The Issue Whether Respondent Florida Department of Health and Rehabilitative Services (HRS), acted illegally, dishonestly, fraudulently, arbitrarily or/and capriciously in determining to award the contract for RFP 95-142CM-FAP to Unisys Corporation (Unisys).
Findings Of Fact On November 14, 1994, HRS's Office of Information Systems distributed the RFP, entitled "FLORIDA System --Applications Programming Services." The RFP was designed to procure the programming services required by HRS to complete the software programming of, among other things, the state's federally mandated Child Support Enforcement System, and to maintain and enhance the system upon its completion. Upon selection of the winning proposal, HRS intended to enter into the contract for thirty-six months, renewable upon agreement of the parties for an additional 12 months. The cost proposal rates for the initial three-year term would be binding for any subsequent work on the project. HRS also reserved the right to acquire additional consulting services from the contractor for related activities for up to one year after the termination of the Contract. HRS began developing this RFP in the late spring or early summer of 1994 in anticipation of the expiration of the current contract with Deloitte for provision of applications programming services. Before release to prospective proposers, the RFP was approved by HRS' Office of Contract Services and the Information Technology Resources Procurement Advisory Commission (ITRPAC), a body consisting of various state officials including the head of the Division of Purchasing, which ensures that the RFP complies with state rules. In addition, various federal agencies approved the RFP before its release to prospective proposers. The RFP provided that 60 percent of the proposal scoring would be based on the technical proposals contained in the responses to the RFP, and that the remaining 40 percent of the score would be assigned to the costs as submitted in the proposals. After scoring and weighting of the scores, the weighted scores were to be combined to determine the winning proposal. The breakdown of scoring between technical and cost components is based upon HRS' standard practice and its experience with the format required by other state and federal agencies with whom HRS works. The division of the scores was also intended to ensure that an unqualified vendor did not secure the bid solely on the basis of low cost. The selection of the evaluation criteria and weighting of evaluation points for this RFP were subject to the discretion of the Department at the time the RFP was prepared. On December 12, 1994, HRS held a bidders' conference at which representatives of Deloitte and Unisys were in attendance. EVALUATION OF RESPONSES On January 6, 1995, Deloitte and Unisys submitted the only two proposals in response to the RFP. Both proposals were deemed responsive to the requirements of the RFP. HRS appointed a five member Evaluation Committee to review and evaluate the proposals. HRS provided training to the Evaluation Committee members specifically directed to the proper method for reviewing and scoring proposals submitted in response to the RFP. Each member of the Evaluation Committee was qualified by training, education and experience to review and evaluate the technical merits of each proposal. The RFP defined the criteria by which the proposals would be reviewed, scored and ranked by the Evaluation Committee, and the contract awarded. Included in the RFP were blank cost proposal forms which the proposers were to complete. Those forms did not include any blank spaces to be filled in referencing costs associated with any "renewal" periods or otherwise provide for including information about proposed costs for any renewal periods. The Evaluation Committee members each independently reviewed the technical proposals submitted in response to the RFP over a period of approximately two weeks. Committee members submitted the raw scores from their technical evaluations to Karin Morris, the HRS System Program Administrator. The cost proposals were opened and scored on January 20, 1995 by Ms. Morris. The RFP provided, in Section 6.0, that a comprehensive, fair, and impartial evaluation would be conducted of all proposals received. The RFP also provided for the grouping of evaluation criteria into six categories with points assigned as follows: - Mandatory Requirements 0 points - Management Summary 0 points - Corporate Capabilities 200 points - Project Staff 200 points - Technical Approach 100 points - Project Workplan 100 points - Cost 400 points Section 6.0 of the RFP also contained the following language: Selection of the successful proposer will be based on the proposal that is determined to be in the best interest of the department, taking into consideration cost and other criteria set forth in the RFP. Further, the RFP provided, in Section 6.1, that: An Evaluation Committee will be established to assist the department in selection of the winning contractor(s). All proposals not meeting the mandatory requirements will be rejected. The committee will evaluate the technical approach, corporate capabilities and project staff of all responsive proposals. The committee will rank proposers by the resulting scores and make a recommended award. The committee will summarize their findings and prepare an evaluation report to the Deputy Secretary for Administration. The report will then be presented to the Secretary of HRS. The Secretary will review the final report, pertinent supporting materials and make the determination of the final award, taking into consideration cost and other evaluation criteria set forth in the RFP. The Secretary reserves the right to take any additional administrative steps deemed necessary in determining the final award. (Emphasis added). Most importantly, Section 6.3(D) of the RFP dealing with the evaluation of the cost proposals stated: The points awarded for the three cost evaluation categories will be totaled and added to the points awarded for technical evaluation cate- gories 3 through 6 to determine the winning proposer. (Emphasis added). After reviewing and comparing the weighted scores of both proposals, the Evaluation Committee issued a "Final Report," with recommendations, on January 30, 1995. The weighted technical scores reflected in the Evaluation Committee's Final Report are as follows: DELOITTE UNISYS Corporate Capabilities 200 186.36 Project Staff 200 159.07 Technical Approach 100 76.62 Project Workplan 100 76.73 TOTAL 600 499 The weighted cost scores were: DELOITTE UNISYS Fixed Price Tasks 10.0 2.27 Monthly Price 357.90 380.0 Hourly Price 7.77 10.0 TOTAL 375.67 392.2 Totaling all categories as required by paragraph 6.3(D) of the RFP, the Department's Evaluation Committee arrived at the following final ranking: DELOITTE UNISYS Technical Proposal 600 499 Business Proposal 376 392 TOTAL 976 891 Based upon the Evaluation Committee's scores, Deloitte's demonstrated technical capability is 20 percent higher than that of Unisys. Under the terms of the RFP, there was no discretion involved in scoring the cost portion of the proposals, including the weight to be accorded costs in the final overall scoring to determine the winning bidder. Based upon HRS' inclusion of the specific criteria in the RFP, the cost portion scoring was merely a mechanical calculation. Both of the proposers' cost proposals fall within the agency's budgetary limits for the current year for accomplishing the work requested by the RFP. Four of the five members of the HRS Evaluation Committee recommended award of the contract to Deloitte, in the following language: Deloitte & Touche scored higher in all areas including recommendations. Deloitte and Touche is the incumbent contractor and therefore there are no risks associated with the transition. Deloitte understood the requirements of the RFP and addressed them more completely in their proposal. Therefore, it is our recommendation that the contract should be awarded to Deloitte & Touche. (Emphasis added). One member of the Evaluation Committee recommended the decision be left to the Secretary of HRS. None of the members of the HRS Evaluation Committee recommended award of the contract to Unisys. HRS SECRETARY'S DECISION TO AWARD TO UNISYS On January 27, 1995, prior to preparation of the recommendations contained in, or the issuance of, the Evaluation Committee's Final Report, HRS Secretary James Towey convened a meeting with Deputy Secretary Lowell Clary, John Holland, Bill Belleville and the department's legal counsel to discuss the contract award process, a draft of the Evaluation Committee's Final Report and other matters the Secretary felt relevant to HRS' ultimate decision on the RFP. At the meeting, Towey was informed by Bill Belleville that Deloitte's proposal was the "best." Towey was also informed by John Holland and Bill Belleville that both companies could perform under the contract. However, neither Holland's nor Belleville's assessments were based on responses to the RFP, but rather upon their own experience with the two vendors outside of this RFP process. Belleville conceded that he believed that a proposer was qualified to perform the contract by merely meeting the "mandatory" requirements of the RFP, a category that was accorded zero points in the scoring criteria. Informed that both companies could perform under the contract, Towey "zeroed in" on costs as the major consideration for the award of the contract. At the meeting, he considered a present-value calculation of the payments that the State would make over the course of a contract, if the contract had been for a 48 month term. The calculation had been prepared by Dean Modling, an HRS senior management analyst supervisor, although the RFP had been approved by the Department of Management Services without provision for such an analysis. The RFP not inform proposers that a present-value analysis would be performed and provision for the present-value of a contract was not included in the scoring criteria for the proposals. Present value calculation became an issue when it was raised and discussed at the January 27, 1995 meeting, and subsequently used in the Secretary's decision to award the contract to Unisys. Towey also considered, in deciding to award the contract to Unisys, a calculation of "raw costs," provided after the January 27, 1995 meeting. These "raw costs" were presented on two charts. Both added up the amounts submitted by each proposer for fixed price tasks and monthly costs, over 36 months. Although the RFP did not request, and neither proposer submitted costs for a 48 month contract, the two charts included a calculation for a hypothetical 48 month contract using the same monthly payments submitted for the 36 month contract. In addition, one of the two charts included a 5.8 percent factor for overtime, which was also not addressed by the RFP or by the proposals submitted in response to the RFP. There was no evaluation criteria contained in the RFP which dealt with the issue of "raw costs" over the term of the contract. Prior to the decision to award to Unisys, HRS never performed and Towey never considered a present value analysis for the 36 month contract period provided for in the RFP. Finally, as a result of concern expressed at the January 27, 1995 meeting regarding whether Unisys could handle the immediate tasks required by the contract, including requirements of the Child Support Enforcement and federal certification programs, Towey considered whether there would be any risk of transition if Unisys were unable to hire some of Deloitte's employees and subcontractors should he decide to award the contract to Unisys. Towey specifically requested Deputy Secretary Clary to research this issue. In order to obtain information, Clary had HRS personnel directly contact Deloitte's subcontractors. Clary responded to Towey three days later on January 30, 1995, the day before the decision by Towey to award the contract to Unisys, that Deloitte's subcontractors would not be prohibited from working for Unisys. Consideration of overtime and risk of transition were not criteria contained in the RFP, nor were these elements evaluated and scored by the HRS Evaluation Committee. By way of a January 31, 1995 memorandum to Clary announcing the award of the contract to Unisys, Towey stated: I have now had an opportunity to review the report of the evaluators of this RFP, the recommendations contained therein, the raw data submitted with the proposals, and the RFP. I understand the nature of the project and its importance to the agency. Based upon my review of the information presented to me and my understanding of similar projects in the past, my decision is to award the contract to Unisys as the proposal most advantageous to the state of Florida, taking into consideration the price and other criteria set forth in the RFP. Although I have considered the risk of transition to a new contractor, I find that I am unable to ignore the dollar savings which will result in awarding the contract to Unisys. Since you and your staff have assured me that both companies are technically competent to perform the work, I believe the monetary savings outweigh any risk that might exist in the transition of contractors. Therefore, I have determined that it is in the state's best