division of Administrative Hearings GTECH was allowed to file an amended formal written protest and petition for formal administrative hearing. Given the nature of the challenge to the proposed agency action, some attention is devoted to the terms in Part II that describe the manner in which the vendors must provide information in their proposals and the Lottery shall evaluate that information in deciding between competing proposals. Part II, Section 1 is entitled: PURPOSE AND GENERAL INFORMATION. Subsection 1.1, INTRODUCTION, states: This request for proposal ("RFP") has been issued by the Florida Department of Lottery ("Lottery") to obtain sealed proposals for Gaming System and Services. This is a Major Procurement as defined in Section 24.103, Fla. Stat. * * * Sections 2, 3, 4 and 5 of this RFP, Part II, define the gaming system and services that the Lottery requires in terms of the desired outputs (i.e. functions, game style, reports). Section 6 [sic] requires each Respondent to provide a price proposal for providing and operating the total system. . . . The Lottery reserves the right to select the proposal(s) or concept that is in the best interest of the State, and 'provides the greatest long-term benefit to the State with respect to the quality of the products or services, dependability and integrity of the vendor(s), dependability of the vendor's products or services, security, competence, timeliness, and maximization of gross revenues and net proceeds over the life of a contract' Chapter 24.105(14), Fla. Stat. Respondents who are determined to be responsive and responsible pursuant to RFP Part I, and whose technical proposals under RFP Part II are determined to be responsive to the requirements of RFP Part II, will have their technical proposals submitted to an evaluation committee for evaluation. Thereafter, price proposals will be opened, responsiveness determined, tabulated and points awarded as provided herein. Contracts negotiations may then be commenced with the Respondent with the highest overall score. Part II, Subsection 1.2 LOTTERY OBJECTIVES, states the purpose of the solicitation: . To obtain a gaming system and related services to meet the needs of the Lottery for the term of the contract. . To obtain a gaming system and related services that are operationally sound, incorporate a high level of integrity and security, and minimize risks to the Lottery. . To convert retailer terminals to the new gaming system. Part II, Subsection 1.3 GLOSSARY OF TERMS, includes the following definitions: Responsible Respondent - A Respondent judged by the Lottery to be fully capable of providing the services required, considering security, integrity and financial condition. Responsive Proposal - A proposal submitted which conforms in all material respects to the RFP. Part II, Subsection 1.7 TIMETABLE, states, in part: Part II technical proposals will remain sealed until the Lottery makes a determination of responsiveness and responsibility of the RFP Part I submissions and posts a notice accordingly. After the notice has been posted, the Lottery will open the Part II technical proposals. The weights to be accorded to the evaluation criteria will be announced and posted prior to the opening of the technical proposal. The Lottery will make a determination of RFP Part II technical responsive proposals and responsible Respondents. Responsive technical proposals of responsible Respondents will be presented to an Evaluation Committee to evaluate and score in accordance with the criteria as specified herein. During evaluation of technical proposals, the Evaluation Committee may, at its sole discretion, require oral presentations or demonstrations as described in Section 3.11, of all responsible Respondents who submitted responsive technical proposals. Part II, Subsection 1.18, MANDATORY REQUIREMENTS, states: 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. Part II, Subsection 1.19, NON-RESPONSIVE PROPOSALS, NON-RESPONSIBLE RESPONDENTS, states: Proposals that are deemed non-responsive and proposals that are submitted by non- responsible Respondents will be rejected. A non-responsive proposal is one that does not meet all material requirements of the RFP. Material requirements of the RFP are those set forth as mandatory or without which an adequate analysis and comparison of proposals is impossible, or those which affect the competitiveness of proposals or the cost to the State. The Lottery reserves the right to determine which proposals meet the material requirements of this RFP. A non-responsible Respondent is one who fails to demonstrate financial responsibility, security and integrity. * * * Subsection 1.20, SUBMITTAL REQUIREMENTS, states in part: Technical Proposal The Respondent must completely describe, in detail, the Respondent's methodology, equipment, software, and the benefits of using the Respondent's system and the proposed communications network. The technical proposal shall support the Respondent's basic capability to convert/implement, operate, and maintain the proposed system. CMBE Proposal The Respondent shall submit its CMBE utilization proposal in format of Attachment "C" to this RFP. The CMBE utilization proposal shall not be submitted in any other format. The CMBE utilization proposal must be separately sealed. Subsection 1.21 ACCEPTANCE OF PROPOSALS BY THE LOTTERY, states in part: . . . The Lottery may reject any proposal if it is conditional, incomplete, fails to meet mandatory requirements, or contains any irregularities. The Lottery may cancel the RFP if it is deemed by the Lottery to be in its best interest. Issuance of this RFP in no way constitutes a commitment by the Lottery to award a Contract. Subsection 1.35 CHANGE OF FINANCIAL CONDITIONS, states: If a Respondent who has submitted a proposal in response to this RFP experiences a material adverse change in financial condition prior to the award of the Contract or if the Contractor experiences a material adverse change in financial condition during the term of the Contract with the Lottery, the Contract Manager must be notified in writing at the time the change occurs. Part II Subsection 1.46, ADDITIONAL INFORMATION AND COMMENTS, states: The Lottery reserves the right to request additional information from the Respondent in order to make a thorough review and fair comparison of all proposals submitted. Part II, Section 2 is entitled: MANAGEMENT REQUIREMENTS. Subsection 2.1, EXPERIENCE OF RESPONDENT, states in part: The Respondent shall describe in detail its experience and that of its substantial subcontractors in operating lottery on-line games and instant ticket gaming systems. . . Subsection 2.1 goes on to describe the specific information required to comply with the statement of experience called for in the subsection. Part II, Section 3 is entitled: TECHNICAL REQUIREMENTS. Within Part II, Section 3 is Subsection 3.1, PURPOSE AND INTRODUCTION, which states in part: The requirements that follow represent the Lottery's current and planned business practices. . . . These Lottery gaming system and services include: . On-line games; . Instant ticket validation and accounting; . Primary and back-up computer system and facilities; and . Repair, maintenance, and updates of equipment and software. Each Respondent must describe and discuss in detail its proposed solution to each of the requirements. The Lottery is interested in realizing the benefits of new mainstream technology. The Respondent is to describe clearly what benefits its systems derive from new mainstream technologies and how these benefits will be delivered by these systems, wherever applicable. Because this RFP contemplates a contractual relationship with the Contractor to achieve the common goal of maximizing the long-term proceeds from the Lottery going to education in the State of Florida, the Respondent shall describe any additional or alternative functionality which it can offer in setting this goal. Respondent shall at a minimum offer to provide any lottery gaming systems, equipment, games or play styles that it provides or offers to provide to any other Lottery. Included within the Part II, Section 3, TECHNICAL REQUIREMENTS are the broad categories of systems and equipment to be proposed. This includes Subsections 3.2 SYSTEM CONFIGURATION REQUIREMENTS, 3.3 COMMUNICATIONS NETWORK REQUIREMENTS, 3.4 TERMINAL REQUIREMENTS, 3.5 ONLINE TICKET AND GAMING REQUIREMENTS, 3.6 INSTANT TICKET GAMING REQUIREMENTS, 3.7 INTEGRATION WITH LOTTERY SYSTEMS, 3.8 REPORTING REQUIREMENTS, 3.9 SOFTWARE QUALITY REQUIREMENTS, 3.10 ACCEPTANCE TEST REQUIREMENTS and 3.11 PRESENTATION OF THE PROPOSED SYSTEM. Under Subsection 3.2 SYSTEM CONFIGURATION REQUIREMENTS is found 3.2.1 General System Requirements, which states in part: The Respondent must propose a system capable of meeting the Lottery's current needs and expanding to meet the Lottery's needs as they expand throughout the term of the contract. . . . * * * All the computers, peripherals, terminals and communications equipment proposed by the Respondent must be new and reflect current technology. Under the SYSTEM CONFIGURATION, 3.2.6 describes System Performance as: The Contractor's system must provide at a minimum, the following levels of system performance at all times during the life of the Contract . Throughput of one hundred-fifty thousand (150,000) transactions per minute continuously. . Each single play ticket must be produced in no more than four (4) seconds from completion of data entry ("send" button is pressed or play slip is inserted) to completion of the ticket printing (cut). . Variable length, multi-play [up to ten (10) panels] tickets must be produced within six (6) seconds after completion of data entry. . Validation of on-line and instant tickets within five (5) second after the ticket is read (for dial-up transactions, the clock starts after the communications session is established). . Cancel tickets within five (5) seconds after the ticket is inserted. . Process inventory transactions within five (5) seconds after the completion of data entry. . Dial-up terminals should complete dialing and establish a communications session in twenty (20) seconds or less. Within Subsection 3.3 COMMUNICATIONS NETWORK REQUIREMENTS is 3.3.2 Design Requirements which states: The Network Design Requirements include, but are not limited to the following: * * * The specific requirements are then detailed. Under Subsection 3.4 TERMINAL REQUIREMENTS is set forth 3.4.1 Retailer Terminals which describes the number of on-line and instant ticket retail terminals contemplated for delivery at various intervals within the contract period. Within the description of requirements for retailer terminals are eighty specific categories of features that are identified as “MANDATORY REQUIREMENTS TERMINAL FUNCTION/CHARACTERISTICS” which pertain to on-line and instant ticket retailer terminals, but not in all instances. Under 3.4.1 Retailer Terminals prior to the language “Mandatory Requirements Terminal Function/Characteristics” the vendors are instructed that: . . . The Respondent must indicate and describe its ability to meet each mandatory requirement. The Respondent shall also describe any additional features which are available. There is a description at 3.4.2 MANAGEMENT TERMINALS which details the numbers of management terminals to be provided. About these terminals it is stated: All management terminal workstations must be a new manufacture using the most current technology and possess the following features and capabilities. It then describes the specific requirements for features and capabilities. Other provisions within Section 3 describe specific requirements for minimum compliance with the terms of the RFP, for example, 3.6.13 Retailer Terminal Functions-Instant Ticket System states that: The instant ticket functionality of the retailer terminals must include, at a minimum: This is followed by the requirements envisioned by Part II. It can be seen that the provisions include both minimum requirements and the expectation that the proposals in response to the RFP may contain additional features that exceed the minimum expectations and alternative features. Within Subsection 3.11 PRESENTATION OF THE PROPOSED SYSTEM is 3.11.1 Technical Support which states in part: The Lottery requires that all equipment and software proposed at a minimum, be capable of a demonstration which indicates the Respondent's ability to meet or exceed the Lottery's requirements for a Lottery gaming system(s). Evidence of the Respondent's technical ability and its capability to implement Lottery games functions is expected. It is desired that every software item in the proposed configuration currently be operational in some lottery setting. However, hardware products proposed must be in manufacture or ready for manufacture and delivery to customers. The demonstration(s) may consist of an on- line gaming simulation at one of the Respondent's operations facilities, or presentations at some other appropriate and mutually agreeable venue. The Lottery will allow a maximum of one (1) business day, exclusive of travel, for the Respondent's demonstration. The Respondent must include in the proposal the recommended site to be used for demonstration(s). The Lottery reserves the right to require additional or extended site visits. The items to be demonstrated are not limited in any way; however, the following areas should be included: The RFP goes on to describe what must be demonstrated. Again, it is anticipated that the vendors must meet but can exceed the Lottery’s requirements for the Lottery gaming systems and offer alternatives. Part II, Section 4 is entitled: OPERATIONS AND SECURITY. It includes Subsections 4.1 CONSUMABLE SUPPLIES, 4.2 FACILITIES, 4.3 FIELD OFFICES, 4.4 FIELD SERVICE, 4.5 SUPPORT SERVICE, 4.6 CORPORATE SUPPORT AND CAPABILITIES, SUBSECTION 4.7 “RETAILER HOTLINE” SERVICES, 4.8 SECURITY, 4.9 BUSINESS RECOVERY, 4.10 INCIDENTS AND ANOMALIES, 4.11 OFF-SITE DATA STORAGE REQUIREMENTS AND 4.12 CONVERSION PLAN. Part II, Section 5 is entitled: MARKETING REQUIREMENTS. Within Section 5, Subsection 5.1 MARKETING SUPPORT, states in part: . . . [t]he respondent shall describe its experience with lottery marketing programs and the type of support the Contractor proposes to provide the Lottery. Subsequent subsections within Section 5 discuss the vendor’s need to describe the proposed development of on-line lottery games, promotions at the retailer terminal, remote sales and training for retailers and lottery staff. Part II, Section 6 is entitled: CERTIFIED MINORITY BUSINESS ENTERPRISE UTILIZATION. That section makes it incumbent on the vendors to propose the use of ten percent (10%) CMBEs. The vendors could get credit for an additional ten percent (10%) CMBEs in scoring their respective proposals. Section 6 states in part: The Contractor will be required to annually expend to CMBE's during the life of the Contract a minimum of ten [percent (10%) of the compensation paid to the Contractor by the Florida Lottery. Each Respondent will provide as part of its technical proposal a CMBE Utilization Plan. The plan shall be clear, direct, and unambiguous, show an appropriate understanding of its purpose, and include: . An unequivocal commitment to a definite percentage of expenditure of funds to State of Florida CMBEs; . Identification of type of goods and services utilizing CMBE utilization; . Identification of each CMBE to be utilized (Provide copy of current Minority Commission certificate or application); . A full range of strategies to ensure maximum minority utilization; and . Identify the amount projected to be paid to each CMBE. Each Respondent shall ensure that the amount of its price proposal cannot be deduced by calculation from the details of its CMBE utilization plan. * * * A respondent may receive up to five (5) bonus points for proposing a CMBE utilization percentage that exceeds the required ten percent (10%) minimum of the Contractor's compensation to be paid to CMBEs. One (1) bonus point will be awarded for each two percent (2%) increment that exceeds the ten percent (10%) minimum for up to five (5) bonus points. Any partial percentage proposed which is less than a two percent (2%) increment will not receive a point award. Additional CMBE utilization shall be proposed on Attachment "C" hereto. In computing percentages, the Respondent is to assume annual on-line sales of one billion seven hundred ten million and five hundred fourteen thousand dollars ($1,710,514,000.). Attachment “C” was provided to the vendors in the following format: [Name of Respondent] will expend annually at least percentage of compensation to CMBEs, above the required ten percent (10%). Identified below are the names and addresses of the CMBEs to be utilized and the types of services to be performed. Part II, Section 7 entitled: PRICE PROPOSAL explains the manner in which the vendors should analyze, prepare and quote the proposed price as a percentage of net on-line sales. Attachment “B” which is referred to in Section 7 breaks out those percentages for the five years contemplated by the contract and the two renewal terms which are two years each. The formula for scoring the price proposals is detailed in Subsection 8.4 EVALUATION OF PRICE PROPOSALS which states: After the technical evaluation process has been completed, the price proposals will be opened and future year's prices will be reduced to present value. Points for the qualifying price proposals will be assigned based strictly on the formula detailed below. LC/PC Weight = Score Where: Weight = twenty percent (20%). LC = The lowest cost offered in any proposal being evaluated. PC = The cost offered in proposal being scored Although Attachment “B” carries forward the percentage estimate for net on-line sales through the two renewal terms, the Lottery in response to a question posed by GTECH stated that only the base five years in the original contract would be considered in scoring the price proposals. In fact, when the price proposals were evaluated and scored the Lottery took all nine years into account. The Lottery changed its approach based upon requirements set forth in Section 287.057(2), Florida Statutes, that makes it necessary for the agency to consider the entire price proposal by a vendor for all periods. In reliance upon the answer to its question GTECH submitted its price proposal believing that only the first five years would be used to evaluate its price proposal. Part II, Section 8 is entitled: EVALUATION. It explains in a limited manner the nature of the process to determine the winner in the competition for the contract. Subsection 8.1 INTRODUCTION states in part: The Lottery will conduct a comprehensive, fair and impartial evaluation of responsive proposals of responsible Respondents. To make this determination, an evaluation committee will be established to evaluate the management, technical, operations/security, and marketing proposals. The purpose of the evaluation committee will be to review the proposals and assign point values to each of the scoring criteria. The evaluation process may include the following phases: . Examination for compliance with proposal submission requirements and the contractual provisions. . Evaluations of Technical, Management, Operations/Security, and Marketing requirements. . On-site inspections and demonstrations. . Evaluation of the Price Proposal. . Evaluation report and recommendation. . . Subsection 8.2 EXAMINATION FOR COMPLIANCE states: The purpose of this review is to determine if each proposal has complied with RFP instructions, and is responsive. Proposals that do not satisfy the mandatory requirements or that are so incomplete as to preclude evaluation, will be rejected. Further 8.3 EVALUATION OF PROPOSALS states: The following proposal Sections will be evaluated: Management Proposal (Section 2) - weight fifteen percent (15%) - Consideration will be given, but not limited, to the following elements: . Respondent's relevant experience . Respondent's relevant disclosures Technical Proposal (Section 3) - weight forty percent (40%) - Consideration will be given, but not limited, to the following elements: . Terminal Capability (On-Line and Instant) . On-Line System Capability . Instant Ticket System Capability . Gaming Software Operations/Security Proposal (Section 4) - weight fifteen percent (15%) - Consideration will be given, but not limited, to the following elements: . Facilities Management Capability . Security Plan . Business Recovery Plan . Conversion Plan Marketing Proposal (Section 5) - weight ten percent (10%) - Consideration will be given, but not limited, to the following elements: . Marketing Support Proposal . Respondent's Relevant Experience in Game Development and Enhancement . Terminal Promotions . Training The weight factors assigned represent a portion of 100 hundred percent (100%). The scores assigned to each Section under Section 8.3 will be totaled and added to the score assigned under Section 8.4 and 8.5 to arrive at a total score for each proposal. Subsection 8.5 EVALUATION OF CMBE PROPOSALS states: The bonus points to be awarded each Respondent will be determined in accordance with Section 6. Subsection 8.6 TOTAL SCORE states: The total score for each Respondent shall be the sum of the scores determined in Sections 8.3, 8.4, and 8.5 above. The Respondent with the highest score will be ranked as the preferred source. The maximum total score will be one hundred and five (105) points: eighty (80) points for technical, twenty (20) points for price, and five (5) bonus points for CMBE utilization. Within Subsection 8.7 RECOMMENDATION AND NEGOTIATION is 8.7.1 Recommendation which states: Upon completion of the evaluation and scoring, the Evaluation Committee shall rank the proposals in the order of preference deemed to be the most highly qualified to perform and provide the requested gaming system and services. The ranking will be provided to the Contracting Officer. EVALUATION CHECKLIST AND OTHER DETAILS In addition to the explanations given in the RFP which have been detailed concerning proposal requirements and evaluation methods, the Lottery provided each evaluator of the evaluation committee with a form referred to as a “Gaming System and Services Evaluation Checklist.” This form was intended to assist the evaluators in performing their duties. In its introduction the evaluation checklist states: The technical proposals are to be evaluated based upon the criteria set forth in the RFP. They are not to be evaluated based on criteria not set forth in the RFP. Each and every criterion expressed in the RFP is to be applied by all members of the Evaluation Committee to each proposal considered. In each scored area, award points available corresponding to: Outstanding A percentage of points which is 81-100% of points Good 61-80% of points Fair 41-60% of points Poor 0-40% of points The evaluation checklist then contained a summary of the various sections to be evaluated by the evaluators with a line provided for the entry of scores for those sections under consideration. To further assist the evaluators, information was provided which established the range of points that could be awarded for each section depending upon whether the assessment led to the conclusion that the proposal was outstanding, good, fair or poor in relation to a specific section. For example, Section 2 carried a maximum of fifteen points. Therefore, outstanding would be 12 to 15 points, good 9 to 12 points, fair 6 to 9 points and poor 0 to 6 points. In the final analysis the evaluators used the evaluation checklist to record points for those sections that they were responsible for evaluating, Sections 2 through 5. The overall method of the establishment of scores for the respective sections to Part II comports with the requirement at Subsection 1.7 E that weights be accorded the evaluation criteria and be announced and posted prior to the opening of the technical proposals. The term "criteria" refers to the requirements set out in Part II. The Lottery must then assign the points described in Section 8 as percentages, through a competitive process to arrive at the highest ranked competitor. This task must be accomplished in a manner that is other than clearly erroneous, contrary to competition, arbitrary or capricious. The information in Section 8 concerning weights to be assigned the respective sections to Part II, as augmented, also comports with Section 287.057(2), Florida Statutes, related to the need to include the criteria, requirements, for determining acceptability of the proposals. Outside the evaluation performed by the committee members for Sections 2 through 5, Marvin Doyal, Inspector General, Florida Department of the Lottery, determined the points assigned to the price proposals related to Section 7. Patti Osburn, Purchasing Manager for the Lottery, evaluated the vendor responses to Section 6. In doing so Ms. Osburn used a responsiveness checklist related to the CMBE utilization plan for the vendor. Notwithstanding that Part II contemplated that the proposals submitted by GTECH and AWI would be