The Issue The issue in this case is whether Respondent, the Department of Children and Families, properly rejected all bids received on an Invitation to Bid on Proposed Lease No. 590:2622.
Findings Of Fact The Existing Lease and the Decision to Look for New Space. District 7 of the Respondent, the Department of Children and Families (at all times relevant to this proceeding, the Department of Children and Families was known as the Department of Health and Rehabilitative Services)(hereinafter referred to as the “District”), leases approximately 26,955 spare feet of office space located in Palm Bay, Brevard County, Florida. The space is used as a client service center. Pursuant to the District’s current lease, the lease will expire on April 30, 1997. The current lease (hereinafter referred to as the “Existing Lease”) was still in effect at the time of the formal hearing of this matter. The Existing Lease also provides for a five-year renewal. For the first two years of the renewal period, the Existing Lease provides for a rental rate of $11.50 per square foot. For the third and fourth years of the renewal the rate is $11.75 and for the last year, $12.00. In June of 1995, the District submitted a Letter of Agency Staffing (hereinafter referred to as a “LAS”) and a Request for Prior Approval of Space Need (hereinafter referred to as a “RSN”), to the Department of Management Services. Pursuant to the LAS and RSN, the District sought approval from the Department of Management Services to seek a new lease of 26,872 square feet of office space in Palm Bay. The reasons given for seeking approval of a new lease set out in the RSN were as follows: New Service Center in Brevard County(Palm Bay Area). The existing lease is up! 4/30/97. The current space does not adequately provide for : (1) Secured storage, visitation areas, and case file storage. The June of 1995, RSN was approved. The District, however, did not immediately seek the approved space. The evidence failed to prove why. In July of 1996 the District submitted another Request for Space Need (hereinafter referred to as the “Second RSN”). The same amount of space was sought and the same justification for seeking new space was described in the Second RSN. The Second RSN was approved by the Department of Management Services on or about July 8, 1996. The RSN and the Second RSN were prepared by Jim Birch. Mr. Birch is the District’s Facilities Services Manager. The reason for seeking a new lease set out in the RSN and the Second RSN was provided to Mr. Birch by Bill Rawlings and Philip Penley. Mr. Penley is the District’s Sub-District Administrator for Brevard County. Mr. Rawlings is the Program Administrator for Brevard County. The Existing Lease was first entered into in 1977. The amount of space leased has increased over the years and is located in more than one building. Mr. Penley decided to request approval to seek new space in the hopes that the client service center in Palm Bay could be moved under one roof and in the hopes that more ideal space could be obtained. The representation in the RSN and the Second RSN that the existing space “does not adequately provide for: (1) Secured storage, visitation areas, and case file storage” is misleading and incorrect. The programs located in the existing space in Palm Bay can, in fact, be carried out without relocating. The Invitation to Bid. The District released an Invitation to Bid (hereinafter referred to as the “ITB”), between July 16 and July 19, 1996. The ITB provided that the “Project Contact Person” was Mr. Birch. The ITB sought bids on proposed lease number 590:2622, for approximately 26,872 square feet of office space in an existing building. The ITB sought office space in Palm Bay. The building was to be used as the District’s client service center. The term of the lease was to be ten years with five one-year optional renewal periods. The ITB scheduled a pre-bid meeting for August 8, 1996. Attendance at the meeting was not mandatory. The ITB specified, however, that “information and explanations provided at this meeting must be complied with by the bidder ” A representative of Petitioner, Executive Ventures (hereinafter referred to as “Executive”), attended the pre-bid meeting on August 8, 1996. During that meeting, the lessor under the Existing Lease asked questions about the renewal terms of the Existing Lease. Executive’s representative informed Executive of the discussions soon after the meeting. Executive was, therefore, aware of the existence of the Existing Lease and the fact that it could be renewed prior to submitting a bid in response to the ITB. The ITB provided that bids could be submitted at any time up to 10:00 a.m., September 12, 1996. Bids were to be opened at the close of the bidding period. The ITB provided that all bids received were to be evaluated first for technical responsiveness. Nonresponsive bids were to be withdrawn