The Issue At issue in this proceeding is whether Petitioner's lottery prize is subject to an outstanding debt to a state agency.
Findings Of Fact By letter of June 9, 1997, the Department of Education, Office of Student Financial Assistance (Department), notified the Department of the Lottery (Lottery) that Petitioner owed the Department $26,356.28, as of June 9, 1997, as a consequence of outstanding defaulted student loans. Thereafter, pursuant to Section 24.115(4), Florida Statutes, the Lottery transmitted the prize amount ($24,781.66), less Federal income tax withheld ($6,938.86), to the Department. By letter of June 10, 1997, the Department notified Petitioner that it was in receipt of his prize money, less Federal income tax withheld, and that, since the amount owed the Department exceeded the amount of the prize, it planned to apply the entire sum it had received ($17,842.80) to the outstanding indebtedness. The Department's letter also advised Petitioner of his right to request a formal hearing pursuant to Section 120.57, Florida Statutes, to contest the Department's decision. Petitioner filed a timely request for a formal hearing to contest the Department's decision, and the matter was referred to the Division of Administrative Hearings for the assignment of an administrative law judge to conduct the formal hearing Petitioner had requested. At hearing, the proof demonstrated that Petitioner was the recipient of three student loans, each of which was funded by Centrust Savings Bank (Centrust) and guaranteed by the Department. The first loan (No. 7701) was in the amount of $3,000, which was disbursed on December 19, 1986. The second loan (No. 557720) was in the sum of $5,000, which was disbursed on January 29, 1987. The third loan (No. 631534) was for $5,000; however, only $2,500 was disbursed. That disbursement occurred on November 26, 1987. Petitioner defaulted on the student loans, and Centrust filed a claim with the Department. The Department, as guarantor, paid the lender the amounts due on the loans as follows: A.) On August 12, 1993, the Department paid the claim on Loan No. 557720. At the time, the principal due was $5,021.562 and interest due was $1,942.59, for a total of $6,964.15. B.) Also on August 12, 1993, the Department paid the claim on Loan No. 631534. At the time, the principal due was $2,510.78, and interest due was $971.29, for a total of $3,482.07. C.) Finally, on January 20, 1994, the Department paid the claim on Loan No. 7701. At the time, the principal due was $3,118.28, and interest due was $2,458.40, for a total of $5,576.68. As of June 9, 1997, the date the Department received the proceeds of Petitioner's lottery prize, the balance due on the defaulted loans, with accrued interest, was as follows: Loan No. 7701, $7,842.80; Loan No. 557720, $9,096.52; and Loan No. 631534, $4,548.25. In total, as of June 9, 1997, Petitioner owed the Department $21,487.57, as principal and accrued interest owing on the defaulted loans.3
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which approves the application of the $17,842.80 of Petitioner's lottery prize the Department received toward the partial satisfaction of the debt owing the Department. DONE AND ENTERED this 21st day of January, 1998, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 21st day of January, 1998.
Findings Of Fact Respondents hold license 23-3237 COP and at all times here relevant were so licensed. On 7 November, 1977, Respondent, Juan Rodriguez, sold less than five grams of marijuana to Rocco Delio, an undercover policeman, on the licensed premises. Delio paid Rodriguez $11 for the marijuana and two beers. When arrested in December 1977 on a warrant charging him with the sale of marijuana, Rodriguez had an old lottery ticket in his possession as well as a list of numbers which the arresting officers thought to be lottery numbers. Rodriguez testified that the lottery ticket was an old one he bad obtained in Puerto Rico and that he had forgotten the ticket was in his wallet. He further identified the list of numbers as measurements he had taken for a building. Rodriguez denied ever selling any lottery tickets. At his trial on the charge of possession and sale of marijuana and possession of lottery paraphernalia Rodriguez pleaded guilty, upon the advice of counsel, to unlawful sale of marijuana, and adjudication of guilt was withheld. (Exhibit 1). Rodriguez testified that he paid a $300 fine and was told by his attorney that the plea and subsequent withholding adjudication of guilt would not affect his business. At this hearing Rodriguez denied selling marijuana to the policeman who had testified to the contrary. The Petitioner's witness is deemed a much more credible witness and it was this testimony, plus the guilty plea entered in Circuit Court that resulted in the finding that Respondent possessed and sold marijuana on the licensed premises. No evidence was submitted with respect to Counts 3, 4 and 7 of the Notice to Show Cause. The admissions of Respondent with respect to the facts alleged in Counts 5 and 6 were rebutted by Respondent's testimony, which was not contradicted by Petitioner's witness, that the lottery ticket was old and that the list of numbers found on Rodriguez' person was not a list of lottery numbers.
The Issue The State of Florida, Department of Lottery, (the Lottery), received responses to its request for proposals to provide for a gaming system and services for the Lottery, RFP No. 95/96-001/R (the RFP). GTECH Corporation (GTECH) and Automated Wagering International, Inc. (AWI) were respondents to the RFP. The respondents did not contest the Department's determination under Part I finding GTECH and AWI preliminarily responsible and responsive vendors in that the vendors had shown financial responsibility, security and integrity. The Lottery then considered the responses by GTECH and AWI to Part II, the technical proposals by the vendors. Part II also examined responsiveness, responsibility, financial responsibility, security, and integrity. Subsequently the Lottery determined to commence negotiations for the award of a contract to provide the gaming system and services called for in the RFP. AWI was the proposed awardee based upon higher scores it received in competition with GTech under Part II. GTECH opposes the decision to award a contract to AWI. In its challenge GTECH contests the proposed agency action to award to AWI based upon a claim that AWI is not a responsive or responsible bidder to Part II. GTECH also contests the manner in which the Lottery performed its evaluation to determine the proposed awardee based upon scores assigned for Part II, assuming that AWI was determined to be a responsive and responsible bidder. Finally, GTech challenges the Lottery proposed decision finding AWI financially responsible. The hearing de novo was conducted to determine whether the Department's proposed agency action was contrary to its governing statutes, rule or policies or specifications in Part II. This recommended order examines whether the proposed agency action as challenged by GTECH was clearly erroneous, contrary to competition, arbitrary or capricious. Section 120.57(3)(f), Florida Statutes (1996 Supp.).
Findings Of Fact The Lottery was created to implement the purposes of s. 15, Art. X of the Florida State Constitution to raise additional monies to provide for education through its operation of lottery games. The Lottery's responsibilities are described in Chapter 24, Florida Statutes. Included among its opportunities is the right to enter into contracts for the purchase, lease, or lease- purchase of goods or services necessary to carry out its function. Section 24.111, Florida Statutes (1996 Supp.). GTECH and AWI are foreign corporations authorized to do business in Florida. AWI is a wholly-owned subsidiary of Video Lottery Technologies, Inc., (VLT). The companies are engaged in the provision of goods and services as described in Section 24.111, Florida Statutes (1996 Supp.). AWI is the current provider of goods and services to the Lottery common to those sought by the RFP. OVERVIEW OF THE RFP The Lottery issued RFP No. 95/96-001/R entitled Request for Proposal for a Gaming System & Services for the Florida Lottery. GTECH and AWI submitted proposals. The RFP was divided into Parts I and II. Part I addressed the requirements that the proposers establish financial responsibility, security and integrity as contemplated by Section 24.111, Florida Statutes. Part II addressed management requirements, technical specifications, operations and security, marketing, Certified Minority Business Enterprise requirements (CMBE) and price proposals of the respective vendors. The Lottery issued Part II on September 29, 1995. GTECH and AWI submitted their proposals for Part II on December 15, 1995, together with supplemental information in response to Part I. On May 7, 1996, the Lottery issued its "Notice of Responsiveness and Notice of Responsible Respondents". The Lottery found both GTECH and AWI to be responsive and responsible offerors as contemplated by the requirements in Part I. No challenge was made to the agency decision related to Part I. There had been a challenge to the specifications set forth in Part I, which was later resolved. This intervening challenge caused a delay in opening of the responses to Sections 1 through 5 to Part II. The responses by GTECH and AWI were opened on August 23, 1996. But the cost proposals in response to Part II were sealed and not opened until all other responses to the remaining sections to Part II had been evaluated and scored. The vendors also submitted information in response to Part II, Section 6, calling for a commitment to provide services in accordance with the CMBE Program. That program calls for the commitment to use a percentage of services by CMBEs in delivering the goods and services through the principal contractor. On October 31, 1996, the Lottery issued its notice of award, responsiveness and responsibility declaring AWI to be the highest ranked vendor. Based upon this notice the Lottery intended to award a contract to AWI contingent upon the ability to successfully negotiate a contract with AWI to deliver the goods and services called for in the RFP. In arriving at its proposed decision the Lottery relied upon an evaluation committee to evaluate and score responses to Part II, Sections 2 through 5. Scoring for Part II, Sections 6 and 7 was performed by other persons employed by the Lottery not associated with the evaluation committee. Following receipt of notice of the proposed agency decision to award to its competitor, GTECH filed a formal written protest and petition for formal administrative hearing with the Lottery. The filing date was November 5, 1996. In its protest GTECH challenged the preliminary decision by the Lottery in many particulars. Eventually the case was referred to the Division of Administrative Hearings to conduct a hearing consistent with Section 120.57(1), Florida Statutes (1996 Supp.). While the case was pending before the Division of Administrative Hearings GTECH was allowed to file an amended formal written protest and petition for formal administrative hearing. Given the nature of the challenge to the proposed agency action, some attention is devoted to the terms in Part II that describe the manner in which the vendors must provide information in their proposals and the Lottery shall evaluate that information in deciding between competing proposals. Part II, Section 1 is entitled: PURPOSE AND GENERAL INFORMATION. Subsection 1.1, INTRODUCTION, states: This request for proposal ("RFP") has been issued by the Florida Department of Lottery ("Lottery") to obtain sealed proposals for Gaming System and Services. This is a Major Procurement as defined in Section 24.103, Fla. Stat. * * * Sections 2, 3, 4 and 5 of this RFP, Part II, define the gaming system and services that the Lottery requires in terms of the desired outputs (i.e. functions, game style, reports). Section 6 [sic] requires each Respondent to provide a price proposal for providing and operating the total system. . . . The Lottery reserves the right to select the proposal(s) or concept that is in the best interest of the State, and 'provides the greatest long-term benefit to the State with respect to the quality of the products or services, dependability and integrity of the vendor(s), dependability of the vendor's products or services, security, competence, timeliness, and maximization of gross revenues and net proceeds over the life of a contract' Chapter 24.105(14), Fla. Stat. Respondents who are determined to be responsive and responsible pursuant to RFP Part I, and whose technical proposals under RFP Part II are determined to be responsive to the requirements of RFP Part II, will have their technical proposals submitted to an evaluation committee for evaluation. Thereafter, price proposals will be opened, responsiveness determined, tabulated and points awarded as provided herein. Contracts negotiations may then be commenced with the Respondent with the highest overall score. Part II, Subsection 1.2 LOTTERY OBJECTIVES, states the purpose of the solicitation: . To obtain a gaming system and related services to meet the needs of the Lottery for the term of the contract. . To obtain a gaming system and related services that are operationally sound, incorporate a high level of integrity and security, and minimize risks to the Lottery. . To convert retailer terminals to the new gaming system. Part II, Subsection 1.3 GLOSSARY OF TERMS, includes the following definitions: Responsible Respondent - A Respondent judged by the Lottery to be fully capable of providing the services required, considering security, integrity and financial condition. Responsive Proposal - A proposal submitted which conforms in all material respects to the RFP. Part II, Subsection 1.7 TIMETABLE, states, in part: Part II technical proposals will remain sealed until the Lottery makes a determination of responsiveness and responsibility of the RFP Part I submissions and posts a notice accordingly. After the notice has been posted, the Lottery will open the Part II technical proposals. The weights to be accorded to the evaluation criteria will be announced and posted prior to the opening of the technical proposal. The Lottery will make a determination of RFP Part II technical responsive proposals and responsible Respondents. Responsive technical proposals of responsible Respondents will be presented to an Evaluation Committee to evaluate and score in accordance with the criteria as specified herein. During evaluation of technical proposals, the Evaluation Committee may, at its sole discretion, require oral presentations or demonstrations as described in Section 3.11, of all responsible Respondents who submitted responsive technical proposals. Part II, Subsection 1.18, MANDATORY REQUIREMENTS, states: The Lottery has established certain mandatory requirements which must be included as part of any proposal. The use of the terms "shall", "must" or "will" (except to indicate simple futurity) in this RFP indicate a mandatory requirement or condition. The words "should" or "may" in this RFP indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature will not by itself cause rejection of a proposal. Part II, Subsection 1.19, NON-RESPONSIVE PROPOSALS, NON-RESPONSIBLE RESPONDENTS, states: Proposals that are deemed non-responsive and proposals that are submitted by non- responsible Respondents will be rejected. A non-responsive proposal is one that does not meet all material requirements of the RFP. Material requirements of the RFP are those set forth as mandatory or without which an adequate analysis and comparison of proposals is impossible, or those which affect the competitiveness of proposals or the cost to the State. The Lottery reserves the right to determine which proposals meet the material requirements of this RFP. A non-responsible Respondent is one who fails to demonstrate financial responsibility, security and integrity. * * * Subsection 1.20, SUBMITTAL REQUIREMENTS, states in part: Technical Proposal The Respondent must completely describe, in detail, the Respondent's methodology, equipment, software, and the benefits of using the Respondent's system and the proposed communications network. The technical proposal shall support the Respondent's basic capability to convert/implement, operate, and maintain the proposed system. CMBE Proposal The Respondent shall submit its CMBE utilization proposal in format of Attachment "C" to this RFP. The CMBE utilization proposal shall not be submitted in any other format. The CMBE utilization proposal must be separately sealed. Subsection 1.21 ACCEPTANCE OF PROPOSALS BY THE LOTTERY, states in part: . . . The Lottery may reject any proposal if it is conditional, incomplete, fails to meet mandatory requirements, or contains any irregularities. The Lottery may cancel the RFP if it is deemed by the Lottery to be in its best interest. Issuance of this RFP in no way constitutes a commitment by the Lottery to award a Contract. Subsection 1.35 CHANGE OF FINANCIAL CONDITIONS, states: If a Respondent who has submitted a proposal in response to this RFP experiences a material adverse change in financial condition prior to the award of the Contract or if the Contractor experiences a material adverse change in financial condition during the term of the Contract with the Lottery, the Contract Manager must be notified in writing at the time the change occurs. Part II Subsection 1.46, ADDITIONAL INFORMATION AND COMMENTS, states: The Lottery reserves the right to request additional information from the Respondent in order to make a thorough review and fair comparison of all proposals submitted. Part II, Section 2 is entitled: MANAGEMENT REQUIREMENTS. Subsection 2.1, EXPERIENCE OF RESPONDENT, states in part: The Respondent shall describe in detail its experience and that of its substantial subcontractors in operating lottery on-line games and instant ticket gaming systems. . . Subsection 2.1 goes on to describe the specific information required to comply with the statement of experience called for in the subsection. Part II, Section 3 is entitled: TECHNICAL REQUIREMENTS. Within Part II, Section 3 is Subsection 3.1, PURPOSE AND INTRODUCTION, which states in part: The requirements that follow represent the Lottery's current and planned business practices. . . . These Lottery gaming system and services include: . On-line games; . Instant ticket validation and accounting; . Primary and back-up computer system and facilities; and . Repair, maintenance, and updates of equipment and software. Each Respondent must describe and discuss in detail its proposed solution to each of the requirements. The Lottery is interested in realizing the benefits of new mainstream technology. The Respondent is to describe clearly what benefits its systems derive from new mainstream technologies and how these benefits will be delivered by these systems, wherever applicable. Because this RFP contemplates a contractual relationship with the Contractor to achieve the common goal of maximizing the long-term proceeds from the Lottery going to education in the State of Florida, the Respondent shall describe any additional or alternative functionality which it can offer in setting this goal. Respondent shall at a minimum offer to provide any lottery gaming systems, equipment, games or play styles that it provides or offers to provide to any other Lottery. Included within the Part II, Section 3, TECHNICAL REQUIREMENTS are the broad categories of systems and equipment to be proposed. This includes Subsections 3.2 SYSTEM CONFIGURATION REQUIREMENTS, 3.3 COMMUNICATIONS NETWORK REQUIREMENTS, 3.4 TERMINAL REQUIREMENTS, 3.5 ONLINE TICKET AND GAMING REQUIREMENTS, 3.6 INSTANT TICKET GAMING REQUIREMENTS, 3.7 INTEGRATION WITH LOTTERY SYSTEMS, 3.8 REPORTING REQUIREMENTS, 3.9 SOFTWARE QUALITY REQUIREMENTS, 3.10 ACCEPTANCE TEST REQUIREMENTS and 3.11 PRESENTATION OF THE PROPOSED SYSTEM. Under Subsection 3.2 SYSTEM CONFIGURATION REQUIREMENTS is found 3.2.1 General System Requirements, which states in part: The Respondent must propose a system capable of meeting the Lottery's current needs and expanding to meet the Lottery's needs as they expand throughout the term of the contract. . . . * * * All the computers, peripherals, terminals and communications equipment proposed by the Respondent must be new and reflect current technology. Under the SYSTEM CONFIGURATION, 3.2.6 describes System Performance as: The Contractor's system must provide at a minimum, the following levels of system performance at all times during the life of the Contract . Throughput of one hundred-fifty thousand (150,000) transactions per minute continuously. . Each single play ticket must be produced in no more than four (4) seconds from completion of data entry ("send" button is pressed or play slip is inserted) to completion of the ticket printing (cut). . Variable length, multi-play [up to ten (10) panels] tickets must be produced within six (6) seconds after completion of data entry. . Validation of on-line and instant tickets within five (5) second after the ticket is read (for dial-up transactions, the clock starts after the communications session is established). . Cancel tickets within five (5) seconds after the ticket is inserted. . Process inventory transactions within five (5) seconds after the completion of data entry. . Dial-up terminals should complete dialing and establish a communications session in twenty (20) seconds or less. Within Subsection 3.3 COMMUNICATIONS NETWORK REQUIREMENTS is 3.3.2 Design Requirements which states: The Network Design Requirements include, but are not limited to the following: * * * The specific requirements are then detailed. Under Subsection 3.4 TERMINAL REQUIREMENTS is set forth 3.4.1 Retailer Terminals which describes the number of on-line and instant ticket retail terminals contemplated for delivery at various intervals within the contract period. Within the description of requirements for retailer terminals are eighty specific categories of features that are identified as “MANDATORY REQUIREMENTS TERMINAL FUNCTION/CHARACTERISTICS” which pertain to on-line and instant ticket retailer terminals, but not in all instances. Under 3.4.1 Retailer Terminals prior to the language “Mandatory Requirements Terminal Function/Characteristics” the vendors are instructed that: . . . The Respondent must indicate and describe its ability to meet each mandatory requirement. The Respondent shall also describe any additional features which are available. There is a description at 3.4.2 MANAGEMENT TERMINALS which details the numbers of management terminals to be provided. About these terminals it is stated: All management terminal workstations must be a new manufacture using the most current technology and possess the following features and capabilities. It then describes the specific requirements for features and capabilities. Other provisions within Section 3 describe specific requirements for minimum compliance with the terms of the RFP, for example, 3.6.13 Retailer Terminal Functions-Instant Ticket System states that: The instant ticket functionality of the retailer terminals must include, at a minimum: This is followed by the requirements envisioned by Part II. It can be seen that the provisions include both minimum requirements and the expectation that the proposals in response to the RFP may contain additional features that exceed the minimum expectations and alternative features. Within Subsection 3.11 PRESENTATION OF THE PROPOSED SYSTEM is 3.11.1 Technical Support which states in part: The Lottery requires that all equipment and software proposed at a minimum, be capable of a demonstration which indicates the Respondent's ability to meet or exceed the Lottery's requirements for a Lottery gaming system(s). Evidence of the Respondent's technical ability and its capability to implement Lottery games functions is expected. It is desired that every software item in the proposed configuration currently be operational in some lottery setting. However, hardware products proposed must be in manufacture or ready for manufacture and delivery to customers. The demonstration(s) may consist of an on- line gaming simulation at one of the Respondent's operations facilities, or presentations at some other appropriate and mutually agreeable venue. The Lottery will allow a maximum of one (1) business day, exclusive of travel, for the Respondent's demonstration. The Respondent must include in the proposal the recommended site to be used for demonstration(s). The Lottery reserves the right to require additional or extended site visits. The items to be demonstrated are not limited in any way; however, the following areas should be included: The RFP goes on to describe what must be demonstrated. Again, it is anticipated that the vendors must meet but can exceed the Lottery’s requirements for the Lottery gaming systems and offer alternatives. Part II, Section 4 is entitled: OPERATIONS AND SECURITY. It includes Subsections 4.1 CONSUMABLE SUPPLIES, 4.2 FACILITIES, 4.3 FIELD OFFICES, 4.4 FIELD SERVICE, 4.5 SUPPORT SERVICE, 4.6 CORPORATE SUPPORT AND CAPABILITIES, SUBSECTION 4.7 “RETAILER HOTLINE” SERVICES, 4.8 SECURITY, 4.9 BUSINESS RECOVERY, 4.10 INCIDENTS AND ANOMALIES, 4.11 OFF-SITE DATA STORAGE REQUIREMENTS AND 4.12 CONVERSION PLAN. Part II, Section 5 is entitled: MARKETING REQUIREMENTS. Within Section 5, Subsection 5.1 MARKETING SUPPORT, states in part: . . . [t]he respondent shall describe its experience with lottery marketing programs and the type of support the Contractor proposes to provide the Lottery. Subsequent subsections within Section 5 discuss the vendor’s need to describe the proposed development of on-line lottery games, promotions at the retailer terminal, remote sales and training for retailers and lottery staff. Part II, Section 6 is entitled: CERTIFIED MINORITY BUSINESS ENTERPRISE UTILIZATION. That section makes it incumbent on the vendors to propose the use of ten percent (10%) CMBEs. The vendors could get credit for an additional ten percent (10%) CMBEs in scoring their respective proposals. Section 6 states in part: The Contractor will be required to annually expend to CMBE's during the life of the Contract a minimum of ten [percent (10%) of the compensation paid to the Contractor by the Florida Lottery. Each Respondent will provide as part of its technical proposal a CMBE Utilization Plan. The plan shall be clear, direct, and unambiguous, show an appropriate understanding of its purpose, and include: . An unequivocal commitment to a definite percentage of expenditure of funds to State of Florida CMBEs; . Identification of type of goods and services utilizing CMBE utilization; . Identification of each CMBE to be utilized (Provide copy of current Minority Commission certificate or application); . A full range of strategies to ensure maximum minority utilization; and . Identify the amount projected to be paid to each CMBE. Each Respondent shall ensure that the amount of its price proposal cannot be deduced by calculation from the details of its CMBE utilization plan. * * * A respondent may receive up to five (5) bonus points for proposing a CMBE utilization percentage that exceeds the required ten percent (10%) minimum of the Contractor's compensation to be paid to CMBEs. One (1) bonus point will be awarded for each two percent (2%) increment that exceeds the ten percent (10%) minimum for up to five (5) bonus points. Any partial percentage proposed which is less than a two percent (2%) increment will not receive a point award. Additional CMBE utilization shall be proposed on Attachment "C" hereto. In computing percentages, the Respondent is to assume annual on-line sales of one billion seven hundred ten million and five hundred fourteen thousand dollars ($1,710,514,000.). Attachment “C” was provided to the vendors in the following format: [Name of Respondent] will expend annually at least percentage of compensation to CMBEs, above the required ten percent (10%). Identified below are the names and addresses of the CMBEs to be utilized and the types of services to be performed. Part II, Section 7 entitled: PRICE PROPOSAL explains the manner in which the vendors should analyze, prepare and quote the proposed price as a percentage of net on-line sales. Attachment “B” which is referred to in Section 7 breaks out those percentages for the five years contemplated by the contract and the two renewal terms which are two years each. The formula for scoring the price proposals is detailed in Subsection 8.4 EVALUATION OF PRICE PROPOSALS which states: After the technical evaluation process has been completed, the price proposals will be opened and future year's prices will be reduced to present value. Points for the qualifying price proposals will be assigned based strictly on the formula detailed below. LC/PC Weight = Score Where: Weight = twenty percent (20%). LC = The lowest cost offered in any proposal being evaluated. PC = The cost offered in proposal being scored Although Attachment “B” carries forward the percentage estimate for net on-line sales through the two renewal terms, the Lottery in response to a question posed by GTECH stated that only the base five years in the original contract would be considered in scoring the price proposals. In fact, when the price proposals were evaluated and scored the Lottery took all nine years into account. The Lottery changed its approach based upon requirements set forth in Section 287.057(2), Florida Statutes, that makes it necessary for the agency to consider the entire price proposal by a vendor for all periods. In reliance upon the answer to its question GTECH submitted its price proposal believing that only the first five years would be used to evaluate its price proposal. Part II, Section 8 is entitled: EVALUATION. It explains in a limited manner the nature of the process to determine the winner in the competition for the contract. Subsection 8.1 INTRODUCTION states in part: The Lottery will conduct a comprehensive, fair and impartial evaluation of responsive proposals of responsible Respondents. To make this determination, an evaluation committee will be established to evaluate the management, technical, operations/security, and marketing proposals. The purpose of the evaluation committee will be to review the proposals and assign point values to each of the scoring criteria. The evaluation process may include the following phases: . Examination for compliance with proposal submission requirements and the contractual provisions. . Evaluations of Technical, Management, Operations/Security, and Marketing requirements. . On-site inspections and demonstrations. . Evaluation of the Price Proposal. . Evaluation report and recommendation. . . Subsection 8.2 EXAMINATION FOR COMPLIANCE states: The purpose of this review is to determine if each proposal has complied with RFP instructions, and is responsive. Proposals that do not satisfy the mandatory requirements or that are so incomplete as to preclude evaluation, will be rejected. Further 8.3 EVALUATION OF PROPOSALS states: The following proposal Sections will be evaluated: Management Proposal (Section 2) - weight fifteen percent (15%) - Consideration will be given, but not limited, to the following elements: . Respondent's relevant experience . Respondent's relevant disclosures Technical Proposal (Section 3) - weight forty percent (40%) - Consideration will be given, but not limited, to the following elements: . Terminal Capability (On-Line and Instant) . On-Line System Capability . Instant Ticket System Capability . Gaming Software Operations/Security Proposal (Section 4) - weight fifteen percent (15%) - Consideration will be given, but not limited, to the following elements: . Facilities Management Capability . Security Plan . Business Recovery Plan . Conversion Plan Marketing Proposal (Section 5) - weight ten percent (10%) - Consideration will be given, but not limited, to the following elements: . Marketing Support Proposal . Respondent's Relevant Experience in Game Development and Enhancement . Terminal Promotions . Training The weight factors assigned represent a portion of 100 hundred percent (100%). The scores assigned to each Section under Section 8.3 will be totaled and added to the score assigned under Section 8.4 and 8.5 to arrive at a total score for each proposal. Subsection 8.5 EVALUATION OF CMBE PROPOSALS states: The bonus points to be awarded each Respondent will be determined in accordance with Section 6. Subsection 8.6 TOTAL SCORE states: The total score for each Respondent shall be the sum of the scores determined in Sections 8.3, 8.4, and 8.5 above. The Respondent with the highest score will be ranked as the preferred source. The maximum total score will be one hundred and five (105) points: eighty (80) points for technical, twenty (20) points for price, and five (5) bonus points for CMBE utilization. Within Subsection 8.7 RECOMMENDATION AND NEGOTIATION is 8.7.1 Recommendation which states: Upon completion of the evaluation and scoring, the Evaluation Committee shall rank the proposals in the order of preference deemed to be the most highly qualified to perform and provide the requested gaming system and services. The ranking will be provided to the Contracting Officer. EVALUATION CHECKLIST AND OTHER DETAILS In addition to the explanations given in the RFP which have been detailed concerning proposal requirements and evaluation methods, the Lottery provided each evaluator of the evaluation committee with a form referred to as a “Gaming System and Services Evaluation Checklist.” This form was intended to assist the evaluators in performing their duties. In its introduction the evaluation checklist states: The technical proposals are to be evaluated based upon the criteria set forth in the RFP. They are not to be evaluated based on criteria not set forth in the RFP. Each and every criterion expressed in the RFP is to be applied by all members of the Evaluation Committee to each proposal considered. In each scored area, award points available corresponding to: Outstanding A percentage of points which is 81-100% of points Good 61-80% of points Fair 41-60% of points Poor 0-40% of points The evaluation checklist then contained a summary of the various sections to be evaluated by the evaluators with a line provided for the entry of scores for those sections under consideration. To further assist the evaluators, information was provided which established the range of points that could be awarded for each section depending upon whether the assessment led to the conclusion that the proposal was outstanding, good, fair or poor in relation to a specific section. For example, Section 2 carried a maximum of fifteen points. Therefore, outstanding would be 12 to 15 points, good 9 to 12 points, fair 6 to 9 points and poor 0 to 6 points. In the final analysis the evaluators used the evaluation checklist to record points for those sections that they were responsible for evaluating, Sections 2 through 5. The overall method of the establishment of scores for the respective sections to Part II comports with the requirement at Subsection 1.7 E that weights be accorded the evaluation criteria and be announced and posted prior to the opening of the technical proposals. The term "criteria" refers to the requirements set out in Part II. The Lottery must then assign the points described in Section 8 as percentages, through a competitive process to arrive at the highest ranked competitor. This task must be accomplished in a manner that is other than clearly erroneous, contrary to competition, arbitrary or capricious. The information in Section 8 concerning weights to be assigned the respective sections to Part II, as augmented, also comports with Section 287.057(2), Florida Statutes, related to the need to include the criteria, requirements, for determining acceptability of the proposals. Outside the evaluation performed by the committee members for Sections 2 through 5, Marvin Doyal, Inspector General, Florida Department of the Lottery, determined the points assigned to the price proposals related to Section 7. Patti Osburn, Purchasing Manager for the Lottery, evaluated the vendor responses to Section 6. In doing so Ms. Osburn used a responsiveness checklist related to the CMBE utilization plan for the vendor. Notwithstanding that Part II contemplated that the proposals submitted by GTECH and AWI would be compared to determine the best proposal, the evaluation committee through the exercise of independent judgment by the individual committee members was allowed to determine occasions when proposals would be considered solely on the basis of meeting minimum standards established in Part II and those occasions where a more subjective analysis would be made to decide which vendor had the better proposal in a given section under evaluation. No direction was given the evaluators by the Lottery concerning those instances where the aspect of the proposal under consideration would be examined for responsiveness to minimum standards and those instances in which additional assessment would be performed in comparing the proposals, where consistent with Part II, the vendors have proposed to do more than the minimum requirements. The individual committee members were left with their own devices in making this determination. The only reasonable construction that may be given to Part II and its intentions concerning responses to Part II would be to determine compliance with minimum requirements outlined, and to also examine the responses in those particulars where the vendor proposes more than a minimum response. The committee members might conclude that the features proposed by the vendors beyond any minimum expectations outlined in Part II were not useful. Nonetheless, the committee members were obligated to examine those features in the respective proposals which were more than the minimum. Then if found useful, they should have compared those additional or alternate features to any comparable proposal by the competitor for scoring purposes or unilaterally credit the vendor where there were no comparables. This approach was not discretionary. Moreover, Part II in great measure was devoid of particulars in establishing specific requirements for proposals. In those instances the vendors were expected to suggest their solutions and they were to be assessed and scored comparatively, typical of RFPs. Ultimately, having prepared themselves to perform the evaluation, by means that will be described in more detail, the evaluation committee convened in a meeting and examined the proposals for Sections 2 through 5, section by section. This process was a free ranging discussion and committee members could raise any concerns which they had. The scoring that was done in relation to a given section was performed individually by having the committee member identify the number of points which he or she intended to assign for each section and its subordinate parts related to each vendor. By this process, the subparts to the individual sections were examined but no instructions were given to the evaluation committee that led the members to assign specific points for a subpart in a given section. The guidance was that within the maximum available points for a section the individual evaluator had to determine the number of points to award the vendor, using his or her own method to determine the importance of subparts and how those subparts might affect the score for the section. In performing their task the evaluators had the advantage of the scoring chart which referred to percentages of the points for outstanding, good, fair or poor proposals related to a section. The committee members did not discuss the scores that they individually intended to assign to sections within the proposals while taking part in the evaluation meeting. No committee member was the dominant figure in this process. Nothing in the statutes, rules, RFP or policies utilized by the Lottery in evaluating responses to requests for proposals prohibits the Lottery from having individual committee members independently evaluate the proposals consistent with the expectations set forth in the RFP. The consequences associated with this technique, would be, to the extent that the individual evaluators misapprehend their assignment and act contrary to the controlling statutes, rules, policies or the RFP, when performing the evaluation of the proposals, that conduct could be considered clearly erroneous, contrary to competition, arbitrary or capricious. In that instance the Lottery would be made to suffer the decision not to impose a more uniform approach to the task of evaluation. Given the extremely technical nature of Part II, the evaluators needed to be sufficiently informed about the technology within the proposals to conduct a meaningful comparison of the proposals. ACTIVITIES THAT PRECEDED EVALUATION AND SCORING Frank Carter is the Director of Security for the Lottery. As part of the evaluation process he had his staff create a responsiveness checklist to compare proposals against specific requirements within Part II. Mr. Carter instructed his staff to go through Part II and based upon its terms prepare a list of items that were to be included in the responsiveness checklist. Staff members involved with the initial review of the proposals and execution of the checklist were Lyn Jones, Jodie Clark and Jeanette Austin. The level of understanding by the staff members assigned by Mr. Carter to prepare the checklist and compare the proposals to that checklist was sufficient to determine whether a response had been given in the proposal to a requirement set out in Part II. Staff members were not technically qualified to judge the merits of the response. Their activity involved a review for completeness of the proposals, not an assessment of the quality of the proposals made in response to the Part II. At a subsequent meeting of the Lottery staff, not including the evaluation committee members, a more discrete evaluation of proposals was made but not for all items. This limited review was designed to examine whether certain items within the proposals were responsive to Part II. The meeting which convened to consider particular aspects of the proposals included Mr. Carter, Mr. Doyal, David Columbo, the Lottery Assistant Secretary for Operations, Denise Rodenbough, Information Resource Manager II for the Lottery and John Stacklyn. No other attempt to determine the overall responsiveness of the proposals to the requirements of Part II was made prior to the hearing de novo. In September 1996, the evaluation committee had been formed and began to undertake its assignment leading to the evaluation and scoring of the proposals. In a meeting of the evaluation committee conducted at the inception of the process leading to the evaluation and scoring of the proposals, the committee members were provided with copies of the proposal. Remarks by Kenneth Hart, General Counsel for the Lottery, reminded committee members that they should not meet outside of the framework of a convened session of the committee for purposes of discussing the proposals. At an early meeting, Mr. Hart told the evaluation committee that if it needed to acquire information of a technical nature to assist in understanding the proposals, the committee could have someone who was expert in a particular technical area come and talk to the evaluation committee, as well as benefiting from the technical insights held by committee members. In this process Mr. Columbo also conducted a class in what is referred to as "Lottery 101". This class was primarily for the benefit of committee members who were not employed by the Lottery. In the "Lottery 101" course Mr. Columbo gave an overview of the current operation of the Lottery and the lottery industry as a whole, together with a historical perspective of contemporary lotteries. In this instruction Mr. Columbo discussed in general terms the nature of the instant and on-line portions of the Lottery as it operated at the time of the explanation. Following the "Lottery 101" meeting, a meeting was held to address technical aspects of the proposals. The principal presenter at the meeting was the committee member William Hunter. He was called upon to address the committee based upon his understanding of the current Lottery System and its basic technical features. This presentation was made in addition to answering questions that other committee members had about the pending proposals. Mr. Hunter provided the committee members with a graphic depiction of the information resource management currently employed by the Lottery. This diagram set forth the models of equipment, the location of the equipment, with the division of that equipment between the Lottery and AWI and the control of specific equipment being portrayed. The diagram also showed the interfaces of the equipment through a "ring network". As with other evaluators who spoke at this meeting, and on other occasions, when the evaluation committee was assembled, William Hunter was expected to distinguish between his remarks that he offered that were described as factual and the remarks that constituted his opinion. The attempt at explaining the chart that described the current lottery operation was not as a means to contrast that experience with what had been requested for proposals to Part II. In the discussions Mr. William Hunter told the committee members that the mainframe environment proposed by GTECH in its response had two operating systems whereas AWI had one operating system. William Hunter explained to the committee members that in the Lottery's experience it is more difficult to manage multiple operating systems in that the Lottery staff would have to have competence to operate both systems. In reality, GTECH had proposed operating systems in the mainframe environment that depicted one operating system for which the Lottery employees would be responsible. However, at hearing William Hunter explained that the data base machine depicted as an operating system that was prospectively run by GTECH would be moved to allow the Lottery employees to operate the equipment, making the Lottery ultimately responsible for two operating systems in the mainframe environment. William Hunter offered this comment on the basis that the Lottery and GTECH would negotiate to move the data base machine from GTECH to the Lottery if GTECH was selected. AWI had proposed the IBM RS6000, Model 24 as its primary processing unit (CPU). Alternatively, it proposed the IBM RS6000, Model 30. GTECH proposed DEC Alpha 2100 as its primary processing unit. In discussing the relative merits of the CPUs at the meeting, William Hunter limited his comments to a general question about scaleability or expandability of the competing systems to the effect that the competing proposals were both adequately scaleable for foreseeable needs. This meant that the proposed CPUs would both respond to the computing needs that the Lottery had for the foreseeable future, in his opinion. In the context of Part II this refers to the basic contract period with the two periods of extension. No detailed discussion was given concerning the basic architecture of the CPUs during the meeting. In the meeting William Hunter told the other committee members that the centralized data base, Oracle, proposed by AWI was the preeminent data base. The centralized data base proposed by GTECH was described as being the preeminent data base in the past, but not at the time the meeting was held. William Hunter did not further explain what he meant by preeminent. Nor did he make any comparative analysis of the two centralized data bases. In the meeting William Hunter explained that at the time the present operating environment was changed to that contracted for under the RFP, should GTECH win the competition, two retailer terminals would be in place for a period of time during the conversion period and that this would be inconvenient for the retailers. This remark was made in response to a question about the conversion from the current system run by AWI to a system run by GTECH, if GTECH won the bid. He told committee members that counter space was in very high demand at most of the retailer locations and that the least amount of disruption in use of counter space would be better for the retailer. During this presentation the only comments about telecommunications proposed by the vendors was related to the intention to set up a meeting with someone else to explain telecommunications in general terms. In connection with the need for the proposers to comply with the requirements for dual security numbers on lottery tickets, William Hunter made the statement that GTECH might not have understood the reasons why the Lottery had framed its requirement on dual security numbers. That requirement was that the instant ticket transaction not go through the central system controlled by the vendor. He explained to the other committee members that the intent of the RFP was to provide security from compromise by the vendor. The reason for Mr. Hunter's belief in the uncertainty as to GTECH's understanding of that requirement was in association with the GTECH detailed description of a solution that allowed the vendor to control the instant ticket transaction with an alternative solution that did not allow that control. Mr. Hunter offered similar remarks concerning a GTECH proposal for the instant ticket logging system. William Hunter attended a seminar in Orlando, Florida, following the technical presentation made to the evaluation committee. Other evaluation committee members did not attend that seminar. The seminar was presented by the Gartner Group. The Gartner Group analyzes the data processing market and sells data processing information. The Lottery, through the State of Florida, has access to the services provided by the Gartner Group in data processing. While at the Orlando seminar William Hunter spoke with Jay Poltz, a presenter for the Gartner Group. This conversation was contrary to the admonitions by Dr. Mann, Mr. Hart and the terms of the RFP which were designed to protect the confidentially of the RFP process from disclosure to persons outside that process. William Hunter spoke to Mr. Poltz based upon the belief that Mr. Poltz would be able to advise Mr. Hunter concerning telecommunications networks called for by the RFP. William Hunter carried the proposals by AWI and GTECH in response to Part II, Section 3, with him to the seminar. Mr. Hunter let Mr. Poltz see the diagram in the AWI proposal at page 3-85 related to the proposed telecommunications network, together with text associated with the general design described in that diagram. The conversation about the AWI telecommunications proposal held with Mr. Poltz did not include discussion of the radio communications that made up a part of the AWI proposal. William Hunter also showed Mr. Poltz information from the GTECH proposal related