compared to determine the best proposal, the evaluation committee through the exercise of independent judgment by the individual committee members was allowed to determine occasions when proposals would be considered solely on the basis of meeting minimum standards established in Part II and those occasions where a more subjective analysis would be made to decide which vendor had the better proposal in a given section under evaluation. No direction was given the evaluators by the Lottery concerning those instances where the aspect of the proposal under consideration would be examined for responsiveness to minimum standards and those instances in which additional assessment would be performed in comparing the proposals, where consistent with Part II, the vendors have proposed to do more than the minimum requirements. The individual committee members were left with their own devices in making this determination. The only reasonable construction that may be given to Part II and its intentions concerning responses to Part II would be to determine compliance with minimum requirements outlined, and to also examine the responses in those particulars where the vendor proposes more than a minimum response. The committee members might conclude that the features proposed by the vendors beyond any minimum expectations outlined in Part II were not useful. Nonetheless, the committee members were obligated to examine those features in the respective proposals which were more than the minimum. Then if found useful, they should have compared those additional or alternate features to any comparable proposal by the competitor for scoring purposes or unilaterally credit the vendor where there were no comparables. This approach was not discretionary. Moreover, Part II in great measure was devoid of particulars in establishing specific requirements for proposals. In those instances the vendors were expected to suggest their solutions and they were to be assessed and scored comparatively, typical of RFPs. Ultimately, having prepared themselves to perform the evaluation, by means that will be described in more detail, the evaluation committee convened in a meeting and examined the proposals for Sections 2 through 5, section by section. This process was a free ranging discussion and committee members could raise any concerns which they had. The scoring that was done in relation to a given section was performed individually by having the committee member identify the number of points which he or she intended to assign for each section and its subordinate parts related to each vendor. By this process, the subparts to the individual sections were examined but no instructions were given to the evaluation committee that led the members to assign specific points for a subpart in a given section. The guidance was that within the maximum available points for a section the individual evaluator had to determine the number of points to award the vendor, using his or her own method to determine the importance of subparts and how those subparts might affect the score for the section. In performing their task the evaluators had the advantage of the scoring chart which referred to percentages of the points for outstanding, good, fair or poor proposals related to a section. The committee members did not discuss the scores that they individually intended to assign to sections within the proposals while taking part in the evaluation meeting. No committee member was the dominant figure in this process. Nothing in the statutes, rules, RFP or policies utilized by the Lottery in evaluating responses to requests for proposals prohibits the Lottery from having individual committee members independently evaluate the proposals consistent with the expectations set forth in the RFP. The consequences associated with this technique, would be, to the extent that the individual evaluators misapprehend their assignment and act contrary to the controlling statutes, rules, policies or the RFP, when performing the evaluation of the proposals, that conduct could be considered clearly erroneous, contrary to competition, arbitrary or capricious. In that instance the Lottery would be made to suffer the decision not to impose a more uniform approach to the task of evaluation. Given the extremely technical nature of Part II, the evaluators needed to be sufficiently informed about the technology within the proposals to conduct a meaningful comparison of the proposals. ACTIVITIES THAT PRECEDED EVALUATION AND SCORING Frank Carter is the Director of Security for the Lottery. As part of the evaluation process he had his staff create a responsiveness checklist to compare proposals against specific requirements within Part II. Mr. Carter instructed his staff to go through Part II and based upon its terms prepare a list of items that were to be included in the responsiveness checklist. Staff members involved with the initial review of the proposals and execution of the checklist were Lyn Jones, Jodie Clark and Jeanette Austin. The level of understanding by the staff members assigned by Mr. Carter to prepare the checklist and compare the proposals to that checklist was sufficient to determine whether a response had been given in the proposal to a requirement set out in Part II. Staff members were not technically qualified to judge the merits of the response. Their activity involved a review for completeness of the proposals, not an assessment of the quality of the proposals made in response to the Part II. At a subsequent meeting of the Lottery staff, not including the evaluation committee members, a more discrete evaluation of proposals was made but not for all items. This limited review was designed to examine whether certain items within the proposals were responsive to Part II. The meeting which convened to consider particular aspects of the proposals included Mr. Carter, Mr. Doyal, David Columbo, the Lottery Assistant Secretary for Operations, Denise Rodenbough, Information Resource Manager II for the Lottery and John Stacklyn. No other attempt to determine the overall responsiveness of the proposals to the requirements of Part II was made prior to the hearing de novo. In September 1996, the evaluation committee had been formed and began to undertake its assignment leading to the evaluation and scoring of the proposals. In a meeting of the evaluation committee conducted at the inception of the process leading to the evaluation and scoring of the proposals, the committee members were provided with copies of the proposal. Remarks by Kenneth Hart, General Counsel for the Lottery, reminded committee members that they should not meet outside of the framework of a convened session of the committee for purposes of discussing the proposals. At an early meeting, Mr. Hart told the evaluation committee that if it needed to acquire information of a technical nature to assist in understanding the proposals, the committee could have someone who was expert in a particular technical area come and talk to the evaluation committee, as well as benefiting from the technical insights held by committee members. In this process Mr. Columbo also conducted a class in what is referred to as "Lottery 101". This class was primarily for the benefit of committee members who were not employed by the Lottery. In the "Lottery 101" course Mr. Columbo gave an overview of the current operation of the Lottery and the lottery industry as a whole, together with a historical perspective of contemporary lotteries. In this instruction Mr. Columbo discussed in general terms the nature of the instant and on-line portions of the Lottery as it operated at the time of the explanation. Following the "Lottery 101" meeting, a meeting was held to address technical aspects of the proposals. The principal presenter at the meeting was the committee member William Hunter. He was called upon to address the committee based upon his understanding of the current Lottery System and its basic technical features. This presentation was made in addition to answering questions that other committee members had about the pending proposals. Mr. Hunter provided the committee members with a graphic depiction of the information resource management currently employed by the Lottery. This diagram set forth the models of equipment, the location of the equipment, with the division of that equipment between the Lottery and AWI and the control of specific equipment being portrayed. The diagram also showed the interfaces of the equipment through a "ring network". As with other evaluators who spoke at this meeting, and on other occasions, when the evaluation committee was assembled, William Hunter was expected to distinguish between his remarks that he offered that were described as factual and the remarks that constituted his opinion. The attempt at explaining the chart that described the current lottery operation was not as a means to contrast that experience with what had been requested for proposals to Part II. In the discussions Mr. William Hunter told the committee members that the mainframe environment proposed by GTECH in its response had two operating systems whereas AWI had one operating system. William Hunter explained to the committee members that in the Lottery's experience it is more difficult to manage multiple operating systems in that the Lottery staff would have to have competence to operate both systems. In reality, GTECH had proposed operating systems in the mainframe environment that depicted one operating system for which the Lottery employees would be responsible. However, at hearing William Hunter explained that the data base machine depicted as an operating system that was prospectively run by GTECH would be moved to allow the Lottery employees to operate the equipment, making the Lottery ultimately responsible for two operating systems in the mainframe environment. William Hunter offered this comment on the basis that the Lottery and GTECH would negotiate to move the data base machine from GTECH to the Lottery if GTECH was selected. AWI had proposed the IBM RS6000, Model 24 as its primary processing unit (CPU). Alternatively, it proposed the IBM RS6000, Model 30. GTECH proposed DEC Alpha 2100 as its primary processing unit. In discussing the relative merits of the CPUs at the meeting, William Hunter limited his comments to a general question about scaleability or expandability of the competing systems to the effect that the competing proposals were both adequately scaleable for foreseeable needs. This meant that the proposed CPUs would both respond to the computing needs that the Lottery had for the foreseeable future, in his opinion. In the context of Part II this refers to the basic contract period with the two periods of extension. No detailed discussion was given concerning the basic architecture of the CPUs during the meeting. In the meeting William Hunter told the other committee members that the centralized data base, Oracle, proposed by AWI was the preeminent data base. The centralized data base proposed by GTECH was described as being the preeminent data base in the past, but not at the time the meeting was held. William Hunter did not further explain what he meant by preeminent. Nor did he make any comparative analysis of the two centralized data bases. In the meeting William Hunter explained that at the time the present operating environment was changed to that contracted for under the RFP, should GTECH win the competition, two retailer terminals would be in place for a period of time during the conversion period and that this would be inconvenient for the retailers. This remark was made in response to a question about the conversion from the current system run by AWI to a system run by GTECH, if GTECH won the bid. He told committee members that counter space was in very high demand at most of the retailer locations and that the least amount of disruption in use of counter space would be better for the retailer. During this presentation the only comments about telecommunications proposed by the vendors was related to the intention to set up a meeting with someone else to explain telecommunications in general terms. In connection with the need for the proposers to comply with the requirements for dual security numbers on lottery tickets, William Hunter made the statement that GTECH might not have understood the reasons why the Lottery had framed its requirement on dual security numbers. That requirement was that the instant ticket transaction not go through the central system controlled by the vendor. He explained to the other committee members that the intent of the RFP was to provide security from compromise by the vendor. The reason for Mr. Hunter's belief in the uncertainty as to GTECH's understanding of that requirement was in association with the GTECH detailed description of a solution that allowed the vendor to control the instant ticket transaction with an alternative solution that did not allow that control. Mr. Hunter offered similar remarks concerning a GTECH proposal for the instant ticket logging system. William Hunter attended a seminar in Orlando, Florida, following the technical presentation made to the evaluation committee. Other evaluation committee members did not attend that seminar. The seminar was presented by the Gartner Group. The Gartner Group analyzes the data processing market and sells data processing information. The Lottery, through the State of Florida, has access to the services provided by the Gartner Group in data processing. While at the Orlando seminar William Hunter spoke with Jay Poltz, a presenter for the Gartner Group. This conversation was contrary to the admonitions by Dr. Mann, Mr. Hart and the terms of the RFP which were designed to protect the confidentially of the RFP process from disclosure to persons outside that process. William Hunter spoke to Mr. Poltz based upon the belief that Mr. Poltz would be able to advise Mr. Hunter concerning telecommunications networks called for by the RFP. William Hunter carried the proposals by AWI and GTECH in response to Part II, Section 3, with him to the seminar. Mr. Hunter let Mr. Poltz see the diagram in the AWI proposal at page 3-85 related to the proposed telecommunications network, together with text associated with the general design described in that diagram. The conversation about the AWI telecommunications proposal held with Mr. Poltz did not include discussion of the radio communications that made up a part of the AWI proposal. William Hunter also showed Mr. Poltz information from the GTECH proposal related to telecommunications to include charts and text. Concerning the GTECH proposal, Mr. Poltz told William Hunter that the telecommunications proposal by that vendor was a “doable solution.” Mr. Poltz did state that one of the possible areas of concern to the Lottery should be the time delay of any system that went through a satellite, such as the GTECH proposal. He told Mr. Hunter that the satellite system in the down-link transmission was subject to possible “fading” during heavy rainstorms. Mr. Poltz told William Hunter that the wireless/satellite type of telecommunications network was generally used for economic reasons as a way to by-pass more costly land line communications provided by local telephone companies. In particular Mr. Poltz told William Hunter that K- band satellite was subject to fading due to heavy thunderstorms. Mr. Poltz told William Hunter that the AWI proposal was also “doable.” Mr. Poltz characterized the AWI proposal as more conservative. Mr. Hunter did not ask Mr. Poltz to specifically state an opinion concerning the reliability of the proposed telecommunications systems offered by the vendors. This conversation between Mr. Hunter and Mr. Poltz lasted about fifteen minutes. At a later meeting with the committee William Hunter basically described the information that he had been given by Mr. Poltz. This information should have been disregarded by the evaluators having been obtained outside the normal channels employed in the evaluation process and without the ability for other evaluators to participate directly with Mr. Poltz. At the suggestion of George Banks, a committee member, the Lottery invited Glenn Mayne, Director, State of Florida, Department of Management Services, Division of Communications to speak to the evaluation committee concerning the telecommunications systems employed by Florida government. Before taking a position with the Department of Management Services involving communications, Mr. Mayne had worked with the state university system running the communications network among the universities. Mr. Mayne has had experience working for a computer manufacturer, specializing in data communications products. He holds a degree in mathematics and physics. In responding to the request to make a presentation to the evaluation committee, Mr. Mayne did not resort to an examination of the proposals by the vendors. He was not requested to examine those materials. Mr. Mayne spoke of transport of information by voice, data and video signaling. He explained how the State of Florida used existing facilities to provide communications in those media. He explained the ability of the State of Florida to get different forms of service through providers in the telecommunications industry in Florida. He remarked that the SUNCOM network uses digital communications. He explained that there exists digital land line capability throughout Florida down to the local level within the experience of Florida government. The experience of Florida government has been that the local telephone companies want to move from analog to digital land line communications. The industry trend, to his knowledge, is to provide digital communications in that it requires less maintenance and has fewer inherent problems than analog communications. Nonetheless, Mr. Mayne recognizes that provision of digital communications at the local level is somewhat dependent upon the ability to bring enough business to the local telephone company in the area to warrant provision of digital communications. In his presentation Mr. Mayne outlined the basic function of land-based communications versus satellite communications. He also discussed radio frequency communications. Mr. Mayne drew a diagram on the board in the room where the committee was assembled to point out the difference in the implementation of a land-based communications system and the implementation of a system using radio frequency. Upon inquiry from a member of the committee Mr. Mayne then introduced the addition of satellite communications into the drawing on the board. A rough approximation of this drawing as recounted by Mr. Mayne during a deposition may be found as GTECH exhibit 117. Mr. Mayne discussed some of the questions of reliability involved with the various technologies, land-based, radio or satellite. He talked in terms of the possible points of failure in those systems that might have to be considered in engineering the system without describing the needed engineering. In discussing the land-based system he spoke of the need to account for the level of service that the user wanted from the serving wire centers, back through the various central offices together with the facilities associated with the user. He spoke of the radio based communications as to transmitting capability out of the site and the receiving capability. There was not a great deal of discussion about reliability of satellite communications, other than to say that the experience that the State had with that form of communication had been highly reliable. The evaluation committee explained to Mr. Mayne that the alternatives being proposed by the vendors were in a general sense related to a land-based system versus one involving radio frequency and some satellite. In particular in describing the land-based communication system Mr. Mayne referred to data terminal equipment which would go into an access line and then would go into a serving wire center; from there the signal would go to the public switch network and to another serving wire center to another access line and a data center on the other end. In his explanation, the radio frequency transmission went from the data terminal equipment which involves introduction of a radio frequency modem which would then go back to some collection point, some tower site, that would pick up the signal and bring the signal down from the tower and from there back through a serving wire center and through an access line. Mr. Mayne understood, in conversation with the evaluators, that there was going to be beyond that point, transmission to a satellite and down from the satellite and after the down-link from the satellite back through a wiring center ending in a data center. Mr. Mayne explained that in adding radio frequency and satellite that you were introducing another order of magnitude in engineering that had to be considered, as contrasted with a system that strictly used a circuit that involved land lines through the public switch network. The diagram drawn by Mr. Mayne in his explanation was hypothetical in nature. In a limited respect it explains the use of the various forms of telecommunications, land-based, radio frequency and satellite. The hypothetical system was explained to be reliable if engineered properly. In the final analysis, Mr. Mayne’s presentation on telecommunications has limited utility when taking into account his failure to be exposed to the specifics of the telecommunications proposals by the vendors. The information he imparted was not intended and did not serve the function to educate the evaluators concerning the engineering in the proposed systems, especially as the engineering might address the possible points of failure which Mr. Mayne briefly addressed in his remarks to the committee. In arriving at their scores assigned in the evaluation, the evaluators took into consideration the presentations by Messrs. William Hunter and Mayne. Although the vendors had proposed recommended sites for demonstration of their technical capabilities when the proposals were submitted on December 15, 1995, as called for by Part II, at 3.11.1, by September, 1996, AWI was no longer serving the lottery in Arizona, the site that it initially proposed for demonstration of its technical proposal. The Lottery denies that this had any influence in its decision to offer the opportunity for the vendors to change the original recommended demonstration sites; however, it would not have been possible for AWI to demonstrate its technical proposal in Arizona, no longer being the vendor serving that lottery jurisdiction. Nothing in the language of Part II at 3.11.1 prohibits the demonstration being made at a mutually agreeable venue other than initially proposed by the vendors. In accordance with the overture by the Lottery both vendors selected different venues than had been originally recommended. GTECH chose Washington State for its demonstration. AWI selected Maryland. Beyond the obvious recognition that AWI could not demonstrate its technical proposal in Arizona, the Lottery reasoned that 10 months had passed since the proposals had been submitted and that it felt that newer technology may have been employed in some other jurisdiction than had been recommended initially by the vendors and that the demonstration of the newer technology might be beneficial both to the Lottery and the vendors. The Lottery decision to change the site locations for demonstrating the technical proposals was acceptable under the terms of the RFP. Consistent with Part II, at 3.11.1, the Lottery required the vendors to demonstrate their equipment and software proposed. To this end the evaluation team spent one day in a site visit at Washington State where GTECH normally provided services for the Washington State Lottery. Subsequently, the evaluation committee spent one day in Maryland in a site visit where AWI normally performed services for the Maryland State Lottery. The purpose of the visits was to examine the proposed equipment and software consistent with the test items described in Part II at 3.11.1, as well as any other available functions which the evaluators desired to have the vendors demonstrate. At the site visits the evaluators were provided explanations concerning the respective proposals and allowed to ask questions of those persons making the presentations. Certain equipment was also available for examination. Government representatives from the Washington and Maryland State Lotteries were available to explain their experience with the vendors who served those states. At the Washington site visit GTECH made the evaluators aware that, in addition to its satellite down-link in Rhode Island where its hub-center was located, GTECH intended to build a new hub-center in Austin, Texas. For a transaction to be completed under the proposed GTECH system in that portion using radio/satellite, the transaction would go from a satellite dish installed at a retailer location to the satellite, from the satellite to the hub-center in Rhode Island, from the Rhode Island hub-center to a local land