from further consideration. Responsive bids were to be presented to a bid evaluation committee “for comparison and formulation of a recommendation for award.” The ITB informed potential bidders that the District reserved the right to reject all bids received in response to the ITB. The first page of the ITB provides that “[t]he Florida Department of [Children and Families] reserves the right to reject any and all bids and award to the bid judged to be in the best interest of the state.” At page A1-5-8 of the ITB the following is provided concerning the rejection of bids: ITB. REJECTION OF BIDS 1. The department reserves the right to reject any and all bids when such rejection is in the interest of the State of Florida. Such rejection shall not be arbitrary, but be based on strong justification which shall be communicated to each rejected bidder by certified mail. [Emphasis in original]. . . . . Bids Submitted in Response to the ITB. A total of four bids were submitted in response to the The bids were opened on September 12, 1996. A bid tabulation sheet was prepared by Mr. Birch. The annual rental rates per square foot for the ten years of the lease were included on the tabulation as required by the ITB. Pursuant to the ITB, no other information was provided at the time the bids were opened and tabulated Executive submitted one of the four bids. Executive’s bid consisted of 90 to 100 pages. Executive expended a good deal of effort and incurred expenses in the amount of approximately $17,000.00 in preparing its bid. The suggestion that Executive incurred unnecessary expenses is not supported by the weight of the evidence. The rental rates per square foot bid by Executive for the term of the proposed leased are as follows: Year Rate 1 $14.56 2 15.00 3 15.53 4 16.08 5 16.73 6 17.40 7 18.10 8 19.01 9 19.96 10 20.96 The District’s Decision to Reject All Bids. Mr. Birch had expected to receive rental rate bids in the range of $12.00 to $13.00. Mr. Birch’s expectation was based upon what he had been told to expect by John Stewart and Mr. Penley. Mr. Stewart is the District’s General Service Manager. Upon tabulating the bids, Mr. Birch discovered that the bids were higher than expected. He realized that the bids were $3.00 per square foot higher than the Existing Lease. Mr. Birch contacted Mr. Stewart and informed him of the difference in rates. Mr. Stewart informed Mr. Penley of the rates that had been bid. Mr. Penley informed Mr. Stewart that the bid rates were too high. Mr. Stewart then informed Sid McAlister, the Deputy District Administrator, and Paul Sneed. Mr. McAlister and Mr. Sneed told Mr. Stewart that the rates bid were excessive. Mr. Stewart subsequently directed Mr. Birch to notify the bidders that all bids were being rejected. Had the bids received in response to the ITB been accepted, the District would have been required to pay an additional approximately $80,000.00 in rent during the first year of the lease. The amount of rent required in the second year would be in excess of $80,000.00. The decision to reject all bids was based upon a realization of the impact the rates contained in the bids would have on the District’s budget if the lowest bid were accepted in relation to the impact on the District’s budget of the rates of the Existing Lease. The District realized that the increase in rent would have a substantial negative impact on its budget. It was also suggested that the impact on the District’s budget as a result of the newly enacted Federal “Welfare Reform Act” was also considered. In particular, the impact of the Welfare Reform Act’s “Work and Gaining Economic Self Sufficiency” or “WAGES” program was considered. The Welfare Reform Act and, consequently WAGES, was signed into law in August of 1996. WAGES was effective October 1, 1996. Among other things, WAGES establishes time limits for the District’s clients' receipt of cash benefits. It also results in the integration of programs of the District and the Department of Labor. This integration of programs will have impacts on the District’s space needs, staffing levels and the ability to pay rental rates in the future. Mr. Penley was aware of WAGES. It was suggested that at the time the ITB was issued little was known about the impact on the District that WAGES would have and that it was not until the bids were received that Mr. Penley had sufficient information concerning WAGES to be concerned about the impact of WAGES on the District’s budget. The weight of the evidence in this case failed to prove that when the decision of the District to reject all bids was made that the decision was based upon WAGES. While the impact of WAGES was of greater concern at the time of the formal hearing, the evidence failed to prove that the District’s concern about WAGES as explained at the formal hearing was taken into account at the time the bids were rejected. Notice of the District’s Decision to