interest to award the contract to Unisys. Please take whatever steps are necessary to implement this decision. (Emphasis added). By his actions, Towey exercised more than the prerogative conferred by the RFP to "take any additional administrative steps deemed necessary in determining the final award" and actually evaluated criteria other than that contained in the RFP in reaching his decision to award the contract to Unisys. Further, in awarding the contract to Unisys, Towey effectively altered the relative weight of the criteria as specified in the RFP. Towey relied upon the advice of Clary. Illustrative of Clary's perspective is his testimony at the final hearing that he believed the 60/40 weighting contained in the RFP to be inapplicable to decision making by the Secretary of HRS. Neither Bill Belleville nor John Holland reviewed, in detail, the proposals submitted in response to the RFP. Neither performed their own independent analysis of the responses. Further, Clary never reviewed the RFP nor the proposals submitted in response to the RFP. In the course of his decision making process with regard to award of the contract to Unisys, Towey relied on the advice of Clary, Belleville and Holland, referred to by Towey as his "top managers", despite their undisputed lack of familiarity with the Deloitte and Unisys proposals. While his memorandum dated January 31, 1995, states he reviewed the RFP, Towey admitted in his testimony at the final hearing that he had not personally reviewed the document. Further, he never reviewed or performed his own analysis of the two proposals submitted in response to the RFP. The members of the Evaluation Committee members were the only persons to fully and carefully evaluate the two proposals and score them under the criteria contained in the RFP. Since that time, no one else from HRS has attempted to reevaluate or re-score the proposals. Neither Towey nor anyone else involved in the January 27, 1995 meeting disagrees with the analysis and scoring of the proposals by the Evaluation Committee. PRESENT-VALUE ANALYSIS Section 1.2 of the RFP, states, in part: This RFP will result in a thirty-six month contract. Further, Section 4.12(C) of the RFP states, in part: Upon selection of the winning proposal, the department shall enter into a contract for thirty-six (36) months. Although the possibility of renewal of the contract for a maximum of a single, one year term is contained in the RFP, there is no provision in the RFP which requires that HRS renew the contract after 36 months or that the contractor accept a renewal after 36 months for any specific term. By the terms of the RFP, any renewal of the contract for a period beyond the 36 month term is subject to negotiation between the contractor and the department. While proposals submitted by Unisys and Deloitte commit to maintaining the same costs in the event of renewal, negotiation as to the length, price and staffing for any renewal period less than a year, is not excluded by the terms of the RFP. Neither HRS nor the contractor is bound, under the terms of the RFP, to any extension of the contract. HRS' own manual, HRSP 75-3, entitled "Developing a Request for Proposal," states, in the section on contract renewals: If Contract Renewals have been provided for in this RFP, include the following recommended language in the Special Provisions subsection of the RFP: This contract may be renewed on a yearly basis not to exceed two (2) years beyond the initial contract or for a period no longer than the term of the original contract whichever period is longer. Such renewals shall be contingent upon satisfactory performance evaluations as determined by the department and shall be subject to the availability of funds. As specified in the provider's response to the RFP/ITB, the total cost for the contract under the' first year renewal will not exceed $ and the second year renewal will not exceed $ . Each renewal shall be confirmed in writing and shall be subject to the same terms and conditions set forth in the initial contract. (Emphasis added). Another in-house document at HRS is HRS manual, HRSM 75-2 (May 1, 1994 update), entitled "Contract Management System for Contractual Services". Chapter 5 of that document, entitled "Contractual Procurement Requirements," states, in pertinent part: The dollar amount and the manner in which the costs for the . . . renewals will be calculated must be specified in the response to the RFP and in the resulting contract document. By contrast, the RFP contains none of the language specified in either HRS manual regarding renewal. Section 4.12(c) of the RFP merely states: This contract term shall be renewable for a max- imum of a one year term upon the mutual agreement in writing of the contractor and the department. (Emphasis added). Terms of the RFP did not invite proposers to submit a specific cost or any other information for a renewal period or explain how costs for a renewal period would be calculated. Neither did the RFP contain any language that renewals would be conditioned on satisfactory performance by the contractor. Proposers, on blank cost forms, were requested in the RFP to provide HRS with their proposed prices for fixed price items, monthly costs and hourly costs. The forms, contrary to the requirements of HRS manuals applicable in situations where information for a renewal term is requested, did not provide a place for proposers to indicate costs for any renewal term or to demonstrate how those costs were calculated. Both contractors understood that any renewal would be subject to negotiation. The "Standard Contract" contained in the RFP provides only for a term of 36 months and a cost for that specific contract term. Consistent with the terms of the RFP that the contract was for a 36 month term, HRS submitted, on more than one occasion, materials to ITRPAC. In those materials, HRS represented that the proposed budget amounts of $25 million and $28 million for the project were for a three year term contract. The Notice of Award which HRS issued stated that a three year contract was to be awarded. Although the RFP addressed staffing at a maximum of 107 persons, HRS was aware that 100 percent staffing might not always occur. Section 2.l(B)(5) of the RFP permits 90 percent of the maximum staffing level at a given time without the vendor incurring a penalty. At one point in the RFP preparation, a draft of the RFP required 95 percent staffing. Even that level was considered by HRS to be too restrictive and anti-competitive and was amended to 90 percent out of fear that a 95 percent staffing level would discourage submission of competitive proposals. The 90 percent figure was also used in the RFP to account, in part, for projected attrition of contractor employees that HRS had historically experienced on this project. From the standpoint of budgetary allowances by HRS for the project, it is realistic to believe that the job will be staffed at somewhere between 90 percent and 95 percent rather than at the maximum staffing level of 107 employees. Although Section 4.15(D)(5) of the RFP states that the State is not responsible for paying contractor's employees for leave or vacation time, the testimony of Petitioner's financial expert, Dr. Elton Scott, establishes that a reasonable assumption is to assume that each employee is entitled to, and would take, at least two weeks vacation. Such an assumption should also be included when performing a present value analysis, particularly when assuming 100 percent staffing. Depending on budget allocations for this project, it is possible that HRS would only require that the contractor provide as few as 46 employees. The present value calculation performed by HRS indicated that, over 48 months, at 100 percent staffing (107 employees), the monetary cost of awarding the contract to Unisys would be approximately $500,000 less than the cost of awarding the contract to Deloitte, a savings of approximately 1.5 percent over the term of the contract. As demonstrated by HRS' subsequent present value calculation performed at final hearing in this cause, for the 36 month actual contract period, at maximum staffing, HRS would realize a savings of no more than $39,802 by awarding the contract to Unisys, a savings of less than 2/10ths of 1 percent. None of HRS' present value calculations accounted for leave/vacation time or for any staffing levels under 100 percent for any other reasons. Based upon the terms of the RFP, the language of HRS' procurement manuals, and the expert testimony of Dr. Scott, any valid present-value analysis should have included a 36 month term contract. Any such analysis should also have taken into account varying levels of staffing, leave/vacation time, and overtime if staffed at the minimum required. A properly performed present-value analysis indicates that Deloitte's proposal is less expensive than the Unisys proposal in the following amounts over a 36 month contract term, at the staffing levels indicated: Employees Leave/Vacation Time Overtime Deloitte Savings 107 2 weeks none $12,791 96 none none $109,062 96 none 5.8 percent $ 18,327 46 none none $844,473 (Pet. Exh. 15) The only scenario in which the Unisys proposal is less costly than the Deloitte proposal, using the proper present value analysis, would be at 107 employees, with no accounting for leave time. This unlikely future scenario would result in a savings of no more than $47,378, or less than 2/10ths of l percent of the contract amount over 36 months. Because it requires an up-front payment of more than $1,600,000 (as compared to $78,000 for Deloitte), the Unisys proposal places the State of Florida at substantially more financial risk than the Deloitte proposal in the event of nonperformance by Unisys. On February 1, 1995, HRS posted its notice of intent to award the Contract to Unisys. Deloitte filed its timely notice of intent to protest on February 3, 1995, and filed its timely formal protest and request for hearing on February 13, 1995.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered which declines the award to Unisys and takes into account the foregoing findings of fact and conclusions of law when deciding the future course of contracting for the services sought by the RFP. DONE and ENTERED this 12th day of May, 1995. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of May, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made with regard to purposed findings of fact submitted by the parties. Intervenor's Proposed Findings: Adopted. Adopted as to 1st sentence. Remainder not relevant with exception of last sentence which is adopted. Rejected, subordinate to HO findings. Accepted. Rejected, subordinate to HO findings. 6.-7. Rejected, cumulative. 8. Accepted. 9.-10. Rejected, subordinate to HO findings. Accepted. Rejected, subordinate to HO findings. Accepted. Rejected, cumulative. 15.-17. Rejected, subordinate. 18.-20. Rejected, relevance. 21.-22. Accepted. 23. Rejected, subordinate to HO findings. 24.-25. Accepted. 26.-29. Rejected, subordinate to HO findings. 30. Accepted. 31.-36. Rejected, subordinate. Rejected, weight of the evidence. Rejected, opinion, weight of the evidence. 39.-41. Rejected, subordinate. Respondent's Proposed Findings: 1.-3. Adopted, not verbatim. 1.-6. Adopted by reference. 7. Rejected, relevance. 8.-9. Rejected, cumulative, unnecessary. 10.-12. Accepted. 13. Rejected, cumulative. 14.-16. Accepted. Rejected, weight of the evidence. Rejected, relevance. Rejected, weight of the evidence. 20.-21. Rejected, argument. 22.-23. Rejected, subordinate to HO findings. 24. Rejected, argument. 25.-27. Rejected, subordinate, weight of the evidence. 28.-29. Rejected, relevance. 30.-31. Rejected, subordinate. Rejected, weight of the evidence. Rejected, subordinate, weight of the evidence. Rejected, relevance. 35.-36. Rejected, cumulative. Rejected, weight of the evidence. Accepted. Rejected, argument, weight of the evidence. Rejected, relevance, argument. 41.-42. Rejected, argument. Rejected, subordinate. Rejected, 20 percent difference, improper characterization. Rejected, relevance, argument. Rejected, argument, subordinate. Rejected, redundant, subordinate. Rejected, legal conclusion. Rejected, relevance, argument, lack of credible evidence. Rejected, weight of the evidence. Rejected, subordinate. Rejected, weight of the evidence. Rejected, relevance. Rejected, argumentative, legal conclusion. Rejected, legal conclusion, argument. Rejected, legal conclusion. Petitioner's Proposed Findings Of Fact: 1.-43. Accepted, though not verbatim in some instances. 44. Subordinate to HO findings. 45.-48. Accepted. Subordinate. Accepted. Subordinate. 52.-70. Accepted. COPIES FURNISHED: William E. Williams, Esq. Red D. Ware, Esq. Huey, Guilday & Tucker, P.A. 106 E. College Ave., Ste. 900 Tallahassee, FL 32301 William A. Frieder, Esq. Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 W. Robert Vezina, III Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Dr. Tallahassee, FL 32302 Steven A. Blaske Unisys Corporation 4151 Ashford Dunwoody Rd. Atlanta, GA 30319 Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 Kim Tucker, Esq. Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700
The Issue The issue is whether proposed rule 25-14.031 of the Public Service Commission constitutes an invalid exercise of delegated legislative authority.