line, from the local exchange to a long distance carrier's land line, from the long distance carrier to another local exchange, from the local exchange to the Tallahassee data center for the Lottery and return. In the event that the retailer site did not have a satellite dish installed at the retail location and had a radio installed instead, a radio transmission would be made to a master radio through a satellite antenna and from there to the satellite. These two approaches for communication would comprise as much as twenty-four percent of the GTECH communications network. The remaining communications would be land-based communications. Of the radio/satellite component within the GTECH proposal approximately 2,054 terminals would be connected, with 250 to 300 of those using satellite dishes at the retail facility. In conversation between the evaluation committee and the Washington lottery staff, the Washington lottery staff told the evaluators that Washington had experienced some problems with their telecommunications network which employed satellite technology. The problems allegedly had to do with what was described as satellite outages. The basis for the Washington lottery staff claim of satellite telecommunications problems related to the satellite were allegedly in relation to bad weather on the east coast that affected the hub-center in Rhode Island. The Washington lottery employees reported that any time there was a major storm on the east coast there were consequences because part of their system was dependent upon satellite technology connected with the east coast. The only east coast storm referred to was a hurricane that the Washington Lottery staff did not report as affecting more than five percent of the retail sites. When a representative of GTECH was asked about down- time in the Washington operation based upon the tele- communications network, that individual stated that there was no problem of that sort. Don Stanford, Chief Technical Officer for GTECH was at the Washington site visit. He is the person who denied problems with the satellite portion of the telecommunications network in Washington. Subsequently he provided a letter to explain what he believed to be the explanation for downtime. This information was received by the evaluation committee after the Washington site visit and before the meeting that was held to discuss and score the proposals. In the correspondence reference is made to the report by the Washington lottery that 13 of the 350 installed GSATs which formed the communications up-link with the satellites had been exhibiting outages as of October 11, 1996. According to the correspondence, the hub-center in West Greenwich, Rhode Island measured inbound carriers (transmissions) within operational guidelines. When the hub-center turned the outbound carriers (transmissions) up this alleviated the problem for the GSAT installations in Washington at the retailer sites. It was determined by GTECH, as described in the letter, that the issue created by the inadequate performance was not related to weather. It was related to mistakes in the installation of the GSATs. Those problems were being corrected. This correspondence also makes reference to the installation of another hub-center antenna in Austin, Texas. The letter of explanation is credited. The misimpression created by the Washington lottery staff that the problem with the telecommunications network was caused by weather-related difficulties at the Rhode Island hub-center was satisfactorily addressed in the follow-up correspondence by Mr. Stanford. One evaluator, Mr. Estevez believed that the problem was with a single storm, while Mr. Bailey referred to the Washington Lottery officials describing that problems arose anytime there was a storm, the connotation being that there was more than a single storm. Taking their testimony in context, it is concluded that a single storm had occurred following the conversion of the Washington Lottery to a system provided by GTECH and that the incident which the Washington Lottery officials attributed to bad weather was in fact related to improperly installed equipment, not the storm. Mr. Estevez determined that GTECH had not satisfied him that weather problems would not present obstacles to the performance of the GTECH telecommunications network in that portion that uses satellite, given the experience reported by the Washington lottery employees and his knowledge of Florida weather. During the Maryland site visits to allow AWI to demonstrate its proposal, questions were posed concerning the intention by AWI to use radio telecommunications. In particular, questions of what type radio, the number of licenses needed to operate the radios, and number of licenses obtained to that point in time were raised. The response given was that those details had not been determined to that point and would be provided in the event that AWI was successful in the competition and entered into contract negotiations with the Lottery. After the site visit, in addition to the basic information that had been provided in the proposal, AWI wrote the Lottery to answer questions about the intended use of radio in the proposed telecommunications solution, among other items which AWI responded to after the site visit. In its remarks through the correspondence AWI stated that it would employ radio technology only when other more reliable means of telecommunications are not available. In no event did AWI intend to employ radio technology for more than five percent of the total on-line terminal population in Florida. It identified the band widths within which it might operate as under 2400bps with a capability to run at 4800bps. It was not explained in the correspondence what was meant by a means of telecommunications more reliable than radio technology. It is assumed this reference is to digital land line which was described in the AWI proposal. At the site visit AWI did not demonstrate any radio equipment or antennas that would be used as part of a the tele- communications network. AWI did not indicate the geographical location of any radio that it intended to use in Florida. This is contrasted with very specific information which GTECH provided about its intended use of radio for telecommunications as described in its proposal and at the site visit. In its proposal AWI had addressed the topic of digital radio in discussing a number of telecommunications technologies. In summarizing its view of digital radio it stated: . . . AWI believes that selected implementation of digital radio is a cost effective network alternative in certain applications when utilized in proper augmentation with traditional terrestrial facilities. In its discussion concerning digital radio, AWI had detailed what it considered to be the relative merits and demerits of the use of that technology, in addition to discussing other possible technologies, to include digital land line which constituted its principal technology of choice. The system proposed by AWI to meet the vast majority of the Florida telecommunications needs is a four wire Digital Data Service with SONET infrastructure. The telecommunications network that was employed during the site visit was not one for which AWI was accountable. The Maryland state lottery was responsible for that system. The evaluators did not place an emphasis on the comparability of the Maryland telecommunications network to what AWI proposed for Florida. It is not clear from the record whether any portion of the Maryland Lottery telecommunications network employed radio as part of the network. In contrast there was definite comparability between the GTECH telecommunications network proposal for Florida and the telecommunications network demonstrated in Washington state. Nonetheless, the available telecommunications network in Maryland was sufficient to allow the Lottery to observe the integral equipment and software proposed by AWI operating in a test environment, which appears to be the emphasis in Part II at 3.11.1, requiring a demonstration of select functionality in the overall proposed Lottery Gaming System. In addition AWI made persons available to the evaluation committee who could explain details of the telecommunications proposal for Florida. At the Maryland site visit, it was revealed that the Lottery operation in that state employed Master Link 3.0, a different generation of software than had been employed in Arizona and proposed for Florida in response to Part II. The AWI proposal for Florida referred to Master Link 2.0. But this change comports with the expectation in Part II that current technology be made available. During the Maryland site visit AWI also referred to its use of Master Link 3.0 in its services provided to the state of Minnesota. Among the items demonstrated for the evaluators in the Maryland visit was the Ovation Integra terminal. This was one of the on-line retailer terminals described in the proposal by AWI to meet the terms of the Florida RFP. The demonstration was by benchmark tests designed to confirm the functionality of the retailer terminal. That model would also read instant tickets. While at the site visit the evaluators observed the Ovation Modular terminal, another on-line retailer terminal that reads instant tickets, while operating at a retail site. The critical components of the Ovation Modular terminal are the same as found in the Ovation Integra terminal. The Ovation Modular terminal is also depicted in the proposal presented by AWI. GTECH had its proposed on-line retailer terminal benchmarked during the Washington state site visit. That same model was also seen operating in a retail environment. Both vendors provided a demonstration of their proposed on-line and instant terminal functionality in a production environment at an active retailer site as required by Part II at 3.11.1, as well as met the requirements within that provision to demonstrate evidence of system performance in a test environment (benchmark) to include on-line and instant retail terminal functionality for terminal models proposed. During the Maryland site visit, as had been the experience in the Washington site visit, the evaluators had demonstrated for them the system take-over in a test environment from the host system to a duplex system and from a primary site to a secondary site. Although the back-up computer system which took over from the primary computer system in the failed take- over and recovery tests was not located in the immediate environs at the Maryland site visit, the evaluators were able to observe the test by the use of consoles at the Maryland location. The arrangements for the failed take-over and recovery tests in Maryland complied with the expectations set forth in Part II, at 3.11.1. AWI, subsidiary to VLT, requested that Richard Haddrill, President of VLT and Acting Senior Officer for AWI participate in the Maryland site visit. He did so by telephone conference with the evaluation members. His purpose was not to demonstrate AWI’s technical capabilities; rather his emphasis was to explain the relationship between AWI and EDS, substantial contractor to AWI. EDS is described in the AWI proposal as engaged in a strategic alliance with AWI to provide services to the AWI lottery customers. At the time that the proposal was submitted to the Lottery for Part II, it was anticipated that EDS would provide the majority of services and personnel to carry out the terms of any contract entered into between AWI and the Lottery. Before Mr. Haddrill spoke to the evaluation team on the occasion of the Maryland site visit, EDS had sued VLT/AWI for breach of the terms of a Master Services Agreement which formed the basis for EDS to support AWI in serving lottery operations where AWI had contracts with various governmental entities. The allegations in the complaint touched upon subjects related to the performance of AWI and EDS in their delivery of services to lotteries. The outcome of the suit could also have a bearing on the financial responsibility of AWI as a prospective vendor for the Lottery. In his remarks, Mr. Haddrill told the evaluation committee that EDS was continuing to work with AWI, that in the future, if EDS and AWI disengaged, his expectation would be that personnel who had been involved with serving the needs for AWI as EDS employees, and before that as AWI employees, would continue to serve AWI and its customers, whether those employees were working for EDS or not. The main emphasis by Mr. Haddrill was that in the event that EDS and AWI discontinued their relationship, the personnel who had been providing the services for AWI customers would continue to perform those duties. The basis for this belief was conversation between Mr. Haddrill and representatives of EDS, in which, according to him, the sentiment was expressed that services to the respective lotteries not be discontinued in view of the dispute between AWI and EDS. At the time Mr. Haddrill spoke to evaluation committee there was no written agreement for AWI to continue to use the EDS service personnel in the event that the EDS and AWI relationship could not be revitalized for the long term. The reason for drawing attention to the AWI relationship with EDS was Mr. Haddrill's belief that some of the evaluation committee members were aware of the termination of the Master Services Agreement between EDS and AWI and the associated law suit before he made his remarks. Mr. Haddrill mentioned that EDS had sued VLT/AWI for work that EDS had done for VLT/AWI. The basis for the suit being that VLT/AWI withheld payments from EDS for the services provided by EDS in the interest of AWI's lottery customers. The policy decision to allow technical updates to be demonstrated at the two site visits in Washington State and Maryland to take advantage of technical improvements in the vendor’s proposed systems did not offend any terms set forth in Part II. Indeed this choice is in furtherance of Subsection 3.1 which contemplates proposing technology offered to other lotteries. On the other hand, a considerable period of time had passed between December 15, 1995, and September 1996, when the evaluation committee commenced its assignment to address the proposals directed to Part II. For that reason interest was expressed within the committee to have the vendors update their proposals to reflect the current business experience of the vendors in the manner contemplated by Part II, Subsection 2.1. This request by Mr. William Hunter was not favorably considered by the Lottery administration. Mr. Columbo speaking for Lottery management stated that updating would create a problem in that "at some point you have to stop taking information". Therefore, it was decided that the evaluation would be conducted on the basis of information submitted by the vendors on December 15, 1995, contained within the proposals. Whatever reading is given Part II, Subsection 1.46, the Lottery was within its rights in exercising the discretion not to seek additional information that describes the circumstances as of December 15, 1995 or September, 1996, extraneous information which the Lottery executive staff received about AWI lottery operations in other states, and AWI's relationship with its subcontractor, EDS, notwithstanding. The issue of the proper treatment of that information as it relates to a change in the circumstance of AWI's business operations beyond December 15, 1995, is a separate, if somewhat related consideration of the propriety of the Lottery refusing to affirmatively request that both vendors be required to update their business experience or any other aspect of their proposals effective September, 1996. Concerning the information received about AWI's performance in other jurisdictions and the AWI relationship with EDS, this information can be and was considered at the hearing de novo related to the credibility of the information provided in the December 15, 1995 proposal for Part II, Section 2. The exception to this view is the AWI response to Section 4.6 at 4.6.1 and 4.6.2 which should be considered beyond December 15, 1995. This exception will subsequently be explained. Moreover, to the extent that any change in circumstances that may have occurred related to the business experience of the vendors would affect the financial responsibility, integrity or security of the respective vendors, the Lottery is called upon to continue to examine those issues throughout the competitive bidding process, negotiations for a contract and during the operative period of a contract. Otherwise the Lottery acted within its discretion in not pursuing information it was provided about AWI's performance beyond December 15, 1995. MORE ON EXECUTIVE DECISION NOT TO INFORM COMMITTEE CONCERNING CHANGE IN AWI STATUS Mr. Columbo, through information provided by VLT/AWI, was made aware that the contract between AWI and the Arizona lottery was being terminated. This knowledge was gained before the evaluators commenced their process of review and evaluation of the AWI proposal which described the AWI experience with the Arizona lottery consistent with requirements set forth in Part II, Section 2. This information received by Mr. Columbo and other senior members of the Lottery staff was provided subsequent to the submission of proposals on December 15, 1995. Some of the details related to events that transpired beyond December 15, 1995. Therefore, it was information beyond what was contemplated in Subsection 2.1 where it says to describe the experience of AWI and its substantial subcontractors over the past five years, or in some instances past two years, on the subject of contract performance in Lottery jurisdictions. To the extent that information which the Lottery senior staff received related to events beyond December 15, 1995 pertained to performance in those jurisdictions, and was unrelated to matters of financial responsibility, security and integrity, the Lottery was within its bounds when it decided not to share the information concerning the AWI performance in Arizona, with the evaluators. It would have been inappropriate to selectively provide that information without updates to the performance of AWI in other jurisdictions and GTECH in the jurisdictions where it continued to provide services beyond December 15, 1995. The decision was not contrary to the operative terms in Part II and has support in the interpretation that Subsection 1.46 addresses the possibility of updates but does not mandate that course. These findings are not intended to address whether the information which AWI provided concerning its experience in Arizona as of December 15, 1995 was truthful. That issue will be examined separately. Around July 15, 1996, VLT/AWI gave notice to the Lottery that its Master Services Agreement with EDS had been terminated, with an arrangement being made to substitute on a week to week basis the EDS services to AWI. In particular, the senior members of the Lottery staff were told of this development. A decision was made by the Lottery senior staff not to advise the evaluators concerning the dispute between VLT/AWI and EDS. Nonetheless, the evaluation committee became aware of the problems between VLT/AWI and EDS and held the conversation with Mr. Haddrill on that subject. Additionally, this hearing examined the implications of that problem as it would possibly influence AWI’s financial responsibility. For the same reasons that were given in discussing Part II, Subsection 2.1 as they relate to overall performance by AWI by history, the EDS contribution to that performance need not be updated beyond December 15, 1995. However, there is another problem that has not been adequately addressed based upon the decision by the policy makers within the Lottery to deprive the evaluators of the opportunity to examine more critically the events that transpired beyond December 15, 1995, through the hearing dates. That problem is in association with the need to comply with Part II, at 4.6.1 and 4.6.2, related to provision of a detailed description of the organizational structure and staff that would be responsible for carrying out the terms of a contract. The proposal by AWI describes in great detail the contribution which EDS would make to the fulfillment of the requirements of the contract. When the Lottery senior staff learned that problems existed between AWI and EDS it should have apprised the evaluation committee about those matters to assist the evaluators in examining the AWI proposal for 4.6.1 and 4.6.2, notwithstanding that the limited information that the senior staff had received indicated that EDS was still performing the services. The conversation between the evaluators and Mr. Haddrill was not a reasonable alternative to divulging the information which the lottery had received independent of Mr. Haddrill’s remarks. Subsequently, VLT/AWI and EDS resolved their suit by settlement. That resolution calls for a change in the affiliation of personnel who would provide the services under the contract. Those changes were made known during the hearing, to some extent. But the evaluators did not examine the outcome of that settlement in relation to personnel as it might influence their impression of the organizational structure and staff. The organizational structure and staff cannot be reasonably assessed without resort to an examination of the settlement as it influences organizational structure and staff as revealed in the hearing. This should be done as a means to decide the appropriate points to be assigned AWI for its proposal in response to Part II, Section 4. If this were done, this would overcome the impropriety of the Lottery failing to provide the intervening information between December 15, 1995, and the time of the settlement of the EDS suit and would assure the fairness of the competitive bid process related to this item. The fact that some of the evaluators deducted points from AWI based upon the problems it experienced with EDS, as they understood the problems to be, based upon the limited information that was made available to them, does not serve as a viable alternative to an evaluation based upon the most current and more comprehensive information about the relationship between AWI and EDS. CREDIBILITY OF INFORMATION IN AWI PROPOSAL GTECH complains that false or misleading information contained within the AWI proposal caused the evaluation committee to incorrectly score the AWI proposal. In response to Section 2: Management Requirements, AWI included, at page 2-10, information concerning its services to the Arizona Lottery. On that page is Table 2-2: ARIZONA LOTTERY FAST FACTS. That table reflects the on-line terminals and instant-only terminals in inventory on November 1, 1995. Page 2- 10 refers to the delivery and installation of the on-line terminals at start-up. As further explained on page 2-10 it is noted that the delivery and installation of the instant terminals was delayed a few days. Nothing in these remarks describes the performance of the terminals once installed. At page 2-10 the description is given that the two classes of terminals were currently in operation as of December 15, 1995, the date upon which the proposal was submitted. Table 2-2 also refers to sales prior to the conversion of the system to AWI related to the on-line terminal per week performance in the fiscal year 1995. None of this information is false or misleading. Reference to the Arizona Lottery, AWI, at page 2-11 in its proposal, states that: “AWI has not missed an operational deadline in Arizona.” That statement is contradicted by the problem that was explained on the prior page concerning delivery and installation of the instant terminals. Moreover, separate and apart from the experience of down-time reported by AWI in relation to its performance in Arizona, which AWI accounted for in its proposal, operational problems were experienced when 700 retailer terminals did not communicate with the central system in the first week of operation in Arizona and in excess of 500 of the retailer terminals were not communicating with the central system in the second week of operation in Arizona. However, the misleading information about operational deadlines is not deemed to be so material as to reject the AWI proposal as unresponsive to Part II, Section 2, when considered in the context of the overall information provided about AWI's prior experience in the Lottery business. Again referring to the information that AWI reported about its service to the Arizona Lottery, at page 2-12 there is a reference to what is referred to as “shared achievements.” There it is stated: On-Time System Launch-Despite prolonged protests filed by the out-going vendor, AWI was able to launch the entire MasterLink system, including both on-line and instant game processing, on the designated start-up date of November 1, 1995. This was the industry’s first simultaneously launch of on- line and instant game processing, and is even more significant because the two services are integrated into a single system. This statement is contradictory in that the instant game processing was not launched on November 1, 1995, as evidenced