to telecommunications to include charts and text. Concerning the GTECH proposal, Mr. Poltz told William Hunter that the telecommunications proposal by that vendor was a “doable solution.” Mr. Poltz did state that one of the possible areas of concern to the Lottery should be the time delay of any system that went through a satellite, such as the GTECH proposal. He told Mr. Hunter that the satellite system in the down-link transmission was subject to possible “fading” during heavy rainstorms. Mr. Poltz told William Hunter that the wireless/satellite type of telecommunications network was generally used for economic reasons as a way to by-pass more costly land line communications provided by local telephone companies. In particular Mr. Poltz told William Hunter that K- band satellite was subject to fading due to heavy thunderstorms. Mr. Poltz told William Hunter that the AWI proposal was also “doable.” Mr. Poltz characterized the AWI proposal as more conservative. Mr. Hunter did not ask Mr. Poltz to specifically state an opinion concerning the reliability of the proposed telecommunications systems offered by the vendors. This conversation between Mr. Hunter and Mr. Poltz lasted about fifteen minutes. At a later meeting with the committee William Hunter basically described the information that he had been given by Mr. Poltz. This information should have been disregarded by the evaluators having been obtained outside the normal channels employed in the evaluation process and without the ability for other evaluators to participate directly with Mr. Poltz. At the suggestion of George Banks, a committee member, the Lottery invited Glenn Mayne, Director, State of Florida, Department of Management Services, Division of Communications to speak to the evaluation committee concerning the telecommunications systems employed by Florida government. Before taking a position with the Department of Management Services involving communications, Mr. Mayne had worked with the state university system running the communications network among the universities. Mr. Mayne has had experience working for a computer manufacturer, specializing in data communications products. He holds a degree in mathematics and physics. In responding to the request to make a presentation to the evaluation committee, Mr. Mayne did not resort to an examination of the proposals by the vendors. He was not requested to examine those materials. Mr. Mayne spoke of transport of information by voice, data and video signaling. He explained how the State of Florida used existing facilities to provide communications in those media. He explained the ability of the State of Florida to get different forms of service through providers in the telecommunications industry in Florida. He remarked that the SUNCOM network uses digital communications. He explained that there exists digital land line capability throughout Florida down to the local level within the experience of Florida government. The experience of Florida government has been that the local telephone companies want to move from analog to digital land line communications. The industry trend, to his knowledge, is to provide digital communications in that it requires less maintenance and has fewer inherent problems than analog communications. Nonetheless, Mr. Mayne recognizes that provision of digital communications at the local level is somewhat dependent upon the ability to bring enough business to the local telephone company in the area to warrant provision of digital communications. In his presentation Mr. Mayne outlined the basic function of land-based communications versus satellite communications. He also discussed radio frequency communications. Mr. Mayne drew a diagram on the board in the room where the committee was assembled to point out the difference in the implementation of a land-based communications system and the implementation of a system using radio frequency. Upon inquiry from a member of the committee Mr. Mayne then introduced the addition of satellite communications into the drawing on the board. A rough approximation of this drawing as recounted by Mr. Mayne during a deposition may be found as GTECH exhibit 117. Mr. Mayne discussed some of the questions of reliability involved with the various technologies, land-based, radio or satellite. He talked in terms of the possible points of failure in those systems that might have to be considered in engineering the system without describing the needed engineering. In discussing the land-based system he spoke of the need to account for the level of service that the user wanted from the serving wire centers, back through the various central offices together with the facilities associated with the user. He spoke of the radio based communications as to transmitting capability out of the site and the receiving capability. There was not a great deal of discussion about reliability of satellite communications, other than to say that the experience that the State had with that form of communication had been highly reliable. The evaluation committee explained to Mr. Mayne that the alternatives being proposed by the vendors were in a general sense related to a land-based system versus one involving radio frequency and some satellite. In particular in describing the land-based communication system Mr. Mayne referred to data terminal equipment which would go into an access line and then would go into a serving wire center; from there the signal would go to the public switch network and to another serving wire center to another access line and a data center on the other end. In his explanation, the radio frequency transmission went from the data terminal equipment which involves introduction of a radio frequency modem which would then go back to some collection point, some tower site, that would pick up the signal and bring the signal down from the tower and from there back through a serving wire center and through an access line. Mr. Mayne understood, in conversation with the evaluators, that there was going to be beyond that point, transmission to a satellite and down from the satellite and after the down-link from the satellite back through a wiring center ending in a data center. Mr. Mayne explained that in adding radio frequency and satellite that you were introducing another order of magnitude in engineering that had to be considered, as contrasted with a system that strictly used a circuit that involved land lines through the public switch network. The diagram drawn by Mr. Mayne in his explanation was hypothetical in nature. In a limited respect it explains the use of the various forms of telecommunications, land-based, radio frequency and satellite. The hypothetical system was explained to be reliable if engineered properly. In the final analysis, Mr. Mayne’s presentation on telecommunications has limited utility when taking into account his failure to be exposed to the specifics of the telecommunications proposals by the vendors. The information he imparted was not intended and did not serve the function to educate the evaluators concerning the engineering in the proposed systems, especially as the engineering might address the possible points of failure which Mr. Mayne briefly addressed in his remarks to the committee. In arriving at their scores assigned in the evaluation, the evaluators took into consideration the presentations by Messrs. William Hunter and Mayne. Although the vendors had proposed recommended sites for demonstration of their technical capabilities when the proposals were submitted on December 15, 1995, as called for by Part II, at 3.11.1, by September, 1996, AWI was no longer serving the lottery in Arizona, the site that it initially proposed for demonstration of its technical proposal. The Lottery denies that this had any influence in its decision to offer the opportunity for the vendors to change the original recommended demonstration sites; however, it would not have been possible for AWI to demonstrate its technical proposal in Arizona, no longer being the vendor serving that lottery jurisdiction. Nothing in the language of Part II at 3.11.1 prohibits the demonstration being made at a mutually agreeable venue other than initially proposed by the vendors. In accordance with the overture by the Lottery both vendors selected different venues than had been originally recommended. GTECH chose Washington State for its demonstration. AWI selected Maryland. Beyond the obvious recognition that AWI could not demonstrate its technical proposal in Arizona, the Lottery reasoned that 10 months had passed since the proposals had been submitted and that it felt that newer technology may have been employed in some other jurisdiction than had been recommended initially by the vendors and that the demonstration of the newer technology might be beneficial both to the Lottery and the vendors. The Lottery decision to change the site locations for demonstrating the technical proposals was acceptable under the terms of the RFP. Consistent with Part II, at 3.11.1, the Lottery required the vendors to demonstrate their equipment and software proposed. To this end the evaluation team spent one day in a site visit at Washington State where GTECH normally provided services for the Washington State Lottery. Subsequently, the evaluation committee spent one day in Maryland in a site visit where AWI normally performed services for the Maryland State Lottery. The purpose of the visits was to examine the proposed equipment and software consistent with the test items described in Part II at 3.11.1, as well as any other available functions which the evaluators desired to have the vendors demonstrate. At the site visits the evaluators were provided explanations concerning the respective proposals and allowed to ask questions of those persons making the presentations. Certain equipment was also available for examination. Government representatives from the Washington and Maryland State Lotteries were available to explain their experience with the vendors who served those states. At the Washington site visit GTECH made the evaluators aware that, in addition to its satellite down-link in Rhode Island where its hub-center was located, GTECH intended to build a new hub-center in Austin, Texas. For a transaction to be completed under the proposed GTECH system in that portion using radio/satellite, the transaction would go from a satellite dish installed at a retailer location to the satellite, from the satellite to the hub-center in Rhode Island, from the Rhode Island hub-center to a local land line, from the local exchange to a long distance carrier's land line, from the long distance carrier to another local exchange, from the local exchange to the Tallahassee data center for the Lottery and return. In the event that the retailer site did not have a satellite dish installed at the retail location and had a radio installed instead, a radio transmission would be made to a master radio through a satellite antenna and from there to the satellite. These two approaches for communication would comprise as much as twenty-four percent of the GTECH communications network. The remaining communications would be land-based communications. Of the radio/satellite component within the GTECH proposal approximately 2,054 terminals would be connected, with 250 to 300 of those using satellite dishes at the retail facility. In conversation between the evaluation committee and the Washington lottery staff, the Washington lottery staff told the evaluators that Washington had experienced some problems with their telecommunications network which employed satellite technology. The problems allegedly had to do with what was described as satellite outages. The basis for the Washington lottery staff claim of satellite telecommunications problems related to the satellite were allegedly in relation to bad weather on the east coast that affected the hub-center in Rhode Island. The Washington lottery employees reported that any time there was a major storm on the east coast there were consequences because part of their system was dependent upon satellite technology connected with the east coast. The only east coast storm referred to was a hurricane that the Washington Lottery staff did not report as affecting more than five percent of the retail sites. When a representative of GTECH was asked about down- time in the Washington operation based upon the tele- communications network, that individual stated that there was no problem of that sort. Don Stanford, Chief Technical Officer for GTECH was at the Washington site visit. He is the person who denied problems with the satellite portion of the telecommunications network in Washington. Subsequently he provided a letter to explain what he believed to be the explanation for downtime. This information was received by the evaluation committee after the Washington site visit and before the meeting that was held to discuss and score the proposals. In the correspondence reference is made to the report by the Washington lottery that 13 of the 350 installed GSATs which formed the communications up-link with the satellites had been exhibiting outages as of October 11, 1996. According to the correspondence, the hub-center in West Greenwich, Rhode Island measured inbound carriers (transmissions) within operational guidelines. When the hub-center turned the outbound carriers (transmissions) up this alleviated the problem for the GSAT installations in Washington at the retailer sites. It was determined by GTECH, as described in the letter, that the issue created by the inadequate performance was not related to weather. It was related to mistakes in the installation of the GSATs. Those problems were being corrected. This correspondence also makes reference to the installation of another hub-center antenna in Austin, Texas. The letter of explanation is credited. The misimpression created by the Washington lottery staff that the problem with the telecommunications network was caused by weather-related difficulties at the Rhode Island hub-center was satisfactorily addressed in the follow-up correspondence by Mr. Stanford. One evaluator, Mr. Estevez believed that the problem was with a single storm, while Mr. Bailey referred to the Washington Lottery officials describing that problems arose anytime there was a storm, the connotation being that there was more than a single storm. Taking their testimony in context, it is concluded that a single storm had occurred following the conversion of the Washington Lottery to a system provided by GTECH and that the incident which the Washington Lottery officials attributed to bad weather was in fact related to improperly installed equipment, not the storm. Mr. Estevez determined that GTECH had not satisfied him that weather problems would not present obstacles to the performance of the GTECH telecommunications network in that portion that uses satellite, given the experience reported by the Washington lottery employees and his knowledge of Florida weather. During the Maryland site visits to allow AWI to demonstrate its proposal, questions were posed concerning the intention by AWI to use radio telecommunications. In particular, questions of what type radio, the number of licenses needed to operate the radios, and number of licenses obtained to that point in time were raised. The response given was that those details had not been determined to that point and would be provided in the event that AWI was successful in the competition and entered into contract negotiations with the Lottery. After the site visit, in addition to the basic information that had been provided in the proposal, AWI wrote the Lottery to answer questions about the intended use of radio in the proposed telecommunications solution, among other items which AWI responded to after the site visit. In its remarks through the correspondence AWI stated that it would employ radio technology only when other more reliable means of telecommunications are not available. In no event did AWI intend to employ radio technology for more than five percent of the total on-line terminal population in Florida. It identified the band widths within which it might operate as under 2400bps with a capability to run at 4800bps. It was not explained in the correspondence what was meant by a means of telecommunications more reliable than radio technology. It is assumed this reference is to digital land line which was described in the AWI proposal. At the site visit AWI did not demonstrate any radio equipment or antennas that would be used as part of a the tele- communications network. AWI did not indicate the geographical location of any radio that it intended to use in Florida. This is contrasted with very specific information which GTECH provided about its intended use of radio for telecommunications as described in its proposal and at the site visit. In its proposal AWI had addressed the topic of digital radio in discussing a number of telecommunications technologies. In summarizing its view of digital radio it stated: . . . AWI believes that selected implementation of digital radio is a cost effective network alternative in certain applications when utilized in proper augmentation with traditional terrestrial facilities. In its discussion concerning digital radio, AWI had detailed what it considered to be the relative merits and demerits of the use of that technology, in addition to discussing other possible technologies, to include digital land line which constituted its principal technology of choice. The system proposed by AWI to meet the vast majority of the Florida telecommunications needs is a four wire Digital Data Service with SONET infrastructure. The telecommunications network that was employed during the site visit was not one for which AWI was accountable. The Maryland state lottery was responsible for that system. The evaluators did not place an emphasis on the comparability of the Maryland telecommunications network to what AWI proposed for Florida. It is not clear from the record whether any portion of the Maryland Lottery telecommunications network employed radio as part of the network. In contrast there was definite comparability between the GTECH telecommunications network proposal for Florida and the telecommunications network demonstrated in Washington state. Nonetheless, the available telecommunications network in Maryland was sufficient to allow the Lottery to observe the integral equipment and software proposed by AWI operating in a test environment, which appears to be the emphasis in Part II at 3.11.1, requiring a demonstration of select functionality in the overall proposed Lottery Gaming System. In addition AWI made persons available to the evaluation committee who could explain details of the telecommunications proposal for Florida. At the Maryland site visit, it was revealed that the Lottery operation in that state employed Master Link 3.0, a different generation of software than had been employed in Arizona and proposed for Florida in response to Part II. The AWI proposal for Florida referred to Master Link 2.0. But this change comports with the expectation in Part II that current technology be made available. During the Maryland site visit AWI also referred to its use of Master Link 3.0 in its services provided to the state of Minnesota. Among the items demonstrated for the evaluators in the Maryland visit was the Ovation Integra terminal. This was one of the on-line retailer terminals described in the proposal by AWI to meet the terms of the Florida RFP. The demonstration was by benchmark tests designed to confirm the functionality of the retailer terminal. That model would also read instant tickets. While at the site visit the evaluators observed the Ovation Modular terminal, another on-line retailer terminal that reads instant tickets, while operating at a retail site. The critical components of the Ovation Modular terminal are the same as found in the Ovation Integra terminal. The Ovation Modular terminal is also depicted in the proposal presented by AWI. GTECH had its proposed on-line retailer terminal benchmarked during the Washington state site visit. That same model was also seen operating in a retail environment. Both vendors provided a demonstration of their proposed on-line and instant terminal functionality in a production environment at an active retailer site as required by Part II at 3.11.1, as well as met the requirements within that provision to demonstrate evidence of system performance in a test environment (benchmark) to include on-line and instant retail terminal functionality for terminal models proposed. During the Maryland site visit, as had been the experience in the Washington site visit, the evaluators had demonstrated for them the system take-over in a test environment from the host system to a duplex system and from a primary site to a secondary site. Although the back-up computer system which took over from the primary computer system in the failed take- over and recovery tests was not located in the immediate environs at the Maryland site visit, the evaluators were able to observe the test by the use of consoles at the Maryland location. The arrangements for the failed take-over and recovery tests in Maryland complied with the expectations set forth in Part II, at 3.11.1. AWI, subsidiary to VLT, requested that Richard Haddrill, President of VLT and Acting Senior Officer for AWI participate in the Maryland site visit. He did so by telephone conference with the evaluation members. His purpose was not to demonstrate AWI’s technical capabilities; rather his emphasis was to explain the relationship between AWI and EDS, substantial contractor to AWI. EDS is described in the AWI proposal as engaged in a strategic alliance with AWI to provide services to the AWI lottery customers. At the time that the proposal was submitted to the Lottery for Part II, it was anticipated that EDS would provide the majority of services and personnel to carry out the terms of any contract entered into between AWI and the Lottery. Before Mr. Haddrill spoke to the evaluation team on the occasion of the Maryland site visit, EDS had sued VLT/AWI for breach of the terms of a Master Services Agreement which formed the basis for EDS to support AWI in serving lottery operations where AWI had contracts with various governmental entities. The allegations in the complaint touched upon subjects related to the performance of AWI and EDS in their delivery of services to lotteries. The outcome of the suit could also have a bearing on the financial responsibility of AWI as a prospective vendor for the Lottery. In his remarks, Mr. Haddrill told the evaluation committee that EDS was continuing to work with AWI, that in the future, if EDS and AWI disengaged, his expectation would be that personnel who had been involved with serving the needs for AWI as EDS employees, and before that as AWI employees, would continue to serve AWI and its customers, whether those employees were working for EDS or not. The main emphasis by Mr. Haddrill was that in the event that EDS and AWI discontinued their relationship, the personnel who had been providing the services for AWI customers would continue to perform those duties. The basis for this belief was conversation between Mr. Haddrill and representatives of EDS, in which, according to him, the sentiment was expressed that services to the respective lotteries not be discontinued in view of the dispute between AWI and EDS. At the time Mr. Haddrill spoke to evaluation committee there was no written agreement for AWI to continue to use the EDS service personnel in the event that the EDS and AWI relationship could not be revitalized for the long term. The reason for drawing attention to the AWI relationship with EDS was Mr. Haddrill's belief that some of the evaluation committee members were aware of the termination of the Master Services Agreement between EDS and AWI and the associated law suit before he made his remarks. Mr. Haddrill mentioned that EDS had sued VLT/AWI for work that EDS had done for VLT/AWI. The basis for the suit being that VLT/AWI withheld payments from EDS for the services provided by EDS in the interest of AWI's lottery customers. The policy decision to allow technical updates to be demonstrated at the two site visits in Washington State and Maryland to take advantage of technical improvements in the vendor’s proposed systems did not offend any terms set forth in Part II. Indeed this choice is in furtherance of Subsection 3.1 which contemplates proposing technology offered to other lotteries. On the other hand, a considerable period of time had passed between December 15, 1995, and September 1996, when the evaluation committee commenced its assignment to address the proposals directed to Part II. For that reason interest was expressed within the committee to have the vendors update their proposals to reflect the current business experience of the vendors in the manner contemplated by Part II, Subsection 2.1. This request by Mr. William Hunter was not favorably considered by the Lottery administration. Mr. Columbo speaking for Lottery management stated that updating would create a problem in that "at some point you have to stop taking information". Therefore, it was decided that the evaluation would be conducted on the basis of information submitted by the vendors on December 15, 1995, contained within the proposals. Whatever reading is given Part II, Subsection 1.46, the Lottery was within its rights in exercising the discretion not to seek