Findings Of Fact Background The Public Service Commission (Commission) proposed rule 25-14.102, Florida Administrative Code, governing accounting for other postretirement benefits (OPEBs), by publication in the Florida Administrative Weekly. The Citizens of the State of Florida (Citizens) filed a timely challenge to that proposed rule, and they have standing to bring the challenge. The proposed rule applies to utilities regulated by the Commission under Chapters 364, 366 and 367, Florida Statutes (1991), which include telecommunications companies, investor-owned electric and gas utilities, and water and wastewater utilities. No specific statute requires that a regulated utility use the accrual accounting method for OPEBs. Section (1) of the proposed rule defines postretirement benefits other than pensions, and prescribes the sole acceptable method for measuring and recognizing the employer's accumulated postretirement benefit obligation.1 Under Section (2), utilities must account for the cost of such benefits in the manner required by Statement of Financial Accounting Standards No. 106, entitled "Employers' Accounting For Postretirement Benefits Other Than Pensions" published by the Financial Accounting Standards Board in December 1990, and they are prohibited from using deferral accounting under Statement of Financial Accounting Standards No. 71 (Accounting for the Effects of Certain Types of Regulation) for these benefits unless the utility obtains prior approval from the Commission. Section (3) specifies that unfunded accumulated postretirement benefit obligations will be treated as a reduction to rate base in Commission rate proceedings. This means a utility is not entitled to earn a return on an amount equal to the accumulated postretirement benefit obligation recognized on its financial statement which the utility has not actually funded. This can be done by treating the unfunded obligation as a reduction to the utility's working capital by adding it to current liabilities. Section (3) also makes explicit that if the Commission disallows a specific OPEB expense, the cost of that disallowed expense does not reduce the utility's rate base. The Board and its Standards The Financial Accounting Standards Board is the authoritative body which promulgates standards of financial accounting for the accounting profession. It was organized in 1972 as the successor to the Accounting Principles Board. The Board derives its authority through Rule 203 of the Code of Professional Ethics of the American Institute of Certified Public Accountants. Its pronouncements are an important source of what are known as "generally accepted accounting principles." These principles are concerned with both measurement and disclosure. Measurement principles determine the timing and amounts of items which enter the accounting cycle and have an impact on financial statements. They are quantitative standards which require numerically precise answers to problems and activities which may be subject to substantial uncertainty. Disclosure principles deal with factors which may not be numerical. They compliment measurement standards by explaining the standards and giving other information on accounting policies, contingencies and uncertainties which are essential ingredients in the analytical process of accounting. Generally accepted accounting principles thus include the measurement of economic activity, the time when such measurements are made and recorded, disclosures surrounding these activities, and the preparation and presentation of summarized economic activities found in financial statements. Complicated business activities often give rise to complex accounting principles. The Board has issued 110 Statements on Financial Accounting Standards to date, issued Interpretations and Technical Bulletins, and devoted substantial time and resources to development of a Conceptual Framework for Financial Accounting. Once adopted by the Financial Accounting Standards Board, the text of numbered financial accounting standards are not amended. If, for some reason, the Board wished to change the accounting treatment required by a Financial Accounting Standard, a new standard bearing a new number would be adopted. Under current practice of the Financial Accounting Standard Board, the Commission's adoption of FAS 106 is not an attempt to currently adopt future changes to FAS 106, for there will be none. Moreover, the language of section (1) of the proposed rule adopts the Standard as promulgated in December 1990. Standard 106, which the proposed rule would adopt, is not solely applicable to utilities, but is part of generally accepted accounting principles applicable to all business enterprises. Standard 106 sets measurement and disclosure standards for the manner in which postretirement benefits other than pensions are treated in external financial statements. Standard 106 itself consists of 38 pages of black letter text, and is supplemented with appendices which include a comparison of accounting for other postemployment benefits with accounting for pensions; illustrations; background information concerning considerations which were the basis for the conclusions reached in Standard 106 which are an integral part of the Standard; and a glossary (Commission composite Exhibit 1, at tab 2). The Standard treats OPEBs as a form of deferred compensation and requires accrual accounting. Expected postretirement costs are to be attributed to the period when an employee renders services. The Standard prescribes a uniform methodology for measuring and recognizing the employer's accumulated postretirement benefit obligation. The Standard applies to all postretirement benefits, and benefits payable to disabled workers. The benefits encompassed include tuition assistance, legal services, day care, housing subsidies, and other benefits. The most significant one is postretirement health care. Benefits most often depend on a formula established by the employer, using factors such as years of service, or compensation before retirement. These benefits may be available to current employees, former employees, beneficiaries such as spouses and to persons dependent on the retiree. The Standard focuses on the substantive benefit plan--the one employees understand based on past practice or by the employer's communication of intended plan changes. This is usually the same as the employer's current benefit plan, but if the written plan and practice differ, practice controls. Using the substantive benefit plan, the Standard attempts to account for the exchange between employers who provide OPEBs and employees whose services are provided at least in part to obtain these OPEBs. Standard 106 requires that the employer's liability be fully accrued when the employee is fully eligible for all expected benefits, even if the employee continues to work, since the employee has already provided the service which has earned the benefits. The costs are attributed in equal amounts (unless the plan text loads a disproportionate share of benefits in early years of employment) over the period from initial employment until the employee attains full eligibility for all benefits. The basic tenet of FAS 106 is that while it requires the use of some variables that are difficult to measure, recognition and measurement of the overall liability of the employer to provide OPEBs is best done through accrual accounting. The use of estimates is superior to implying, by failure to accrue, that no cost or obligation exists prior to the actual cash payment of benefits to retirees. The Financial Accounting Standards Board began work on accounting for OPEBs in 1979, as part of an ongoing project on accounting for pensions. By 1984, the Board decided to separate out accounting for OPEBs as a separate project. In April 1987 the Board issued, as an interim measure, its Technical Bulletin No. 87-1, Accounting For A Change In Method Of Accounting For Certain Postretirement Benefits. Standard 106 amends another, older source of generally accepted accounting principles, Opinion 12 of the Accounting Principles Board of the American Institute of Certified Public Accountants, a predecessor to the Financial Accounting Standards Board. The amendment is effective for fiscal years beginning after March 15, 1991. Portions of Standard 106, which are wholly new and not an amendment to APB 12, are effective for fiscal years beginning after December 15, 1992. Standard 106 shares with other accounting standards a salient characteristic of pension accounting--delayed recognition. Changes are not made immediately, but are recognized in a gradual and systematic way. This is why there is a transition obligation in Standard 106. The employer's accumulated postretirement benefit obligation for benefits attributable to the period before Standard 106 became effective is recognized on a delayed basis. The recognition period used must result in recognition of the accumulated obligation at least as rapidly as it would be recognized on a "pay- as-you-go" or cash basis. Until a utility actually recognizes a portion of its accumulated postretirement benefit obligation, that portion of the obligation plays no part in setting the utility's rates. The Standard requires the use of some assumptions, i.e., the estimates about the occurrence of future events, such as plan continuity. Continuity of the substantive plan for OPEBs is presumed in the absence of evidence to the contrary. Actuarial assumptions are also required, such as retirement age, salary progression in pay-related benefit plans, the probability of payment based on employee turnover, mortality and dependency status. When discount rates are used in present value calculations required by the Standard, they are to be based on current interest rates, as of the measurement date, for high quality fixed income investments with similar face amounts and maturities at which the postretirement benefit obligations could be settled. Present value factors for health care benefits require consideration of cost trend rates, medicare reimbursement rates and per capita claims cost by age. Standard 106 requires companies to recognize and account for the cost of OPEBs during the time period in which employees earn those benefits. Companies have generally recognized the expense of OPEBs on their financial statements only as those benefits were paid out to retired employees rather than accruing a liability for those future payments as they were earned by employees (the "accrual method"). The pay-as-you-go method was acceptable when OPEB expenses were small, but those expenses are now so significant that the Financial Accounting Standards Board has determined that the pay-as-you-go method of accounting distorts financial statements and is inappropriate. The utility rate payers pay the cost of OPEBs and other expenses in their utility rates. Recognition of OPEB expenses under the pay-as-you-go method causes current utility rate payers to fund benefits paid to retired utility employees. After the transition period, the implementation of accrual accounting for OPEBs will match employees' OPEB expenses solely with the group of rate payers who actually benefit from service from those employees. The accrual accounting method also contributes to containment of health care costs, since utilities must currently measure the value of the benefits promised in the future and also book a liability for those future health care costs attributable to all employees, not just retired employees. Other accrual requirements of the Commission The Commission already requires utilities to use accrual accounting for other significant expenses. Utilities accrue depreciation expenses after their initial cash outlay for plant so that the cost of construction is paid over the useful life of the plant by rate payers who receive service from that plant, rather than from rate payers who happened to be using the system during the period in which the plant was constructed and the construction cost incurred. These expenses do not represent actual cash outlays. As is typical of depreciation, these non-cash expenses are not matched with deposits in internal or external accounts to provide a fund out of which to build new plants