by the previous comments that the delivery and installation of the instant terminals was delayed a few days. This contradictory statement about the on time system launch constitutes misleading information. The significance of this misstatement concerning the system launch does not rise to the level of a material deviation causing the AWI proposal to be declared unresponsive when considered in the context of the overall proposal concerning AWI’s experience. At page 2-55 of the AWI proposal is found Table 2-13: System Down-time. This Table reports the system down-time in Arizona among other jurisdictions where AWI delivered services. The report of system down-time is in response to the requirements at Subsection 2.1 and in accordance with the definition at Subsection 1.47 which defines system down-time. The information about Arizona comports with the provisions of Part II. Within the AWI proposal is information provided in response to Subsection 3.4 TERMINAL REQUIREMENTS. In particular reference is made to 3.4.1 which AWI characterizes as 3.4.1.1 New and Current Technology. At page 3-131 within that section of the proposal AWI states: Industry - leading engineering and high- quality manufacturing combined to ensure that the terminals delivered to the Florida Lottery are in top working condition. During the Arizona implementation, 96% of the terminals operated perfectly directly out of the box; the remaining 4% required only minor fine-tuning prior to installation. . . . This statement is neither false nor misleading. It refers to the circumstances of this equipment prior to installation at retailer sites. Finally, GTECH complains about the alleged false and misleading nature of information which AWI provided in response to 3.11.1 Technical Support, as that requirement deals with the need to demonstrate the vendors equipment and software. AWI in response at page 3-441 of its proposal has a section entitled Demonstrability of Equipment and Software: AWI proposes the use of two sites for the purpose of fulfilling all of the demonstration requirements identified in the RFP: the Arizona Lottery, our newest production environment, in Phoenix, Arizona, and our systems development facility in Hackensack, New Jersey. Every critical software requirement specified in the Florida Lottery RFP is currently operational for the Arizona Lottery, where Release 2.0 of the MasterLinkTM system, including the Instant Game Module and the latest on-line and instant ticket retailer terminal software, has been in operation since the November 1, 1995, startup. Further, the IBM RISC system platform serving Arizona's needs is similar to that proposed for Florida, and more than 2,300 OvationTM Retailer Terminals are currently installed there. Other than the fact that the instant ticket retailer software was not in operation since November 1, 1995, as previously explained, the information contained on page 3-441 that is referred to is not false or misleading. The misstatement about the operation of instant ticket retailer terminal software from the inception of the service to Arizona is not so material as to declare the AWI proposal unresponsive when considered in the context of the overall proposal. Especially when one considers that the purpose of page 3-441 is to identify prospectively the place at which AWI would demonstrate its equipment and software and the nature of equipment and software to be made available, in which instance the evaluators from Florida would have the opportunity for personal examination of those items. The fact that the site visit was held in Maryland does not change the impression of these facts. On balance the inaccuracies that have been identified in the AWI proposal did not compromise the ability of the evaluators to perform a fair and impartial assessment in comparing the competitors’ proposals. AWI CERTIFIED MINORITY BUSINESS ENTERPRISE GTECH disputes the award of five bonus points to AWI representing proposed CMBE utilization of twenty percent. Consistent with the requirement to identify the amount projected to be paid each CMBE to meet the minimum ten percent obligation, AWI proposes the use of Flamingo Graphics, and states the amount of the price in a manner to ensure that the overall price proposal by AWI cannot be deduced by calculation from the details in the minimum CMBE utilization plan. Thus, AWI complied with Section 6, to that extent. Section 6 segregates the additional ten percent commitment opportunity for the vendors, for which they may be awarded up to five bonus points, from the requirement to describe the minimum utilization for the first ten percent commitment. The information that must be provided by the vendor to earn the five bonus points requires the vendor to state the additional percentage above the required ten percent and to identify the names and addresses of the CMBEs that the vendor will use and the types of services to be performed by those vendors. Attachment “C” does not call for the establishment of the amount to be paid those CMBEs who make up the additional ten percent for which the bonus is requested. The AWI Attachment “C” proposes to provide an additional ten percent compensation to CMBEs above the minimum ten percent and gives the names and addresses and services to be performed by CMBEs without mentioning price. This complies with Section 6 and the Lottery was correct in awarding AWI the bonus points. PRICING GTECH was right to complain that it had been misled concerning the manner in which the price proposals by the vendors would be evaluated. Both vendors should have been informed when the Lottery decided to examine the initial five-year term of the contract and the renewal options, totaling 9 years. That choice was in substitution for the choice to evaluate only the base 5- year term of the contract that had been explained to the vendors before the vendors prepared their proposals. The percentage of on-line net sales that AWI used remained constant for the full 9 years at 1.8%. By contrast, GTECH offered 2.1% of sales for the initial five year term of the contract adjusted to 2.31% for the remaining 4 years. Although GTECH complains that it was treated unfairly and hypothesizes that it might have responded differently had it known that it could take advantage of a full 9 year period in stating its price proposal, at the hearing it did not explain those adjustments. Absent such explanation there is not a factual basis to rectify the problem consistent with its request. As matters stand, the GTECH percentage quote exceeds AWI's quote, no matter what point in time was chosen for performing the price scoring calculation. Even if the approach contemplated by the explanation given to the vendors was applied and the calculation made on a five year term, instead of the 20 points that AWI received on the 9 year basis and the approximately 17 points that GTECH received on the 9 year basis, this would bring about a result that awarded 20 points to AWI and something in excess of 17 points for GTECH. Based upon the record as its stands, the decision to use the 9 year planning horizon for calculating the price scoring does not constitute a significant departure from the requirements of fairness in its results. The decision, while unfair, was not material in its import. EVALUATION COMMITTEE MEMBERS The Secretary of the Lottery, Dr. Marcia Mann, notified the evaluation committee members of their selection and appointment to the evaluation committee. Those individuals selected were Robert Estevez, Barbara Goltz, George Banks, Robert Hunter, William Hunter and Gerald Bailey. By the appointment letter Dr. Mann advised the committee members, except Mr. Bailey, that they would be briefed on the evaluation procedures and reminded the members to maintain the confidentiality of the materials under review. Mr. Estevez is the Lottery’s Director of Games Management and has experience in field operations and knowledge of the existing on-line gaming system. Ms. Goltz is the Assistant Secretary for Finance and Administration with the Lottery. This position is comparable to a Chief Financial Officer in private business. In addition to her background in accounting, Ms. Goltz is familiar with the overall operations of the Lottery. Ms. Goltz was appointed chairperson of the evaluation committee. Another Lottery employee who served on the evaluation committee is William Hunter, Director of Information Resource Management, who has acquired expertise in computer systems and computer technology in relation to operations in the Lottery. Outside committee members included George Banks, State of Florida, Department of Management Services, Director of the Division of Purchasing, who has considerable knowledge of the state procurement process. Robert Hunter was an attorney with the United States General Accounting Office, with long-standing experience in evaluating government procurements, to include federal, state and local government purchases. Gerald Bailey, State of Florida, Department of Law Enforcement, Director of Performance Management, has basic familiarity with computer systems and experience concerning research and development. Committee Evaluation and Scoring for Part II BARBARA GOLTZ Sec. GTECH AWI 2.0 13 13.5 3.0 34 36.5 4.0 13 13.5 5.0 9 9 In performing her evaluation Ms. Goltz paid particular attention to features proposed by the vendors that would benefit the retailer in the interest of greater sales and efficiency. The idea of efficiency was in association with what she described as “user friendly.” In the event that subsections within Section 3.0 specifically described the criteria that must be met to comply with the RFP requirements, if the vendor demonstrated the ability to meet those criteria, that was deemed acceptable and no further evaluation was made to differentiate between the solutions proposed by the vendors. By contrast, Ms. Goltz gave as example the telecommunications network in which she described the RFP requirements as being explained as “no more or less to what could be proposed. . . It was wide open . . .” Therefore, this would lend itself to a comparison between the vendor’s solutions in her mind. Within Section 3 there are instances where the requirements are defined in some detail with a caveat that those details must be provided “at a minimum.” An example is Part II at 3.2.6 System Performance. Here it is expected pursuant to Subsection 3.1 that any additional or alternative capacity, features or capabilities that are proposed by the vendors beyond the minimum requirements must be assessed on their merits and to the extent that they provide useful value to the Lottery, credited in the scoring process in the manner already described. Other similar language which contemplates review of more than minimum compliance were the requirements set forth in the RFP where details are described with the caveat that the proposal is “not limited to” the required items. When the quoted language is found a uniform approach to assessing additional information to decide its value to the Lottery is called for. An example is Part II at Subsection 3.3.2 Design Requirements related to the telecommunications network. Another example of the occasion upon which more information may be provided than is mandated is found at 3.4.1 Retailer Terminals where the proposals must comply with an extensive list of requirements but also are to describe “any additional features which are available.” Those additional features should be assessed for their value and credit given in the instance where the additional features are found to be useful. To the extent that other sections reviewed by the evaluation committee contain similar language that the evaluators had the same responsibility in assessing the additional as well as alternative capacity, features or capabilities to determine the value of those items with credit being given for useful extras or alternates. Even in the instance where there is no qualifying language it would not be safe to assume that Part II, Section 3 requires the evaluators to limit their assessment to whether the proposals are responsive to the mandatory terms of the RFP. An example is Part II, at 3.4.3 On-Line Management Terminal Functions and Reports (A. Game Controls). The evaluators would be expected to examine additions and alternative approaches in the format already described. Where the instructions within the RFP create broad latitude for the vendors to suggest the solution in response to general parameters described in the RFP, such as Part II, at 3.2.1 General System Requirements, the evaluators needed to assess and value the proposals in arriving at the scores to be assigned the competitors. Ms. Goltz and other evaluators did not always follow this process called for in Part II, Subsection 3.1. The failure to adhere to the requirements was a material departure from the RFP. In performing her evaluation, Ms. Goltz scored Sections 2 and 5 as single units, whereas Sections 3 and 4 were analyzed in their subparts with greater emphasis placed on matters which she considered to be more important. The beginning point for her scoring was what she described as the “outstanding companies” in the competition; however, she did not believe that any company was entitled to a perfect score in relation to a given section. Ms. Goltz under Subsection 2.1 Experience of Respondent awarded a point to AWI because AWI has individuals who currently work in providing services to the Lottery under the existing contract. Nothing in Subsection 2.1 contemplates rewarding the incumbent merely because it has employees with whom the Lottery is familiar. The point should be deducted. Given that the Lottery had chosen to limit its consideration of a vendor's performance in accordance with Subsection 2.1 to the period ending December 15, 1995, and the nature of the instructions set forth in Subsection 2.1, it was not appropriate to deduct half a point from AWI for its problems with EDS as known by Ms. Goltz when she evaluated the proposals. The half point should be reinstated. It is acceptable for the fact finder in this proceeding to add and subtract points in the event that there is no basis in the RFP to award points or deduct points, as contrasted with taking issue with an evaluator in the instance where there is authority to assign points but there is some question about the amount of points to be assigned. The fact finder is not expected to reevaluate the proposals in this highly technical RFP. Ms. Goltz had a differentiation in scores between AWI which received 5.5 points for its telecommunications network and GTECH which received 4.5 points for its telecommunications network. This decision was based upon the stated intention by GTECH to serve as many as 24 percent of its retailers through wireless technology, as contrasted with a more limited number of retailers served by AWI through wireless technology. This was a decision which had no reasonable basis in fact. This gross differentiation ignores the need for a more specific analysis of the proposals and the explanations in the record concerning the technologies proposed by the vendors to provide for telecommunications requested by the Lottery. Absent a more thorough evaluation of the specific telecommunications proposals by the vendors, it does not suffice to distinguish between those proposals based solely on the number of retailers served by wireless technology. This discussion is in relation to Part II, Subsection 3.3. ROBERT HUNTER Sec. GTECH AWI 2.0 14 15 3.0 32 35 4.0 11 13 5.0 8 8 In evaluating Part II, Section 2, Robert Hunter scored AWI higher because it was the incumbent vendor. Again, there is no basis in Section 2 to provide greater recognition to the incumbent. This choice constituted the sole distinction between the two vendors in Mr. Hunter’s assessment. The result of the decision was a one point differential between AWI and GTECH. That point should not be upheld. In evaluating Subsection 3.2 System Configuration Requirements, Mr. Hunter, with the exception of 3.2.4 Remote Logging, determined that the vendors met minimum requirements in the RFP and ended his assessment. Mr. Hunter was required to assess the value of the proposed solutions by the vendors with greater particularity as a means to satisfy the Lottery's needs. Likewise, Subsection 3.9 Software Quality Requirements, contemplated the need to evaluate proposed solutions concerning their relative merit. Mr. Hunter failed to do this in contravention of the requirements of the RFP. In connection with Subsection 3.3 Communications Network Requirements, Mr. Hunter in his comparison and evaluation noted that as much as 24 percent of the telecommunications proposed by GTECH was wireless and that in his estimation was less dependable than AWI’s use of technology similar to what is used under the current contract between AWI and the Lottery. To Mr. Hunter, the potential problems inherent in the GTECH solution related to the fact that the satellite down-link hub-center in Rhode Island had a redundant capacity, another back-up down-link, but that there was no other available back-up in a different geographic location than Rhode Island gave him concern. In his evaluation Mr. Hunter noted the possibility of degraded service due to weather. He noted that radio wireless communication in metropolitan areas might be problematic. In his evaluation Mr. Hunter took the view that the better choice for the Lottery was to adopt a telecommunications solution that was closer to the technology that had been used in the past. That technology was associated with telephone lines. He did not believe that it was the best course to try something that he believed was a new technology: satellite technology. To him the use of extensive satellite technology was not as desirable. In performing his evaluation, Mr. Hunter paid attention to the vendors’ assertions that their respective telecommunications networks were superior to other technologies. Again, as with Ms. Goltz, Mr. Hunter dealt in generalities in contrasting the telecommunications solutions presented by the vendors in their proposals. This in contrast to a more thorough examination of the proposals and their relative merit. In candor, Mr. Hunter admitted that he did not perform an engineering analysis of the telecommunications proposals because he did not feel he was qualified to do that. Nonetheless, the RFP contemplates that the Lottery will sufficiently educate the evaluators concerning the details of the telecommunications proposals to allow an informed judgment to be made about the proposals to determine the better solution. To this end the Lottery has the advantage of the record in the de novo hearing in addition to any information that had been imparted to the evaluators prior to the hearing to assist the evaluators in performing their task. For the most part, the Lottery ignored that information. Neither Mr. Hunter nor his colleagues on the evaluation team made a sufficiently meaningful assessment of the telecommunications proposals by the vendors prior to hearing or as a product of the information presented in the hearing record. This lack of specific understanding of the proposed solutions for telecommunications skewed the result in Mr. Hunter’s scoring in Section 3. In particular Mr. Hunter and other evaluators failed to sufficiently analyze the telecommunications proposal by GTECH. GERALD BAILEY Sec. GTECH AWI 2.0 15 11.25 3.0 30 40 4.0 11.25 15 5.0 10 10 204. In responding to the AWI proposal for Section 2: Management Requirements, Mr. Bailey deducted 25 percent of the value based upon what he termed the EDS issue. That refers to the problems between EDS and AWI that he was made aware of in the course of the overall evaluation process. It was not appropriate to deduct these points bearing in mind that proposal requirements of Section 2 ended December 15, 1995. In Subsection 3.2 System Configuration Requirements, Mr. Bailey used an approach common to Mr. Robert Hunter and other evaluators where the relative value of the solutions in the context of comparison to the competitors solutions was not completely considered. This oversight was contrary to the expectations set forth in the RFP. Mr. Bailey took issue with the technology proposed by GTECH for telecommunications as referred to in Subsection 3.3 Communications Network Requirements. The more extensive reliance on radio technology, and more specifically, satellite technology, was found to be a liability. Mr. Bailey perceived the AWI technology to be “more conservative” and “more reliable.” Mr. Bailey was so troubled by GTECH’s proposed telecommunications technology in using satellite that he deducted 10 points of the possible 40 points to be assigned for Section 3.0 leaving GTECH with 30 points. Of the information which Mr. Bailey received concerning the telecommunications proposals by the vendors, he was especially impressed with the Washington State lottery staffs’ comment that they had experienced difficulties with the satellite portion of their telecommunications system. For reasons previously described, Mr. Bailey’s treatment of the telecommunications proposals, particularly the GTECH telecommunications proposal, was insufficient. WILLIAM HUNTER Sec. GTECH AWI 2.0 13 13 3.0 29 3 4.0 10 13 5.0 7 8 In performing his evaluation Mr. William Hunter looked through his notes, listened to the discussion by the committee, thought in terms of the site visits, did a comparative analysis in his mind as to the relative weight of the two vendors for meeting the prescribed sections within Part II and then compared the higher of those vendors to what would be an appropriate score and scored the vendors following that comparison. Anything that Mr. Hunter observed in the proposals that was particularly positive would influence the scoring. Anything that was especially negative would also influence the scoring. The assignment of points based upon the positive or negative findings did not result in the addition or deduction of points on a uniform basis. Under Subsection 2.1 EXPERIENCE OF RESPONDENT, Mr. Hunter improperly gave consideration to AWI because of its incumbency with the Lottery. Similarly, it was inappropriate for Mr. Hunter to deduct from the GTECH score because it was unfamiliar with Florida. Under Subsection 2.1, Mr. Hunter inappropriately scored the GTECH proposal down based upon less flexibility in changing to meet the Lottery requirements. On that subject, subsection 2.1 does not contemplate the use of anecdotal information gained from the GTECH proposal related to other sections within Part II and remarks made at the Washington State site visit, as a means to score the statement of experience called for in Subsection 2.1. In his actions Mr. Hunter violated the terms of Subsection 2.1 in this instance. Subsection 2.1 relates to historical experience in providing services similar to those required by the RFP up to and including December 15, 1995, not information that responds to other sections within Part II prospectively, to include demonstration of equipment and software at a site visit. In evaluating Subsection 2.1 Mr. Hunter related his view of the overall proposal by GTECH in response to Part II to the extent that GTECH did not know how the Lottery operated. Subsection 2.1 did not contemplate the necessity to demonstrate that the vendor understood how Florida operated at present. It contemplated the provision of specific information about a vendor's history in providing lottery services worldwide. Under Subsection 2.1 Mr. Hunter scored AWI negatively because of the EDS relationship. For reasons previously described this negative score was not justified. When Mr. Hunter performed his evaluation of 3.2.6 System Performance, he did not find any advantage to a vendor's equipment being able to perform at levels in excess of the performance levels mandated. Therefore, a vendor would not be entitled to have its score enhanced by virtue of greater performance. In association with Subsection 3.3 Communications Network Requirement, Mr. Hunter downgraded GTECH for the use of wireless VSAT, the satellite. He also felt uncomfortable with AWI's use of radio in its telecommunications proposal. But he did not compare the reliability of AWI's radio component to the components within the GTECH telecommunications proposal. He did not assess the reliability of both systems, one against the other. He did not specifically inform himself concerning the reliability of the GTECH telecommunications proposal. Instead he observed that the AWI telecommunications system had less components. He should have compared the specific proposals in all respects. While Mr. Hunter indicated that he was mindful of the details set forth in the GTECH proposal for telecommunications to include the wireless component of its solution, his assessment ignores the evidence de novo concerning the GTECH tele- communications proposal and its wireless component. There is a need for Mr. Hunter and other committee members to evaluate the overall record concerning the GTECH telecommunications proposal in comparison to the AWI telecommunications