additional information that describes the circumstances as of December 15, 1995 or September, 1996, extraneous information which the Lottery executive staff received about AWI lottery operations in other states, and AWI's relationship with its subcontractor, EDS, notwithstanding. The issue of the proper treatment of that information as it relates to a change in the circumstance of AWI's business operations beyond December 15, 1995, is a separate, if somewhat related consideration of the propriety of the Lottery refusing to affirmatively request that both vendors be required to update their business experience or any other aspect of their proposals effective September, 1996. Concerning the information received about AWI's performance in other jurisdictions and the AWI relationship with EDS, this information can be and was considered at the hearing de novo related to the credibility of the information provided in the December 15, 1995 proposal for Part II, Section 2. The exception to this view is the AWI response to Section 4.6 at 4.6.1 and 4.6.2 which should be considered beyond December 15, 1995. This exception will subsequently be explained. Moreover, to the extent that any change in circumstances that may have occurred related to the business experience of the vendors would affect the financial responsibility, integrity or security of the respective vendors, the Lottery is called upon to continue to examine those issues throughout the competitive bidding process, negotiations for a contract and during the operative period of a contract. Otherwise the Lottery acted within its discretion in not pursuing information it was provided about AWI's performance beyond December 15, 1995. MORE ON EXECUTIVE DECISION NOT TO INFORM COMMITTEE CONCERNING CHANGE IN AWI STATUS Mr. Columbo, through information provided by VLT/AWI, was made aware that the contract between AWI and the Arizona lottery was being terminated. This knowledge was gained before the evaluators commenced their process of review and evaluation of the AWI proposal which described the AWI experience with the Arizona lottery consistent with requirements set forth in Part II, Section 2. This information received by Mr. Columbo and other senior members of the Lottery staff was provided subsequent to the submission of proposals on December 15, 1995. Some of the details related to events that transpired beyond December 15, 1995. Therefore, it was information beyond what was contemplated in Subsection 2.1 where it says to describe the experience of AWI and its substantial subcontractors over the past five years, or in some instances past two years, on the subject of contract performance in Lottery jurisdictions. To the extent that information which the Lottery senior staff received related to events beyond December 15, 1995 pertained to performance in those jurisdictions, and was unrelated to matters of financial responsibility, security and integrity, the Lottery was within its bounds when it decided not to share the information concerning the AWI performance in Arizona, with the evaluators. It would have been inappropriate to selectively provide that information without updates to the performance of AWI in other jurisdictions and GTECH in the jurisdictions where it continued to provide services beyond December 15, 1995. The decision was not contrary to the operative terms in Part II and has support in the interpretation that Subsection 1.46 addresses the possibility of updates but does not mandate that course. These findings are not intended to address whether the information which AWI provided concerning its experience in Arizona as of December 15, 1995 was truthful. That issue will be examined separately. Around July 15, 1996, VLT/AWI gave notice to the Lottery that its Master Services Agreement with EDS had been terminated, with an arrangement being made to substitute on a week to week basis the EDS services to AWI. In particular, the senior members of the Lottery staff were told of this development. A decision was made by the Lottery senior staff not to advise the evaluators concerning the dispute between VLT/AWI and EDS. Nonetheless, the evaluation committee became aware of the problems between VLT/AWI and EDS and held the conversation with Mr. Haddrill on that subject. Additionally, this hearing examined the implications of that problem as it would possibly influence AWI’s financial responsibility. For the same reasons that were given in discussing Part II, Subsection 2.1 as they relate to overall performance by AWI by history, the EDS contribution to that performance need not be updated beyond December 15, 1995. However, there is another problem that has not been adequately addressed based upon the decision by the policy makers within the Lottery to deprive the evaluators of the opportunity to examine more critically the events that transpired beyond December 15, 1995, through the hearing dates. That problem is in association with the need to comply with Part II, at 4.6.1 and 4.6.2, related to provision of a detailed description of the organizational structure and staff that would be responsible for carrying out the terms of a contract. The proposal by AWI describes in great detail the contribution which EDS would make to the fulfillment of the requirements of the contract. When the Lottery senior staff learned that problems existed between AWI and EDS it should have apprised the evaluation committee about those matters to assist the evaluators in examining the AWI proposal for 4.6.1 and 4.6.2, notwithstanding that the limited information that the senior staff had received indicated that EDS was still performing the services. The conversation between the evaluators and Mr. Haddrill was not a reasonable alternative to divulging the information which the lottery had received independent of Mr. Haddrill’s remarks. Subsequently, VLT/AWI and EDS resolved their suit by settlement. That resolution calls for a change in the affiliation of personnel who would provide the services under the contract. Those changes were made known during the hearing, to some extent. But the evaluators did not examine the outcome of that settlement in relation to personnel as it might influence their impression of the organizational structure and staff. The organizational structure and staff cannot be reasonably assessed without resort to an examination of the settlement as it influences organizational structure and staff as revealed in the hearing. This should be done as a means to decide the appropriate points to be assigned AWI for its proposal in response to Part II, Section 4. If this were done, this would overcome the impropriety of the Lottery failing to provide the intervening information between December 15, 1995, and the time of the settlement of the EDS suit and would assure the fairness of the competitive bid process related to this item. The fact that some of the evaluators deducted points from AWI based upon the problems it experienced with EDS, as they understood the problems to be, based upon the limited information that was made available to them, does not serve as a viable alternative to an evaluation based upon the most current and more comprehensive information about the relationship between AWI and EDS. CREDIBILITY OF INFORMATION IN AWI PROPOSAL GTECH complains that false or misleading information contained within the AWI proposal caused the evaluation committee to incorrectly score the AWI proposal. In response to Section 2: Management Requirements, AWI included, at page 2-10, information concerning its services to the Arizona Lottery. On that page is Table 2-2: ARIZONA LOTTERY FAST FACTS. That table reflects the on-line terminals and instant-only terminals in inventory on November 1, 1995. Page 2- 10 refers to the delivery and installation of the on-line terminals at start-up. As further explained on page 2-10 it is noted that the delivery and installation of the instant terminals was delayed a few days. Nothing in these remarks describes the performance of the terminals once installed. At page 2-10 the description is given that the two classes of terminals were currently in operation as of December 15, 1995, the date upon which the proposal was submitted. Table 2-2 also refers to sales prior to the conversion of the system to AWI related to the on-line terminal per week performance in the fiscal year 1995. None of this information is false or misleading. Reference to the Arizona Lottery, AWI, at page 2-11 in its proposal, states that: “AWI has not missed an operational deadline in Arizona.” That statement is contradicted by the problem that was explained on the prior page concerning delivery and installation of the instant terminals. Moreover, separate and apart from the experience of down-time reported by AWI in relation to its performance in Arizona, which AWI accounted for in its proposal, operational problems were experienced when 700 retailer terminals did not communicate with the central system in the first week of operation in Arizona and in excess of 500 of the retailer terminals were not communicating with the central system in the second week of operation in Arizona. However, the misleading information about operational deadlines is not deemed to be so material as to reject the AWI proposal as unresponsive to Part II, Section 2, when considered in the context of the overall information provided about AWI's prior experience in the Lottery business. Again referring to the information that AWI reported about its service to the Arizona Lottery, at page 2-12 there is a reference to what is referred to as “shared achievements.” There it is stated: On-Time System Launch-Despite prolonged protests filed by the out-going vendor, AWI was able to launch the entire MasterLink system, including both on-line and instant game processing, on the designated start-up date of November 1, 1995. This was the industry’s first simultaneously launch of on- line and instant game processing, and is even more significant because the two services are integrated into a single system. This statement is contradictory in that the instant game processing was not launched on November 1, 1995, as evidenced by the previous comments that the delivery and installation of the instant terminals was delayed a few days. This contradictory statement about the on time system launch constitutes misleading information. The significance of this misstatement concerning the system launch does not rise to the level of a material deviation causing the AWI proposal to be declared unresponsive when considered in the context of the overall proposal concerning AWI’s experience. At page 2-55 of the AWI proposal is found Table 2-13: System Down-time. This Table reports the system down-time in Arizona among other jurisdictions where AWI delivered services. The report of system down-time is in response to the requirements at Subsection 2.1 and in accordance with the definition at Subsection 1.47 which defines system down-time. The information about Arizona comports with the provisions of Part II. Within the AWI proposal is information provided in response to Subsection 3.4 TERMINAL REQUIREMENTS. In particular reference is made to 3.4.1 which AWI characterizes as 3.4.1.1 New and Current Technology. At page 3-131 within that section of the proposal AWI states: Industry - leading engineering and high- quality manufacturing combined to ensure that the terminals delivered to the Florida Lottery are in top working condition. During the Arizona implementation, 96% of the terminals operated perfectly directly out of the box; the remaining 4% required only minor fine-tuning prior to installation. . . . This statement is neither false nor misleading. It refers to the circumstances of this equipment prior to installation at retailer sites. Finally, GTECH complains about the alleged false and misleading nature of information which AWI provided in response to 3.11.1 Technical Support, as that requirement deals with the need to demonstrate the vendors equipment and software. AWI in response at page 3-441 of its proposal has a section entitled Demonstrability of Equipment and Software: AWI proposes the use of two sites for the purpose of fulfilling all of the demonstration requirements identified in the RFP: the Arizona Lottery, our newest production environment, in Phoenix, Arizona, and our systems development facility in Hackensack, New Jersey. Every critical software requirement specified in the Florida Lottery RFP is currently operational for the Arizona Lottery, where Release 2.0 of the MasterLinkTM system, including the Instant Game Module and the latest on-line and instant ticket retailer terminal software, has been in operation since the November 1, 1995, startup. Further, the IBM RISC system platform serving Arizona's needs is similar to that proposed for Florida, and more than 2,300 OvationTM Retailer Terminals are currently installed there. Other than the fact that the instant ticket retailer software was not in operation since November 1, 1995, as previously explained, the information contained on page 3-441 that is referred to is not false or misleading. The misstatement about the operation of instant ticket retailer terminal software from the inception of the service to Arizona is not so material as to declare the AWI proposal unresponsive when considered in the context of the overall proposal. Especially when one considers that the purpose of page 3-441 is to identify prospectively the place at which AWI would demonstrate its equipment and software and the nature of equipment and software to be made available, in which instance the evaluators from Florida would have the opportunity for personal examination of those items. The fact that the site visit was held in Maryland does not change the impression of these facts. On balance the inaccuracies that have been identified in the AWI proposal did not compromise the ability of the evaluators to perform a fair and impartial assessment in comparing the competitors’ proposals. AWI CERTIFIED MINORITY BUSINESS ENTERPRISE GTECH disputes the award of five bonus points to AWI representing proposed CMBE utilization of twenty percent. Consistent with the requirement to identify the amount projected to be paid each CMBE to meet the minimum ten percent obligation, AWI proposes the use of Flamingo Graphics, and states the amount of the price in a manner to ensure that the overall price proposal by AWI cannot be deduced by calculation from the details in the minimum CMBE utilization plan. Thus, AWI complied with Section 6, to that extent. Section 6 segregates the additional ten percent commitment opportunity for the vendors, for which they may be awarded up to five bonus points, from the requirement to describe the minimum utilization for the first ten percent commitment. The information that must be provided by the vendor to earn the five bonus points requires the vendor to state the additional percentage above the required ten percent and to identify the names and addresses of the CMBEs that the vendor will use and the types of services to be performed by those vendors. Attachment “C” does not call for the establishment of the amount to be paid those CMBEs who make up the additional ten percent for which the bonus is requested. The AWI Attachment “C” proposes to provide an additional ten percent compensation to CMBEs above the minimum ten percent and gives the names and addresses and services to be performed by CMBEs without mentioning price. This complies with Section 6 and the Lottery was correct in awarding AWI the bonus points. PRICING GTECH was right to complain that it had been misled concerning the manner in which the price proposals by the vendors would be evaluated. Both vendors should have been informed when the Lottery decided to examine the initial five-year term of the contract and the renewal options, totaling 9 years. That choice was in substitution for the choice to evaluate only the base 5- year term of the contract that had been explained to the vendors before the vendors prepared their proposals. The percentage of on-line net sales that AWI used remained constant for the full 9 years at 1.8%. By contrast, GTECH offered 2.1% of sales for the initial five year term of the contract adjusted to 2.31% for the remaining 4 years. Although GTECH complains that it was treated unfairly and hypothesizes that it might have responded differently had it known that it could take advantage of a full 9 year period in stating its price proposal, at the hearing it did not explain those adjustments. Absent such explanation there is not a factual basis to rectify the problem consistent with its request. As matters stand, the GTECH percentage quote exceeds AWI's quote, no matter what point in time was chosen for performing the price scoring calculation. Even if the approach contemplated by the explanation given to the vendors was applied and the calculation made on a five year term, instead of the 20 points that AWI received on the 9 year basis and the approximately 17 points that GTECH received on the 9 year basis, this would bring about a result that awarded 20 points to AWI and something in excess of 17 points for GTECH. Based upon the record as its stands, the decision to use the 9 year planning horizon for calculating the price scoring does not constitute a significant departure from the requirements of fairness in its results. The decision, while unfair, was not material in its import. EVALUATION COMMITTEE MEMBERS The Secretary of the Lottery, Dr. Marcia Mann, notified the evaluation committee members of their selection and appointment to the evaluation committee. Those individuals selected were Robert Estevez, Barbara Goltz, George Banks, Robert Hunter, William Hunter and Gerald Bailey. By the appointment letter Dr. Mann advised the committee members, except Mr. Bailey, that they would be briefed on the evaluation procedures and reminded the members to maintain the confidentiality of the materials under review. Mr. Estevez is the Lottery’s Director of Games Management and has experience in field operations and knowledge of the existing on-line gaming system. Ms. Goltz is the Assistant Secretary for Finance and Administration with the Lottery. This position is comparable to a Chief Financial Officer in private business. In addition to her background in accounting, Ms. Goltz is familiar with the overall operations of the Lottery. Ms. Goltz was appointed chairperson of the evaluation committee. Another Lottery employee who served on the evaluation committee is William Hunter, Director of Information Resource Management, who has acquired expertise in computer systems and computer technology in relation to operations in the Lottery. Outside committee members included George Banks, State of Florida, Department of Management Services, Director of the Division of Purchasing, who has considerable knowledge of the state procurement process. Robert Hunter was an attorney with the United States General Accounting Office, with long-standing experience in evaluating government procurements, to include federal, state and local government purchases. Gerald Bailey, State of Florida, Department of Law Enforcement, Director of Performance Management, has basic familiarity with computer systems and experience concerning research and development. Committee Evaluation and Scoring for Part II BARBARA GOLTZ Sec. GTECH AWI 2.0 13 13.5 3.0 34 36.5 4.0 13 13.5 5.0 9 9 In performing her evaluation Ms. Goltz paid particular attention to features proposed by the vendors that would benefit the retailer in the interest of greater sales and efficiency. The idea of efficiency was in association with what she described as “user friendly.” In the event that subsections within Section 3.0 specifically described the criteria that must be met to comply with the RFP requirements, if the vendor demonstrated the ability to meet those criteria, that was deemed acceptable and no further evaluation was made to differentiate between the solutions proposed by the vendors. By contrast, Ms. Goltz gave as example the telecommunications network in which she described the RFP requirements as being explained as “no more or less to what could be proposed. . . It was wide open . . .” Therefore, this would lend itself to a comparison between the vendor’s solutions in her mind. Within Section 3 there are instances where the requirements are defined in some detail with a caveat that those details must be provided “at a minimum.” An example is Part II at 3.2.6 System Performance. Here it is expected pursuant to Subsection 3.1 that any additional or alternative capacity, features or capabilities that are proposed by the vendors beyond the minimum requirements must be assessed on their merits and to the extent that they provide useful value to the Lottery, credited in the scoring process in the manner already described. Other similar language which contemplates review of more than minimum compliance were the requirements set forth in the RFP where details are described with the caveat that the proposal is “not limited to” the required items. When the quoted language is found a uniform approach to assessing additional information to decide its value to the Lottery is called for. An example is Part II at Subsection 3.3.2 Design Requirements related to the telecommunications network. Another example of the occasion upon which more information may be provided than is mandated is found at 3.4.1 Retailer Terminals where the proposals must comply with an extensive list of requirements but also are to describe “any additional features which are available.” Those additional features should be assessed for their value and credit given in the instance where the additional features are found to be useful. To the extent that other sections reviewed by the evaluation committee contain similar language that the evaluators had the same responsibility in assessing the additional as well as alternative capacity, features or capabilities to determine the value of those items with credit being given for useful extras or alternates. Even in the instance where there is no qualifying language it would not be safe to assume that Part II, Section 3 requires the evaluators to limit their assessment to whether the proposals are responsive to the mandatory terms of the RFP. An example is Part II, at 3.4.3 On-Line Management Terminal Functions and Reports (A. Game Controls). The evaluators would be expected to examine additions and alternative approaches in the format already described. Where the instructions within the RFP create broad latitude for the vendors to suggest the solution in response to general parameters described in the RFP, such as Part II, at 3.2.1 General System Requirements, the evaluators needed to assess and value the proposals in arriving at the scores to be assigned the competitors. Ms. Goltz and other evaluators did not always follow this process called for in Part II, Subsection 3.1. The failure to adhere to the requirements was a material departure from the RFP. In performing her evaluation, Ms. Goltz scored Sections 2 and 5 as single units, whereas Sections 3 and 4 were analyzed in their subparts with greater emphasis placed on matters which she considered to be more important. The beginning point for her scoring was what she described as the “outstanding companies” in the competition; however, she did not believe that any company was entitled to a perfect score in relation to a given section. Ms. Goltz under Subsection 2.1 Experience of Respondent awarded a point to AWI because AWI has individuals who currently work in providing services to the Lottery under the existing contract. Nothing in Subsection 2.1 contemplates rewarding the incumbent merely because it has employees with whom the Lottery is familiar. The point should be deducted. Given that the Lottery had chosen to limit its consideration of a vendor's performance in accordance with Subsection 2.1 to the period ending December 15, 1995, and the nature of the instructions set forth in Subsection 2.1, it was not appropriate to deduct half a point from AWI for its problems with EDS as known by Ms. Goltz when she evaluated the proposals. The half point should be reinstated. It is acceptable for the fact finder in this proceeding to add and subtract points in the event that there is no basis in the RFP to award points or deduct points, as contrasted with taking issue with an evaluator in the instance where there is authority to assign points but there is some question about the amount of points to be assigned. The fact finder is not expected to reevaluate the proposals in this highly technical RFP. Ms. Goltz had a differentiation in scores between AWI which received 5.5 points for its telecommunications network and GTECH which received 4.5 points for its telecommunications network. This decision was based upon the stated intention by GTECH to serve as many as 24 percent of its retailers through wireless technology, as contrasted with a more limited number of retailers served by AWI through wireless technology. This was a decision which had no reasonable basis in fact. This gross differentiation ignores the need for a more specific analysis of the proposals and the explanations in the record concerning the technologies proposed by the vendors to provide for telecommunications requested by the Lottery. Absent a more thorough evaluation of the specific telecommunications proposals by the vendors, it does not suffice to distinguish between those proposals based solely on the number of retailers