as current plants are retired. Rather, depreciation expenses recovered in utility rates become an additional source of cash, which is matched by a corresponding decrease in the value of plant on which a utility earns a rate of return. Utilities accrue nuclear decommissioning expenses before those expenses actually become current cash outlays. Through this method, rate payers who have received the benefit of power produced at a nuclear plant pay an estimated portion of the eventual dismantlement cost of the plant in each of the years during which the plant is actually in service. Unlike depreciation, the Commission requires that these expenses be funded currently, because the cost of closure of nuclear plants will be large--perhaps hundreds of millions of dollars in a one-year period. It could be difficult or impossible for a utility to raise such amounts in the capital markets at the time they are needed. Requiring accrual accounting treatment for OPEB expenses is consistent with existing Commission policy for the treatment of these other large expenses. Commission policy development Before this rule was proposed, the Commission was developing a policy on proper accounting for OPEB expenses in utility rate hearings conducted under Section 120.57, Florida Statutes. In rate cases for Centel and Gulf Power Corporation, the Commission required the use of accrual accounting for OPEBs. In the latest rate case for Florida Power Corporation, Final Order PSC-92-1197- FOF-EI entered October 22, 1992, the Commission ordered the utility to adopt accrual accounting for OPEB expenses under FAS 106 (Commission Exhibit 2 at 67, paragraph Z). In the latest rate case for United Telephone Company of Florida, Final Order PSC-92-0708-FOF-TL, the Commission also ordered that utility to adopt accrual accounting for OPEBs under FAS 106 (Commission Exhibit 3 at 34, paragraph VII.C.1.) In none of these cases did the Commission take the position that the use of accrual accounting under FAS 106 automatically required Commission approval of all expenses shown by the utilities as OPEB expenses in their rate filings with the Commission. The proposed rule instructs utilities how to prepare their accounting information for Commission review. The rule's text does not require the Commission to allow recovery of all costs presented for review in each rate case. A utility recovers accrued OPEB expenses through rates only when the Commission takes action to change rates, and that action always takes place in the context of a rate case which is subject to a Section 120.57(1) evidentiary hearing. In a rate case, the Commission will review the utility's accrual for OPEB expenses, and has the authority to disallow any expense which the Commission finds imprudently incurred, unreasonable in amount, or not related to providing utility service. Adoption of FAS 106 does not limit the Commission's ability to adjust expenses claimed by utilities. The Commission has recognized in the Economic Impact Statement for the proposed rule that intervenors can challenge a utility's actuarial assumptions, discount rates, benefit levels, cost containment efforts, or other accruals in rate hearings (Commission Composite Exhibit 1, tab 3, EIS at page 5). The proposed rule represents a policy decision made by the Commission, which is consistent with the conclusion reached by the Financial Accounting Standards Board, that accrual accounting under FAS 106 is the most appropriate method to account for OPEB expenses. Impermissible Assumptions? Citizens object that the rule provides vague guidance to utilities about what should be included in the calculation of OPEB expenses, but sets no specific formula for expense calculations so that two companies would apply a formula and arrive at the same result if they were providing similar benefits. Under FAS 106 the utilities must make estimates and assumptions, and the manner in which they are used can affect the final benefit cost used in rate setting. Under the proposed rule, the utilities are not required to fund the accumulated postretirement benefit obligation, which is an expense, with an internal or external account. Just as depreciation expenses result in a write- down of the value of the depreciated asset, so that the utility earns a rate of return only on the depreciated asset value, any unfunded accumulated postretirement benefit expense allowed by the Commission reduces the utility's rate base so no return is earned on that amount. This can be done as a reduction to the utility's working capital, by treating any portion of the accumulated postretirement benefit obligation which has been allowed but not actually funded by the utility as a current liability. For some utilities, such as water and sewer utilities, the regulatory accounting derives working capital in an unusual way--i.e., by computing one eighth of the operation and maintenance expense rather than subtracting current liabilities from current assets (Tr. 118). For these utilities, the reduction to rate base will have to be accomplished in some other way. If a specific OPEB expense for retirees is disallowed by the Commission (e.g., dental coverage for retirees) the utility does not recover that expense in its rate base. Concomitantly the disallowed expense does not become a reduction to rate base [Tr. 151, proposed rule section (3)]. 1. The Substantive Benefit Plan. 25. The first assumption a utility must make concerns the substantive content of the future benefit plan. Standard 106 requires a utility to assume that its current written benefit plan will be the plan in effect throughout the time used to calculate benefits for employees who will retire in the future. The utility may deviate from this written plan if it has communicated to its employees that their postretirement benefits will be something other than what is found in its current plan. Standard 106 requires the utility to decide whether it has communicated something other than its current plan to its employees and if so, what that plan is. The substantive plan must be disclosed in the utility's filings with the Commission [Standard 106, paragraph 74(a)]. The witness for the Citizens has reviewed benefit plans for nine utilities, and found that although they are quite detailed, all contain language which permits the utility to modify, amend, withdraw, or terminate benefits. This does not invalidate the proposed rule. Assumptions must necessarily be made today about benefits payable in the future. The Commission retains the authority to review the explicit assumptions the utility makes about the future content of its benefit plans when evaluating a utility's current OPEB expense. The disclosure requirement will draw attention to the utility's choices, which the Commission can review. Significant matters which must be disclosed include any changes in cost-sharing provisions between the utility and retirees in the form of co- payments or deductibles, changes in monetary benefits, changes in employees covered or types of benefits provided, or the utility's funding policy for its allowed OPEB expenses. 2. Transition obligation and amortization period. 26. Standard 106 also permits utilities to make assumptions and requires disclosures about their transition obligation and amortization period. The transition obligation is one of six cost components that a utility may include in the calculation of postemployment benefits under FAS 106. The transition obligation attempts to quantify and recognize the employer's liability for benefits that employees accrued or earned before accruals for OPEB expenses became mandatory. It attempts to recognize prior period costs, and to include those costs on the utilities' financial statements. The amortization period for the transition obligation is not a set number of years, FAS 106 allows the utilities a range of choices. Prior period costs can be immediately recognized in the first year FAS 106 is effective, or amortized over the average service life of employees, or over some set number of years. The amortization period may be anywhere from one to twenty years for a particular utility, but cannot be slower than the recognition of the obligation on a pay-as-you-go or cash basis. The shorter the amortization period, the higher the annual cost that will be recognized currently. Rate payers in those years covered by the amortization period will pay for a portion of the prior period costs in each of those years. Thus, if a ten-year period is used, the rate payers for the next ten years will be charged currently for benefits to be paid in the future to employees, which benefits were earned before the accrual method of accounting for OPEBs was required by FAS 106, in addition to accruals for current employees. Standard 106, paragraph 74 (b) includes required disclosures about amortization of unrecognized transition obligations. 3. Attribution period. 27. The Standard also requires the utilities to compute an attribution period, which measures the timing of an employee's eligibility for benefits, and attributes the benefit earned by the employee to that period. For example, if the utility's substantive plan promises employees that they will receive OPEB benefits once they reach the age of 55 if they also have five years of service with the utility, then the utility must accrue the full liability associated with the total cost of that employee's OPEBs by the time the employee reaches age 55 and has five years of service, even though the employee may continue to work beyond that time. Standard 106 does not require the utility's substantive plan to contain any specific attribution period. This permits utilities with otherwise similar circumstances but different substantive plans to have an attribution period of "55 years old with ten years of service" while another may select a period of "55 years old and five years of service." Because the second utility promises the employees benefits in a shorter period of time, the annual cost, which is recovered from the rate payers, will be greater under FAS 106 for the second utility than for the first. The terms of the substantive plan control because it is the best evidence of the exchange transaction between employer and employee. 4. Marital and Dependent Status. 28. The Standard also directs the utility to develop an explicit assumption about its employees' marital status and number of covered dependents on retirement. This is important because substantive plan provisions which entitle a spouse or dependents to health care or other welfare benefits substantially increase the employer's cost and obligation for postretirement benefits. Utilities historically have used differing assumptions about these matters. These factors can be determined based on the actual experience of each utility, and may vary from utility to utility. 5. Discount Rate. 29. A discount rate is applied to a company's calculated future postretirement benefit liability in order to discount that amount back to a present value. The liability for OPEB expenses for the period prior to the adoption of FAS 106 is amortized. In other words, the discount rate is used to calculate a present value of the utility's transition obligation. The selection of a discount rate is initially left to the utility. The discount rates used by business enterprises have varied. Since a difference in the discount rate selected could result in approximately a ten percent difference in the utilities' annual expense for OPEBs, two different utilities, in similar circumstances and with similar customer bases in geographic proximity to one another could use different discount rates, and generate different expenses for similar OPEBs. Discount rates are, however, to be chosen based on the interest rates paid, as of the measurement date, on high grade investment securities that have cash flows matching the timing and amount of benefit payments due to employees. The variability should be minor from utility to utility if the measurement dates involved are similar and the timing and amounts of benefits due are similar. The weighted-average of assumed discount rates used to measure the accumulated postretirement benefit obligation must be disclosed. Standard 106, paragraph 74(e). 