Reject All Bids. On September 13, 1996, the day after the bids were opened, the District sent a letter to Executive and the other bidders informing them of the decision to reject all bids: This is to give notice that in the best interest of the State of Florida and the Department of [Children and Families], that any and all bids are hereby rejected. The letter was signed by Mr. Birch. The letter informing Executive of the decision was sent by certified mail. “Strong justification” for the rejection was not “communicated to each rejected bidder by certified mail.” After receiving the September 13, 1996 rejection letter, Executive was informed during a telephone call with Mr. Birch that all bids had been rejected due to excessive rental rates and budgetary constraints. The District failed to comply with the requirement of the ITB that it inform bidders by certified mail of the reason why it rejected all bids. The appropriate remedy for this error, however, would not be to require that the District now evaluate the bids. The appropriate remedy for the error would be to require that the District send out a corrected notice by certified mail containing the explanation of the reasons for rejecting the bids required by the ITB. This remedy would only be appropriate, however, if Executive had sought such a remedy AND the evidence had proved that Executive had been prejudiced by the failure to provide the explanation of the District’s justification for rejecting all bids contemplated by the ITB. Evidence to support such a finding was not presented. In fact, the evidence proved that Executive was not prejudiced by the District’s error. Executive was given additional information concerning the bid rejection during a telephone conversation and it had an opportunity to explore the reasons for the rejection through discovery prior to the formal hearing of this case. Executive, therefore, had the opportunity to determine the specific justification for the rejection in preparation for the hearing on this matter. Zone Rates. The Department of Management Services establishes maximum rental rates which agencies can agree to pay without obtaining approval of the Department of Management Services. The rates are established for geographic zones on what is referred to as a “Zone Rate Schedule”. Zone Rate Schedules may be obtained from the Department of Management Services or other agencies by potential bidders. At all times relevant to this proceeding Executive was aware of the Zone Rate Schedule applicable to Palm Bay. Rental rates which do not exceed the zone rate by more than 10% may be accepted by an agency without further approval from the Department of Management Services. Any rate in excess of 10% over the zone rate must be approved by the Department of Management Services before an agency may accept it. The rental rates submitted by Executive in response to the ITB exceeded the zone rate but not by more than 10%. Individuals involved with the District’s decision in this matter either were not aware of the Zone Rate Schedule or gave it no consideration in deciding to reject all bids. The evidence also failed to prove that agreeing to pay a rate included on a Zone Rate Schedule for which approval from the Department of Management Services need not be obtained is necessarily in the “best interest of the state”. Additionally, the evidence failed to prove that the District did not have a reasonable basis for rejecting all bids despite the fact that the rates bid by Executive were within the Zone Rate Schedule plus 10%. Executive’s Challenge. Executive filed a Protest dated September 25, 1996, challenging as arbitrary the Department’s decision to reject all bids. In its Protest Executive alleged the following “facts” in support of its argument that the District’s rejection of all bids was arbitrary: The District failed to “communicate to each rejected bidder any justification whatsoever for rejecting any and all bids.” The District had decided to “reject any and all bids if the bid rental per square foot exceeded the rental they were paying under their present Lease, since such Lease had an option to renew for an additional five years. The present Lease renewal failed to comply with the requirements and specifications set forth in the Invitation to Bid.” The District, “at all times, knew that if such bids exceeded the square foot rental of the present Lease, that they intended to reject all bids and renew the existing Lease, although the existing Lease failed to meet the bid specifications.” The District “violated the competitive bidding procedure by failing to include in their Invitation to Bid a provision that any bid exceeding a specific dollar amount per square foot would be rejected in favor of the existing Lease. ” Although the evidence proved the first fact cited in finding of fact 51, that fact does not support a conclusion that the District’s decision was