proposal and the needs of the Lottery as described in Part II. In scoring the GTECH proposal Part II at 3.5.12 Dual Security Number, Mr. Hunter gave GTECH a negative score for offering an alternative solution that caused the sign-on number to be remotely logged and stored in the dual security system through a process that involves vendor access. GTECH had also indicated its willingness to do what was required by 3.5.12 should the lottery reject the suggested alternative solution. It was inappropriate to assign a negative score for offering the alternative while agreeing to provide the suggested solution. Mr. Hunter took a similar view concerning the GTECH proposal for Part II at 3.5.13 Ticket Stock Location. For the same reason, it was inappropriate to give a negative score to GTECH for a suggested alternative proposal while agreeing to comply with the requirements. Mr. Hunter need not have credited GTECH for its alternatives if he did not find them valuable, but he could not discredit GTECH. To do so was contrary to Subsection 3.1, which called upon the vendors to offer alternatives, especially if in production in other lottery jurisdictions. ROBERT ESTEVEZ Sec. GTECH AWI 2.0 13 13 3.0 32 38 4.0 8 12 5.0 8 10 In carrying out his evaluation Mr. Estevez had expectations born out by his nine years experience with the Lottery. Based upon that experience he had different expectations depending on the section being considered. He utilized the scoring range for the individual sections related to percentages for outstanding, good, fair and poor. In reference to Subsection 3.2 System Configuration Requirements, Mr. Estevez recognized that GTECH had the more advanced solution but did not feel that there was a significant difference between the solution proposed by GTECH when compared to the AWI solution. If the solutions were completely examined and compared by the method that has been identified, that would not be an unreasonable outcome. In evaluating the proposed solutions for Subsection 3.2 System Configuration Requirements, Mr. Estevez was mindful of the minimum performance expectations described at 3.2.6 System Performance. In consideration of his experience with the Lottery as a means to evaluate the proposals, implicit in his scoring, Mr. Estevez was not persuaded that the extra performance capability of the GTECH equipment was valuable to the Lottery. In evaluating the proposals pursuant to Subsection 3.3 Communications Network Requirements, at 3.3.4 Communications Technologies, Mr. Estevez noted that the GTECH proposal contained as much as 24 percent wireless which caused him concern about points of failure in that system. By comparison, he perceived that AWI in its digital network was more secure and reliable. He particularly had concerns about the wireless equipment whether involving a tower in the middle of a field or a satellite dish placed somewhere in the open. Telephone facilities, to him, seemed to be more secure and not open to people going up to those facilities. In contrasting the security of the telephone company facility with a tower in the middle of a field, Mr. Estevez acknowledged that the belief that the tower was more susceptible to compromise was just his own unprofessional opinion. As with other evaluators, Mr. Estevez’s evaluation of the satellite/radio telecommunications proposal by GTECH tends to overlook the details in the proposal and does not take into consideration the explanations at hearing concerning the viability of the specific solution offered by GTECH in the use of that technology. To arrive at a proper understanding of the GTECH and AWI telecommunications proposals as a means to compare the respective solutions, Mr. Estevez and other evaluators need to reassess the written proposals, the impressions gained at the site visit and the technical explanations provided at the hearing. Absent that analysis, the decision to score GTECH negatively and AWI positively in the telecommunications area is inappropriate. Mr. Estevez recalls that during the Washington site visit staff for the Washington lottery were asked by the evaluators if the Washington lottery had experienced problems with the satellite component to its telecommunications by virtue of a hurricane on the East coast. The answer was yes. Mr. Estevez does not recall whether the Washington lottery staff told the evaluators about the number of terminals in the Washington system that were affected by this event. In relation to 3.5.12 Dual Security Number, Mr. Estevez gave GTECH a negative score. Again, the basis for that decision concerned the GTECH alternative proposal which did not coincide with the requirements in the RFP, in a setting where GTECH committed to provide the solution called for by the Lottery and was allowed to suggest an alternative. There was no legitimate basis for scoring GTECH down for offering the alternative solution. Mr. Estevez had become familiar with the controversy between AWI and the Arizona lottery. As a consequence he determined not to consider the information in the AWI proposal that referred to the Arizona experience when performing his evaluation. That decision was inappropriate. Mr. Estevez was obligated to examine the information about Arizona, up to and including December 15, 1995, the date that proposals were submitted in response to Part II of the RFP. GEORGE BANKS Sec. GTECH AWI 2.0 15 15 3.0 36 38.5 4.0 15 15 5.0 9 10 When Mr. Banks evaluated Section 3: Technical Requirements, he observed that there were ten subsections. He assigned weights of four points maximum for each subsection. He then examined the line items within the subsections and did a “benchmark” of GTECH’s proposal compared to AWI’s proposal to determine which vendor should get the full complement of four points for each subsection as opposed to some lesser number. However, in some instances when scoring the proposals Mr. Banks reduced the score of both proposals, as opposed to awarding maximum points to the superior proposal. It is concluded that the term “benchmark” refers to a comparison of the proposed solutions. In scoring Subsection 2.1 Experience of Respondent, Mr. Banks noted AWI’s incumbency. As explained before, nothing in that subsection contemplates crediting the incumbent merely because it is the incumbent. The subsection contemplates a description of the experience in all jurisdictions to be evaluated on the merits of that experience, whether in Florida or other locations. To the extent that the AWI incumbency influenced Mr. Banks in arriving at the score assigned for Section 2: Management Requirements, it was inappropriate to credit the incumbent. In association with Subsection 3.3 Communications Network Requirements, at 3.3.4 Communications Technologies, Mr. Banks commented that GTECH proposed as much as 24 percent wireless. This led him to score GTECH at three points of a maximum four points in his grading system. By contrast, AWI was assigned four points for the subsection. In scoring this subsection, Mr. Banks did not perceive that wireless telecommunications through the use of satellite and radio frequency was non-reliable. He stated that he had a sense of comfort and confidence in the digital land line system because from the standpoint of maturity that it was already deployed in the current operating telecommunications of the Lottery. He commented that his attempt was to reconcile whether you put all the confidence in betting on satellite technology and risk the Lottery, or go with proven and what is known to work and is being deployed in the state, that being digital land line. In his evaluation Mr. Banks posed the question to himself to what extent the opportunity for failure was greater with satellite than with digital land line. The fact that GTECH would have as many as 24 percent of its retailers hooked up to wireless telecommunications through radio frequency or satellite as opposed to what he describes as seven percent of wireless for AWI represented the bigger risk. The overall percentage of wireless was the prime factor for down-grading the GTECH telecommunications proposal, with particular emphasis on the proposed use of satellite. Mr. Banks, in his view of wireless radio communications, believed that the signal could be obstructed by high-rise buildings. Mr. Banks believed that the wireless radio communications proposed by both vendors would be used in rural areas. While Mr. Banks took note of the reliability of the specific telecommunications proposed by GTECH as set out in the proposal and as explained in the Washington State site visit he was persuaded that there were more opportunities for points of failure in the satellite system. The possibility of a second GTECH hub-center in Austin, Texas, had not been realized at the time of the site visit to Washington State as Mr. Banks understood it. It can be inferred that Mr. Banks would have felt more comfortable with the advent of the Austin, Texas hub-center. In making his judgments Mr. Banks understood that there were no empirical studies or statistics that the evaluators were familiar with and tried to use as a means to make a judgment about telecommunications proposals. As with other evaluators Mr. Banks was not provided the opportunity to examine the testimony at hearing of experts concerning the reliability of wireless communications via satellite and radio based upon engineering principles. That opportunity is necessary to insure a fair and comprehensive treatment of the proposals. Related to Part II at 3.5.12 Dual Security Number, Mr. Banks entered a minus in his scoring for the GTECH proposal which was stated in the alternative, one method complying with the RFP requirement and the other not. As described before, while GTECH suggested a solution contrary to the RFP, it committed itself to comply with the RFP, and was encouraged by Subsection 3.1 to offer an alternative. Therefore, it was inappropriate to down- grade the score for GTECH in relation to this requirement. EXPERT WITNESSES IN TELECOMMUNICATIONS AND RELATED TECHNOLOGIES The following witnesses provided testimony concerning the telecommunications proposals and related technology by the vendors, which testimony should be taken into account before scoring the proposals in formulating the final agency action. Richard Desjardins, Director of Special Projects for GTECH, provided testimony concerning the GTECH telecommunications proposal related to radio and satellite. James A. Stratigos, President and CEO of Media Four, Incorporated, is an expert in the design and implementation of telecommunications networks, including the use of digital radio and satellite. He testified about the use of radio and satellite as it would impact this project. Donald L. Stanford, Senior Vice President and Chief Technical Officer for GTECH, who is expert in lottery technologies and systems testified concerning the GTECH telecommunications proposal. Paul Lowenwirth, EDS employee serving the account of AWI, testified. He had the overall responsibility for developing the telecommunications network proposed by AWI. He is an expert in the development and implementation of telecommunications networks. Andrew Bruce Greenspan, an EDS employee, who is expert in central systems testified concerning system configuration requirements. Barry Ankersen, who works for IBM and is an expert in central systems processors, testified. Bridgett Garnsey, Vice President for Product Development and Technical Sales for AWI, an expert in systems development and application support, testified. Edward John Hinkel, an EDS employee, who has a background in computer terminal technologies (software) testified concerning the AWI proposal for terminals. Steve Beason, Vice President of software for GTECH, testified concerning system configuration proposals by the vendors. David Isaacson, GTECH Manager of Product Marketing, with a background in computer science engineering, testified by deposition concerning AWI's central system processor. Paul Pinto, GTECH Technical Services Director II, with a background in computer technology software development and quality assurance, testified by deposition concerning a comparison of the proposed central systems of the vendors. Generally stated the above-witnesses provided information concerning the proposed technology offered by the vendors in response to Section 3: Technical Requirements. In formulating the agency decision this de novo evidence needs to be examined and utilized in assisting the evaluators in assigning scores to Section 3. The agency should not ignore that record in favor of the opinions held at the conclusion of the evaluation process in October 1996. If the agency fails to consider this evidence, the fact finder cannot ultimately determine whether the agency’s action was appropriate, and is without the authority to determine the proper course of action by performing an independent evaluation of the technical proposals based upon the record de novo. AWI FINANCIAL RESPONSIBILITY Based upon its interpretation of Section 24.111(2), Florida Statutes, and subsection 1.19, the Lottery examined the financial responsibility of the vendors through the time of the hearing. As contemplated by Section 24.111(2)(g), Florida Statutes, and required by subsection 1.35, the vendors are called upon to advise the Lottery should a vendor experience a material adverse change in financial condition prior to the award of the contract. The meaning of the terms "financial responsibility" and "material adverse change in financial condition," as perceived by the Lottery, take into account the specifics of a vendor's financial position. There is no exact definition of the terms in the statutes, rules or policies of the Lottery. Nonetheless, the Lottery has made an effort to inform itself concerning the financial issues described in this paragraph. Relevant to this inquiry is the question of the financial responsibility and any material adverse change in the financial condition of AWI. Within the context of the matter of financial responsibility and possible material adverse change in the financial condition, Mr. Doyal as Inspector General for the Lottery and a CPA has examined certain financial information to establish the Lottery's policy position concerning the financial viability of AWI as a competing vendor in this procurement. As spokesperson for the Lottery, Mr. Doyal expressed the policy position of the agency concerning AWI's financial responsibility and view on the subject of whether AWI has experienced a material adverse change in financial condition. In behalf of the Lottery he has concluded that AWI is financially responsible and has not experienced a material adverse change in financial condition. His insights concerning the issue of financial responsibility extend beyond the Lottery's unchallenged decision in Part I of the RFP where the Lottery was specifically charged with determining the financial responsibility of the vendors. After the decision in Part I, Mr. Doyal continued to monitor the issue of financial responsibility for all periods including the hearing dates. He also looked at the related question of the possible experience of material adverse change in financial condition. As a means to inform himself concerning the financial position of AWI, Mr. Doyal mainly relied upon quarterly reports filed with the Securities and Exchange Commission through copies provided to the Lottery based upon the fact that AWI is the incumbent vendor. The reports are referred to as Form 10-Q's. They are associated with the business of the parent corporation, VLT, and its subsidiaries, to include AWI. Those reports are for the quarterly periods ending March 31, 1996, June 30, 1996 and September 30, 1996. To arrive at his opinion concerning the financial viability of AWI Mr. Doyal also examined terms of a settlement of the court action between VLT/AWI and its subcontractor EDS, together with consideration of the testimony of other experts who testified concerning the implications of the settlement as that might influence the financial health of AWI. Mr. Doyal's decision to rely upon the credibility of the information in the 10-Qs and to monitor the outcome of the events described and to take action only upon the occasion when he became convinced that AWI was no longer financially responsible or had experienced a material adverse change in financial condition was acceptable. There was no obligation to undertake an independent investigation absent the belief that the AWI financial position had degraded to the point where that became necessary. Those matters set forth in the quarterly 10-Qs adequately form the basis for examining AWI's financial responsibility and the issue of any material adverse change in financial condition experienced by AWI. The Lottery decision through Mr. Doyal to utilize that body of information for the purpose of examining financial responsibility and the issue of the possible material adverse change in financial condition was within the agency discretion as a policy matter. The parties were entitled in the hearing de novo to produce and did produce collateral evidence that would more completely or more correctly explain the information set forth in the 10-Qs and the ability to update that information in the 10-Qs as a means of examining the question of financial responsibility and the related issue of any experience of material of adverse change in the AWI financial condition. An example of collateral evidence would be the information provided concerning the settlement of the suit between VLT/AWI and EDS. Beyond those opportunities, GTECH was not allowed to advance its claim that the Lottery's failure to pursue a more extensive investigation in the first instance, to look to sources of information outside what was contained within the 10-Q's, constituted an act of arbitrariness. The de novo opportunity to expand upon or clarify the details set forth in the 10-Qs allowed the other parties to offer a more comprehensive explanation of the financial condition of AWI, if that was their choice. In particular, the parties were given the opportunity to produce expert witnesses who could examine and contest the material relied upon by Mr. Doyal and his opinion and offer any supplemental material and contrary opinion to assist the trier of fact in deciding the issue of financial responsibility and the related matter of any material adverse change in financial condition experienced by AWI. In examining the question of financial responsibility and the issue of material adverse change in financial condition, to determine if AWI is a responsible bidder, it is recognized that the hearing de novo is not intended to examine the ability of AWI to provide the required fidelity and performance bonds consistent with Part II, Subsection 2.2. The inquiry directed to the AWI financial responsibility and whether AWI has experienced a material adverse change in financial condition does not include reference to the specific ability of AWI to fund its participation in a contract to provide the services envisioned in the RFP. The vendors were told that consideration of the ability to fund would not be part of the evaluation process in determining the best proposal when that issue was broached by GTECH prior to the submission of proposals. Specifically, GTECH in its questions posed to the Lottery prior to submission of proposals asked the following: "Will the financial stability of a vendor be evaluated in connection with its ability to fund the provision of a new system to the Lottery?" The Lottery answered: "Section 24.111(2), Fla. Stat, specifies the information that will be used in determining the financial responsibility . . . of the Respondents." That section within the Florida Statutes does not make it incumbent upon the Lottery to examine the financial ability to fund the project as part of the evaluation. In summary, the ability to fund the project is not part of the consideration of financial responsibility and the question of any experience of a material adverse change in financial condition. Part II, Subsection 1.3 does contemplate that a vendor be fully capable of providing the services when taking into account the vendor's financial condition as a general observation unrelated to specific funding requirements for this project. A vendor unable to meet those terms would be deemed unresponsible and its proposal would be rejected pursuant to Subsection 1.19. The 10-Qs for the several quarters in 1996 reveal a great deal about the financial condition of VLT/AWI. Contrary to the impression of the GTECH's expert, Neil Hochberg, CPA, the 10- Qs are adequate to form an impression concerning financial responsibility and any material adverse change in the financial condition of AWI from May 7, 1996 through the period covered by the 10-Qs. The 10-Qs are supplemented by the details of the settlement of the suit between VLT/AWI and EDS. AWI remains obligated to inform the Lottery concerning any experience of material adverse change in financial conditions prior to the award of the contract or after that award should it succeed in the competition. The failure to disclose that information consistent with Part II, Subsection 1.35 would justify denial of the award of the contract or constitute a breach of the contract between AWI and the Lottery. To the extent that GTECH expresses concern that the period between September 30, 1996 and the hearing date is inadequately explained in the record concerning the financial viability of AWI, it bore the burden to prove de novo that AWI is not financially responsible or has experienced a material adverse change in its financial condition. It could not speculate without proof. Significantly, the financial difficulties that are explained in the 10-Qs concerning AWI's performance in providing services to other Lottery jurisdictions and its dispute with EDS have been resolved for the most part. This allows conclusions to be reached concerning the implications of those events. In addition to the explanations found in the 10-Qs, other evidence was presented to augment that proof which further clarified the impression of AWI's financial position. The remarks by Mr. Doyal and the financial experts presented by AWI lead to the conclusion that sufficient information was available to examine the financial health of AWI. The 10-Qs describe the dispute that existed between AWI and the Arizona Lottery. Reference is also made to a dispute with the Minnesota Lottery that was served by AWI. Eventually, the Arizona dispute was settled with an eight million dollar payment made to the State of Arizona. AWI contributed approximately 1.1 million to the settlement, with additional monies being paid by EDS, as subcontractor to AWI in Arizona, and by insurance carriers. As part of the settlement AWI received a payment of 1.3 million from the State of Arizona. On balance AWI realized a small net financial gain but lost the contract to its competitor. It was not shown that the settlement of the dispute with Arizona in which AWI was terminated as the vendor compromised AWI's financial responsibility and constituted a material adverse change in financial condition. Notwithstanding the payment of the Arizona claim, AWI was successful in renewing its technology errors and omissions insurance policy in the amount of 25 million dollars for 1997 without any significant increase in the cost of the policy. Concerning the State of Minnesota, it had been reported in the 10-Qs that the State of Minnesota assessed its vendor AWI approximately 1 million dollars in penalties by way of liquidated damages for late delivery of software. This assessment was offset by revenues otherwise owed to AWI. Another 3.5 million dollar payment to AWI under an existing contract was withheld by Minnesota based upon a dispute over delivery of another software item. Additionally, the State of Minnesota decided not to renew AWI's contract for reasons of convenience and in 1996 advertised for bids for the future services related to the on-line game. AWI was selected as the lowest bidder under the new solicitation. As part of that process, it has been reported that AWI was technically compliant with the requirements in the solicitation and financially responsible. Negotiations are underway to conclude the new contract. It has not been shown that any of the circumstances between AWI and the State of Minnesota compromise the financial responsibility of AWI or constitute a material adverse change in the financial condition of AWI. In the 10-Qs, reference is made to the AWI relationship with the Kentucky lottery. AWI successfully bid on the contract. However, it withdrew from negotiations based upon the disclosure that AWI might be sold and the pendency of the financial dispute between VLT/AWI and EDS. Those circumstances would not allow AWI to negotiate with Kentucky upon terms that the state deemed acceptable. As with the situation in Arizona the loss of the Kentucky contract deprived AWI of a revenue source, but it has not been shown that the loss of the Kentucky contract compromises AWI's financial responsibility or constitutes a material