6. Future Medical Expenses. Standard 106 requires utilities to measure expected postretirement benefit obligations for health care benefits by making explicit assumptions about the timing and amount of these benefits payable to plan participants in the future. Recent medical claims costs in the geographic area are useful in making estimates of assumed per capita claims cost by age from the earliest date benefits could be due to a participant through the longest life expectancy of participants. Utilities must also calculate their best estimate of the projected medical inflation trend far into the future. The FAS 106 does not require or even suggest a specific time frame that the utilities' estimated trend rate is to encompass. There are a number of indices currently used to evaluate medical inflation which could be used, such as the National Hospital Input Price Index, or a utility could develop a Florida hospital input price index. Some indices show medical inflation trend rates as high as 21 percent, others are as low as 13 percent. The effect of a one percent change in the medical inflation trend can result in a change of 15 to 19 percent in the utilities' current expense level, to be charged to current rate payers. Over time it should be possible to use claims cost data specific to each utility, based on 1) current medical care utilization and delivery patterns, 2) evidence of the health status of covered employees, and 3) the location of employees, to project costs specifically for the Florida markets where retirees reside. More art than science is inherent in factoring in assumptions about changes in health care utilization patterns based on technological advances. This is the stock-in-trade of consulting actuaries, and such estimates can be made. These estimates are more easily evaluated because a sensitivity analysis of the effect of a 1% increase in assumed health care cost trend rates on the accumulated postretirement benefit obligation for health benefits, and on the aggregate of the service and interest cost components of net periodic postretirement health care benefit costs are required to be presented by the utility. Standard 106, paragraph 74(f). The short answer to the problem of variability arising from the use of permissible assumptions under FAS 106, is that the rule is not invalid because acceptable choices are not etched in stone. All choices available under FAS 106 are subject to review by the Commission. Important ones must be highlighted by disclosures and, in some cases, sensitivity analyses. Unreasonable assumptions could be rejected by the Commission, even though the rule does not state this in haec verba as to each of the estimates or assumptions available to utilities under the proposed rule. The simplest example would be the utilities' selection of a discount rate. The Commission has modified the discount rate selected by a utility in the past. If the rate selected is unreasonable, based on the market interest rate being paid on high quality fixed income investments as of the measurement date, the Commission could disallow the utilities' assumption, and use instead another rate which the Commission determined from evidence more closely reflected the market rate for analogous investment vehicles providing necessary cash flows for expected benefit payouts. The text of FAS 106 requires the utility to use the assumption that "individually represents the best estimate of a particular future event, to measure the expected postretirement benefit obligation." FAS 106, paragraph 29. The utility is not free to make whatever assumption it believes will result in the highest charge to its customers. The test is whether the assumption made reflects the utility's "best estimate of the plan's future experience solely with respect to that assumption" (FAS 106, Glossary, definition of Explicit Assumptions, at page 197, Commission Composite Exhibit 1, tab 2 [emphasis added]). The Commission retains authority to question whether an assumption is the best estimate of future experience, which is a fact specific inquiry into the circumstances of each utility, its employee cohort and its substantive plan. The Commission has authority in the text of FAS 106 to make a searching inquiry into each explicit assumption to insure that the best estimate, given the utility's unique circumstances, has been used. If not the Commission can disallow the expense the assumption generates.
The Issue Whether Respondent's intended award of the contract arising out of Request for Proposal No. 09L04FP4 to Intervenor is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Stipulated Facts In accordance with a 2001 legislative mandate, the Developmental Disabilities Program, formerly part of the Department of Children and Family Services and now within the Agency, established a requirement for prior service authorization (PSA) reviews for individuals enrolled in the Developmental Disabilities Home and Community Based Services waiver (waiver). Following a competitive procurement process, Maximus, Petitioner herein, was awarded a contract to provide PSA reviews for persons satisfying certain selection criteria, and related services. These PSA reviews ensure that services for which reimbursement is provided under the waiver are based on medical necessity. Currently only those cost plans that meet certain selection criteria are reviewed. A 2004 legislative mandate required the Developmental Disabilities program to expand the PSA program to review all support and cost plans for the waiver, including those that do not meet the selection criteria that trigger a PSA review under the Agency's existing contract with Maximus. On or about October 13, 2004, the Agency issued Request for Proposal No. 09L04FP4- Agency for Persons With Disabilities Prior Service Authorization Reviews (the APSAR contract). The RFP sought a vendor to serve as the contracted provider to conduct the additional reviews required by the 2004 legislative mandate (the ASPAR Contractor). The RFP proposals were to include responses to inquiries concerning the qualifications and capabilities of each proposer, as well as the proposed's vendor's proposal for providing the requested services (the technical proposal) and a separate proposal setting forth the proposed vendor's costs for providing such services (the cost proposal). Pursuant to the provisions of the RFP, the ASPAR Contractor will be responsible for reviewing these additional support plans and cost plans in order to ensure that individuals receiving waiver services receive medically necessary services to meet their identified needs. Pursuant to the provisions of the RFP, the ASPAR Contractor will be responsible for determining whether the Developmental Disabilities program is the appropriate funding source for the service(s) identified and shall recommend alternative funding mechanisms. The RFP set forth evaluation criteria and a scoring process in which a proposal could receive a maximum of 100 points, 25 of which are attributable to the cost proposal. The RFP states that "[t]he agency will attempt to contract with the prospective vendor attaining the highest total price." The deadline for submission of proposals in response to the RFP was November 2, 2004. The Agency received proposals from three prospective vendors: APS, Maximus, and First Health Services. On November 12, 2004, the Agency posted its Notice of Intended Award of the APSAR contract to APS. The Notice of Intended Award reflected the prospective vendors' scores as follows: APS, 86.45; Maximus, 82.06; and First Health, 71.52. Of its total score of 86.75, APS received 25 points for its cost proposal as the prospective vendor with the lowest total price. On November 16, 2004, Maximus timely filed a notice of intent to protest the Agency's intent to award the ASPAR contract to APS. Maximus timely filed its formal written protest, a Petition for Administrative Proceedings, with an accompanying bond which satisfied the applicable statutory and RFP requirements. Findings of Fact Based on the Evidence of the Record APS has standing to intervene in this proceeding. The APSAR contract being procured through the RFP is a fixed price contract. Lorena Fulcher is the Agency's procurement manager for the RFP. When the proposals were received, the Agency screened each of them for compliance with a list of fatal criteria set forth in Section 6.3.1 of the RFP. According to Ms. Fulcher, the purpose of the initial screening was to determine whether the proposals should go to a formal evaluation process. No scoring or points were associated with whether a vendor met the fatal criteria. The Agency determined that all three vendors met the fatal criteria. Therefore, the three proposals were sent to an evaluation committee which was responsible for evaluating the technical aspects of the proposals. Fatal Criteria Petitioner asserts that Intervenor did not satisfy one of the mandatory requirements of the RFP and, therefore, its proposal should not have been forwarded for further review and scoring by the evaluation committee. Section 5.4 of the RFP states that the mandatory requirements are described as "Fatal Criteria" on the RFP rating sheet and that failure to comply with all mandatory requirements will render a proposal non-responsive and ineligible for further evaluation. Section 6.3.1 of the RFP is entitled, "Fatal Criteria." One criterion reads as follows: "Did the proposal document and describe at least one year of experience in the developmental disabilities field and with Home and Community Based Services waivers?" According to Ms. Fulcher, the Agency looked at each proposal in its entirety to determine that there was prior experience with the sort of review that the Agency was trying to procure with the RFP. Ms. Fulcher referenced several pages of Intervenor's proposal relating to this criterion that the Agency reviewed in making its determination to send Intervenor's proposal to the evaluation committee. One such reference is contained on page 9 of Intervenor's proposal. That page references Intervenor's experience with Georgia Medicaid since 1999. On page 84 of Intervenor's proposal, that experience is further described as "Prior authorization and Concurrent Review for all Medicaid services under the Rehabilitation Option to individuals with mental health disorders and/or developmental disabilities. Specialized projects include technical assistance to HCBS Waiver providers." Intervenor was formed in the early 1990's and was acquired by APS Healthcare in 2002. Intervenor's proposal explains: "APS Midwest is a wholly owned subsidiary of APS Healthcare Bethesda, Inc. APS Midwest, formerly known as Innovative Resource Group, was acquired by APS in 2002." Petitioner argues that the Georgia experience should not have been counted because it was experience acquired prior to the 2002 acquisition of Intervenor. Specifically, Petitioner argues that since the Georgia project has been ongoing since 1999 and since Intervenor was not acquired by the APS parent company until 2002, that Intervenor could not have been the provider. APS Healthcare, and its subsidiaries, including Intervenor, are managed as a single entity and many of their services and resources are integrated. The evidence established that the resources of the APS family of companies are available in the performance of the contract. Moreover, the undersigned is not persuaded that Intervenor was prohibited in any way by the language of the RFP or otherwise, from referencing experience obtained by a parent or related corporate entity prior to the 2002 acquisition. Intervenor's proposal contained references to other experience which the Agency considered in determining that Intervenor's proposal met the one-year experience fatal criterion at issue. These included experience obtained in Pennsylvania, Idaho, and other states in the developmental disabilities field and with home and community based services waivers. The Agency's determination that Intervenor met the "one-year" experience fatal criterion is supported by the evidence of record. The Agency's decision to forward Intervenor's proposal to the evaluation committee was appropriate. Any evaluation or scoring of the content of Intervenor's