arbitrary. As to the other facts alleged by Executive in its Protest cited in finding of fact 53, the evidence simply failed to prove those alleged facts. At hearing, Executive presented the testimony of Mary Goodman, a consultant and former Chief of the Bureau of Property Management, Department of Management Services. Ms. Goodman was accepted as an expert witness. Ms. Goodman opined that the District’s actions in this matter were arbitrary. Ms. Goodman’s opinion was based in part on her conclusion that the submittal of the RSN and the Second RSN constituted a “determination by the Department to not renew the existing lease.” The evidence failed to support this contention. Executive has failed to cite any provision of Florida law which supports this contention. Ms. Goodman also based her opinion on the assumption that the District had established a rental rate cap which it failed to inform prospective bidders of. The evidence failed to support this assumption. Ms. Goodman also based her opinion on the fact that the bid submitted by Executive was within the Zone Rate Schedule for the area. The evidence in this case failed to prove that the fact that the bids were within 10% of the Zone Rate Schedule rates means that the decision to reject bids that would have cost the District approximately $80,000.00 the first year in additional rent was arbitrary because the rental bids did not require approval of the Department of Management Services. Executive has cited no provision of Florida law that requires agencies to accept bids simple because they do not require approval from the Department of Management Services. Ms. Goodman also based her opinion on her conclusion that the District should have known of its budgetary constraints before issuance of the ITB. Ms. Goodman, however, acknowledged that she knew nothing specifically about the District’s budget. Finally, Ms. Goodman based her opinion on the District’s failure to provide the notice of the District’s reason for rejecting the bids required by the ITB. As discussed, supra, the evidence failed to support this conclusion. The evidence failed to prove that Executive filed the action for an improper purpose.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Department of Children and Families dismissing the Protest filed by Executive Ventures. DONE and ORDERED this 30th day of April, 1997, in Tallahassee, Florida. LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 1997. COPIES FURNISHED: Walter Smith, Esquire SMITH, GRIMSLEY, BAUMAN, PINKERTON, PETERMANN, SAXER, WELLS Post Office Box 2379 Fort Walton Beach, Florida 32549 Eric D. Dunlap Assistant District Legal Counsel Department of Children and Families 400 West Robinson Street Suite S-1106 Orlando, Florida 32801 Richard A. Doran General Counsel Department of Children & Families Building 2 Room 204 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory D. Venz, Agency Clerk Department of Children & Families Building 2, Room 204 1317 Winewood Boulevard Tallahassee, Florida 32399-0700
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by Respondent dismissing its claim against Petitioner for recaptured depreciation. DONE and ENTERED this 19th day of August, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER 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 19th day of August, 1982.
Findings Of Fact Certain hospital equipment ("Equipment") was sold in 1973 and 1974 by Hospital Contract Consultants ("Vendor") to F & E Community Developers and Jackson Realty Builders (hereinafter referred to as "Purchasers") who simultaneously leased the Equipment to Petitioner. These companies are located in Indiana. At the time of purchase, Florida sales tax ("Tax") was paid by the Purchasers and on or about March 18, 1974, the tax was remitted to the State of Florida by the Vendor. However, the Tax was paid in the name of Medical Facilities Equipment Company, a subsidiary of Vendor. In 1976, the Department of Revenue audited Petitioner and on or about April 26, 1976 assessed a tax on purchases and rental of the Equipment. On or about April 26, 1976, petitioner agreed to pay the amount of the assessment on the purchases and rentals which included the Equipment, in monthly installments of approximately Ten Thousand and no/100 Dollars ($10,000.00) each and subsequently paid such amount of assessment with the last monthly installment paid on or about November 26, 1976. On or about December, 1976, the Department of Revenue, State of Florida, checked its records and could not find the Vendor registered to file and pay sales tax with the State of Florida. Petitioner then looked to the State of Indiana for a tax refund. On or about January 4, 1977, Petitioner filed for a refund of sales tax from the State of Florida in the amount of Thirty Five Thousand One Hundred Four and 02/100 Dollars ($35,104.02). This amount was the sales tax paid to and remitted by various