served by wireless technology. This discussion is in relation to Part II, Subsection 3.3. ROBERT HUNTER Sec. GTECH AWI 2.0 14 15 3.0 32 35 4.0 11 13 5.0 8 8 In evaluating Part II, Section 2, Robert Hunter scored AWI higher because it was the incumbent vendor. Again, there is no basis in Section 2 to provide greater recognition to the incumbent. This choice constituted the sole distinction between the two vendors in Mr. Hunter’s assessment. The result of the decision was a one point differential between AWI and GTECH. That point should not be upheld. In evaluating Subsection 3.2 System Configuration Requirements, Mr. Hunter, with the exception of 3.2.4 Remote Logging, determined that the vendors met minimum requirements in the RFP and ended his assessment. Mr. Hunter was required to assess the value of the proposed solutions by the vendors with greater particularity as a means to satisfy the Lottery's needs. Likewise, Subsection 3.9 Software Quality Requirements, contemplated the need to evaluate proposed solutions concerning their relative merit. Mr. Hunter failed to do this in contravention of the requirements of the RFP. In connection with Subsection 3.3 Communications Network Requirements, Mr. Hunter in his comparison and evaluation noted that as much as 24 percent of the telecommunications proposed by GTECH was wireless and that in his estimation was less dependable than AWI’s use of technology similar to what is used under the current contract between AWI and the Lottery. To Mr. Hunter, the potential problems inherent in the GTECH solution related to the fact that the satellite down-link hub-center in Rhode Island had a redundant capacity, another back-up down-link, but that there was no other available back-up in a different geographic location than Rhode Island gave him concern. In his evaluation Mr. Hunter noted the possibility of degraded service due to weather. He noted that radio wireless communication in metropolitan areas might be problematic. In his evaluation Mr. Hunter took the view that the better choice for the Lottery was to adopt a telecommunications solution that was closer to the technology that had been used in the past. That technology was associated with telephone lines. He did not believe that it was the best course to try something that he believed was a new technology: satellite technology. To him the use of extensive satellite technology was not as desirable. In performing his evaluation, Mr. Hunter paid attention to the vendors’ assertions that their respective telecommunications networks were superior to other technologies. Again, as with Ms. Goltz, Mr. Hunter dealt in generalities in contrasting the telecommunications solutions presented by the vendors in their proposals. This in contrast to a more thorough examination of the proposals and their relative merit. In candor, Mr. Hunter admitted that he did not perform an engineering analysis of the telecommunications proposals because he did not feel he was qualified to do that. Nonetheless, the RFP contemplates that the Lottery will sufficiently educate the evaluators concerning the details of the telecommunications proposals to allow an informed judgment to be made about the proposals to determine the better solution. To this end the Lottery has the advantage of the record in the de novo hearing in addition to any information that had been imparted to the evaluators prior to the hearing to assist the evaluators in performing their task. For the most part, the Lottery ignored that information. Neither Mr. Hunter nor his colleagues on the evaluation team made a sufficiently meaningful assessment of the telecommunications proposals by the vendors prior to hearing or as a product of the information presented in the hearing record. This lack of specific understanding of the proposed solutions for telecommunications skewed the result in Mr. Hunter’s scoring in Section 3. In particular Mr. Hunter and other evaluators failed to sufficiently analyze the telecommunications proposal by GTECH. GERALD BAILEY Sec. GTECH AWI 2.0 15 11.25 3.0 30 40 4.0 11.25 15 5.0 10 10 204. In responding to the AWI proposal for Section 2: Management Requirements, Mr. Bailey deducted 25 percent of the value based upon what he termed the EDS issue. That refers to the problems between EDS and AWI that he was made aware of in the course of the overall evaluation process. It was not appropriate to deduct these points bearing in mind that proposal requirements of Section 2 ended December 15, 1995. In Subsection 3.2 System Configuration Requirements, Mr. Bailey used an approach common to Mr. Robert Hunter and other evaluators where the relative value of the solutions in the context of comparison to the competitors solutions was not completely considered. This oversight was contrary to the expectations set forth in the RFP. Mr. Bailey took issue with the technology proposed by GTECH for telecommunications as referred to in Subsection 3.3 Communications Network Requirements. The more extensive reliance on radio technology, and more specifically, satellite technology, was found to be a liability. Mr. Bailey perceived the AWI technology to be “more conservative” and “more reliable.” Mr. Bailey was so troubled by GTECH’s proposed telecommunications technology in using satellite that he deducted 10 points of the possible 40 points to be assigned for Section 3.0 leaving GTECH with 30 points. Of the information which Mr. Bailey received concerning the telecommunications proposals by the vendors, he was especially impressed with the Washington State lottery staffs’ comment that they had experienced difficulties with the satellite portion of their telecommunications system. For reasons previously described, Mr. Bailey’s treatment of the telecommunications proposals, particularly the GTECH telecommunications proposal, was insufficient. WILLIAM HUNTER Sec. GTECH AWI 2.0 13 13 3.0 29 3 4.0 10 13 5.0 7 8 In performing his evaluation Mr. William Hunter looked through his notes, listened to the discussion by the committee, thought in terms of the site visits, did a comparative analysis in his mind as to the relative weight of the two vendors for meeting the prescribed sections within Part II and then compared the higher of those vendors to what would be an appropriate score and scored the vendors following that comparison. Anything that Mr. Hunter observed in the proposals that was particularly positive would influence the scoring. Anything that was especially negative would also influence the scoring. The assignment of points based upon the positive or negative findings did not result in the addition or deduction of points on a uniform basis. Under Subsection 2.1 EXPERIENCE OF RESPONDENT, Mr. Hunter improperly gave consideration to AWI because of its incumbency with the Lottery. Similarly, it was inappropriate for Mr. Hunter to deduct from the GTECH score because it was unfamiliar with Florida. Under Subsection 2.1, Mr. Hunter inappropriately scored the GTECH proposal down based upon less flexibility in changing to meet the Lottery requirements. On that subject, subsection 2.1 does not contemplate the use of anecdotal information gained from the GTECH proposal related to other sections within Part II and remarks made at the Washington State site visit, as a means to score the statement of experience called for in Subsection 2.1. In his actions Mr. Hunter violated the terms of Subsection 2.1 in this instance. Subsection 2.1 relates to historical experience in providing services similar to those required by the RFP up to and including December 15, 1995, not information that responds to other sections within Part II prospectively, to include demonstration of equipment and software at a site visit. In evaluating Subsection 2.1 Mr. Hunter related his view of the overall proposal by GTECH in response to Part II to the extent that GTECH did not know how the Lottery operated. Subsection 2.1 did not contemplate the necessity to demonstrate that the vendor understood how Florida operated at present. It contemplated the provision of specific information about a vendor's history in providing lottery services worldwide. Under Subsection 2.1 Mr. Hunter scored AWI negatively because of the EDS relationship. For reasons previously described this negative score was not justified. When Mr. Hunter performed his evaluation of 3.2.6 System Performance, he did not find any advantage to a vendor's equipment being able to perform at levels in excess of the performance levels mandated. Therefore, a vendor would not be entitled to have its score enhanced by virtue of greater performance. In association with Subsection 3.3 Communications Network Requirement, Mr. Hunter downgraded GTECH for the use of wireless VSAT, the satellite. He also felt uncomfortable with AWI's use of radio in its telecommunications proposal. But he did not compare the reliability of AWI's radio component to the components within the GTECH telecommunications proposal. He did not assess the reliability of both systems, one against the other. He did not specifically inform himself concerning the reliability of the GTECH telecommunications proposal. Instead he observed that the AWI telecommunications system had less components. He should have compared the specific proposals in all respects. While Mr. Hunter indicated that he was mindful of the details set forth in the GTECH proposal for telecommunications to include the wireless component of its solution, his assessment ignores the evidence de novo concerning the GTECH tele- communications proposal and its wireless component. There is a need for Mr. Hunter and other committee members to evaluate the overall record concerning the GTECH telecommunications proposal in comparison to the AWI telecommunications proposal and the needs of the Lottery as described in Part II. In scoring the GTECH proposal Part II at 3.5.12 Dual Security Number, Mr. Hunter gave GTECH a negative score for offering an alternative solution that caused the sign-on number to be remotely logged and stored in the dual security system through a process that involves vendor access. GTECH had also indicated its willingness to do what was required by 3.5.12 should the lottery reject the suggested alternative solution. It was inappropriate to assign a negative score for offering the alternative while agreeing to provide the suggested solution. Mr. Hunter took a similar view concerning the GTECH proposal for Part II at 3.5.13 Ticket Stock Location. For the same reason, it was inappropriate to give a negative score to GTECH for a suggested alternative proposal while agreeing to comply with the requirements. Mr. Hunter need not have credited GTECH for its alternatives if he did not find them valuable, but he could not discredit GTECH. To do so was contrary to Subsection 3.1, which called upon the vendors to offer alternatives, especially if in production in other lottery jurisdictions. ROBERT ESTEVEZ Sec. GTECH AWI 2.0 13 13 3.0 32 38 4.0 8 12 5.0 8 10 In carrying out his evaluation Mr. Estevez had expectations born out by his nine years experience with the Lottery. Based upon that experience he had different expectations depending on the section being considered. He utilized the scoring range for the individual sections related to percentages for outstanding, good, fair and poor. In reference to Subsection 3.2 System Configuration Requirements, Mr. Estevez recognized that GTECH had the more advanced solution but did not feel that there was a significant difference between the solution proposed by GTECH when compared to the AWI solution. If the solutions were completely examined and compared by the method that has been identified, that would not be an unreasonable outcome. In evaluating the proposed solutions for Subsection 3.2 System Configuration Requirements, Mr. Estevez was mindful of the minimum performance expectations described at 3.2.6 System Performance. In consideration of his experience with the Lottery as a means to evaluate the proposals, implicit in his scoring, Mr. Estevez was not persuaded that the extra performance capability of the GTECH equipment was valuable to the Lottery. In evaluating the proposals pursuant to Subsection 3.3 Communications Network Requirements, at 3.3.4 Communications Technologies, Mr. Estevez noted that the GTECH proposal contained as much as 24 percent wireless which caused him concern about points of failure in that system. By comparison, he perceived that AWI in its digital network was more secure and reliable. He particularly had concerns about the wireless equipment whether involving a tower in the middle of a field or a satellite dish placed somewhere in the open. Telephone facilities, to him, seemed to be more secure and not open to people going up to those facilities. In contrasting the security of the telephone company facility with a tower in the middle of a field, Mr. Estevez acknowledged that the belief that the tower was more susceptible to compromise was just his own unprofessional opinion. As with other evaluators, Mr. Estevez’s evaluation of the satellite/radio telecommunications proposal by GTECH tends to overlook the details in the proposal and does not take into consideration the explanations at hearing concerning the viability of the specific solution offered by GTECH in the use of that technology. To arrive at a proper understanding of the GTECH and AWI telecommunications proposals as a means to compare the respective solutions, Mr. Estevez and other evaluators need to reassess the written proposals, the impressions gained at the site visit and the technical explanations provided at the hearing. Absent that analysis, the decision to score GTECH negatively and AWI positively in the telecommunications area is inappropriate. Mr. Estevez recalls that during the Washington site visit staff for the Washington lottery were asked by the evaluators if the Washington lottery had experienced problems with the satellite component to its telecommunications by virtue of a hurricane on the East coast. The answer was yes. Mr. Estevez does not recall whether the Washington lottery staff told the evaluators about the number of terminals in the Washington system that were affected by this event. In relation to 3.5.12 Dual Security Number, Mr. Estevez gave GTECH a negative score. Again, the basis for that decision concerned the GTECH alternative proposal which did not coincide with the requirements in the RFP, in a setting where GTECH committed to provide the solution called for by the Lottery and was allowed to suggest an alternative. There was no legitimate basis for scoring GTECH down for offering the alternative solution. Mr. Estevez had become familiar with the controversy between AWI and the Arizona lottery. As a consequence he determined not to consider the information in the AWI proposal that referred to the Arizona experience when performing his evaluation. That decision was inappropriate. Mr. Estevez was obligated to examine the information about Arizona, up to and including December 15, 1995, the date that proposals were submitted in response to Part II of the RFP. GEORGE BANKS Sec. GTECH AWI 2.0 15 15 3.0 36 38.5 4.0 15 15 5.0 9 10 When Mr. Banks evaluated Section 3: Technical Requirements, he observed that there were ten subsections. He assigned weights of four points maximum for each subsection. He then examined the line items within the subsections and did a “benchmark” of GTECH’s proposal compared to AWI’s proposal to determine which vendor should get the full complement of four points for each subsection as opposed to some lesser number. However, in some instances when scoring the proposals Mr. Banks reduced the score of both proposals, as opposed to awarding maximum points to the superior proposal. It is concluded that the term “benchmark” refers to a comparison of the proposed solutions. In scoring Subsection 2.1 Experience of Respondent, Mr. Banks noted AWI’s incumbency. As explained before, nothing in that subsection contemplates crediting the incumbent merely because it is the incumbent. The subsection contemplates a description of the experience in all jurisdictions to be evaluated on the merits of that experience, whether in Florida or other locations. To the extent that the AWI incumbency influenced Mr. Banks in arriving at the score assigned for Section 2: Management Requirements, it was inappropriate to credit the incumbent. In association with Subsection 3.3 Communications Network Requirements, at 3.3.4 Communications Technologies, Mr. Banks commented that GTECH proposed as much as 24 percent wireless. This led him to score GTECH at three points of a maximum four points in his grading system. By contrast, AWI was assigned four points for the subsection. In scoring this subsection, Mr. Banks did not perceive that wireless telecommunications through the use of satellite and radio frequency was non-reliable. He stated that he had a sense of comfort and confidence in the digital land line system because from the standpoint of maturity that it was already deployed in the current operating telecommunications of the Lottery. He commented that his attempt was to reconcile whether you put all the confidence in betting on satellite technology and risk the Lottery, or go with proven and what is known to work and is being deployed in the state, that being digital land line. In his evaluation Mr. Banks posed the question to himself to what extent the opportunity for failure was greater with satellite than with digital land line. The fact that GTECH would have as many as 24 percent of its retailers hooked up to wireless telecommunications through radio frequency or satellite as opposed to what he describes as seven percent of wireless for AWI represented the bigger risk. The overall percentage of wireless was the prime factor for down-grading the GTECH telecommunications proposal, with particular emphasis on the proposed use of satellite. Mr. Banks, in his view of wireless radio communications, believed that the signal could be obstructed by high-rise buildings. Mr. Banks believed that the wireless radio communications proposed by both vendors would be used in rural areas. While Mr. Banks took note of the reliability of the specific telecommunications proposed by GTECH as set out in the proposal and as explained in the Washington State site visit he was persuaded that there were more opportunities for points of failure in the satellite system. The possibility of a second GTECH hub-center in Austin, Texas, had not been realized at the time of the site visit to Washington State as Mr. Banks understood it. It can be inferred that Mr. Banks would have felt more comfortable with the advent of the Austin, Texas hub-center. In making his judgments Mr. Banks understood that there were no empirical studies or statistics that the evaluators were familiar with and tried to use as a means to make a judgment about telecommunications proposals. As with other evaluators Mr. Banks was not provided the opportunity to examine the testimony at hearing of experts concerning the reliability of wireless communications via satellite and radio based upon engineering principles. That opportunity is necessary to insure a fair and comprehensive treatment of the proposals. Related to Part II at 3.5.12 Dual Security Number, Mr. Banks entered a minus in his scoring for the GTECH proposal which was stated in the alternative, one method complying with the RFP requirement and the other not. As described before, while GTECH suggested a solution contrary to the RFP, it committed itself to comply with the RFP, and was encouraged by Subsection 3.1 to offer an alternative. Therefore, it was inappropriate to down- grade the score for GTECH in relation to this requirement. EXPERT WITNESSES IN TELECOMMUNICATIONS AND RELATED TECHNOLOGIES The following witnesses provided testimony concerning the telecommunications proposals and related technology by the vendors, which testimony should be taken into account before scoring the proposals in formulating the final agency action. Richard Desjardins, Director of Special Projects for GTECH, provided testimony concerning the GTECH telecommunications proposal related to radio and satellite. James A. Stratigos, President and CEO of Media Four, Incorporated, is an expert in the design and implementation of telecommunications networks, including the use of digital radio and satellite. He testified about the use of radio and satellite as it would impact this project. Donald L. Stanford, Senior Vice President and Chief Technical Officer for GTECH, who is expert in lottery technologies and systems testified concerning the GTECH telecommunications proposal. Paul Lowenwirth, EDS employee serving the account of AWI, testified. He had the overall responsibility for developing the telecommunications network proposed by AWI. He is an expert in the development and implementation of telecommunications networks. Andrew Bruce Greenspan, an EDS employee, who is expert in central systems testified concerning system configuration requirements. Barry Ankersen, who works for IBM and is an expert in central systems processors, testified. Bridgett Garnsey, Vice President for Product Development and Technical Sales for AWI, an expert in systems development and application support, testified. Edward John Hinkel, an EDS employee, who has a background in computer terminal technologies (software) testified concerning the AWI proposal for terminals. Steve Beason, Vice President of software for GTECH, testified concerning system configuration proposals by the vendors. David Isaacson, GTECH Manager of Product Marketing, with a background in computer science engineering, testified by deposition concerning AWI's central system processor. Paul Pinto, GTECH Technical Services Director II, with a background in computer technology software development and quality assurance, testified by deposition concerning a comparison of the proposed central systems of the vendors. Generally stated the above-witnesses provided information concerning the proposed technology offered by the vendors in response to Section 3: Technical Requirements. In formulating the agency decision this de novo evidence needs to be examined and utilized in assisting the evaluators in assigning scores to Section 3. The agency should not ignore that record in favor of the opinions held at the conclusion of the evaluation process in October 1996. If the agency fails to consider this evidence, the fact finder cannot ultimately determine whether the agency’s action was appropriate, and is without the authority to determine the proper course of action by performing an independent evaluation of the technical proposals based upon the record de novo. AWI FINANCIAL RESPONSIBILITY Based upon its interpretation of Section 24.111(2), Florida Statutes, and subsection 1.19, the Lottery examined the financial responsibility of the vendors through the time of the hearing. As contemplated by Section 24.111(2)(g), Florida Statutes, and required by subsection 1.35, the vendors are called upon to advise the Lottery should a vendor experience a material adverse change in financial condition prior to the award of the contract. The meaning of the terms "financial responsibility" and "material adverse change in financial condition," as perceived by the Lottery, take into account the specifics of a vendor's financial position. There is no exact definition of the terms in the statutes, rules or policies of the Lottery. Nonetheless, the Lottery has made an effort to inform itself concerning the financial issues described in this paragraph. Relevant to this inquiry is the question of the financial responsibility and any material adverse change in the financial condition of AWI. Within the context of the matter of financial responsibility and possible material adverse change in the financial condition, Mr. Doyal as Inspector General for the Lottery and a CPA has examined certain financial information to establish the Lottery's policy position concerning the financial viability of AWI as a competing vendor in this procurement. As spokesperson for the Lottery, Mr. Doyal expressed the policy position of the agency concerning AWI's financial responsibility and view on the subject of whether AWI has experienced a material adverse change in financial condition. In behalf of the Lottery he has concluded that AWI is financially responsible and has not experienced a material adverse change in financial condition. His insights concerning the issue of financial responsibility extend beyond the Lottery's unchallenged decision in Part I of the RFP where the Lottery was specifically charged with determining the financial responsibility of the vendors. After the decision in Part I, Mr. Doyal continued to monitor the issue of financial responsibility for all periods including the hearing dates. He also looked at the related question of the possible experience of material adverse change in financial condition. As a means to inform himself concerning the financial position of AWI, Mr. Doyal mainly relied upon quarterly reports filed with the Securities and Exchange Commission through copies provided to the Lottery based upon the fact that AWI is the incumbent vendor. The reports are referred to as Form 10-Q's. They are associated with the business of the parent corporation, VLT, and its subsidiaries, to include AWI. Those reports are for the quarterly periods ending March 31, 1996, June 30, 1996 and September 30, 1996. To arrive at his opinion concerning the financial viability of AWI Mr. Doyal also examined