representations was left to the evaluation committee. The Cost Proposals Section 4.4 of the RFP reads in pertinent part as follows: The prospective vendor shall clearly present in the cost proposal the total cost for each deliverable as described in Section 3.6, Task List. A pricing schedule must be presented that indicates a unit cost for each task to be performed, with all task amounts added for a grand total cost for each deliverable. The total cost of all deliverables will be presented as the proposed total contract amount. The cost proposal must be bound separately. The vendor must submit as supporting documentation, a detailed line-item budget that delineates and constitutes all costs contained in the proposed total contract amount. The line-item budget shall delineate the number and type of positions that will be required to complete the work identified for each major task, and discrete associated expenses. Further, Section 4.4 included a grid described as an "Example Format of the Pricing Schedule." The RFP does not state that a proposer must use the grid format provided in this section. The grid includes columns marked "Unit Cost," "Number of Units," "Amount for Year 1," "Amount for Year 2" and "Amount for Year 3." At the bottom of the grid, there is a line for a "Total per year" and there is a line for the "Grand Total." APS used the grid format as shown in Section 4.4 of the RFP. Below the grid, APS included a notation that reads: "Please note that costs are adjusted for years two and three accordingly." Following this notation are four "bullets" one of which reads: "Unit cost for PSA reviews slightly increase to reflect a 1-2% growth rate in years two and three. However, if the number of reviews significantly increase more than this amount, pricing would have to be adjusted accordingly." Petitioner argues that the language of the above referenced "bullet" constitutes a contingent price, as opposed to a fixed price as required by the RFP, and, therefore, Intervenor should have received a score of zero for its cost proposal. Section 6.3.3. of the RFP provides in pertinent part: "Evaluating Cost Proposals--The prospective vendor with the lowest total price shall be awarded 25 points or 25% of the maximum total score." Section 6.3.3 further provides that the other prospective vendors would be awarded points by dividing the lowest price by the prospective vendor's price and then dividing the resulting percentage by four. The Agency scored the cost proposal by the grand total stated in each proposal. That is, the points assigned for the cost proposals were based solely on the total price proposed. According to Ms. Fulcher, the Agency ignored the bullets for purposes of scoring the cost proposals because the RFP was for a fixed price contract. Petitioner Maximus submitted a total cost proposal in the amount of $10,259,131. Intervenor APS submitted a total cost proposal in the amount of $7,460,615. Accordingly, the Agency awarded Intervenor 25 points for submitting the proposal with the lowest grand total cost of the three vendors, and awarded Petitioner 18 points for its grand total cost. There is nothing in the referenced "bullet" in APS' proposal that implies that the grand total might increase. The "bullet" clearly references "unit costs" only. Moreover, Section 4.3 of the RFP states that payment method and pricing will be determined during negotiations. According to Ms. Fulcher, the cost information requested other than the total cost was to be used only for purposes of negotiating and drafting the contract. Petitioner argues that Intervenor's cost proposal contained mathematical errors that, if corrected, would increase the total cost proposed. The difference between the two proposals was $2,798,516. The evidence does not establish that if the mathematical errors were corrected, Intervenor's actual cost would have been higher than Petitioner's proposed total cost. Further, Petitioner offered testimony speculating how Intervenor's actual costs might be higher than those reflected in Intervenor's proposal. Petitioner's speculation in this regard is of no consequence. Moreover, the contract is clearly a fixed fee contract. The proposers, including Intervenor, are bound by the fixed total cost reflected in the respective proposals.2/ The Technical Proposals Petitioner asserts that the Agency erroneously scored its technical proposal, thereby depriving Petitioner of points that would have resulted in an award of the contract to Petitioner. The RFP required the vendors to submit sealed technical proposals separate from the cost proposals. In contrast to the cost proposals, the scoring formula for the technical proposals was not based on a ratio comparison of the best proposal to the other proposals. Rather, the formula for scoring the technical proposals provided that the total score of each technical proposal would be divided by 48 to arrive at a total percentage of 100 that was then converted into points. Thus the formula for scoring technical proposals is not based on a comparison of one vendor's proposal to the others, but is based on how well each vendor did within a possible score of 36. Section 6.3.4 of the RFP sets forth the formula for scoring the technical proposals: The prospective vendor with the highest rating in this section (36 points) shall be awarded 75% (75 points) of the maximum possible score. Other prospective vendors are awarded points using the following formula: The rating is divided by 48 to determine the points awarded (36/48=75%). Section 6.3.4 of the RFP also provided three examples applying the formula for awarding points to technical proposals, with each example showing a vendor's points divided by 48. The numerator of the above formula was derived by taking the average of the total points assigned by each of the four evaluators, which was then divided by 48. The average of the evaluators' scores for Petitioner's technical proposal was 30.75. The average of the evaluators' scores for the APS technical proposal was 29.5. Accordingly, when the formula was applied, Petitioner's technical proposal score was 64.06 (30.75/48=64.06%) and Intervenor's technical proposal score was 61.45 (29.5/48=61.45%). Petitioner argues that because it received the highest technical score of 30.75, it was entitled to 75 points for its technical proposal. Petitioner, nor any other vendor, received a score of 36, the highest possible score for the technical proposal. Because no vendor received the maximum possible technical rating of 36 points, no vendor was awarded the maximum possible score of 75 points for the technical proposals. The agency applied the formula to the three vendors in a consistent manner. While the wording of Section 6.3.4 is awkward, the Agency's interpretation of that section is a reasonable one that was applied equally to all vendors. Petitioner's Proposal Finally, Intervenor asserts that Petitioner's proposal was non-responsive because it is dependant upon Petitioner continuing to provide services under its existing contract with the Agency. Petitioner's proposal was prepared using a methodology that contemplated allocating some costs to its existing contract and some costs to the contract solicited by the RFP because Petitioner already has certain resources that can be employed to provide services in the solicited contract. There is no dispute that Petitioner holds a current related contract. The Agency's determination that Petitioner's proposal was responsive in this regard was reasonable. How the costs are to be allocated was subject to evaluation and scoring by the evaluation committee.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Agency for Persons with Disabilities enter a final order dismissing Petitioner's protest. DONE AND ENTERED this 15th day of March, 2005, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings 1230 Apalachee Parkway The DeSoto Building 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 15th day of March, 2005.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part Il, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $2,500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed February 23, 2015 2:41 PM Division of Administrative Hearings 3. Conditional licensure status is imposed on the Respondent beginning on May 15, 2014 and ending on June 15, 2014. ORDERED at Tallahassee, Florida, on this I day of Boren, , 2015. NOTICE OF RIGHT TO JUDICIAL REVIEW. A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct of this Final Order was served on the below-named persons by the method designated on this Veen } Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting | Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) John E. Bradley Brian Kelly, Esquire Office of the General Counsel Law Offices of Brian Kelly, PC Agency for Health Care Administration 7316 Wisconsin Avenue, Suite 200 (Electronic Mail) Bethesda, Maryland 20814 (U.S. Mail)
The Issue Whether the proposed action to award a contract to the Intervenor, Three Springs, Inc., is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact In April of 2001, the Department of Juvenile Justice (Department) issued a Request for Proposals (RFP) for proposals to design and operate a 50 bed high-risk sexual offender program in Broward County, Florida for male youth ages 10-18. Such facility, known as the Elaine Gordon Treatment Center, was to be operated 24 hours per day, seven days per week. Two entities timely submitted proposals for the facility: BSF and TSI. Their responses were submitted on May 8, 2001. Three Department employees (Jennifer Gallman, Ken Mason, and Barbara Manakas) were to evaluate the proposals based upon the criteria identified in the RFP. The Department gave each of the evaluators a score sheet upon which to calculate each proposal relative to the RFP criteria. The evaluators assigned scores ranging from 0 to 5 for each listed item. The evaluator's score was then multiplied by an assigned weight to calculate an overall score for the criterion. After all the computations were completed, Jennifer Gallman scored TSI at 325 and BSF at 346. Similarly, Ken Mason scored TSI at 399 and BSF at 399. Barbara Manakas scored TSI at 326 and BSF at 282. The scores from the three evaluators were then averaged to reach scores of 342.33 for TSI and 337.33 for BSF. On June 4, 2001, the Department posted its Notice of Intended Contract Award and identified TSI as the offeror with the highest score (and therefore the intended recipient for the contract). The Petitioner timely filed the instant challenge to the proposed award to TSI. The Petitioner currently operates the Elaine Gordon Treatment Center. On May 8, 2001, the same date the proposals were due for the instant RFP, the Petitioner received a "cure notice" from the Department citing alleged deficiencies at the Elaine Gordon Treatment Center. The purpose of the notice was to advise the provider (BSF) that the agency intended to take action on the alleged deficiencies. The allegations of the notice surprised Petitioner's management as it had been working in tandem with the Department to correct deficiencies that had occurred at the facility and were well known to the parties. One of the evaluators for the instant RFP was aware of the cure notice and the alleged deficiencies. That evaluator scored the BSF proposal approximately 40 points lower than the proposal submitted by the Intervenor. The Petitioner asserts that the evaluator's assessment of the BSF proposal was biased. In essence, the Petitioner theorizes that an evaluator considering only the information within the four corners of the proposals would have more objectively scored the Petitioner's proposal. Petitioner maintains that the evaluator's bias is demonstrated by the written comments on the forms that are positive for the Intervenor, but are inappropriately silent or negative toward the Petitioner. In support of these assertions, the Petitioner relies in part on an e-mail sent by the evaluator to a superior that stated: If I am aware of deficiencies in operating programs may I include my knowledge (such as results of DJJ QA reviews) in scoring this item or do I have to use only the information provided in the proposal? The evaluator was aware of quality reviews (QA reviews) wherein the Petitioner had been deemed unsatisfactory. That rating had led to the cancellation of a Department contract with the Petitioner in Palm Beach County. The evaluator maintains that despite a reference to the outside information she possessed (specifically cited in one section of her assessment of the Petitioner's proposal), she judged the instant proposal on the merits of the information contained within the proposal itself. Nevertheless the contract cancellation she referred to had occurred a couple of years ago. The other two evaluators did not consider such outside information in scoring the proposals. Neither evaluator knew of the alleged deficiencies at the subject facility or of the history in Palm Beach County. The evaluators were also obligated to review a second portion of the proposals known in this record as "the cost proposal." One evaluator refused to consider that information in scoring the contested portions of the proposal. That is, she would not consider data included in the cost proposal to clarify or augment the technical response even if such information helped to more fully understand the first portion. In comparing the scores, if the Petitioner's scores were increased to allow for additional points and TSI's points are not reduced, the overall scoring of the RFP would not change. That is, the overall result of the proposal calculations would not change the outcome of the intended award. Only if TSI's scores are lowered could the result change. The unchallenged, unbiased evaluators gave TSI scores comparable to the third evaluator. TSI's score fairly relates to the responses it submitted for the RFP.