adverse change in its financial condition. It was disclosed in the 10-Qs that difficulties were experienced in trying to obtain the renewal of a 30 million dollar performance bond to satisfy requirements in the contract held with the State of Maryland. EDS was a subcontractor in Maryland. EDS gave notice to its surety that it would no longer guarantee AWI's obligations to the bonding company. AWI was noticed by the surety that the bond would not be renewed. There ensued negotiations in an attempt to gain substitute collateral for the EDS guaranty. In the third quarter 10-Q AWI had reported that "no assurance" could be given that the bonding issue would be satisfactorily resolved. AWI did resolve it satisfactorily by re-negotiating the bonding program and arranging for the renewal of the 30 million dollar performance bond without a lapse in coverage. As substitute for the EDS guaranty, AWI posted three one-million dollar cash-backed letters of credit. AWI has also renewed its performance bond in Florida for the existing contract. That performance bond for the period for 1997 is in the amount of 12 million dollars. In the final analysis, GTECH has not shown that AWI is unable to obtain performance bonds and that the issue concerning bonds is an indication of the lack of financial responsibility and evidence of a material adverse change in financial condition. The 10-Qs make reference to the termination of the Master Services Agreement between VLT/AWI and EDS. In particular, reference is made to this event as constituting a default under a loan agreement between AWI and its principal lender First Bank, NA. As reported within a 10-Q that default was waived subject to an amendment to the loan agreement. AWI and First Bank entered into a fourth amendment to the loan agreement waiving default, the importance of which is that the line of credit extended from the bank was reduced from 20 million to 17.5 million. These circumstances were not shown to constitute a material adverse change in the financial condition of AWI nor to constitute a compromise in AWI's financial responsibility. In the 10-Qs frequent reference is made to the dispute between AWI and EDS in which AWI had withheld payments to EDS for alleged problems with the EDS performance in providing services to the Arizona and Minnesota lotteries. This led to the termination of the Master Services Agreement and the suit by EDS calling for payment for the services it had rendered in those states. In the 10-Qs AWI continues to insist that it is not responsible for the claims by EDS. Nonetheless, during the second quarter 10-Q, VLT/AWI acknowledged that the circumstances as they existed within the lottery jurisdictions and the dispute with EDS could possibly led VLT/AWI to experience a material adverse change. The circumstances that existed between AWI and the lotteries have been explained leading to the conclusion that no material adverse changes occurred in the final analysis. Likewise, the EDS dispute was resolved by a settlement in the court action. That resolution was not shown to have undermined the financial responsibility of AWI, nor constituted a material adverse change in the financial condition of AWI. EDS had claimed 39 million dollars for its services. By the agreement between VLT/AWI and EDS, VLT/AWI will pay a 27 million dollar note to EDS secured by AWI assets, such as its plant, equipment, software, terminal inventory and VLT stock with a current market value of nine million dollars which had been transferred to VLT/AWI as part of the settlement. VLT/AWI also receives equipment and consumables with an approximate value of seven million dollars. The 27 million dollar note is a long-term instrument. Through the settlement EDS will no longer act as a strategic partner for VLT/AWI, and VLT/AWI will lose the indemnity provided by EDS. The settlement contemplates that several hundred employees who work for EDS will become employees of AWI. The settlement has a short term benefit for VLT/AWI. Long term implications are not clear. For now, the settlement does not compromise AWI's financial responsibility nor constitute a material adverse change in AWI's financial condition. This settlement has profound implications on the future organizational structure of the persons responsible for performing services under a contract. The information by AWI in response to subsection 4.6 changes dramatically. The associated financial statements within the 10-Qs detail the difficulties experienced by VLT/AWI in those reporting periods. Those difficulties were in great measure in relation to the VLT/AWI lottery operations previously described and the EDS controversy. Taking into account the testimony by the financial experts concerning the financial statements, together with the outcome of the EDS suit, it has not been shown that AWI is lacking in financial responsibility. Nor has it been shown that AWI has experienced a material adverse change in its financial condition. OTHER ISSUES Contrary to the allegation in the petition, it was not shown that AWI failed to meet the requirements of Part II at 3.2.6 by using non-conforming tickets in its site demonstration, thus rendering benchmark tests invalid. Contrary to the allegations in the petition, Part II, Subsection 3.3 COMMUNICATIONS NETWORK REQUIREMENTS, does not call upon the vendors to name the Interlata communications carrier for the digital backbone of the proposed communications network to have their proposals evaluated. Contrary to the allegations in the petition, the retailer terminals proposed by AWI comply with the minimum requirements set forth in Part II at 3.4.1 Retailer Terminals. Contrary to the allegations in the petition, the management terminals proposed by AWI meet the requirements of Part II at 3.4.2 MANAGEMENT TERMINALS. Contrary to the allegations in the petition, AWI's proposed retailer terminals can communicate through the existing system. More generally described, AWI has not misrepresented the benefits of its conversion plan in its proposal. Part II, Subsection 5.1 MARKETING SUPPORT calls upon the vendor to describe the type of support it would provide the Lottery, such as game ideas, etc. The petition alleges that AWI in its marketing proposal focused on schemes that were not viable options for the Lottery. At hearing it was revealed that this refers to the question of the legality of some of the proposals by AWI in its marketing solution. To conclude that the marketing requirements in the RFP contemplate proposal of illegal practices is an unreasonable construction. However, it has not been shown that any of the marketing proposals by AWI that fit that category unduly influenced the evaluators. Consequently, those aspects of the AWI marketing proposal, if illegal, are immaterial.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That a final order be entered that, Consistent with the fact finding and conclusions of law: Reconvenes the evaluation committee. Requires the committee to reevaluate and rescore Section 2 taking into account only those items that have been discussed in the recommended order as they influence the overall scores for that section. Requires the committee members to review Section 3 to the RFP, the proposals for Section 3, their notes on that section from all occasions, the expert testimony in the hearing transcript and by deposition about which they have not had exposure, and consistent with the methodology set forth in the recommended order requires the evaluators to rescore the proposals for Section 3. Requires AWI to amend its proposal for Subsection 4.6 consistent with the hearing record in relation to the EDS settlement. Requires the evaluators to rescore the AWI response to Subsection 4.6 at 4.6.1 and 4.6.2 taking into account the amendment. Requires the evaluators and in turn the Lottery to adjust the overall scores assigned the vendors under Part II based upon the outcome of the limited reevaluation. After engaging in the process, the results of the rankings should be posted and the vendors given the further opportunity to challenge the proposed agency action limited to the matters involved in the reevaluation. Section 120.57(3), Florida Statutes (1996 Supp.). Dismisses all other allegations by GTECH in the present case. DONE and ENTERED this 5th day of May, 1997, in Tallahassee, Florida. CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 5th day of May, 1997. COPIES FURNISHED: Thomas F. Panza, Esquire Mark A. Emanuele, Esquire PANZA, MAURER, MAYNARD & NEEL, P.A. 214 South Monroe Street, Suite 320 Tallahassee, FL 32301 Thomas F. Panza, Esquire Mark A. Emanuele, Esquire PANZA, MAURER, MAYNARD & NEEL, P.A. 3600 North Federal Highway Third Floor, NationsBank Building Fort Lauderdale, FL 33308 William H. Roberts, Esquire Susan P. Stephens, Esquire Department of Legal Affairs The Capitol Tallahassee, FL 32399-1050 Martha Harrell Chumbler, Esquire Michael P. Donaldson, Esquire Post Office Box 190 Tallahassee, FL 32302 Kevin E. O'Malley, Esquire GALLAGHER AND KENNEDY 2600 North Central Avenue Phoenix, AZ 85004 Kenneth H. Hart, General Counsel Lousia H. Warren, Esquire Department of Lottery 250 Marriott Drive Tallahassee, FL 32301 William R. Murray, Esquire WILLIAMS AND CONNELLY 725 12th Street Northeast Washington, DC 20005 Dr. Marcia Mann Secretary Department of Lottery 250 Marriott Drive Tallahassee, FL 32301
Findings Of Fact The Petitioner, Berry Investment Group, d/b/a The Berry Ranch, among other things, grows and sells sod. Full Circle Service, Inc., is a landscaping business that was a customer of the Petitioner. Aetna Casualty & Surety Company is the surety for Full Circle to secure the faithful accounting for and payment to producers such as the Petitioner for agricultural products purchased by Full Circle. 1/ During 1986, Full Circle did business with the Petitioner on a running account. Full Circle would order the delivery of sod for installation at different Full Circle jobs. The Petitioner would invoice each delivery separately. During 1986, the Petitioner delivered $4073.40 worth of sod to Full Circle's San Marino Bay in Tampa and Barnett Bank job in Ft. Myers. (In addition, $854.60 for trucking fees and $246.40 of tax was invoiced on these deliveries.) This sod was of acceptable quality 2/ , yet Full Circle has not paid for this sod. Also during 1986, the Petitioner delivered sod to Full Circle for installation at another job in Ft. Myers called Iona Lakes. Full Circle paid the Petitioner over $19,000 for this sod. When the sod was not acceptable to Full Circle's customer, Full Circle replaced much of the sod and claims this and other consequential and incidental damages relating to the Iona Lakes job should be set off against, and therefore completely extinguished, the Petitioner's San Marino Bay and Barnett Bank claims.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Department of Agriculture and Consumer Services enter a final order adjudicating that $4073.40 is the amount of the indebtedness owed to the plaintiff under its Amended Complaint and ordering Full Circle Service, Inc., to pay the indebtedness or, if it is not paid within 15 days after the final order is issued, ordering Aetna Casualty & Surety Company to pay it. RECOMMENDED this 5th day of January, 1988 in Tallahassee, Florida. J. LAWRENCE JOHNSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 1987.
The Issue Whether the Respondent's determination that the proposal the Petitioner submitted in response to the Revised Request for Proposal No. 98/99-010/G was non-responsive is arbitrary or capricious. Whether the Respondent's determination that it would initiate contract negotiations with the only company submitting a responsive proposal in response to the Revised Request for Proposal No. 98/99-010/G and that it would award a contract to that company if the negotiations were successful is contrary to the applicable statutes, rules or policies, or the proposal specifications.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department of the Lottery is the state agency responsible for operating the state lottery authorized by Section 15, Article X, Florida Constitution. Section 24.104, Florida Statutes (1999). The Department is authorized to "[e]nter into contracts for the purchase, lease, or lease- purchase of such goods and services as are necessary for the operation and promotion of the state lottery " Section 24.105(17), Florida Statutes (1999). Bellsouth Communication Systems, Inc., is a corporation authorized to do business in the State of Florida. In 1987, Bellsouth was awarded the contract to install and maintain the Department's telecommunication system. This contract expired in 1993, and Bellsouth and the Department entered into a second contract that expired in 1999. Bellsouth is currently maintaining the Department's telecommunications equipment pursuant to the Second Extension of Agreement for Maintenance of Telephone Equipment and Software, and Miscellaneous Data Processing and Telecommunications Equipment and Software, which was executed on September 29, 1999. This extension commenced on October 1, 1999, and "shall continue until the execution and implementation of a new contract, . . . not to exceed six(6) months." The services that Bellsouth is currently providing to the Department are similar to the services specified in the Revised Request for Proposal. Revised Request for Proposal and Department's Revised Notice of Responsiveness and Responsibility. On February 8, 1999, the Department issued Request for Proposal Number 98/99-007/G, Request for Proposal for Maintenance of Telecommunications Equipment and Software, and Miscellaneous Data Processing Equipment and Software for the Florida Lottery ("Request for Proposal"). The Department received three proposals in response to Request for Proposal Number 98/99-007/G, including one submitted by Bellsouth. The proposals were opened on March 2, 1999. At 4:30 p.m. on March 29, 1999, the Department posted a Notice of Responsiveness and Responsibility, Notice of Rejection of All Proposals for Request for Proposal Number 98/99-007/G. The Department rejected all proposals because it determined that all three proposals were non-responsive. 2/ On April 27, 1999, the Department issued Request for Proposal Number 98/99-010/G - Revised, Revised Request for Proposal for Maintenance of Telecommunications Equipment and Software, and Miscellaneous Data Processing Equipment and Software for the Florida Lottery. The provisions of the Revised Request for Proposal were similar in many respects to the original Request for Proposal Number 98/99-007/G, but some of the original requirements were substantially modified. For the convenience of those responding to the Revised Request for Proposal, those portions of the Revised Request for Proposal in which there were major substantive changes were indicated in bold print, underlined and italicized. 3/ Two addenda to the Revised Request for Proposal were issued, one on May 19, 1999, and one on May 21, 1999. The responses to the Revised Request for Proposal were opened on June 4, 1999, and the Department posted a notice that stated that it had received three proposals, all of which were non-responsive. It subsequently withdrew this notice and posted a Revised Notice of Responsiveness and Responsibility, Notice of Intent to Negotiate, Notice of Contract Award, 98/99-010/G, Request for Proposal for Maintenance of Telecommunications Equipment and Software and Miscellaneous Data Processing Equipment and Software for the Florida Lottery ("Revised Notice") at 9:30 a.m. on September 7, 1999. In the Revised Notice, the Department stated that it had received four proposals and that three had been found to be non-responsive. The Department found Bellsouth's proposal non- responsive for the following reason: Responses to the following sections were conditional: Section 2.10 Section 2.22E Section 2.22H Section 3.3A Section 3.6 The Department also found the proposals of GTE Florida Incorporated and Sprint non-responsive. The Department announced in the Revised Notice: A fourth response which was received timely was inadvertently omitted from the responsiveness and responsibility review. The following Respondent submitted a responsive proposal: GTE Communications Corporation No Respondent was determined to be non- responsible. * * * The Florida Lottery will evaluate GTE Communications Corporation's proposal for acceptability. If the proposal is determined to be acceptable, the Lottery intends to initiate contract negotiations and, subject to completion of successful negotiations, intends to award a contract. Award is contingent upon successful completion of negotiations. Should the Florida Lottery fail to successfully negotiate a contract with the responsive firm, the Lottery will score the technical and price proposals of the non- responsive firms using the criteria set forth in the Request for Proposal. Negotiations will then begin with the firm who receives the highest ranked score. If the Florida Lottery is unable to negotiate a satisfactory contract with that firm, negotiations will continue with the next highest ranked firm. Failing accord with the second highest ranked firm, the Secretary or designee will continue negotiations with the third highest ranked firm. Should the Secretary or designee be unable to negotiate a satisfactory contract with any of the selected firms, additional firms may be selected in accordance with Rule 53ER97-39, Florida Administrative Code, or negotiations may be reinstated following the original order of priority. The Florida Lottery will award a contract to the Respondent offering the terms and conditions which best meet its needs. Although the cost proposals submitted by the four companies submitting proposals to the Revised Request for Proposal had not been opened as of the date of the final hearing, it is undisputed that the value of the contract exceeds $25,000. The Revised Request for Proposal and Bellsouth's proposal. In Section 1.1 of the General Information section of the Revised Request for Proposal, the purpose of the Revised Request for Proposal is explained in pertinent part as follows: This Request for Proposal ("RFP") has been issued by the Florida Department of the Lottery ("Lottery") to obtain sealed proposals from respondents qualified to provide maintenance of the Florida Lottery's statewide telecommunications equipment and software, and miscellaneous data processing equipment and software. 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 Rule 53ER97-39, Florida Administrative Code, and Chapter 24, Fla. Stat. The Lottery considers it in the best interest of the State of Florida to acquire the commodities and/or services described herein through a competitive formal Request for Proposal process. Bellsouth's response to the Revised Request for Proposal was prepared by a group of employees located in Alabama and was coordinated by the sales executive who has been handling the current Bellsouth contract with the Department. The group was headed by V. Carol Moore, a bid support manager for contracts, whose duties are to "review incoming RFPs and commercial proposals for terms and conditions of compliance in relation to our company's policies." 4/ Ms. Moore was the person primarily responsible for preparing those portions of Bellsouth's proposal that did not involve purely technical information regarding maintenance and pricing. Her area of responsibility included those sections of the Revised Request for Proposal that were deemed conditional by the Department. In preparing the proposal, Ms. Moore was guided by her interpretation of the description of mandatory requirements of the proposals in Section 2.1 of the Revised Request for Proposal and her interpretation of the evaluation review process described in Section 5.2 of the Revised Request for Proposal, as well as by Bellsouth's business practices and policies. Ms. Moore particularly noted the Department's failure to expressly provide in the first paragraph of Section 2.1 that deviation from the mandatory requirements of the proposal, defined as those requirements containing the words "shall," "must," and "will," would be grounds for rejecting a proposal. She also particularly noted the Department's announced intention in Section 5.2 to negotiate "fair, competitive, and reasonable" conditions and prices with those responding to the Revised Request for Proposal. Ms. Moore assumed that the clarifications and modifications included in Bellsouth's proposal would be considered alternatives to the requirements included in the Revised Request for Proposal and that the clarifications and modifications would be subject to negotiations with the Department once the bid process entered the contract negotiation phase. 5/ Section 2.10 of the Special Conditions section of the Revised Request for Proposal provides: 2.10 Proposal Tenure All Proposals are binding until execution of a contract. Bellsouth included in its proposal the following statement: 2.10 Proposal Tenure Bellsouth Response: Read and Agreed, with the clarification that Bellsouth's proposed pricing is valid for 90 days after bid submission, to allow sufficient time for evaluation and award. Extensions may be mutually agreed if the situation warrants. Bellsouth included the clarification limiting the tenure of its pricing proposal for the following reason: It was a business decision in that with these kinds of RFPs the process can take an extensive amount of time sometimes. And we don't generally hold our pricing open for longer than 90 days and that's because whatever stipulations we get from our manufacturers we have to live with in those bounds also. And so we felt like it was appropriate to put a time frame on the pricing only, but realizing of course these kinds of acquisitions though municipalities and governments sometimes take longer than 90 days, we did give them an avenue for extending it for whatever circumstances that might warrant that particular extension. 6/ It is Bellsouth's practice to include such language in virtually all of its responses to requests for proposals because the prices Bellsouth obtains from manufacturers are subject to change, and Bellsouth cannot guarantee its prices indefinitely. Section 2.22E of the Special Condition section of the Revised Request for Proposal provides: 2.22 Contents of Contract In addition to the terms and conditions referenced above, the Contract between the Lottery and the Contractor shall also include at least the following provisions: * * * E. Subcontracting - The Contractor may enter into written subcontracts for performance of work under the Contract with prior written approval of the Lottery. All subcontractors shall be subject to the approval of the Lottery. The Lottery shall have the continuing right throughout the term of the Contract to disapprove subcontractors if such disapproval would be in the best interest of the Lottery. The Lottery shall have the right to inspect and acquire copies of any of the subcontractor documents executed between the Contractor and the subcontractor. Bellsouth included in its proposal the following statement: 2.22 Contents of Contract * * * E. Subcontracting Bellsouth Response: Read and Agreed. Rejection of Bellsouth's subcontractor(s) shall be reasonably applied and approval not unreasonably withheld. The extent of "copies of any of the subcontractor documents executed between the Contractor and the subcontractor" shall be as mutually agreed and only to the extent required under Florida law. Bellsouth included the final sentence to give notice to the Department that, in the event Bellsouth decided to use subcontractors, it wanted the opportunity to sit down with the Department and discuss the documents that the Department required, as well as the law applicable to their disclosure. Bellsouth was concerned that the Department would require it to provide unlimited access to documents executed between it and a subcontractor because some of the documents might contain proprietary information, such as "specific internal pricing methodologies and profit margins and things like that." 7/ Section 2.22H of the Special Condition section of the Revised Request for Proposal provides: 2.22 Contents of Contract In addition to the terms and conditions referenced above, the Contract between the Lottery and the Contractor shall also include at least the following provisions: * * * Indemnification - Contractor shall act as an independent contractor and not as an employee of the Lottery in the performance of the tasks and duties which are the subject of the Contract. Contractor shall be liable, and agrees to be liable for, and shall indemnify, defend, and hold the Lottery, the state of Florida, its officers and employees harmless from all claims, suits, judgments, or damages (including litigation costs and reasonable attorney's fees) arising from Contractor's performance of the tasks and duties which are the subject of the Contract, including: Claims for the unauthorized use of name or likeness of any person, libel, slander, defamation, disparagement, piracy, plagiarism, unfair competition, idea misappropriation, infringement of copyright title, patent, slogan or other property rights and any invasion of the right of privacy; and Claims arising from contracts between the Contractor and third parties made pursuant to the Contract. Bellsouth included in its proposal the following statement: 2.22 Contents of Contract * * * H. Indemnification Bellsouth Response: Read and Agreed with the following clarifications: (i) to the maximum extent allowed by applicable Florida law, indemnification is reciprocal and applicable only to each parties' negligent or wrongful acts or omissions arising under each others' performance under the contract; and (ii) with respect to the intellectual property aspects of section H.1., Bellsouth substitutes section 24 of the enclosed Master Agreement located in Tab 8 of this response. 