terms of a settlement of the court action between VLT/AWI and its subcontractor EDS, together with consideration of the testimony of other experts who testified concerning the implications of the settlement as that might influence the financial health of AWI. Mr. Doyal's decision to rely upon the credibility of the information in the 10-Qs and to monitor the outcome of the events described and to take action only upon the occasion when he became convinced that AWI was no longer financially responsible or had experienced a material adverse change in financial condition was acceptable. There was no obligation to undertake an independent investigation absent the belief that the AWI financial position had degraded to the point where that became necessary. Those matters set forth in the quarterly 10-Qs adequately form the basis for examining AWI's financial responsibility and the issue of any material adverse change in financial condition experienced by AWI. The Lottery decision through Mr. Doyal to utilize that body of information for the purpose of examining financial responsibility and the issue of the possible material adverse change in financial condition was within the agency discretion as a policy matter. The parties were entitled in the hearing de novo to produce and did produce collateral evidence that would more completely or more correctly explain the information set forth in the 10-Qs and the ability to update that information in the 10-Qs as a means of examining the question of financial responsibility and the related issue of any experience of material of adverse change in the AWI financial condition. An example of collateral evidence would be the information provided concerning the settlement of the suit between VLT/AWI and EDS. Beyond those opportunities, GTECH was not allowed to advance its claim that the Lottery's failure to pursue a more extensive investigation in the first instance, to look to sources of information outside what was contained within the 10-Q's, constituted an act of arbitrariness. The de novo opportunity to expand upon or clarify the details set forth in the 10-Qs allowed the other parties to offer a more comprehensive explanation of the financial condition of AWI, if that was their choice. In particular, the parties were given the opportunity to produce expert witnesses who could examine and contest the material relied upon by Mr. Doyal and his opinion and offer any supplemental material and contrary opinion to assist the trier of fact in deciding the issue of financial responsibility and the related matter of any material adverse change in financial condition experienced by AWI. In examining the question of financial responsibility and the issue of material adverse change in financial condition, to determine if AWI is a responsible bidder, it is recognized that the hearing de novo is not intended to examine the ability of AWI to provide the required fidelity and performance bonds consistent with Part II, Subsection 2.2. The inquiry directed to the AWI financial responsibility and whether AWI has experienced a material adverse change in financial condition does not include reference to the specific ability of AWI to fund its participation in a contract to provide the services envisioned in the RFP. The vendors were told that consideration of the ability to fund would not be part of the evaluation process in determining the best proposal when that issue was broached by GTECH prior to the submission of proposals. Specifically, GTECH in its questions posed to the Lottery prior to submission of proposals asked the following: "Will the financial stability of a vendor be evaluated in connection with its ability to fund the provision of a new system to the Lottery?" The Lottery answered: "Section 24.111(2), Fla. Stat, specifies the information that will be used in determining the financial responsibility . . . of the Respondents." That section within the Florida Statutes does not make it incumbent upon the Lottery to examine the financial ability to fund the project as part of the evaluation. In summary, the ability to fund the project is not part of the consideration of financial responsibility and the question of any experience of a material adverse change in financial condition. Part II, Subsection 1.3 does contemplate that a vendor be fully capable of providing the services when taking into account the vendor's financial condition as a general observation unrelated to specific funding requirements for this project. A vendor unable to meet those terms would be deemed unresponsible and its proposal would be rejected pursuant to Subsection 1.19. The 10-Qs for the several quarters in 1996 reveal a great deal about the financial condition of VLT/AWI. Contrary to the impression of the GTECH's expert, Neil Hochberg, CPA, the 10- Qs are adequate to form an impression concerning financial responsibility and any material adverse change in the financial condition of AWI from May 7, 1996 through the period covered by the 10-Qs. The 10-Qs are supplemented by the details of the settlement of the suit between VLT/AWI and EDS. AWI remains obligated to inform the Lottery concerning any experience of material adverse change in financial conditions prior to the award of the contract or after that award should it succeed in the competition. The failure to disclose that information consistent with Part II, Subsection 1.35 would justify denial of the award of the contract or constitute a breach of the contract between AWI and the Lottery. To the extent that GTECH expresses concern that the period between September 30, 1996 and the hearing date is inadequately explained in the record concerning the financial viability of AWI, it bore the burden to prove de novo that AWI is not financially responsible or has experienced a material adverse change in its financial condition. It could not speculate without proof. Significantly, the financial difficulties that are explained in the 10-Qs concerning AWI's performance in providing services to other Lottery jurisdictions and its dispute with EDS have been resolved for the most part. This allows conclusions to be reached concerning the implications of those events. In addition to the explanations found in the 10-Qs, other evidence was presented to augment that proof which further clarified the impression of AWI's financial position. The remarks by Mr. Doyal and the financial experts presented by AWI lead to the conclusion that sufficient information was available to examine the financial health of AWI. The 10-Qs describe the dispute that existed between AWI and the Arizona Lottery. Reference is also made to a dispute with the Minnesota Lottery that was served by AWI. Eventually, the Arizona dispute was settled with an eight million dollar payment made to the State of Arizona. AWI contributed approximately 1.1 million to the settlement, with additional monies being paid by EDS, as subcontractor to AWI in Arizona, and by insurance carriers. As part of the settlement AWI received a payment of 1.3 million from the State of Arizona. On balance AWI realized a small net financial gain but lost the contract to its competitor. It was not shown that the settlement of the dispute with Arizona in which AWI was terminated as the vendor compromised AWI's financial responsibility and constituted a material adverse change in financial condition. Notwithstanding the payment of the Arizona claim, AWI was successful in renewing its technology errors and omissions insurance policy in the amount of 25 million dollars for 1997 without any significant increase in the cost of the policy. Concerning the State of Minnesota, it had been reported in the 10-Qs that the State of Minnesota assessed its vendor AWI approximately 1 million dollars in penalties by way of liquidated damages for late delivery of software. This assessment was offset by revenues otherwise owed to AWI. Another 3.5 million dollar payment to AWI under an existing contract was withheld by Minnesota based upon a dispute over delivery of another software item. Additionally, the State of Minnesota decided not to renew AWI's contract for reasons of convenience and in 1996 advertised for bids for the future services related to the on-line game. AWI was selected as the lowest bidder under the new solicitation. As part of that process, it has been reported that AWI was technically compliant with the requirements in the solicitation and financially responsible. Negotiations are underway to conclude the new contract. It has not been shown that any of the circumstances between AWI and the State of Minnesota compromise the financial responsibility of AWI or constitute a material adverse change in the financial condition of AWI. In the 10-Qs, reference is made to the AWI relationship with the Kentucky lottery. AWI successfully bid on the contract. However, it withdrew from negotiations based upon the disclosure that AWI might be sold and the pendency of the financial dispute between VLT/AWI and EDS. Those circumstances would not allow AWI to negotiate with Kentucky upon terms that the state deemed acceptable. As with the situation in Arizona the loss of the Kentucky contract deprived AWI of a revenue source, but it has not been shown that the loss of the Kentucky contract compromises AWI's financial responsibility or constitutes a material adverse change in its financial condition. It was disclosed in the 10-Qs that difficulties were experienced in trying to obtain the renewal of a 30 million dollar performance bond to satisfy requirements in the contract held with the State of Maryland. EDS was a subcontractor in Maryland. EDS gave notice to its surety that it would no longer guarantee AWI's obligations to the bonding company. AWI was noticed by the surety that the bond would not be renewed. There ensued negotiations in an attempt to gain substitute collateral for the EDS guaranty. In the third quarter 10-Q AWI had reported that "no assurance" could be given that the bonding issue would be satisfactorily resolved. AWI did resolve it satisfactorily by re-negotiating the bonding program and arranging for the renewal of the 30 million dollar performance bond without a lapse in coverage. As substitute for the EDS guaranty, AWI posted three one-million dollar cash-backed letters of credit. AWI has also renewed its performance bond in Florida for the existing contract. That performance bond for the period for 1997 is in the amount of 12 million dollars. In the final analysis, GTECH has not shown that AWI is unable to obtain performance bonds and that the issue concerning bonds is an indication of the lack of financial responsibility and evidence of a material adverse change in financial condition. The 10-Qs make reference to the termination of the Master Services Agreement between VLT/AWI and EDS. In particular, reference is made to this event as constituting a default under a loan agreement between AWI and its principal lender First Bank, NA. As reported within a 10-Q that default was waived subject to an amendment to the loan agreement. AWI and First Bank entered into a fourth amendment to the loan agreement waiving default, the importance of which is that the line of credit extended from the bank was reduced from 20 million to 17.5 million. These circumstances were not shown to constitute a material adverse change in the financial condition of AWI nor to constitute a compromise in AWI's financial responsibility. In the 10-Qs frequent reference is made to the dispute between AWI and EDS in which AWI had withheld payments to EDS for alleged problems with the EDS performance in providing services to the Arizona and Minnesota lotteries. This led to the termination of the Master Services Agreement and the suit by EDS calling for payment for the services it had rendered in those states. In the 10-Qs AWI continues to insist that it is not responsible for the claims by EDS. Nonetheless, during the second quarter 10-Q, VLT/AWI acknowledged that the circumstances as they existed within the lottery jurisdictions and the dispute with EDS could possibly led VLT/AWI to experience a material adverse change. The circumstances that existed between AWI and the lotteries have been explained leading to the conclusion that no material adverse changes occurred in the final analysis. Likewise, the EDS dispute was resolved by a settlement in the court action. That resolution was not shown to have undermined the financial responsibility of AWI, nor constituted a material adverse change in the financial condition of AWI. EDS had claimed 39 million dollars for its services. By the agreement between VLT/AWI and EDS, VLT/AWI will pay a 27 million dollar note to EDS secured by AWI assets, such as its plant, equipment, software, terminal inventory and VLT stock with a current market value of nine million dollars which had been transferred to VLT/AWI as part of the settlement. VLT/AWI also receives equipment and consumables with an approximate value of seven million dollars. The 27 million dollar note is a long-term instrument. Through the settlement EDS will no longer act as a strategic partner for VLT/AWI, and VLT/AWI will lose the indemnity provided by EDS. The settlement contemplates that several hundred employees who work for EDS will become employees of AWI. The settlement has a short term benefit for VLT/AWI. Long term implications are not clear. For now, the settlement does not compromise AWI's financial responsibility nor constitute a material adverse change in AWI's financial condition. This settlement has profound implications on the future organizational structure of the persons responsible for performing services under a contract. The information by AWI in response to subsection 4.6 changes dramatically. The associated financial statements within the 10-Qs detail the difficulties experienced by VLT/AWI in those reporting periods. Those difficulties were in great measure in relation to the VLT/AWI lottery operations previously described and the EDS controversy. Taking into account the testimony by the financial experts concerning the financial statements, together with the outcome of the EDS suit, it has not been shown that AWI is lacking in financial responsibility. Nor has it been shown that AWI has experienced a material adverse change in its financial condition. OTHER ISSUES Contrary to the allegation in the petition, it was not shown that AWI failed to meet the requirements of Part II at 3.2.6 by using non-conforming tickets in its site demonstration, thus rendering benchmark tests invalid. Contrary to the allegations in the petition, Part II, Subsection 3.3 COMMUNICATIONS NETWORK REQUIREMENTS, does not call upon the vendors to name the Interlata communications carrier for the digital backbone of the proposed communications network to have their proposals evaluated. Contrary to the allegations in the petition, the retailer terminals proposed by AWI comply with the minimum requirements set forth in Part II at 3.4.1 Retailer Terminals. Contrary to the allegations in the petition, the management terminals proposed by AWI meet the requirements of Part II at 3.4.2 MANAGEMENT TERMINALS. Contrary to the allegations in the petition, AWI's proposed retailer terminals can communicate through the existing system. More generally described, AWI has not misrepresented the benefits of its conversion plan in its proposal. Part II, Subsection 5.1 MARKETING SUPPORT calls upon the vendor to describe the type of support it would provide the Lottery, such as game ideas, etc. The petition alleges that AWI in its marketing proposal focused on schemes that were not viable options for the Lottery. At hearing it was revealed that this refers to the question of the legality of some of the proposals by AWI in its marketing solution. To conclude that the marketing requirements in the RFP contemplate proposal of illegal practices is an unreasonable construction. However, it has not been shown that any of the marketing proposals by AWI that fit that category unduly influenced the evaluators. Consequently, those aspects of the AWI marketing proposal, if illegal, are immaterial.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That a final order be entered that, Consistent with the fact finding and conclusions of law: Reconvenes the evaluation committee. Requires the committee to reevaluate and rescore Section 2 taking into account only those items that have been discussed in the recommended order as they influence the overall scores for that section. Requires the committee members to review Section 3 to the RFP, the proposals for Section 3, their notes on that section from all occasions, the expert testimony in the hearing transcript and by deposition about which they have not had exposure, and consistent with the methodology set forth in the recommended order requires the evaluators to rescore the proposals for Section 3. Requires AWI to amend its proposal for Subsection 4.6 consistent with the hearing record in relation to the EDS settlement. Requires the evaluators to rescore the AWI response to Subsection 4.6 at 4.6.1 and 4.6.2 taking into account the amendment. Requires the evaluators and in turn the Lottery to adjust the overall scores assigned the vendors under Part II based upon the outcome of the limited reevaluation. After engaging in the process, the results of the rankings should be posted and the vendors given the further opportunity to challenge the proposed agency action limited to the matters involved in the reevaluation. Section 120.57(3), Florida Statutes (1996 Supp.). Dismisses all other allegations by GTECH in the present case. DONE and ENTERED this 5th day of May, 1997, in Tallahassee, Florida. CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 5th day of May, 1997. COPIES FURNISHED: Thomas F. Panza, Esquire Mark A. Emanuele, Esquire PANZA, MAURER, MAYNARD & NEEL, P.A. 214 South Monroe Street, Suite 320 Tallahassee, FL 32301 Thomas F. Panza, Esquire Mark A. Emanuele, Esquire PANZA, MAURER, MAYNARD & NEEL, P.A. 3600 North Federal Highway Third Floor, NationsBank Building Fort Lauderdale, FL 33308 William H. Roberts, Esquire Susan P. Stephens, Esquire Department of Legal Affairs The Capitol Tallahassee, FL 32399-1050 Martha Harrell Chumbler, Esquire Michael P. Donaldson, Esquire Post Office Box 190 Tallahassee, FL 32302 Kevin E. O'Malley, Esquire GALLAGHER AND KENNEDY 2600 North Central Avenue Phoenix, AZ 85004 Kenneth H. Hart, General Counsel Lousia H. Warren, Esquire Department of Lottery 250 Marriott Drive Tallahassee, FL 32301 William R. Murray, Esquire WILLIAMS AND CONNELLY 725 12th Street Northeast Washington, DC 20005 Dr. Marcia Mann Secretary Department of Lottery 250 Marriott Drive Tallahassee, FL 32301
The Issue Whether the Department of Revenue should retain and apply the Petitioner's lottery prize to reduce an outstanding arrearage for child support.
Findings Of Fact The Respondents, the Department of Revenue and the Department of Lottery, are agencies of the State of Florida charged with the responsibility of administering and securing lottery prize winnings to apply to child support arrearages. The Petitioner, Frank Agoglia, was one of a group who completed a claim to a lottery prize in the amount of $7,509.50. The claim was timely submitted to the Department of Lottery, and the Petitioner was eligible to receive his share of the lottery prize. Before taxes, the Petitioner's share of the winning prize was $600.00. The Department of Revenue, acting pursuant to law, notified the Department of Lottery that the Petitioner owes court ordered child support in an amount exceeding the claimed prize. As provided in Section 24.115(4), Florida Statutes, the Petitioner's entire share of the lottery prize was transmitted to the Department of Revenue. The Petitioner was timely notified of the transfer. It is the intention of the Department of Revenue to apply the Petitioner's share of the winning prize to the outstanding child support arrearage. By letter dated March 3, 2001, the Petitioner challenged the transfer of the winning share to be applied to the arrearage. The Petitioner has not disputed the paternity of the child nor the child support obligations imposed by a court of law. It is also undisputed that the amount of the arrearage exceeds the Petitioner's share of the lottery prize. The Petitioner presented no evidence to support his contention that the lottery prize winnings should not be applied to the child support arrearage.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order retaining the Petitioner's lottery prize and to apply it to reduce the arrearage of child support owed by the Petitioner. DONE AND ENTERED this 23rd day of January, 2002, 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 23rd day of January, 2002. COPIES FURNISHED: Frank Agoglia 16460 Southwest 146th Court Miami, Florida 33177-1781 Chriss Walker, Esquire Department of Revenue Child Support Enforcement Post Office Box 8030 Tallahassee, Florida 32314-8030 Louisa Warren, Esquire Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 David Griffin, Secretary Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301 Ken Hart, General Counsel Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301
The Issue Whether Petitioner, the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, is authorized to charge and collect interest from Respondent, Florida Gaming Centers, Inc., on the unpaid value of the outsbook for the 1995-1996 meet from August 29, 1997, the date payment of the value of the outsbook was due, to September 8, 1998, the date payment was received by Petitioner.
Findings Of Fact At all times relevant hereto, the Respondent held a permit to conduct jai alai pari-mutuel wagering, under License No. 2909-D Amended, issued by the Department. Between July 1, 1995, and June 30, 1996, inclusive, Respondent held jai alai games for the purpose of conducting pari-mutuel wagering on those games. Respondent's meet for the relevant time period ended on June 30, 1996. One year and sixty days after the end of the State of Florida's (State) fiscal year of June 30, 1996, any "out" tickets that remained uncashed escheated to the State pursuant to Section 550.1645(2), Florida Statutes. Once these tickets or the value thereof escheated to the State, Respondent was required to pay the value of such tickets, as reflected on its outsbook, to the Department no later than August 29, 1997. Pursuant to the outsbook prepared by Respondent, the value of the outs for the 1995-1996 meet was $108,221.20. Nonetheless, Respondent failed to submit to the Department the value of the balance of the outsbook within the prescribed time frame and instead held these funds. On June 2, 1998, the Department served an Administrative Complaint on Respondent, alleging that Respondent had failed to timely submit the value of the outsbook to Petitioner. By letter dated September 4, 1998, Respondent submitted to the Department a check for $109,128.60 as payment for the unpaid value of Respondent's outsbook for the 1995-1996 meet. The Department received Respondent's payment on September 8, 1998. Of the total amount Respondent paid over to the Department, $108,221.20 was credited against the unpaid value of the outsbook for the 1995-1996 meet, resulting in full payment of the outstanding outsbook value. The remaining $907.40 paid by Respondent to Petitioner was an overpayment. Petitioner alleges that Respondent is responsible for interest accrued on the unpaid value of the outsbook for the period of time that amount remained unpaid. According to the Department, the interest owed by Respondent as a result of its failure to timely remit the value of the outsbook, "shall be determined at a rate per annum . . . equal to the State's average investment rate for the preceding month to the month for which interest is being calculated." The average interest rate earned on the investment of State funds as determined by the State Treasurer and/or Comptroller" for the time period of August 1997 through August 1998, was 6.73 percent. The Department determined that the interest "shall accrue on the unpaid aggregate principal amount due the State for the month(s) from the respective due date." Based on its calculations and after deducting Respondent's overpayment of $907.40, the Department asserts that Respondent owes the Department approximately $6,573.85 in accrued interest. Respondent disputes that the Department has authority to collect interest on the unpaid amount of the outsbook and alleges the powers of the Department under Section 550.0251, Florida Statutes, do not include such authority.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that (1) an administrative fine of $1,000.00 be imposed against the Respondent for the violation Section 550.1645, Florida Statutes; and, (2) Respondent shall receive a credit of $907.40 toward payment of the administrative fine. RECOMMENDED this 28th day of January, 1999, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 1999. COPIES FURNISHED: Deborah R. Miller, Director Division of Pari-Mutuel Wagering Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 William P. Cagney, III, Esquire 3400 Financial Center 200 South Biscayne Boulevard Miami, Florida 33131 Eric H. Miller, Esquire Chief Assistant General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 William Woodyard Acting General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether Willie J. Thompson is entitled to the $5,000.00 prize for a winning lottery ticket presented by Mr. Thompson to the Department of the Lottery for collection?