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Juvenile Justice enter a final order dismissing the challenge filed by the Petitioner. DONE AND ENTERED this 25th day of October, 2001, in Tallahassee, Leon County, Florida. J. D. PARRISH 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 25th day of October, 2001. COPIES FURNISHED: David C. Ashburn, Esquire Greenberg Traurig, P.A. 101 East College Avenue Tallahassee, Florida 32301 Brian D. Berkowitz, Esquire Department of Juvenile Justice 2737 Centerview Drive Tallahassee, Florida 32399-3100 Cynthia S. Tunnicliff, Esquire Pennington, Moore, Wilkinson, Bell & Dunbar, P.A. 215 South Monroe Street, Second Floor Post Office Box 10095 Tallahassee, Florida 32302-2095 William G. Bankhead, Secretary Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-3100 Robert N. Sechen, General Counsel Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-3100
Findings Of Fact The findings below are based on the undisputed facts set forth in Petitioner's Protest and supplements thereto, Respondent's Motion to Dismiss, Petitioner's Response in Opposition to Motion to Dismiss, and representations by the parties during the motion hearing. On October 7, 2009, Respondent electronically posted its final ranking of firms which had submitted proposals to provide mechanical engineering services for six HVAC projects for Respondent in 2010. Respondent's electronic posting of the final ranking of firms included the following language: "Failure to file a protest within the time prescribed in Section 120.57(3), shall constitute a waiver of proceeding under Chapter 120, Florida Statutes." On October 12, 2009, Petitioner filed a Notice of Intent to Protest the final rankings. On October 22, 2009, Petitioner filed its Protest. Although Petitioner's Protest was timely filed, Petitioner initially did not file a bond or other security. The Protest alleges that Petitioner was not required to file a bond, because Respondent did not include in its final ranking notice that a failure to post a bond would constitute a waiver of proceedings under Subsection 120.57(3)(a), Florida Statutes. Additionally, the Protest alleges that Respondent: (1) failed to provide Petitioner with notice of the estimated contract amounts within 72 hours, exclusive of Saturdays and Sundays and state holidays, of the filing of a notice of protest as required by Subsection 287.042(2)(c), Florida Statutes; and (2) because Respondent had not provided that notice, Petitioner was unable to calculate the amount of the bond required and was, therefore, relieved of the obligation to file a bond. On October 30, 2009, Respondent, through counsel, wrote to Petitioner. In this correspondence, Respondent informed Petitioner that Section 287.042, Florida Statutes, did not apply to Respondent because it was not an "agency" for purposes of that law. Respondent further informed Petitioner that Section 255.0516, Florida Statutes, allowed Respondent to require a bond in the amount of two percent of the lowest accepted bid or $25,000. Respondent also notified Petitioner that because it was protesting all six project awards, all awards must be included in the calculation of the bond amount required. Finally, Petitioner was allowed ten days within which to post a bond. On November 3, 2009, Petitioner submitted to Respondent a cashier's check in the amount of $3,143.70 and noted that the check was intended to serve as security for the Protest "as required by F.S. 287.042(2)(c)." In the letter which accompanied the check, Petitioner also noted that: (1) the amount of the check was determined by calculating one percent of the largest proposed contract award amount of $314,370.00; and (2) Petitioner was providing that amount "under duress," because Respondent had "just published the contract award amounts." The relief requested by Petitioner in the Protest is that: (1) it be awarded one of the six HVAC projects comprising the final ranking; and/or (2) alternatively, all six awards be rescinded and "start the entire process over." The final ranking which Petitioner protests included six separate projects, each of which had a separate construction budget. Those projects and their respective construction budgets are as follows: Northwest--$1,144,000; Tampa Palms--$2,649,081; Yates--$2,770,828; Ferrell--$2,550,758; Stewart--$2,805,437; and Erwin--$4,191,603. The proposed fees for each project were as follows: $97,240 (Northwest); $211,926 (Tampa Palms); $221,666 (Yates); $204,061 (Ferrell); $224,435 (Stewart); and $314,370 (Erwin).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Hillsborough County School Board, issue a final order dismissing the Protest filed by Petitioner, RHC and Associates, Inc. DONE AND ENTERED this 20th day of January, 2010, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of January, 2010.
Conclusions Having reviewed the Notice of Intent to Deem Application Incomplete and Withdrawn from Further Review dated March 13, 2013 (Ex. 1), and the Administrative Law Judge’s Order Granting Respondent’s Motion to Relinquish Jurisdiction and Dismiss Case As Moot (Ex. 2), the Agency for Health Care Administration finds concludes as follows: 1. The license of the Licensee/Transferor, License Number 5799, was revoked by Final Order dated March 8, 2013. 2. The change of ownership application filed by the Petitioner/Transferee is moot because the Licensee no longer has a license. 3. The Petitioner’s change of ownership application is therefore withdrawn from further review in accordance with the Administrative Law Judge’s order. ORDERED in Tallahassee, Florida, on this 23 day of _ Marly , 2014. Sel retary th-Care Administration
Other Judicial Opinions A party that is adversely affected by this Final Order is entitled to seek judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. Filed March 31, 2014 3:56 PM Division of Administative Hearings CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy offhis Final Order was served on the below- named persons/entities by the method designated on this .$/-day of Space , 2014. Richard J. Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone (850) 412-3630 Jan Mills Shaddrick Haston, Unit Manager Facilities Intake Unit Licensure Unit Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) John E. Bradley, Assistant General Counsel Arlene Mayo-Davis, Field Office Manager Office of the General Counsel Local Field Office Agency for Health Care Administration Agency for Health Care Administration (Electronic Mail) (Electronic Mail) Honorable June C. McKinney Administrative Law Judge Division of Administrative Hearings (Electronic Filing) Bernard P. Coniff, Esquire Counsel for Special Care, Inc. 760 Ponce De Leon, Suite. 101 Coral Gables, Florida 33134 (U.S. Mail) HORIDA AGENCY FOR HEALTH CARE ADMINSTRATION Pa RICK SCOTT ELIZABETH DUDEK GOVERNOR Better Health Care for all Floridians SECRETARY 1c, (OP 2% March 13, 2013 my wk eS CERTIFIED MAIL Bernard P. Coniff, Esq. Wilfred Braceras Special Care, Inc. 760 Ponce De Leon, Ste. 101 Coral Gables, Florida 33134 cense Number: 5799 Po} 300 LE 2°) Fy Certified Article Number 756 9008 9111 6923 4301 SENDERS RECORD NOTICE OF INTENT TO DEEM APPLICATION INCOMPLETE AND ENE EY DERM APPLICATION INCOMPLETE AND WITHDRAWN FROM FURTHER REVIEW Dear Sir/s: Your change of ownership (CHOW) application for a license is deemed incomplete and withdrawn from further consideration pursuant to Section 408.806(3)(b), Florida Statutes (F.S.), which states that “Requested information omitted from an application for licensure, license renewal, or change of ownership, other than an inspection, must be filed with the agency within 21 days after the agency’s request for omitted information or the application shall be deemed incomplete and shall be withdrawn from further consideration and the fees shall be forfeited’. You were notified by correspondence dated 01/18/2013 to provide further information addressing identified apparent errors or omissions within twenty-one days from the receipt of the Agency’s correspondence. Our records indicate you received this correspondence by certified mail on 01/24/2013. The requested information was reviewed by the Agency. However, your application is deemed incomplete and withdrawn from further consideration, The outstanding issues remaining for licensure are: Proof of Financial Ability To Operate Conclusion: The applicant has not met the following Statutory filing requirements for proof of financial ability to operate: ¢ The applicant failed to provide independent evidence that the funds necessary for startup costs, working capital, and contingency financing exist and will be available as needed as required under Section 408.810(8), Florida Statutes. Analysis: Staff reviewed the documents submitted by the applicant to demonstrate proof of financial ability to operate. Due to errors and omissions in the filing, staff is unable to evaluate the applicant’s financial ability to operate. Proof of Funding: The applicant did not provide adequate proof of ability to fund start-up costs, working capital, and required contingency funding as required by Section 408.810(8), Florida Statutes. : The inter-office omissions letter dated January 18, 2013, raised the following issues: 2727 Mahan Drive,MS#30 Tallahassee, Florida 32308 Visit AHCA online at ahca.myflorida.com CYHIBIT 1 Mr. Braceras * BOYNTON BEACH ASSIS. LIVING FACILITY Page 2 03/13/2013 CHOW Purchase Price The applicant did not indicate the purchase price on Schedule 1. In addition, the applicant did not provide documentation of the purchase (purchase agreement, bill of sale, etc.) and did not provide proof of available funding to complete the purchase transaction. Please provide supporting documentation indicating the availability of funds to complete the purchase. Proof may include account statements of the purchaser prior to purchase. If the purchase has already been completed (an executed bill of sale exists) please provide documentation of the transfer of funds including canceled checks, and or electronic funds transfer receipts. if the applicant borrowed any of the funds for the purchase from an institution or individual, please disclose the amount borrowed, the identity of the lender, and documentation supporting the loan. While the applicant did indicate a purchase price of $30,000, it again did not provide proof of CHOW price, potentially significantly understating its. funding requirement. Working Capital, and Contingency Financing Working capital as defined on Schedule 1 as the largest cumulative cash need from year one or