vendors for certain other equipment purchased in 1973 and 1974 and simultaneously leased. The amount of this refund request was granted and paid. Relying upon the facts expressed in paragraph 4 heretofore, Petitioner on or about June 2, 1977 filed with the Department of Revenue of the State of Indiana for the refund of the Tax. On or about June 7, 1979, the Department of Revenue of Indiana determined that the Vendor was registered in the State of Florida as Medical Facilities Equipment Company and therefore Petitioner should obtain the refund of the Tax form the State of Florida. So advised, Petitioner then filed the request for amended refund, which is the subject of this lawsuit, on July 16, 1979 in the amount of Seventeen Thousand Two Hundred Sixteen and 28/100 Dollars ($17,216.28). This request for refund was denied by Respondent, Office of the Comptroller, on the basis of the three year statute of non-claim set forth in section 215.26, Florida Statutes. Purchasers have assigned all rights, title and interest in sales and use tax refunds to Petitioner. During the audit of Petitioner in 1976 the lease arrangement on the equipment apparently came to light and Petitioner was advised sales tax was due on the rentals paid for the equipment. This resulted in an assessment against Petitioner of some $80,000 which was paid at the rate of $10,000 per month, with the last installment in November, 1976. The auditor advised Petitioner that a refund of sales tax on the purchase of this equipment was payable and he checked the Department's records for those companies registered as dealers in Florida. These records disclosed that sales taxes on the sale of some of this rental equipment had been remitted by the sellers of the equipment but Hospital Contract Consultants was not registered. Petitioner was advised to claim a refund of this sales tax from Indiana, the State of domicile of Hospital Contract Consultants. By letter on March 18, 1974, Amedco Inc., the parent company of wholly owned Hospital Contract Consultants, Inc. had advised the Florida Department of Revenue that Medical Facilities Equipment Company, another subsidiary, would report under ID No. 78-23-20785-79 which had previously been assigned to Hospital Contract Consultants Inc. which had erroneously applied for this registration. (Exhibit 2) Not stated in that letter but contained in Indiana Department of Revenue letter of April 18, 1979 was the information that the name of Hospital Contract Consultants had been changed to Medical Facilities Equipment Company. The request for the refund of some $17,000 submitted to Indiana in 1976 was finally denied in 1979 after research by the Indiana Department of Revenue showed the sales tax had been paid to Florida and not to Indiana.
Findings Of Fact The Medicaid reimbursement program is a joint state and federal program which provides reimbursement to Florida-licensed nursing homes for long-term care provided to Medicaid eligible persons. The Florida Title XIX Long Term Care Reimbursement Plan (Plan) governs reimbursement to nursing homes for the provision of Medicaid services. The Agency for Health Care Administration (AHCA) is the State agency responsible for implementation of the Medicaid program in the State of Florida. The AHCA is the successor in interest to the Department of Health and Rehabilitative Services, the agency originally responsible for Medicaid reimbursement. At all times material to this case, Quality Health Care (Quality) is and has been a provider of services for purposes of the Medicaid program. Medicaid per diem reimbursement rates for nursing home care were historically based on a "cost" system, which included four components: operating costs, patient care costs, property asset costs and return on equity. Re-valuation of property due to property asset sales and refinancing mechanisms, resulted in a steadily increasing property cost component to the reimbursement formula. The Federal Deficit Reduction Act of 1984 (DEFRA) was enacted in part to limit the effect of property asset re-valuation on reimbursement. The DEFRA restricted the "step up" in property costs which occurred when existing facilities were sold and existing property was re-valued. The actual effect of the DEFRA provisions was to freeze property cost reimbursement. In response to DEFRA, the State of Florida revised its reimbursement program in 1984-85 to shift from the traditional cost system to the fair rental value system (FRVS.) The FRVS, designed to provide an alternative to the DEFRA imposed limits, was created by the State of Florida and the nursing home industry to address the industry's concerns about the effect of DEFRA on reimbursement rates and cash flow. The FRVS methodology imputes a provider's property asset value and indexes the value to specified inflation factors. A provider is reimbursed for a portion of the indexed value rather than actual property