8/ Bellsouth included this language for the following reason: The indemnification provision itself was staffed through our corporate attorneys who chose to put this particular language in there. We had just gone through another quasi-state agency bid which eventually ended up having this particular kind of language in it so that the indemnification allowed between the parties would be to the point of complying with Florida law and that's what our attorney felt like was appropriate here with an eye on the fact that the lawyers would sit down at contract award time and negotiate this particular provision. 9/ Bellsouth understood that the reciprocal indemnification provision would require each party to the contract to be responsible for its own misconduct, and Bellsouth anticipated that the precise language of the indemnification clause would be worked out during contract negotiations. Section 3.3A of the Scope of Services section of the Revised Request for Proposal provides: SCOPE OF SERVICES Contractor will be required to provide the following services: Maintenance Maintenance is defined as the service necessary to keep equipment and software in or return the equipment and software to good working order. The term includes, but is not limited to, preventative maintenance, adjustments, and replacement or exchange of parts and equipment necessary to remedy and repair all errors or malfunctions of equipment and software, and provision of all software modifications and improvements provided by the Licensor on a priority basis and provision and installation of all engineering orders/field change orders to upgrade the hardware issued by the manufacturer of the equipment. Contractor will be required to provide services in the cities listed on Attachment B. A guaranteed response time for each site listed on Attachment B will be set forth in the Contract. The Contractor will be required to provide maintenance service for additional items of equipment and software added to the Lottery's inventory, either through the contract resulting from the Request for Proposals or otherwise acquired, for the same unit cost as stated on Attachments C1 - C15 (Equipment and Software Maintenance Cost Proposal Forms) of this RFP. The maintenance period for new items purchased will begin at the end of the product's warranty period and will automatically be added by Contractor to any and all occurrences in the Contractor's maintenance tracking database(s) to avoid any lapse in coverage. (Underlining and italics in the original; deleted provisions omitted.) Bellsouth included in its response the following statement: SCOPE OF SERVICES Maintenance Required Bellsouth Response: Read and Agreed, with clarification. * * * Bellsouth maintains one of the most comprehensive proactive preventive maintenance programs in the industry. Bellsouth agrees to provide maintenance service for additional items of equipment and software added to the Lottery's inventory, as long as the equipment/software is either provided by or certified by Bellsouth (through a separate certification process). Please also see Bellsouth Response to Section 4.6 for specific response times. The Department requested that Bellsouth amplify this statement with a description of its certification process. Bellsouth provided the following explanation: Bellsouth Certification Process Should The Florida Lottery install or have installed equipment supplied by companies other than Bellsouth, Bellsouth will certify the equipment - to be added to any existing maintenance/warranty term - on a Time and Materials basis at Bellsouth's then-current rates. These rates may be different from the rates quoted in the bid response because the time of implementation cannot be pre- determined. Should the Lottery decline Certification, the subject part will not be covered by any extended warranty and the Lottery will be liable for any repair cost associated with installing the non-certified part. In some instances, depending upon the part, the existing warranty provided by Bellsouth (if any) may be adversely affected. Generally, the Certification process involves visual inspection, and after installation, complete system diagnostics may be performed. Routine tests as recommended by the system manufacturer as well as the part manufacturer may be performed. The type and amount of testing, diagnostics, and/or repairs are entirely dependent on the individual part. Bellsouth included its clarification to the provisions of Section 3.3A because it wanted the Department to be aware that it had a process for certifying equipment and software purchases from third parties to make sure that the equipment met Bellsouth's standards and would not have a detrimental effect on any of the other equipment Bellsouth was maintaining for the Department. In addition, Bellsouth was concerned that the Department would buy a piece of equipment that was not listed on Attachments C1 - C15 and expect Bellsouth to maintain it for the same price as it would maintain a similar piece of equipment listed in the attachments. Bellsouth wanted to make sure that the Department understood that the prices it provided for the equipment listed in the attachments was for that equipment only, not for similar equipment. It also wanted the Department to understand, first, that additional pieces of equipment certified by Bellsouth would not be maintained at the bid price but at its then-current prices and, second, that the Department would be liable for the costs of maintenance of any additional equipment which was not certified by Bellsouth. Any additional equipment the Department purchased from Bellsouth would be maintained under the terms of the contract. Section 3.6 of the Scope of Services section of the Revised Request for Proposal provides: 3.6 PRICE PROVISIONS The Contractor must provide all labor, commodities and service required to meet the provisions of the Contract. The price proposal must reflect the total cost for maintenance and support services required by the RFP. This includes but is not limited to maintenance, parts and training as specified in Section 3.3. Unless approved in writing by the Lottery, all maintenance costs must be billed monthly in arrears in accordance with Section 215.422, Florida Stat. The monthly billing shall include charges for only those items actually in the possession of the Lottery for the time period maintenance is being charged. There shall be an annual advanced payment discount option which either meets or exceeds the current earnings rate of the State Treasurer. Pricing for maintenance and support service shall not be increased during the first year of the contract. The Contractor may request one (1) price increase per year for the remaining four (4) years of the contract. If the Contract is renewed, Contractor may request one (1) price increase per renewal period to be negotiated by both parties. The request must be supported by documentation acceptable to the Lottery that demonstrates that the Contractor's costs for providing commodities and/or services have increased by at least the percentage of the requested increase; in no event shall the increase exceed the percentage increase in the CPI during the corresponding period. The third paragraph of Section 3.6 of the original Request for Proposal was deleted in its entirety from the Revised Request for Proposal. Bellsouth included in its proposal the following statement: 3.6 PRICE PROVISIONS Bellsouth Response: Read and Agreed. Please see Tab 1 of the Cost Proposal response submitted with this response. The monthly prices quoted for each site are based upon the products outlined in Attachments C1-C15 only (items currently in the possession of Florida Lottery). Monthly maintenance prices quoted for items still under warranty are listed as information only. Once the initial warranty period is over, the equipment will be added to the Florida Lottery's maintenance agreement and Bellsouth's then-current maintenance prices will apply. Bellsouth offers a 5% (five- percent) annual advanced payment discount option. Bellsouth will adjust maintenance prices, not to exceed the CPI, prior to the beginning of the next renewal term, and based on the existing inventory at a particular location. This adjustment shall be automatic as allowed by the contract and not subject to additional documentary justification. Bellsouth included the final sentence because it wanted to make it [price adjustment process] automatic at the time so that it would be a less administrative burden for both parties. And after working with the government, I know what it is to go back in and do price adjustments to contracts. And it is easier if you do know at the onset what it's going to be and how it's going to be adjusted and just do a carte blanche adjustment at that particular point. We wanted to make it easier for everyone to do that. It was certainly a suggestion or an alternative of how they might do it under price and provisions. We also stated that it would be automatic as allowed by the contract. Assuming, of course, that this was going to be a negotiated contract. 10/ Bellsouth specifically included in its proposal the provision that no "additional documentary justification" would be required to support the automatic price adjustment because it was concerned that the Department might require documents containing confidential or proprietary information to support the price increases: [I]t was unknown at that particular point in time when we answered this what kind of additional documentation they [the Department] would be requiring. They could very well have left quite a bit of the company open to their inspection when it didn't have to deal with this particular contract. Not that we tried to hide that particular information, it was just that I didn't -- the company did see the relevance of it. 11/ The Department's determination that Bellsouth's proposal was non-responsive. In Section 1.2 of the General Information section of the Revised Request for Proposal, "responsive proposal" is defined as "[a] timely submitted proposal which conforms in all material respects to the RFP." Sections 2.1 and 2.2 of the Special Conditions section of the Revised Request for Proposal provide in pertinent part: MANDATORY REQUIREMENTS 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 indicates 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 be cause for rejection of a proposal. NON-RESPONSIVE PROPOSALS, NON- RESPONSIBLE RESPONDENTS 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 as mandatory, or without which an adequate analysis and comparison of proposals is impossible, or those which affect the competitiveness of proposals or the cost to the State. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP. Section 2.14 of the Revised Request for Proposal provides in pertinent part: The Contract shall incorporate this RFP, addenda to this RFP, and the Contractor's proposal as an integral part of the Contract, except to the extent that the Contract explicitly provides to the contrary. In the event of a conflict in language among any of the documents reference above, the provisions and requirements of the contract shall govern. In the event that an issue is addressed in the proposal that is not addressed in the RFP, no conflict in language shall be deemed to occur. . . . Nothing in the Revised Request for Proposal instructed those submitting proposals to respond to any of the mandatory requirements of Section 2.22, which specify the contents of the contract, or to any of the mandatory requirements of Section 3, which specify the scope of services to be provided under the contract. The Department generally considers no response to the provisions of these sections, and responses such as "read and understood" or "read and agreed", to indicate acquiescence to the mandatory provisions included in requests for proposals. Section 5.2 of the Revised Request for Proposal describes the evaluation review process as follows: The Secretary shall appoint an Evaluation Committee. All responsive technical proposals submitted by responsible Respondents will be reviewed and scored by the Evaluation Committee. The cost and CMBE proposals will thereafter be publicly opened and evaluated in accordance with the formula set forth in Section 5.4. The issuing Officer shall rank the Respondents based on the total scores of the technical, cost and CMBE proposals. Thereafter, the Lottery shall commence negotiations with the most highly ranked Respondent. Should the Lottery be unable to negotiate with that Respondent the conditions and price that the Florida Lottery deems to be fair, competitive, and reasonable, negotiations with that Respondent shall be terminated. The Florida Lottery shall then undertake negotiations with the second most highly ranked Respondent. Should the Florida Lottery be unable to negotiate a satisfactory Contract with that Respondent, the third and lower ranked Respondents may be selected to participate in this negotiation process or negotiations may be reinstated with the highest ranked Respondent. Negotiations shall continue until an agreement is reached or all proposals are rejected. An award of this RFP does not guarantee execution of a Contract. (Underlining and italics in original.) The "conditions and price" referred to in Section 5.2 of the Revised Request for Proposal include the mandatory requirements of Sections 2.22 and 3. In the course of contract negotiations, the Department can agree to include in the contract provisions different from those contained in these sections of the Revised Request for Proposal. The Department is not, however, required to negotiate or accept alterations to any of the mandatory requirements for the contents of the contract or for the scope of services. In conducting the responsiveness review of Bellsouth's proposal, the Department reviewed only the information contained in the proposal. The Department noted that Bellsouth had included clarifications and modifications to a number of the mandatory requirements of the Revised Request for Proposal, from which it could be inferred that Bellsouth found those mandatory requirements unacceptable. Members of the Department's purchasing office and legal office reviewed the substance of the clarifications and modifications included in Bellsouth's proposal, and some deviations were waived as minor. However, the members of the Department's purchasing office and legal office determined that the clarifications and modifications contained in Sections 2.10, 2.22E, 2.22H, 3.3A, and 3.6 of Bellsouth's proposal constituted material deviations from the mandatory requirements of the Revised Request for Proposal which, by the terms of Section 2.2 of the Revised Request for Proposal, rendered Bellsouth's proposal non-responsive. The Department concluded that Bellsouth's statement in Section 2.10 of its proposal that its pricing proposal would remain valid for only ninety days, with extensions subject to mutual agreement, was a material deviation from the Revised Request for Proposal. Section 2.10 of the Revised Request for Proposal unequivocally states that pricing proposals submitted in response to the Revised Request for Proposal would be "binding until execution of a contract." The Department interprets this requirement as a statement of fact, which would not, under any circumstances, be subject to modification or negotiation. If the Department waived this deviation and accepted Bellsouth's proposal as responsive, Bellsouth could, prior to execution of a contract, unilaterally alter its price proposal. This would not only give Bellsouth a significant advantage over the other companies submitting proposals, it could adversely affect the Department. The Department's legal office reviewed Bellsouth's proposal with respect to the clarifications and modifications included in Sections 2.22E, 2.22H, 3.3A, and 3.6 and concluded that, if the Department waived the deviations from the mandatory requirements in these sections and accepted Bellsouth's proposal as responsive, the Department might be legally bound to accept the clarifications and modifications as part of any contract it might negotiate with Bellsouth. As a consequence, the Department could be precluded from negotiating conditions and prices that it considered "fair, competitive, and reasonable" should Bellsouth's proposal be the most highly ranked and the Department enter into negotiations with Bellsouth. The Department would be adversely affected if it were required to accept Bellsouth's clarifications and modifications to Sections 2.22E, 2.22H, 3.3A, and 3.6: Specifically, Bellsouth would not have an obligation to submit documentation to support price increases; Bellsouth would have the option of refusing to maintain equipment purchased by the Department during the contract period if Bellsouth failed to certify such equipment, with the Department being liable for the cost of maintaining such equipment; Bellsouth would have a more restrictive indemnification obligation than that specified in the Revised Request for Proposal; and Bellsouth could withhold documentation relating to subcontractors to which the Department would be entitled under the mandatory provisions of the Revised Request for Proposal. A document entitled "RE: RFP NO. 98/99-010/G DOCUMENTATION OF CIRCUMSTANCES OF LOTTERY DETERMINATION THAT A THIRD CALL FOR BIDS WOULD NOT BE IN THE BEST INTEREST OF THE LOTTERY," was signed by the Department's Purchasing Supervisor on October 15, 1999. The document provides: THIS DOCUMENT is being created pursuant to Florida Lottery Rule 53ER97-39(5)(f) [Florida Administrative Code] and documents the circumstances of the Lottery's determination that it would not be in the Lottery's best interest to issue a third call for bids in this procurement. The Lottery issued RFP 98/99-007/G for Maintenance of Telecommunications Equipment and Software, and Miscellaneous Data Processing Equipment and Software on February 8, 1999, Of the three responses received to that RFP, none was responsive. Consequently, on March 29, 1999, the Lottery posted its Notice of Responsiveness and Responsibility and Notice of Rejection of All Proposals. As a result of receiving no responsive proposals to the above referenced RFP, the Lottery issued a new revised Request for Proposals, RFP 98/99-010/G for the same services and equipment. This RFP was issued on April 27, 1999. Vendors received a cover sheet with the second RFP titled "Important Notice and Instructions to Respondents" drawing their attention to certain changes in the RFP and encouraging a complete review. Of the responses received to the second RFP, three were not responsive. The Lottery inadvertently overlooked a fourth response, initially, to the revised RFP. While still thinking that only three non-responsive proposals had been received, a Notice of Responsiveness and Responsibility and Notice of Intent to Negotiate and Notice of Contract Award was posted on August 30, 1999. This Notice advised of the Lottery's intended procedure for negotiating and awarding a contract. Subsequent to posting the Notice referred to in paragraph 4, the Lottery discovered that a fourth response had been received under the revised RFP. That response was accordingly reviewed for responsiveness and responsibility using the same criteria as had been applied under the RFP for the first three responses. The fourth response was found to be responsive and responsible. Consequently, the Lottery issued a Revised Notice of Responsiveness and Responsibility and Notice of Intent to Negotiate and Notice of Contract Award under RFP 98/99-010/G. This Notice was dated September 7, 1999. It advised of the Lottery's intent to evaluate the one responsive proposal and, if acceptable, to initiate contract negotiations with the responsive Respondent and, pending the outcome of the negotiations, to award a contract to that Respondent. The foregoing facts and circumstances were all taken into account in making the decision not to issue a third RFP, as provided in Rule 53ER97-39(5)(f). The Lottery considered, for example, that after having issued two Requests for Proposals, with a combined total of seven responses, only one responsive proposal had been received. After having made these two attempts, the Lottery had no reason to believe that additional attempts would prove to be more successful. Further, the Lottery considered the fact that its then current contract for these services was scheduled to expire on September 30, 1999, and that, therefore, there was a need to reach a successor agreement on an expedited basis, if possible. Based on all the foregoing circumstances, it was determined to be in the Lottery's best interest to proceed without issuing yet another Request for Proposal. Although it was drafted over a month after the Department made its decision, this document accurately reflects the factors taken into consideration by the Department in deciding to initiate contract negotiations with GTE. Summary The evidence presented by Bellsouth is not sufficient to establish with the requisite degree of certainty that the Department's determination that Bellsouth's proposal was non- responsive was arbitrary or capricious. Rather, the evidence establishes that Bellsouth chose to include in its proposal clarifications and modifications to mandatory requirements of the Revised Request for Proposal even though those who submitted proposals were advised in Section 2.14 of the Revised Request for Proposal that a proposal would be rejected as non-responsive if it failed to "meet all material requirements of this RFP," where "material requirements" are defined as "those set forth as mandatory." In the absence of anything in the proposal to indicate that Bellsouth intended to put forward these clarifications and modifications simply as negotiating points, the Department could reasonably interpret Bellsouth's responses as conveying its refusal to accept the mandatory requirements of the Revised Request for Proposal. The evidence further establishes that the Department evaluated Bellsouth's proposal during the responsiveness review and determined that, if it were to accept Bellsouth's proposal as responsive, the clarifications and modifications included in Bellsouth's responses to Sections 2.10, 2.22E, 2.22H, 3.3A, and 3.6 could adversely impact the Department and inhibit its ability to negotiate the best terms and conditions were it to enter contract negotiations with Bellsouth. The evidence presented by Bellsouth is not sufficient to establish that the Department reached this conclusion without considering the factors relevant to a determination of responsiveness or that the Department's interpretation of the provisions of the Revised Request for Proposal was irrational or unsupported by facts or logic. Similarly, the evidence submitted by Bellsouth is not sufficient to establish that the Department's decision to initiate contract negotiations with GTE rather than to solicit proposals for a third time was inconsistent with its governing statutes, rules, or the provisions of the Revised Request for Proposal. The Department's contract with Bellsouth for the maintenance of its telecommunications equipment has twice been extended. The Department has twice solicited proposals and received only one proposal that it determined to be responsive. Under these circumstances, it is not unreasonable for the Department to conclude that it would be in its best interests to proceed with contract negotiations with the company submitting the only responsive proposal to the Revised Request for Proposal. The Department is not bound to enter into a contract with GTE unless the Department is able to negotiate the conditions and price that it considers "fair, competitive, and reasonable." Section 5.2, Revised Request for Proposal.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of the Lottery enter a final order Denying the bid protest of Bellsouth Communication Systems, Inc.; Dismissing the Amended Formal Written Protest and Petition for Formal Administrative Hearing filed by Bellsouth Communication Systems, Inc. ,and Denying Bellsouth's request for an award of attorneys' fees and costs. DONE AND ENTERED this 13th day of December, 1999, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of December, 1999.