two, from Schedule 7, Projected Cash Flow Statement, Line 21 of the application. In its application, the agency listed its largest cumulative cash need as $0. However, the correct figure, according to the applicants’ Schedule 7, as filed, is $62,182. In addition to providing funding for start-up costs and working capital requirement, all applicants are required by law to provide for contingency financing. Contingency financing as defined in Section 400.471(2}(e), Florida Statutes, and applies to all agency licensure and requires an applicant’s access to contingency financing in addition to funding anticipated cash flows. The purpose of contingency financing is to provide funding for unanticipated, extraordinary occurrences that the applicant cannot project. The contingency financing should cover at least one-month’s average operating expense over the first year of operations. This funding should be in addition to the funding for working capital and Start-up cost on Schedule 1. On Schedule 1, the applicant calculated its contingency funding requirement as $0. However, based on the financial projections in the application, the total annual operating expense in year one is $1,240,565; therefore, one month’s average operating expense would be $103,380. Note: the amounts above are based on the application as filed. The amounts may change due to the financial and application omissions in this notice. Together, the combined total working capital, and contingency funding requirement for the applicant is $165,562, as filed. In its initial application, the applicant did not complete the working capital or contingency funding components of the minimum funding requirement calculation. The only amount listed were pre- opening costs of $66,375. In its response to omissions, the applicant included those omitted items and adjusted pre-opening costs, which appears to have incorrectly contained the purchase price instead of it being listed separately. Because the applicant did not provide any documentation proving the purchase had been completed, and confirming the purchase price, the purchase price must be added to the minimum funding requirement. Mr. Braceras BOYNTON BEACH ASSIS. .O LIVING FACILITY Page 3 03/13/2013 As a result, the minimum funding requirement, as filed in its omission response, is $213,965 ($60,000 purchase price + $50,780 working capital + $103,185 contingency funding). Insufficient Proof of Funding The applicant did not indicate any source of funds on Schedule 1, and did not provide any supporting documentation as evidence that any required financing exist and are available for immediate use, as directed in the instructions to Schedule 1. Failure to provide proof of ability to fund the minimum funding requirement will result in denial of the application. Pursuant to Schedule 1 instructions, please provide independent, certifiable documentation of the existence and availability of these funds, Examples of documents that support funding include: * copies of current bank statements for accounts owned by the proposed agency, * letters of commitment from a bank or other independent lending source, * or a copy of a line of credit agreement indicating credit line and available credit and any restrictions, * parent company audited financial statements (Note: unaudited financial statements will not be considered as proof of funding ability). In addition, if submitting more than one document as Support for funding, attach a Separate schedule that clearly lists each item, including: Name of the financial institution Cutoff (balance) date Last four digits of the account/identification number Ending balance For a line of credit, along with the above, provide total credit line and available credit Note: any parent company or personal funds pledged to the applicant must meet the above criteria and the owner of the funds must provide a binding letter of financial commitment pledging the funds to the applicant. Note: already paid pre-opening costs being claimed must be supported by paid invoices, receipts, etc. All receipts must be accompanied by a separate schedule prepared in an orderly fashion that recaps the nature of the expenditure, amount, and that ultimately ties to the amount claimed as pre-paid expense on Schedule 1. Receipts received alone, without an orderly analysis attached will not be considered as @ source of funding. As its source of funds the applicant provided bank statements proving $143,760 (one statement indicating $4,916, and the second indicating a balance of $138,844). In addition, the applicant included a copy of a check in the amount of $30,000. Staff is unsure of the nature and relevance of the check as no explanation was given for it. However, the funding shortfall is $70,205 and even if the $30,000 check were proof of some prepaid costs, the minimum funding requirement would still be under funded by $40,205. : Since the proven funding is less than the required funding the applicant has not met the provisions of Section 408.810(8), Florida Statutes, and has not proven the financial ability to operate. Mr. Braceras BOYNTON BEACH ASSIS._D LIVING FACILITY Page 4 03/13/2013 Residential Group Care Inspection Report (DOH Form 4029 Please provide a copy of this report from your county health department. The report must be satisfactory and have a current date. EXPLANATION OF RIGHTS Pursuant to Section 120.569, ES, you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28- 106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Sincerely, Shaddrick Haston, Manage) Assisted Living Unit SH/Pottere ce: Agency Clerk, Mail Stop 3 Legal Intake Unit, Mail Stop 3 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS SPECIAL CARE, INC., Petitioner, vs. Case No. 13-1450 AGENCY FOR HEALTH CARE ADMINISTRATION, Respondent. ORDER GRANTING RESPONDENT’S MOTION TO RELINQUISH JUR[ISDIC]TION AND DISMISS CASE AS MOOT Respondent's Motion to Relinquish Jurfisdic]tion and Dismiss Case as Moot ("Motion") came before the undersigned on June 10, 2013, in which the Agency for Health Care Administration ("Respondent" or “ACHA") asserted that there are no disputed material facts before the undersigned in this matter. ACHA contends that license number 5799, which Special Care, Inc.,*/ is seeking with its change of ownership application, has been revoked by final agency action. Respondent further contends that since license number 5799 ceases to exist, all collateral matters regarding the license are moot, including sufficiency of an application for Petitioner, which is the issue before the undersigned. On June 17, 2013, Special Care, Inc. filed Petitioner's Objection to Respondent's Motion to Relinquish Jurisdiction and Dismiss Case as Moot ("Response"). In the Response, Petitioner did not dispute the material facts of Respondent's Motion stated in paragraphs two through six. Petitioner only alleged duress by Respondent as the reason for Petitioner's submission of a change of ownership application instead of an initial licensure application. After careful consideration of the pleadings, and there being no disputed issues of material fact to be resolved by the Division of Administrative Hearings since Petitioner's change of ownership application is moot because license number 5799 does not exist, it is, therefore, EXHIBIT 2 ORDERED that: 1. The Motion is granted. 2. The final hearing scheduled for July 10, 2013, is canceled. 3. Jurisdiction is relinquished to the Agency for Health Care Administration for entry of a final order. The file of the Division of Administrative Hearings is closed. DONE AND ORDERED this 19th day of June, 2013, in Tallahassee, Leon County, Florida. COHN, JUNE C. McKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 2013.
Findings Of Fact On May 30, 2008, FEC entered an Order of Probable Cause charging Respondent with the following violations: Count 1: On or about January 10, 2007, Respondent violated Section 106.07(1), Florida Statutes, when he failed to file with the filing office his 2006 Q4 CTR due on that date, listing all contributions received and all expenditures made, by or on behalf of the candidate. Count 2: On or about May 7, 2007, Respondent violated Section 106.141(1), Florida Statutes, by failing to properly dispose of surplus campaign funds within 90 days after he was eliminated and to file a report reflecting the disposition of those funds, when Respondent failed to qualify between January 30, 2007 and February 6, 2007, and failed to dispose of funds in his campaign account and file a report reflecting the disposition of the funds on or before May 7, 2007. On or about December 16, 2008, Respondent was personally served with the Order of Probable Cause by process server. Because Respondent neither elected to have a formal or informal hearing conducted before FEC nor elected to resolve the complaint by consent order within 30 days after the date of the filing of FEC's allegations, on January 30, 2009, FEC referred the case to the Division of Administrative Hearings (DOAH), pursuant to Section 106.25(5), Florida Statutes (2007). The case was filed at DOAH on February 2, 2009. On February 6, 2009, Petitioner filed and served its First Requests for Admission upon Respondent. Respondent had 35 days, including time for mailing, to either admit or deny each of the Requests for Admission. Rule 1.370(a), Florida Rules of Civil Procedure provides: Each matter of which an admission is requested shall be separately set forth. The matter is admitted unless the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter within 30 days after service of the request . . Thirty-five days from February 6, 2009, was March 13, 2009. Respondent failed to file a response to FEC's Requests for Admission by March 13, 2009. Additionally, Rule 1.370(b), Florida Rules of Civil Procedure, provides: Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. On March 17, 2009, Petitioner filed its Motion for Summary Final Order, based on the unanswered Requests for Admission, and, therefore, based upon the conclusively established admissions of fact. Respondent filed no response in opposition to the Motion for Summary Final Order, as permitted by Florida Administrative Code Rule 28-106.204. On April 3, 2009, an Order to Show Cause was entered, requiring Respondent to show cause by April 10, 2009, why a Summary Final Order should not be entered against Respondent. Respondent did not file any response. The April 3, 2009, Order to Show Cause gave Respondent a final opportunity to dispute any or all facts, to set aside the Requests for Admission, or to otherwise show cause why the Motion for Summary Final Order should not be granted. Respondent has not shown good cause. Respondent's failure to provide a written answer or objection to FEC's Requests for Admission conclusively establishes the following determinative facts, which prove the charges herein:1/ Respondent signed a Statement of Candidate form for Jacksonville City Council, District 7, on June 8, 2005. Respondent filed an Appointment of Campaign Treasurer and Designation of Campaign Depository for Candidates (DS-DE-9) on or about June 8, 2005, designating himself as the treasurer of his campaign. Respondent did not file his 2006 Q4 Campaign Treasurer's report by January 10, 2007. Respondent received a Memorandum from Beth Fleet, Director of Candidate Administration, dated January 12, 2007, notifying him that he failed to file his 2006 Q4 Campaign Treasurer's Report that was due on January 10, 2007. Respondent received an April 27, 2007, Memorandum from Jerry Holland, Duval County Supervisor of Elections, notifying Respondent that he failed to file his 2006 Q4 Campaign Treasurer's Report that was due on January 10, 2007. Respondent's failure to file his 2006 Q4 Campaign Treasurer's Report is a violation of Section 106.07(1), Florida Statutes. Respondent's Termination Report (TR) was due on May 7, 2007. Respondent received a letter dated April 27, 2007, from Jerry Holland, Duval County Supervisor of Elections, notifying him that his TR was due on May 7, 2007. Respondent did not file his TR with the Duval County Supervisor of Elections by May 7, 2007. Respondent's failure to file his TR by May 7, 2007, is a violation of Section 106.141(1), Florida Statutes.