costs. The methodology itself is not at issue in this proceeding. On October 1, 1985, the State of Florida implemented Medicaid reimbursement on the FRVS program. At the time of implementation of the FRVS, it was determined that application of the FRVS should be temporarily deferred for some providers. The temporary deferment was intended to protect existing providers committed to long term property liability in anticipation of cost reimbursement rates from being injured by the altered reimbursement program and the resulting reduction in reimbursement rates. In order to provide for deferment of the FRVS, the creators of the system created a "hold harmless" provision designed to protect providers in existence and enrolled in the Medicaid program prior to the October 1, 1985 FRVS implementation date by continuing to reimburse such providers under the cost system for an extended period of time. For purposes of the "hold harmless" provision, Quality was in existence and was enrolled in the Medicaid program on October 1, 1985. In creating the FRVS and hold harmless provision, it was clear that facilities qualifying for cost reimbursement under the hold harmless system would receive a benefit unavailable to FRVS-reimbursed providers. It was necessary to create a mechanism by which the advantage of cost reimbursement could be negated. Accordingly the creators determined that the continued cost reimbursement would, be viewed as an "overpayment" by the agency to the facility which would need at some future date to be repaid. The overpayment is known as the "hold harmless payback liability." Because actual property costs decrease over time due to depreciation and retirement of debt, a provider's cost reimbursement eventually becomes less than the projected FRVS reimbursement rate. When a provider's projected reimbursement under the FRVS exceeds the costs system reimbursement, a provider would normally become entitled to reimbursement at the higher rate. In order to collect the hold harmless payback liability, a provider in the hold harmless program otherwise entitled to the higher FRVS reimbursement receives only cost reimbursement until the point when the "overpayment" by the agency has been "reimbursed." When the hold harmless payback liability is extinguished, the provider receives full FRVS reimbursement. Plan section IV.D. provides that during the transition period, some facilities shall continue receive cost reimbursement until such time as FRVS payments exceed cost reimbursement as specified in Section V.E.1.h. of the Plan, at which time a facility shall begin reimbursement under the FRVS. Plan section IV.D. provides as follows: Effective October 1, 1985, a fair rental value system (FRVS) shall be used to reimburse facilities for property. To prevent any facility from receiving lower reimbursement under FRVS than under the former method where depreciation plus interest costs were used to calculate payments, there shall be a transition period in which some facilities shall continue to be paid depreciation plus interest until such time as FRVS payments exceed depreciation and interest as specified in Section V.E.1.h. At that time a facility shall begin reimbursement under the FRVS. Facilities entering the program after October 1, 1985 that had entered into an armslength (not between related parties) legally enforceable agreement for construction or purchase loans prior to October 1, 1985 shall be eligible for the hold harmless clause per Section V.E.1.h. Plan section V.E.1.h. sets forth the hold harmless provision and provides that if after calculation of the FRVS rate FRVS reimbursement is lower than cost reimbursement, a facility shall continue to receive cost reimbursement until such time as the hold harmless payback liability is extinguished. Plan section V.E.1.h. provides as follows: A "hold harmless" provision shall be implemented to ensure that facilities existing and enrolled in the Medicaid program at October 1, 1985 do not receive reimbursement for property and return on equity or use allowance under the FRVS method less than the property cost reimbursement plus return on equity or use allowance given at September 30, 1985. If, after calculation of the FRVS rate, that reimbursement would be lower than depreciation plus interest costs under III.G. 3.-5. of this plan, a facility shall continue to be reimbursed depreciation plus interest according to III.G. 3.-5. of this plan until such time as the net difference in total payments between III.G. 3.-5. and FRVS is -0-. Plan section III.G. 3.