The Issue The issue in this case is whether Respondent should apply $5,000 won by Petitioner in the Florida Lottery toward child support and costs owed by Petitioner pursuant to Section 24.115(4), Florida Statutes (1997). (All chapter and section references are to Florida Statutes (1997) unless otherwise stated).
Findings Of Fact On November 7, 1997, the Circuit Court for the Seventh Judicial Circuit, in and for Volusia County, Florida (the "Circuit Court") entered a Final Judgement on Custody (the "Final Judgment"). The Circuit Court awarded custody of the minor child to Petitioner's ex-wife and ordered Petitioner to pay child support of $485.46 on the first day of each month. Petitioner failed to pay child support in accordance with the Final Judgement. Respondent brought an action to enforce the Final Judgement. On February 10, 1999, a Child Support Hearing Officer for Respondent entered a Report and Recommendation of Hearing Officer on Contempt (the "Contempt Report") determining that Petitioner owed an arrearage in the amount of $8,279.81. The Contempt Report required Petitioner to make timely payments of his monthly obligation for child support in the amount of $485.46 and to make a lump sum payment of $1,000 on or before March 12, 1999, to "purge" himself of contempt. An Income Deduction Order required Petitioner to pay child support of $485.46 each month to the clerk of the court. Petitioner filed a Notice of Exceptions to the Contempt Report and Income Deduction Order. On March 29, 1999, the Circuit Court conducted an emergency hearing to consider Petitioner's exceptions, to direct the Department of Revenue to Release Lottery Funds, and to consider Petitioner's motion to strike the paragraph in the Contempt Report requiring Petitioner to make a lump sum payment of $1,000. The Circuit Court granted Petitioner's Notice of Exceptions and struck the paragraph requiring Petitioner to pay $1,000 on or before March 12, 1999. The Circuit Court also ordered the release of Petitioner's lottery prize to his ex-wife to satisfy part of the arrearage Petitioner owes for child support. In relevant part, the Circuit Court stated: 2. That the [Petitioner'] lottery funds shall be released over to the [ex-wife] . . . . That the Department of Revenue is hereby ordered to release these funds directly to the [ex-wife] in an expedited manner as she is in dire need of said funds. On July 21, 1999, Respondent conducted an audit of the file and determined that Petitioner made some payments between February 10, 1999, and July 21, 1999. As of July 21, 1999, the arrearage of child support and costs owed by Petitioner was $7,395.09. Petitioner submitted no evidence that he has satisfied the arrearage in the amount of $7,395.09. Petitioner argues that he has appealed the order of the Circuit Court authorizing Respondent to disburse Petitioner's lottery prize directly to Petitioner's ex-wife and that DOAH is without jurisdiction.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order finding that Petitioner owes an outstanding obligation for child support in the amount of $7,395.09, through July 21, 1999, and applying the lottery prize to reduce the outstanding obligation of $7,395.09. DONE AND ENTERED this 2nd day of September, 1999, in Tallahassee, Leon County, Florida. DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of September, 1999. COPIES FURNISHED: Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Chris Walker, Senior Attorney Department of Revenue Post Office Box 8030 Tallahassee, Florida 32314 Ubangi Hajj-Mak Post Office Box 269 2208 Southwest Road Sanford, Florida 32772-0269 Sue M. Cobb, Interim Secretary Department of Lottery 250 Marriot Drive Tallahassee, Florida 32301 Ken Hart, General Counsel Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301
The Issue Whether the Petitioner's application for a Pari-Mutuel Wagering occupational license and request for a waiver should be granted or denied for the reasons set forth in the Respondent's letter dated August 20, 2009.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Division is the state agency responsible for issuing occupational licenses to employees of pari-mutuel facilities in Florida. See § 550.105(1), Fla. Stat. On or about April 2, 2009, Ms. Jennings submitted an application for a pari-mutuel wagering license, specifically for a cardroom license that would allow her to be a dealer in the poker room of a pari-mutuel facility. Ms. Jennings indicated on the application form that she had never held a pari-mutuel license in Florida. In the section of the license application entitled "To Be Completed by Cardroom Applicants Only," Ms. Jennings answered "no" to the following question: "Have you ever been convicted of, or had adjudication of guilt withheld for, a felony or misdemeanor involving forgery, larceny, extortion or conspiracy to defraud or filing false reports to government agency, racing or gaming commission or authority, in this state or any other stated under the laws of the United States?" In the section of the application entitled "Background Information", Ms. Jennings answered "no" to the following question: "Have you ever been convicted of or had adjudication withheld for any crime, or pled guilty or nolo contendere to any criminal charges against you? If yes, give details in the space provided below." In the space provided, Ms. Jennings wrote: "Had adjudication; As part of a prosecution of someone else, I cooperated and gave testimony. However, I was personally not convicted of any wrongdoing." Upon investigation, the Division learned that Ms. Jennings had been adjudicated guilty of one count of grand theft in the third degree on January 26, 1995, in Brevard County, Florida. She was sentenced to two years' probation and required to report monthly to her probation officer. Ms. Jennings spent approximately three months in jail prior to her conviction because she could not pay for her bail. On April 22, 2009, Ms. Jennings submitted a request for a waiver from the Division so she could obtain her pari-mutuel wagering license. A waiver must be obtained by, among others, any new applicant for a Florida pari-mutuel license who has been convicted of any felony. Ms. Jennings was 27 years of age when she was convicted of grand theft. She explained that, at the time of the offense, she was involved with a boyfriend who had threatened to kill her and her family when she first became involved with him. She stated that she became "brainwashed and co-dependent on him and basically scared for my life."2 As a result, Ms. Jennings did whatever her boyfriend wanted her to do. According to Ms. Jennings, she was charged with grand theft because, at her boyfriend's direction, she obtained a cell phone under a false name. Ms. Jennings testified that she answered "no" to the question asking if she had been convicted of a crime because she was told by a federal prosecutor named Larry Turner that she would "have a clean record" if she testified against her boyfriend, who had been charged with murder.3 Ms. Jennings testified, and her boyfriend was convicted. Ms. Jennings assumed, therefore, that she would not have "anything in [her] background as a criminal record."4 Ms. Jennings gave the following testimony at the final hearing: She told the Division's investigators about the circumstances of her criminal conviction but did not tell them that she believed her criminal record had been sealed. She was shocked when the Division's investigators told her they had found records of her conviction: "I was like, Huh?"5 She had to go look up the records of the conviction and then her recollection of the arrest and conviction "came back to [her] . . . eventually."6 She was shocked when the Division's investigators told her they had found this conviction because she thought the conviction had been erased. Ms. Jennings has a high school education. After her conviction, Ms. Jennings tried to go to school, but she did not finish. For a time, she worked at a restaurant as a waitress; she had a part-time job doing promotional work for night clubs; and she also worked as a blackjack dealer at a nightclub where blackjack was played for entertainment. When asked what she had done with her life, Ms. Jennings responded: "I had boyfriends and long-term relationships and basically I was taking care of them."7 Ms. Jennings's current boyfriend, her sister, and her best friend testified that Ms. Jennings had always been honest with them. The totality of the evidence presented by Ms. Jennings is insufficient to establish she is rehabilitated and possesses good moral character: She failed to disclose her conviction for grand theft in her application for licensure; her explanations of the reasons for failing to disclose the conviction are inconsistent; her explanation of the act underlying her conviction of grand theft, procuring a cell phone under a false name, is unconvincing; and her vague description of her life since the conviction fails to demonstrate any accomplishments or any positive change in her circumstances since her conviction.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, enter a final order denying the application of Soon Young P. Jennings for a pari-mutuel wagering license. DONE AND ENTERED this 28th day of June, 2010, in Tallahassee, Leon County, Florida. PATRICIA M. HART Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 2010.
The Issue Are the February 13, 2014, letters of Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (Division), requiring totalisator reports to "identify the Florida [permitholder] in reports as both host and guest when applicable," statements that amount to a rule, as defined in section 120.52(16), Florida Statutes (2013).1/
Findings Of Fact Florida permits and regulates betting on greyhound racing,2/ jai alai games,3/ quarter horse racing,4/ and harness racing.5/ The Division is responsible for administration of Florida's statutes and rules governing this betting. JKC and OPKC are separate, individually permitted facilities. Jacksonville Greyhound Racing owns and operates both the JKC and the OPKC. It is not, however, a party to this proceeding. The betting system is a pari-mutuel system. This "means a system of betting on races or games in which the winners divide the total amount bet, after deducting management expenses and taxes, in proportion to the sums they have wagered individually and with regard to the odds assigned to particular outcomes."6/ Each race, contest, or game is an "event."7/ The aggregate wagers called "contributions" to pari-mutuel pools are labeled "handle." § 550.002(13), Fla. Stat. An "intertrack wager" is "a particular form of pari-mutuel wagering in which wagers are accepted at a permitted, in-state track, fronton, or pari-mutuel facility on a race or game transmitted from and performed live at, or simulcast signal rebroadcast from another in-state pari-mutuel facility."8/ The JKC offers intertrack wagering at its permitted facility located in Jacksonville, Florida. It does not offer live events. The OPKC offers intertrack wagering and wagering on live events conducted at its permitted facility in Orange Park. The Racetracks are host tracks when they transmit live greyhound racing to other in-state and out-of-state facilities for off-track wagers.9/ They are guest tracks when wagers are made at their separate permitted locations on pari-mutuel races or games conducted at third-party facilities.10/ Florida statutes and the Division's rules require detailed reports from permitholders to the Division and other permitholders, including tables of wagers, pool data, and winnings.11/ These reports are generated by "totalisators." A totalisator 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."12/ The Division's Form DBPR-PMW-3570 requires host permitholders to report intertrack wagering "handle" by guest on a monthly basis. The host permitholders must sign and attest to the accuracy of the information submitted in the form. Also, Florida Administrative Code Rule 61D-7.023(2) requires generation of reports for each pool within each contest to be printed immediately after the official order of finish is declared. On March 9, 2012, the Division issued a letter to AmTote International ("AmTote"), a licensed totalisator company, and copied Jacksonville Greyhound Racing, notifying AmTote that Florida permitholders and the Division would need a breakdown of the handle of the Racetracks in order to pay appropriate purses, taxes, or other liabilities. It sent a similar letter to other totalisator companies. This was an effort to be accommodating and flexible. The letter concluded: "Please continue to provide handle information broken down by source, which is required by rule to all those in the state of Florida who have been users of that information in the past." The Racetracks rely upon AmTote to provide their totalisator services. Between March 2012 and March 2014, AmTote commingled the Racetracks' wagering data into a single "community," reporting all wagering as coming from the OPKC in order to reduce interface fees paid for the totalisator service. The guest track wagering data and reports exchanged with the other totalisator companies from the Racetracks show up on the AmTote settlement files as OPKC. The reports do not differentiate between wagers made at each of the Racetracks. Before March 1, 2012, AmTote segregated wagering data as coming from either JKC or OPKC. During the two years reported by the Racetracks as a single community, the Racetracks separately provided Florida host tracks a supplemental report breaking down the sources within the common community. The Racetracks provided these supplemental reports--via email or other means--to assist Florida host tracks with reporting requirements. They did not provide them simultaneously with the other reports and data. There were frequently errors that had to be identified and corrected. In an effort to be flexible and work with the Racetracks, the Division tolerated this method of reporting for two years. But it created problems for both the Division and for the other permitholders in the state. On February 13, 2014, the Division prepared and issued correspondence to AmTote, as well as the two other Florida totalisator companies, announcing that it intended to require proper reporting of the data required by rule, including reports of each permitholder. The letter states: This letter is to address the issue of proper and complete identification of each individual permitholder in totalisator reports. Rule 61D-7.024(1), Florida Administrative Code, requires all Florida pari-mutuel permitholders to use an electronically operated totalisator. Rule 61D-7.023(9), F.A.C. states in part, ". . . Each report shall include the permitholder's name . . .," and Rule 61D-7.024(4), F.A.C. states in part, ". . . reports shall be kept logically separate . . . ." Further, Rule 61D-7.023(1), F.A.C. states, "The totalisator licensee shall be responsible for the correctness of all tote produced mutual accounting reports. " In accordance with Florida Administrative Code, the division requires each permitholder to be properly and uniquely identified by totalisator reports provided to the division and to the permitholders. In addition, the totalisators are responsible for the correctness of all tote produced mutual accounting reports. Reports provided after February 28, 2014 must properly identify the Florida Permitholder in reports as both host and guest when applicable. Improper identification of permitholders will be considered a violation of the Florida Administrative Code. On March 11, 2014, AmTote began segregating wagering data from the Racetracks in compliance with the February 13, 2014, letter. The Racetracks will incur additional financial costs if AmTote ends the reporting of all wagering data as coming from OPKC for purposes of reports provided to other totalisator companies licensed in Florida and begins segregating their wagering data by individual permitholders. These costs stem from additional interface fees incurred outside the regulatory jurisdiction of Florida. The only evidence of these costs is the testimony of Matthew Kroetz, vice-president of Operations for Jacksonville Greyhound Racing. The testimony of Mr. Kroetz about the cost of the required change is confusing because he mingles assumed costs for a third closed track as if it were reactivated and operational. Bayard Raceways is that track. The Racetracks' parent company owns it. But the likelihood and timing of that reactivation is speculative. In addition, Bayard is not a party to this proceeding. Neither is the parent company. Mr. Kroetz' testimony establishes that the current cost for the two petitioners is a total of $1,500 per month. He projects that costs for reporting, as the letter requires, would be $4,500 per month for the two Petitioners and the track that may reopen in the future. That testimony is unrebutted and consistent with his testimony that the recurring fees for all three tracks would total over $50,000 annually. It is accepted as accurate. But the $3,000 increase from $1,500 to $4,500 per month is not due solely to the reporting requirement. It is also due to lumping in the non-active track. The evidence does not support including that track, the opening of which is speculative. The monthly fee for the two operating tracks is $1,500 divided by two or $750. Subtracting that, as the current cost for an existing track, from the $3,000 increase, lowers the estimated increase to $2,250. Dividing that by three gives the increased monthly cost per track, or $750 per track. This results in the projected annual cost increase for each of the Racetracks of $9,000. Although Mr. Kroetz testified in summary that the changes would result in an increased cost of "about a thousand dollars per month per facility," that testimony is not persuasive. It is inconsistent with the more detailed testimony relied upon above and would require the improbable and unsupported conclusion that the monthly increase would be more than the existing fees.
The Issue Whether respondent discriminated against petitioner on account of her race in terminating her employment?
Findings Of Fact On May 2, 1985, even before Builders Square, Inc., opened Store No. 1423 at 1412 West Fairfield Drive in Pensacola, Sharon Jackson, an African American woman, started work, putting price tags on merchandise. When the doors opened, on May 22, 1985, she began as a "ticket checker." Stationed by an exit, she punched customers' invoices, once she determined the invoice accurately reflected the merchandise the customer proposed to leave the store with. She continued in this capacity until her employment ended. Builders Square, Inc., hired Ms. Jackson as a "Part Time Non Regular," Respondent's Exhibit No. 1, cashier at an hourly rate of $3.50. On June 7, 1985, she became a regular or permanent part-time employee and received a raise to $4.00 an hour. Respondent's Exhibit No. 2. Effective July 1, 1985, she became a full-time employee, and was reclassified: she went from "CASH I 423628 [to] TKTCMZ 423628." Respondent's Exhibit No. 3. Her wages rose again, on October 21, 1985, this time to $4.50 an hour. Respondent's Exhibit No. 4. In December of 1985, because "sales were not at budget that particular week," (T.56) a pre-Christmas reduction in the work force was decided upon. Denny Dennis, the store manager, and Roger Hittinger, assistant store manager, both white men, "went through the store and looked at areas where [they] could eliminate some employees." (T.44) They decided to abolish one of two ticket checker positions, and to terminate Sharon Jackson's employment. On Friday, December 13, 1985, they informed her she no longer had a job, as of the close of business. Cynthia Priaulx, a white woman, held the only other ticket checker position on December 13, 1985. Ms. Priaulx began work for Builders Square, Inc., on May 13, 1985, as a full-time, permanent salesperson at an hourly rate of $4.75. Respondent's Exhibit No. 9. On August 12, 1985, she became a ticket checker, but her status did not change otherwise, and her wages remained the same. Susan D. Kirkland, another white woman, began working for Builders Square, Inc., as a "Part Time Non Regular," Respondent's Exhibit No. 11, cashier at an hourly rate of $3.50, just as petitioner Jackson had done, although she started some 20 days after Ms. Jackson. Effective July 1, 1985, Susan Kirkland became a regular or permanent part-time employee and received a raise to $4.00 an hour, Respondent's Exhibit No. 12, changes that had occurred, in Ms. Jackson's case, 23 days earlier. Also on July 1, 1985, Ms. Kirkland, like Ms. Jackson, was reclassified: she, too, went from "CASH I 423628 [to] TKTCKR 423628." Respondent's Exhibit No. 12. Effective October 23, 1985, however, she was reclassified from "TKTCKR 423628 [to] CASH 1 423628." Respondent's Exhibit No. 13. Ms. Kirkland had not attained full-time status as of December 13, 1985, as far as the record reveals. Even after October 22, 1985, when ticket checker positions were reduced to two, Ms. Kirkland, who generally worked evenings, sometimes filled in as a ticket checker as did, occasionally, the store managers as well. Even though she did not always work as a cashier, Ms. Kirkland was paid as a cashier after October 22, 1985, and for that reason, missed out on the raise to $4.50 an hour that Ms. Jackson received. The personnel action notice filled out when Builders Square, Inc., discharged Ms. Jackson indicated her eligibility for rehire. Respondent's Exhibit No. 6. Tim Bolt, like Ms. Jackson an African American who was terminated on December 13, 1985, was in fact rehired in 1986. On November 22, 1988, respondent offered to rehire petitioner full-time on unspecified terms, Respondent's Exhibit No. 5, but petitioner declined. She was unwilling to give up her present job at Women's Home, where she has worked 40 hours a week at $3.50 an hour since June 10, 1987. (T.26) On March 11, 1987, she began working at Women's Home for $3.35 an hour, 32 hours a week. Since her employment there she has had "sick leave and insurance." (T.27) The job at Women's Home is the first she has held since working for Builders Square, Inc. For three or four months or maybe for as long as 26 weeks after she lost her job, she received weekly unemployment compensation in the amount of $66. Three of the seven employees who lost their jobs on December 13, 1985, were African Americans. Respondent's Exhibit No. 7. T. 53. Of the three, only Ms. Jackson did not work as a "regular employee." Two of the white employees who lost their jobs in mid-December had worked as regular employees longer than any of the African Americans whose jobs ended. Respondent's Exhibit No. 7. Sixteen of the 84 employees at Builders Square's Store No. 1423 on December 15, 1985, were African American. Of these, three had attained regular employee status later than Ms. Jackson did. Fourteen white employees and a Filipino who still had jobs after Ms. Jackson was discharged attained regular employee status after she did. Respondent's Exhibit No. 8.
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