-5. provides the methodology for calculation of cost reimbursement. As of October 1, 1985, Quality's cost reimbursement exceeded the FRVS reimbursement and the "hold harmless" provision was applicable to Quality. As of October 1, 1985, Quality was entitled to cost reimbursement under the "hold harmless" provision based on the Plan provisions cited herein. The Medicaid program establishes reimbursement rates on a semiannual basis. Rates are communicated to providers via rate notices. For all periods except the July 1, 1987 and January 1, 1988 rate cycles, Quality's cost reimbursement rate exceeded the projected FRVS reimbursement rate. For the July 1, 1987 and January 1, 1988 rate cycles, Quality's cost reimbursement rate was less than the projected FRVS reimbursement rate. The rate fluctuation experienced by Quality in the July 1, 1987 and January 1, 1988 rate periods is best described as an anomaly. On August 19, 1993, the agency issued a retroactive notice of rate adjustment from cost to FRVS beginning in the July 1989 rate cycle and for all subsequent periods. The evidence is unclear as to why the retroactive rate adjustment was to become effective beginning in the July 1989 rate cycle. By letter of September 24, 1993, the AHCA notified Quality that its hold harmless payback liability was $212,574.32. The agency asserts that based on Plan section IV.D., Quality should be shifted to the FRVS reimbursement program based on that fact that for the two rate cycles beginning in July 1, 1987, FRVS reimbursement payments exceeded costs reimbursement. The agency's position is contrary to the language of Plan section V.E.1.h. (the hold harmless provision) which states as follows: ...If, after calculation of the FRVS rate, that reimbursement would be lower than depreciation plus interest costs under III.G. 3.-5. of this plan, a facility shall continue to be reimbursed depreciation plus interest according to III.G. 3.-5. of this plan until such time as the net difference in total payments between III.G. 3.-5. and FRVS is -0-. Based on the Plan provisions cited herein, for the July 1, 1987 and January 1, 1988 rate periods, and for the subsequent period within the time frame at issue in this proceeding, Quality would be entitled to cost reimbursement because the net difference in total payments between cost and FRVS has not reached zero. It is not unusual for reimbursement rates to be set at times other than at the beginning of a rate cycle. Such rate changes result in additional rate notices to providers. On three occasions, the agency sent notices to Quality stating that the reimbursement rate was being set at the lower FRVS level. On each occasion, Quality inquired and was informed that the reimbursement rate would remain at cost. The AHCA asserts that the responses to the Quality inquiries were erroneous and that it is entitled to correct the errors. Quality asserts that it relied to its detriment on the responses to its inquiries and that the agency should be estopped from retroactively altering the reimbursement mechanism under which Quality is paid.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Agency for Health Care Administration enter a Final Order providing that Quality Health Care Center continue to be reimbursed under the cost reimbursement system until such time as Quality's hold harmless payback liability is extinguished. DONE and RECOMMENDED this 29th day of June, 1994 in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of June 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-0164 To comply with the requirements of Section 120.59(2), Florida Statutes, the following constitute rulings on proposed findings of facts submitted by the parties. Petitioner The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 24. Rejected, cumulative. 27-28. Rejected, unnecessary. 30. Rejected, unnecessary. 39-56. Rejected, unnecessary. Respondent The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 8. Rejected, cumulative. 11. Rejected, not supported by cited testimony. 20-23. Rejected, unnecessary. 24. Rejected as to use of term "discovered." ,The agency had sent three notices Quality prior to the August 1993 action. 26-36. Rejected, unnecessary. 37. Rejected, irrelevant. The testimony is clear that the drafters of the Plan did not contemplate the situation at issue in this case. 40-43. Rejected, irrelevant, not supported by the greater weight of the evidence. There is no credible evidence that any other provider has experienced this situation. Further, such treatment would be contrary to the clear provisions of the Plan. 47. Irrelevant. There is no deadline for payment of hold harmless payback liability. 48-52. Rejected, unnecessary. COPIES FURNISHED: Douglas M. Cook, Director 2727 Mahan Drive Tallahassee, Florida 32308 Harold D. Lewis, Esquire The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Peter A. Lewis, Esquire 307 West Park Avenue Post Office Box 1017 Tallahassee, Florida 32302-1017 Heidi Garwood, Esquire 1317 Winewood Boulevard Building 6, Room 234 Tallahassee, Florida 32399-0700
The Issue The issue for disposition in this proceeding is whether the Department of Corrections acted fraudulently, arbitrarily, illegally, or dishonestly when it rejected all bids in lease no. 700:0820.
Findings Of Fact On or about May 9, 1999, the Department of Corrections (DOC or agency) issued a request for proposals (RFP) for the agency's Probation and Parole Office in Fort Myers, Florida (lease no. 700:0820). The RFP sought approximately 5225 square feet of space, plus or minus 3 percent. The RFP required that bidders indicate in their proposals whether the space being offered was within one quarter mile of the following: a school for children in grade 12 or lower, a licensed day care facility, a park or playground, a nursing home, a convalescent center, a hospital, an association for disabled population, a mental health center, a youth center, or a group home for disabled population. Two proposals were submitted: one from Capital Properties Group, Inc. (Capital), and one from Offilock, Inc. (Offilock), the entity currently providing office space for the Probation and Parole Office. Both bids were found to be responsive and were evaluated on or about July 7, 1999. According to the RFP criteria the evaluation team considered the following: fiscal costs (base and options period rental rate), moving costs, location (including proxmity to the Justice Center, public transportation, and clients, as well as security issues), and the facility (layout and future expansion). Offilock's bid included lease rates higher than the rates set for the geographical region by the Department of Management Services (DMS). Capital's bid provided lease rates at the highest end of DMS' rates. While DOC is required to consider DMS' rates, it is not bound by those rates and higher rates would not automatically disqualify a bidder. Still, DOC was concerned with reducing its office lease costs either by reducing the rental rates or by reducing the space requirements. The agency had hoped to obtain a lease rate at the low-to-mid range of DMS' rates. The evaluation committee rated Capital higher than Offilock in the fiscal category but substantially lower than Offilock in the remaining categories. The final scores for the two bidders were Capital: 242; Offilock: 328. In its response to the question described in paragraph 2, above, regarding location, Capital indicated that its space is within one quarter mile of a school for children in grade 12 or lower. It responded "no," as to the other facilities. Offilock's space is not within one quarter mile of any of the facilities. During site visits DOC staff noted that Capital's building abutts a school for children in grades pre-kindergarten through eight, with a playground approximately 30 feet from the proposed office. Across the street from the building is another school for elementary through high-school children. Also across the street is a church with a children's outdoor play area. The office which is the subject of lease no. 700:0820 serves approximately 1100 felony probationers, including sexual offenders, drug offenders, and other felons. Most are required to report to the office at least once a month. Nothing in the RFP for lease no. 700:820 specifies that a property will be disqualified because of proximity to a school or other facility listed in paragraph 2 above. Instead, Section 945.28, Florida Statutes, requires that the DOC provide newspaper notice and written notice to the county or city manager whenever the agency intends to lease or purchase probation and parole office space. DOC complied with this requirement. Before any complaints were received, on July 13, 1999, DOC General Services Manager Malcolm Wilson sent a letter to both Capital and Offilock stating that the agency was rejecting all bids for this project as not being in the best interests of the State of Florida. The letter thanked the bidders and stated they would be given an opportunity to bid on a new package. Although there was some concern initially that Capital's property might not be zoned for a probation and parole office, that concern was eliminated with a letter from the Lee County Department of Community Development. In their testimony at hearing and in their pre- rejection internal memoranda, DOC staff explained that the bases for rejecting all bids were lease costs and the immediate proximity of Capital's offered property to schools and playgrounds. The staff responsible for the decision in lease no. 700:0820 were concerned about public safety and negative responses by the community. In other similar cases in the past the agency has experienced objections by the community. Since July 1999, DOC has included in other probation and parole office RFPs the provision that such offices may not be located within one quarter mile of the facilities listed in Section 945.28, Florida Statutes.
Recommendation Based on the foregoing, it is hereby RECOMMENDED: That the protest of Capital Properties Group, Inc., be dismissed. DONE AND ENTERED this 19th day of May, 2000, in Tallahassee, Leon County, Florida. MARY CLARK 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 19th day of May, 2000. COPIES FURNISHED: Robert A. Sweetapple, Esquire Sweetapple, Broeker & Varkas 165 East Boca Raton Road Boca Raton, Florida 33432-3911 Obed Dorceus, Esquire Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500 Louis A. Vargas, General Counsel Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500 Michael W. Moore, Secretary Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500