Findings Of Fact Horace Bell purchased lottery ticket number 04-202290-059 (hereinafter referred to as the "Ticket") on approximately December 11, 1988. The Ticket was an instant winning ticket in the amount of $5,000.00, in the Florida Lottery's Money Tree Instant game. Willie J. Thompson drove Mr. Bell, his wife and other family members to Tallahassee on December 12, 1988, to file a claim for the prize. Upon arriving at the Lottery's offices Mr. Bell found that he did not have proper identification. Therefore, he allowed Mr. Thompson to present the ticket for collection because Mr. Thompson had proper identification. On December 12, 1988, Mr. Thompson completed a Florida Lottery Winner Claim Form (hereinafter referred to as the "Form") and submitted the Form and the Ticket to the Lottery. On the back of the Ticket Mr. Thompson listed his name and address on the spaces provided for the person claiming the prize and signed the Ticket. Mr. Thompson listed his name, Social Security Number, address and phone number on the Form. Mr. Thompson signed the Form as the "Claimant." In a letter dated December 12, 1988, DHRS notified the Lottery that Mr. Thompson owed $4,026.40 in Title IV-D child support arrearages as of December 12, 1988. Mr. Thompson has been paying his child support arrearages by having $30.00 taken out of each of his pay checks. The $5,000.00 prize was forwarded from the Lottery to the Comptroller on December 12, 1988. By letter dated December 20, 1988, Mr. Thompson was notified that the $5,000.00 prize for the Ticket he submitted was being transmitted to the Comptroller for possible payment of his Title IV-D child support arrearages. Mr. Thompson was notified by the Comptroller by letter dated December 28, 1988, that the Comptroller intended to apply $4,026.40 of the $5,000.00 prize toward his unpaid obligation. Mr. Thompson was provided a state warrant for the $973.60 balance of the $5,000.00 prize. Mr. Thompson requested a formal administrative hearing to contest the proposed action of the Comptroller. Mr. Thompson's total obligation as of the date of the formal hearing had been reduced by the court-ordered $30.00 payments he has made since December, 1988. As of the date of the formal hearing, Mr. Thompson's total obligation was $3,335.60. His obligation will reduce further by payments made up until the date of the issuance of a Final Order in this matter. Mr. Thompson should be given credit for these additional payments.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it Is RECOMMENDED that a Final Order be issued providing for payment of the portion of the $5,000.00 prize attributable to the Ticket owed by Mr. Thompson as child support arrearages as of the date of the Final Order to DHRS. The balance of the $5,000.00 prize should be paid to Mr. Thompson. DONE and ENTERED this 21st day of June, 1989, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of June, 1989. APPENDIX Case Number 89-1102 The Petitioners have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioners' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1. 1. 2. 2-3. 3. 4 and 6. 4 7. 5 9. 6 11. 7 13. 8-9 Conclusions of law. COPIES FURNISHED: Jo Ann Levin Senior Attorney Office of Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Louisa E. Hargrett Senior Attorney Department of the Lottery 250 Marriott Drive Tallahassee, Florida 32301 Chriss Walker Senior Attorney Department of Health and Rehabilitative Services 1317 Winewood Boulevard Tallahassee, Florida 32399-0700 Willie J. Thompson Post Office Box 3655 Jacksonville, Florida 32206 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts General Counsel The Capitol, Plaza Level Tallahassee, Florida 32399-0350
The Issue Whether the Department of Revenue may retain Petitioner's after-tax lottery prize of $4,074.50 and apply it to reduce the outstanding arrearage for child support in the amount of $11,050.00 as of October 23, 2002.
Findings Of Fact DOR and DOL are the agencies of the State of Florida charged with the duty for the administrative enforcement of the intercept of lottery prize winnings to satisfy past due child support debt. Petitioner made a claim to a lottery prize in the amount of $4,074.50 after-tax on or about May 28, 2002. DOR notified DOL that Petitioner was indebted to the state for court-ordered child support through the court depository and administrative cost in the amount of $13,049.25. Pursuant to Section 24.115(4), Florida Statutes, Petitioner's entire lottery prize in the amount of $4,074.50 after-tax was transferred to DOR by DOL. Petitioner was given written notice on May 30, 2002, of the DOR's intent to intercept his lottery prize in the amount of $4,074.50, it had received from DOL, and apply it to partially satisfy his unpaid child support debt. Petitioner requested a formal hearing pursuant to Section 120.57(1), Florida Statutes, regarding the final decision by DOR to retain the $4,074.50 and apply it to the certified child support debt. Petitioner disputes the claim by DOR that he owes child support that is being collected through a court. On October 19, 1984, Catherine Siler, the custodial parent of the children, signed a non-AFDC application for child support enforcement with the Florida Department of Health and Rehabilitative Services, the predecessor to DOR. On October 19, 1984, DOR filed a Uniform Reciprocal Enforcement of Support Act (URESA) petition with the Clerk of Court in Escambia County, Florida, to be forwarded to Indiana. On October 26, 1984, the Escambia County Clerk of Court requested that the Indiana court issue an order to require child support payments to be paid through the Escambia County, Florida Clerk of Court Depository. On May 24, 1985, the Indiana court entered an order requiring the child support payments in the case of Catherine Silver v. Gregory Aull be paid through the Escambia County, Florida Clerk of Court Depository. Florida has received and continues to receive child support payments from Petitioner on behalf of Catherine Siler. At a May 8, 1998, hearing, the Indiana court determined that Petitioner had a support arrearage of $23,009.00. The Indiana court ordered Petitioner to pay the arrearage at the rate of $50.00 per week beginning May 15, 1998. The order required Petitioner to execute a voluntary Wage Withholding Order. Petitioner consistently made payments toward the arrearage and on May 28, 2002, Petitioner had a child support arrearage in the amount of $13,049.25. On October 23, 2002, Petitioner had an arrearage of $11,050.00. DOR intends to apply Petitioner's lottery prize in the amount of $4,074.50 to partially satisfy his past due child support debt.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a Final Order wherein it retains the $4,074.50 lottery prize of Petitioner and apply it to reduce the accrued arrearage of $11,050.00 as of October 23, 2002. DONE AND ENTERED this 31st day of December, 2002, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER 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 31st day of December, 2002. COPIES FURNISHED: Gregory J. Aull 107 Georgia Avenue St. Cloud, Florida 34769 Chriss Walker, Esquire Child Support Enforcement Department of Revenue Post Office Box 8030 Tallahassee, Florida 32314-8030 Louise Warren, Esquire Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Background On March 12, 1991, the Department of Lottery (Department) issued Request for Proposal No. 91-007-LOT/TEN/P entitled "Request for Proposal for the Provision of Advertising and Related Services to the Florida Lottery" (hereafter "the RFP"). The deadline for submitting sealed proposals in response to the RFP was established as April 22, 1991, but extended to April 29, 1991, by Amendment 3 to the RFP. At the time of the deadline, ten proposals had been filed, including those of petitioner, Bozell, Inc. (Bozell), and intervenors, Earle Palmer Brown (EPB) and BBDO South (BBDO). By "Notice of Selection of Finalists," dated May 1, 1991, and posted at the Department's headquarters, the Department advised all bidders that: After review of written proposals submitted in response to the subject RFP, the Florida Department of the Lottery's Evaluation Committee has ranked the responsive proposals in the following order of preference: Ogilvy & Mather Earle Palmer Brown BBDO South Bozell W.B. Doner Fahlgren Martin Benito West & Company Beber Silverstein LMPM The Ad Team In accordance with Section 5.3 of the RFP, the Department intends to conduct oral presentations with the following firms for the purpose of determining final rankings: Ogilvy & Mather Earle Palmer Brown BBDO South Bozell W.B. Doner Pursuant to Florida Statute and Rule 53ER87-16, failure to file a formal written protest and the bond required by Section 287.042(2)(c), Fla. Stat., with the Secretary within 72 hours shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. Here, there was no showing that any protest was timely filed to contest the Department's selection of the five finalists. The five finalists made oral presentations to the evaluation committee on May 7 and 8, 1991, and their cost proposals were opened and scored on May 8, 1991. At the conclusion of its work, the committee awarded EPB an average total score of 174.550 and Bozell an average total score of 171.150; 200 points was the maximum total possible. By notice dated Wednesday, May 8, 1991, at 8:07 p.m., the Department issued its "Notice of Intent to Negotiate a Contract" ranking the top five firms in the following order of preference: (1) EPB, (2) Bozell, (3) Ogilvy & Mather; BBDO; and (5) W.B. Doner. Bozell filed its formal written protest and petition for formal administrative hearing with the Department of Monday, May 13, 1991, at 4:29 p.m. The Request for Proposals The RFP consists of the original RFP issued by the Department, three amendments, and the Department's response to various written questions submitted by potential bidders. Pertinent to this case, the RFP provided: SECTION 1: GENERAL INFORMATION Introduction. This Request for Proposal ("RFP") has been issued by the Florida Department of Lottery ("Lottery") to obtain sealed proposals from qualified firms for the provision of advertising and related services to the Florida Lottery. This RFP, and all other activities leading toward the execution of a contract per this RFP, are conducted under the Lottery policies set forth in Rules 53ER87-10 through 53ER87-19, Florida Administrative Code, and Chapter 24, Fla. Stat. The Lottery considers it in the best interest of the State of Florida to procure the commodities/services described herein through a competitive process. All responding firms should read and be familiar with the Florida Public Education Lottery Act [Chapter 24, Fla. Stat.] to ascertain an understanding of the purposes and requirements placed on the Lottery. A copy of Chapter 24, Fla. Stat., is attached to this RFP. This proposed purchase is a Major Procurement as defined in Section 24.103, Fla. Stat. (1989). Glossary of Terms. * * * Responsive Proposal - Refers to a proposal which contains, in the manner required by this RFP, all documentation, drawings, information, plans, materials, certifications and affirmations, regardless of which section of the RFP sets forth the particular requirements. * * * Questions About This RFP. * * * If revisions to this RFP are necessary after the closing date for submitting proposals, the revisions will be provided to only those Respondents who have submitted Responsive Proposals and have met the basic requirements of this RFP. Such Respondents will then have the opportunity to modify their proposals in conformance with the revisions. Timetable The following timetable will be strictly adhered to in all actions relative to this procurement. * * * All proposals will be opened by Lottery employees at 2:00 p.m. on April 22, 1991 [extended to April 29, 1991, by Amendment 3] in the Purchasing Office at the aforesaid Lottery Headquarters. The public may attend the opening but may not review any proposals submitted. The evaluation process will begin immediately following the proposal opening. The Evaluation Committee will rank the proposals in order of preference based on the evaluation of the technical proposals in accordance with the criteria specified herein. Notice of selection of finalists shall be posted at the Lottery's headquarters. If more than five Responsive Proposals are submitted, at least the five top firms which have submitted Responsive Proposals will be selected for oral presentations to be made in Tallahassee, Florida, at the Lottery's Headquarters. Oral presentations are tentatively scheduled for the week of April 29, 1991 [extended to the week of May 6, 1991, by Amendment 3] . . . . The Evaluation Committee will score the oral presentations and then open and score the cost proposal. The final rankings will be determined based on the evaluation of the technical proposals, oral presentations and cost proposals. Notice of Intent to negotiate with the highest ranked firm will be posted at the Lottery's headquarters. If negotiations with the highest ranked firm are not successful, the Lottery may negotiate with the other listed firms in descending order of rank. Upon successful conclusion of negotiations with a Respondent, a Notice of Award of Contract will be posted at the Lottery's headquarters. * * * 1.12. Proposal Submission. It is the Respondent's responsibility to ensure that its proposal is delivered by the proper time at the place of the proposal opening.... * * * 1.14 Correction or Withdrawal of Proposal. A correction to, or withdrawal of, a proposal may be requested within 72 hours after the proposal opening time and date. Requests received in accordance with this provision may be granted by the Lottery upon proof of the impossibility to perform based upon an obvious error. The Lottery, in its sole discretion, will determine whether a bid may be corrected or withdrawn. Interpretations/Disputes. Any questions concerning conditions and specifications of this RFP shall be directed in writing to the Issuing Officer in the manner provided in Sections 1.8 and 1.9 of this RFP. Inquiries must reference the bid number and the date of proposal opening. No interpretation shall be considered binding unless provided in writing by the Lottery. Any prospective Respondent who disputes the reasonableness or appropriateness of the terms, conditions, and specifications of this RFP shall file a formal written protest in appropriate form within 72 hours of the availability of answers to questions as provided in Section 1.9 of this RFP. Any Respondent who disputes the Lottery's Notice of Selection of Finalists, Notice of Intent to Negotiate, or Notice of Award of Contract, shall file a formal written protest in appropriate form within 72 hours of the notices. Any person who files a formal written protest shall, at the time of filing the formal written protest, post a bond as set forth in Section 287.042(2)(c), Fla. Stat. Failure to file both a protest and bond within the time prescribed in Rule No. 53ER87-16, Florida Administrative Code, shall constitute a waiver of proceedings under Chapter 120, Fla. Stat. Legal Requirements. Applicable provisions of all federal, state, county, and local laws and administrative procedures, regulations, or rules shall govern the development, submittal and evaluation of all proposals received in response hereto and shall govern any and all claims and disputes which may arise between persons submitting a proposal hereto and the Lottery. Lack of knowledge of the law or applicable administrative procedures, regulations or rules by any Respondent shall not constitute a cognizable defense against their effect. * * * Purpose and Overview. A. In accordance with Chapter 24, Fla. Stat., the Florida Department of the Lottery has been charged with the responsibility "to operate the state lottery . . . so as to maximize revenues in a manner consonant with the dignity of the state and the welfare of its citizens." The Contractor will support the Lottery in its mission by providing the advertising services set forth in Section 2.2. The goal of these services is to maximize the sale of tickets, enhance the public image and visibility of the Lottery, and assist in communicating the intent that Lottery proceeds enhance education . . . . Scope of Services. The Contractor shall be the principal advisor and provider to the Lottery for the following advertising and services: Development of strategic advertising plan; Creative strategy, creation and production of all advertising (including television, radio, print, transit and outdoor); Placement of all print, radio, television, transit and outdoor advertising at the lowest competitive rate; Coordination of and contracting for televised broadcasts of lottery drawings; Ticket design; Creation and production of point-of- sales material; Media plans; Educational, promotional and other related activities as directed. The Technical Proposal. The objective of the technical proposal is to demonstrate the Respondent's understanding and proposed method of rendering the requested services. Each Respondent shall provide a written statement of the firm's understanding of the services requested herein as well as a detailed written plan outlining how the firm proposes to go about providing the services set forth in Section 2.2. At a minimum, the technical proposal shall consist of the following information and materials: * * * E. Firm Qualifications. At a minimum, each Respondent must provide the following information which demonstrates the Respondent's ability to provide the services requested: * * * 4. Resumes not to exceed one page each in length of all personnel who would be assigned major roles in the fulfillment of the work obligation outlined in Section 2.2, with a statement identifying the percentage of time, calculated annually, of each person who will work on the Lottery account. * * * 12. Certified financial statements in customary form for the last three (3) fiscal years including an auditor's report. Certified financial statements must be the result of an audit of the Respondent's records in accordance with generally accepted auditing standards by a certified public accountant . . . . * * * 18. List of type and number of additional employees that may be needed if awarded contract. * * * 33. Disclosure information required by and listed in Section 24.111, Fla. Stat. * * * Section 3: INFORMATION REQUIRED FROM RESPONDENT 3.1. GENERAL INSTRUCTIONS. * * * D. Technical proposals must include the following information, be limited to not more than 100 pages (not including cover sheet, table of contents, divider pages, creative materials or resumes) and be presented in the following sequence: * * * Vendor Information Form (Attachment B). * * * Performance bond commitment letter required by Section 6.6. All material or information required to be submitted as part of the technical proposal required by Section 2.3. * * * 13. Any other material or information required by this RFP. * * * 3.4 Use of Subcontractors. If a Respondent proposes to use one or more subcontractors, the proposal must identify the contemplated subcontractor(s) and the scope of the subcontractor's services, and must include evidence of each subcontractor's ability to fulfill its respective duties on behalf of the Respondent. Respondent must also provide the information required by Section 24.111(2), Fla. Stat., for each subcontractor as if the subcontractor were itself a vendor. * * * 3.6 Additional Information and Comments. Respondent shall not submit with their written proposals material beyond that which is covered in the 100-page technical proposal (not including cover sheet, table of contents, divider pages, creative materials or resumes), plus creative comps and samples, resumes of key personnel and the separate cost proposals. The Lottery reserves the right to request additional information from a Respondent in order to make a thorough review and fair comparison of all proposals submitted.... Section 4: MANDATORY REQUIREMENTS Terms. The Lottery has established certain mandatory requirements which must be included as part of any proposal. The use of the terms "shall," "must" or "will" (except to indicate simple futurity) in this RFP indicate a mandatory requirement or condition. The words "should" or "may" in this RFP indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature will not by itself cause rejection of a proposal. 4.2 Non-responsive Proposals. Proposals which do not meet all material requirements of the RFP or which fail to provide all required information, documents, or materials will be rejected as non- responsive. Material requirements of the RFP are those set forth in Section 3.1 and without which an adequate analysis and comparison of proposals is impossible. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP and to accept proposals which deviate from the requirements of the RFP in a minor or technical fashion as determined by the Lottery. SECTION 5: PROPOSAL REVIEW AND CRITERIA FOR SELECTION 5.1. Proposal Submission. Only proposals submitted in the time frame stated herein and with the content required above will be reviewed and considered by the Lottery. A copy of Chapter 24, Florida Statutes, was attached to the RFP, and Section 24.111, Florida Statutes, was specifically referenced in Sections 2.3.E.33 and 3.4 of the RFP. The vendor information form itself referenced the requirements of Section 24.111(2), Florida Statutes. In accordance with RFP Section 1.8, EPB submitted the following question, among others, to the Department: "Does Attachment B [Vendor Information Form] need to be completed by all company officers?" The Department answered "Yes, see question #8, BBDO Atlanta, letter dated March 26, 1991." The referenced answer to BBDO Atlanta emphasized that "a vendor information form must be completed by each person listed in the instructions on the form [all officers, all directors, all owners, all partners, all trustees, all stockholders holding five percent or more, executive director and chairman of the board]." Even section 1.27 of the RFP required that vendor information forms be submitted to the Department prior to or at the time of submitting the proposal. Responsiveness of proposals Under the terms of the RFP, Sections 5.1 and 5.2, the Department was not to consider and evaluate non-responsive proposals. Non-responsive proposals are defined by Section 4.2 of the RFP as follows: Proposals which do not meet all material requirements of this RFP or which fail to provide all required information, documents, or materials will be rejected as non- responsive. Material requirements of the RFP are those set forth in Section 3.1 and without which an adequate analysis and comparison of proposals is impossible. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP and to accept proposals which deviate from the requirements of the RFP in a minor or technical fashion as determined by the Lottery. At the time it submitted its proposal, EPB did not submit the vendor information forms required by subsections 2.3E33, 3.1 and 3.4 of the RFP and by Section 24.111(2), Florida Statutes, for at least three of its corporate officers or directors (Sally Brown, Louise Smoak, and Robert Morse), and did not submit any vendor information forms for its designated subcontractor, Premier Maldonado & Associates. The Department, through its counsel, first requested submission of these forms from EPB on May 8, 1991, the date on which the Notice of Intent to Negotiate was posted. EPB did not supply the missing forms for Premier Maldonado & Associates until May 14, 1991, and for the three corporate officers or directors until on or about May 29, 1991. The RFP required that the vendor information forms be submitted with the proposal, and Section 24.111(2), Florida Statutes, provided in mandatory language that: The Department shall investigate the financial responsibility, security, and integrity of any person who submits a bid proposal or offer as part of a major procurement. Any person who submits a bid proposal or offer as part of a major procurement must, at the time of submitting such bid proposal or offer, provide the following: A disclosure of the vendor's name and address and, as applicable, the name and address of the following: If the vendor is a corporation, the officers, directors, and each stockholder in such corporation, except that in the case of owners of equity securities of a publicly traded corporation, only the names and addresses of those known to the corporation to own beneficially 5 percent or more of such securities need be disclosed. If the vendor is a trust, the trustee and all persons entitled to receive income or benefit from the trust. If the vendor is an association, the members, officers, and directors. If the vendor is a partnership or joint venture, all of the general partners, limited partners, or joint ventures. If the vendor subcontracts any substantial portion of the work to be preformed to a subcontractor, the vendor shall disclose all of the information required by this paragraph to the subcontractor as if the subcontractor were itself a vendor. (Emphasis added) The Department, at hearing offered proof that it did not consider the language of the RFP or Section 24.111(2), Florida Statutes, to require that all such forms be submitted at the time the proposal is submitted, and that it had been the Department's policy to allow bidders to submit additional forms after bid submission. The articulated rationale for such policy is that based solely on the proposals or, stated differently, absent investigation, the Department is unable to assure itself that forms for all required individuals are submitted with any proposal. Accordingly, the Department considers the omission of such forms a technical deficiency that can be cured up to the point of contracting, and limits its investigation to the successful bidder. While the Department may find it difficult, absent investigation, to assure itself that the vendor information mandated by section 24.111(2) is submitted with the proposal, the mandate of section 24.111(2) and the RFP is clear and unequivocal: such information "must" be submitted with the proposal. Notably, under the provisions of the statute and RFP, the onus is on the bidder, the party privy to such information, to assure that its disclosure is complete and where, as here, its disclosure is not complete its bid is non-responsive, since it is at variance with the mandate of section 24.111(2) and the RFP. Importantly, under the requirements of section 24.111(2), the Department is precluded from contracting with any bidder who fails to submit the required vendor information. Accordingly, a successful bidder who, wittingly or unwittingly, failed to make the required disclosure (such as EPB in the instant case) could subsequently decline to provide the Department with the information and thereby effectively withdraw its bid, contrary to the provisions of section 1.14 of the RFP. Such renders the failure to submit the required information at the time of bid submittal a material defect, since it accords such bidder an advantage not enjoyed by other bidders that submitted the required information. In accordance with subsection 3.1D9 of the RFP, each bidder was required to submit with its technical proposal the performance bond commitment letter required by section 6.6 of the RFP. Section 6.6, as amended by Amendments 1 and 3, provided, in pertinent part: The successful Respondent shall be required, at the time of executing the Contract with the Lottery, to post an appropriate performance bond or other security acceptable to the Lottery in the amount of $2.5 million . . . The other acceptable forms of security are: irrevocable letter of credit; Certificate of Deposit assigned to the Lottery (which must be obtained from a financial institution having its principal place of business in the State of Florida) . . . . Respondents must submit with their proposal evidence that they will be able to provide the performance bond or other security. Such evidence may include, but is not limited to, a letter from an authorized agent of a bonding company committing to provide the performance bond or indicating that the bond underwriter is processing a request to provide the bond and stating unequivocally that the bond will be available upon execution of the Contract. At the time it submitted its proposal, EPB submitted an April 25, 1991, letter addressed to it from Sovran Bank as evidence of its ability to provide the required security. That letter provided: As follow up to our conversation yesterday, the company can restrict its revolving line of credit by $2,500,000 (Two Million Five Hundred Thousand Dollars) for a Letter of Credit of the same amount. The alternative is to apply for the Letter of Credit as a separate facility. The particular terms and conditions of the Letter of Credit would be worked out at the time of application . . . . While of the opinion that the Sovran letter evidenced EPB's ability to provide the required security, the Department likewise felt that the letter failed to evidence any commitment on EPB's part to restrict its line of credit to secure the subject letter of credit. Accordingly, it requested additional information from EPB, and by letter of May 1, 1991, EPB responded: This is to clarify the language in the Sovran Bank letter of April 25, 1991, included as Page 9 in Earle Palmer Brown's Proposal . . . Should Earle Palmer Brown be a successful respondent we will, at the time of executing the contract with the Lottery, either restrict our revolving line of credit with Sovran Bank by $2,500,000.00 for an irrevocable letter of credit, or will provide the Lottery with a surety bond for a like amount. The letter of May 1, 1991, adds more confusion than enlightenment regarding EPB's commitment to provide a letter of credit. Clearly, under the provisions of subsection 6.6 of the RFP, EPB's bare assurance that it would, alternatively, provide the Department with a surety bond was not acceptable evidence of its ability to provide such bond. As importantly, by phrasing its proposal as an alternative, to be exercised at its discretion, EPB lent confusion to the issue of what form of security it would provide. Notwithstanding, the requirement of the RFP was that the bidders "submit with their proposals evidence that they will be able to provide the . . . security," and the letter of April 25, 1991, while perhaps sparse, is facially adequate in that regard. Notably, the proof in this case confirms that EPB does have an adequate credit line with Sovran Bank which could be so restricted for a $2.5 million irrevocable letter of credit. In accordance with section 2.3E12 of the RFP, each bidder was required to submit with its technical proposal "certified financial statements in customary form for the last three (3) fiscal years including an auditor's report." In response to a question submitted pursuant to section 1.8 of the RFP, which asked: "If a company does not have certified financial statements for the last three years as required by Section 2.3.E.12 of the RFP, will it be disqualified from submitting a proposal?", the Department answered: "No. Although the absence of certified financial statements would render the proposal nonresponsive." At the time EPB submitted its proposal, it submitted certified financial statements for fiscal years 1986, 1987, 1988 and 1989. As EPB's fiscal year is the calendar year, its auditors had not yet completed their audit for fiscal 1990 by the response deadline. When EPB's certified financial statement for its fiscal 1990 became available on May 14, 1991, it promptly delivered a copy to the Department. While the RFP required financial statements for the last three fiscal years, the Department understood that a bidder's ability to provide such statements would depend on when its fiscal year closed. In this regard, it is common for an independent audit to require up to six months following the close of a fiscal year. Here, EPB was faced with exactly such a dilemma, specifically disclosed such dilemma in its proposal, and provided the financial statements for the last four fiscal years that were available to it. Under such circumstances, it cannot be concluded that the Department departed from the essential requirements of law when it declined to declare EPB's proposal non- responsive for its failure to include a certified financial statement for fiscal 1990, and accepted, as satisfying the requirements of the RFP, financial statements for the last three fiscal years that were reasonably available to EPB. In accordance with the RFP, each bidder was to identify all personnel who would be assigned major roles in the fulfillment of work under the contract. Pertinent to this case, subsection 2.3E provided: At a minimum, each Respondent must provide the following information which demonstrates the Respondent's ability to provide the services requested: * * * 4. Resumes not to exceed one page each in length of all personnel who would be assigned major roles in the fulfillment of the work obligation outlined in Section 2.2, with a statement identifying the percentage of time, calculated annually, of each person who will work on the Lottery account. * * * 18. List of type and number of additional employees that may be needed if awarded contract. At the time EPB submitted its proposal, it identified twenty-four key positions in account service, creative, media and several other categories. As to the management supervisor, the employee is identified as "selected," and as to an account executive and public relations supervisor, the employee is identified as "TBD" (To Be Determined). All other positions were identified with specific individuals and resumes were included for each. Here, Bozell contends that EPB's proposal is non-responsive because EPB did not name and include resumes for the foregoing three positions. Such contention is, however, unpersuasive. Section 2.3E18 clearly contemplated that some bidders would have to hire additional personnel if awarded the contract, and EPB complied with that section of the EPB by identifying such positions. Accordingly, EPB's proposal was not at material variance from the RFP in this regard. Although the Department's "Notice of Selection of Finalists," dated May 1, 1991, discussed supra, purported to rank the "responsive proposals" in order of preference, the proof demonstrates that the evaluation committee, who was charged with such responsibility, did not, by consensus or otherwise, ever determine the responsiveness of any proposal. Here, for the reasons heretofore set forth, EPB's proposal was non-responsive to the RFP, and the committee's failure to address the issue of responsiveness prior to scoring the proposals, for reasons discussed infra, materially affected the fairness of the evaluation process. Bozell's proposal was, however, responsive to the RFP. 2/ The evaluation committee Pursuant to Rule 53ER87-13(5)(i)(2), Florida Administrative Code, and Section 5.3 of the RFP, the Secretary of the Department appointed an evaluation committee, consisting of six members, to evaluate the proposals which were received from interested firms. Regarding the composition of such committee, the Department advised all prospective bidders, in response to a question posed pursuant to Section 1.8 of the RFP, that: The Evaluation Committee will be comprised of Lottery staff and volunteers from a cross- section of Florida business and academic communities. Subsequently, by notice of April 16, 1991, the Department advised all prospective bidders that the members of the evaluation committee would be as follows: Bernard Edwards Deputy Secretary Marketing Department of the Lottery Tallahassee, Florida Ben Johnson Newspaper Columnist Homles Beach, Florida Robert W. McKnight Assistant Secretary Department of Lottery Tallahassee, Florida Richard Mizerski Professor Tallahassee, Florida John Ruchalski Retired Businessman Jupiter, Florida Alan Sawyer Professor Gainesville, Florida Of the six committee members, only two, Bernard Edwards and Robert W. McKnight, were employees of the Department. No objection to the composition of the committee was lodged until the filing of the subject protest; however, there was likewise no point of entry provided by the Department to challenge the composition of the committee. Robert W. McKnight, who chaired the committee, has been employed by the Department as Assistant Secretary since March 4, 1991, and in such capacity has been responsible for the day-to-day operations of the Department. Mr. McKnight holds a B.S. and M.B.A. degree in business administration, with concentrations in advertising, and has in excess of fifteen years experience in marketing. Throughout the course of such employments, as well as his tenure as a Florida legislator, he has had the opportunity to monitor or supervise the work of advertising agencies employed to advance his products or person. Bernard Edwards, currently Deputy Secretary for Marketing of the Department, has been with the Department since 1988. During that tenure, he has filled, at various times, all three deputy secretary positions (operations, administration and marketing), and has participated in the advertising operations of the Florida lottery. Prior to his employment with the Department, Mr. Edwards was Executive Director of the Washington, D.C., lottery, and from 1983 to 1987 Deputy Executive Director of the Pennsylvania State lottery. During the course of such employments, Mr. Edwards has acquired significant experience in the marketing of lottery products, and the advertising incident thereto. Alan Sawyer is a Professor of Marketing and Chairman of the Department of Marketing of the University of Florida in Gainesville, and holds a Ph.D. from Stanford University in marketing. In addition to his teaching and research, Dr. Sawyer has worked with the Federal Trade Commission, as well as numerous other clients, on advertising matters, including matters of advertising deception, and is a recognized expert in advertising and marketing. Ben Johnson is a Doctoral Teaching Associate and Adjunct Professor at the University of South Florida where he teaches upper division and graduate College of Education courses in methods of teaching English, reading, and learning skills. In addition to teaching, Mr. Johnson has, for some years, been researching the lottery operations of various states. As a consequence of the knowledge he has gained concerning those operations he has written a book, The Lottery Book, scheduled for publication in September 1991, which provides general information for players of various state lotteries, and has a nationally syndicated newspaper column called "The Lottery Column" wherein he answers readers' questions regarding lottery operations. From such experience, Mr. Johnson has developed a knowledge of lottery operations, as well as an appreciation for effective lottery marketing and advertising. John Ruchalski, currently retired, holds a degree in business and marketing, and has 35 years of retail management experience. Of those years, 17 were spent as Senior Vice President of Burdines, three as Chief Executive Officer of Bullock's, and two as president of Bloomingdale's. Mr. Ruchalski's past activities have also included service as president of the Florida Chamber of Commerce and chairman of the board of the Florida Retail Federation. In all, the proof shows that Mr. Ruchalski has a strong marketing background, and a familiarity with the advertising needs incident to such operations. The final member of the committee, Richard Mizerski, is a Professor of Marketing at Florida State University, and holds a Ph.D. from the University of Florida in Economics and Business Administration, with a major concentration in marketing and a minor concentration in advertising. Dr. Mizerski, like Dr. Sawyer, has, in addition to his teaching and research, extensive consulting experience in marketing and advertising, and is a recognized expert in the field. Overall, the proof demonstrates that the composition of the evaluation committee was appropriate for the work it was tasked to do, and that it had adequate time to perform an appropriate evaluation. Each committee member had experience and knowledge in marketing, and advertizing incident thereto, and lent to the evaluation process common and diverse experiences in such areas which helped provide a balanced consideration of the proposals. As importantly, each was shown to be committed to the integrity of the process, and complied with the provisions of Section 286.011, Florida Statutes, by assuring that all committee meetings at which official acts were to be taken were conducted publicly, and by not discussing any matter pertaining to their evaluations with any other member except during meetings that had been properly noticed. Market research data Prior to reviewing the proposals, one or more of the committee members requested information from the Department that would accord them insight into the program area. In response to such request, the Department provided each committee member with the market research data it had available. Such data provided demographic insight into Florida lottery marketing operations. At hearing, Bozell complained that it was never informed that the market research data had been provided to the committee, and offered proof, if credited, that had it known such fact it would have drafted its proposal differently. Such proof was not, however, persuasive, nor was the provision of such information to the committee inappropriate. Here, the proof demonstrates that the data provided by the Department was a matter of public record, and many of the committee members, through their research and training, were already familiar with it prior to their appointment. Bozell, as the current provider of advertising services to the lottery, was very familiar with the data, its subcontractor had complied it, and Bozell used it extensively in its proposal. In sum, Bozell was not disadvantaged by the provision of such data to the committee, and it was not treated any differently than any other bidder in this regard. As importantly, the provision of such information to the committee to lend insight into the program area for which services were being sought was quite appropriate to the evaluation process. Technical proposed evaluation Section 2.3 of the RFP describes the items required to be submitted with a firm's technical proposal, and was designed to assess a firm's understanding and proposed method of rendering the services requested by section 2.2 of the RFP. It provides that, "at a minimum," the proposal shall contain the information and materials requested by subsections 2.3A through 2.3E. Subsection 2.3A required submittal of a proposed advertising approach for the Florida lottery which addresses a three-year summary outline advertising plan, to include recommendations for advertising and promotion, and a proposed one-year timetable for advertising, showing development of creative, production, approval, placement and run-time. Subsection 2.3B required comprehensive artistic representations consisting of a detailed media plan for an eight-week Florida lottery instant game within a $1,250,000 budget; a name, ticket design and prize structure for the instant game; a 30-second radio spot for the instant game; a print ad for newspaper or magazine placement for the game; and a point- of-sale example for the game. Subsection 2.3C required one complete advertising campaign representative of the firm's work, including budget, creative strategy, positioning, media strategy and execution, and post-buy analysis. Subsection 2.3D required creative samples previously produced by key members of the proposed creative team consisting of TV ads, radio ads, print ads, outdoor campaigns, and point-of-sale samples. Finally, subsection 2.3E, entitled "firm qualifications," required, "at a minimum," information concerning 33 specific items, "which demonstrates the [firm's] ability to provide the services requested." Among the items for which information was required were the following: 3. Brief and concise statement of Respondent's advertising philosophy, taking into consideration the following points and others that you may feel are appropriate: Method the Respondent uses for developing advertising. How the Respondent currently measures the effectiveness of its advertising. * * * Evidence of any work done for a state, multi-state, national or provincial lottery. Information regarding any advertising or other experience with state agencies and other governmental entities. * * * 12. Certified financial statements in customary form for the last three (3) fiscal years including an auditor's report . . . . * * * 29. Discussion of contributions that your firm could make toward the growth of the Lottery. Section 5.4 of the RFP set forth the general criteria by which a firm's response to subsections 2.3A-E would be evaluated. Such general criteria were the overall qualifications, experience and abilities of the firm, its staff, and contractors to provide timely and professional advertising and related services, determined by evaluating the information contained in subsection 2.3E; and, the relative creativity, approach, quality and thoroughness of the firm's proposed plans directed toward subsections 2.3A-D of the RFP. Such section concluded: "The evaluation worksheet for the technical proposal is attached as Attachment F." Attachment F to the RFP set forth the specific criteria by which a firm's response would be evaluated. That attachment provided as follows: This evaluation considers information submitted in the technical proposal. Emphasis is placed on the firm's qualifications and ability to do the work, which is addressed in the Technical Proposal. A total of 80 points is obtainable. The Technical Proposal shall be evaluated in accordance with the following criteria: Overall Ability - 40 points maximum Do the resumes of the account team support the Respondent's competency to provide the services required by Section 2.2? Proposed Account Team: Is the team make-up appropriate for the work? Do the team members have experience with comparable work? Are there any sub-contracted firms involved? Are minority sub-contractors utilized? Are the hours assigned to the various team members for each task appropriate? Has the Respondent provided advertising services of the scope required in the past? Experience of the Respondent and staff providing advertising service within the State of Florida. Experience of the Respondent and staff in providing Lottery, pari- mutuel, or other gaming related advertising. Financial stability of the firm and financial capability to provide the entire scope of services. Experience of the firm in providing advertising services to accounts in excess of $10 million. Experience of the firm in placing large volumes of electronic media in all media markets in Florida. Based on 1-3, award points, as follows: 20-30 points for exceptional experience 10-20 points for average experience 0-10 points for minimal experience Has the Respondent provided advertising services to other state or governmental entities? If the work was acceptable, award up to 3 points. If the firm has not done such work, award zero points. Does the Respondent possess unique abilities which would make a noticeable (positive) impact on the project? If the answer is yes, award up to points and note reasons. If the answer is no, award zero points. Does the team composition and each member's percentage of involvement, the use of subcontractors (if any), office location, and/or information contained in the proposal indicate that the Respondent will meet time and budget requirements? If the answer is yes, award up to points and note reasons. If the answer is no, award zero points. Does the Respondent's current workload make it likely the Respondent can provide timely and complete service? If the answer is yes, award up to 2 points and note reasons. If the answer is no, award zero points. Advertising approach and creative samples required by Sections 2.3A-D = 40 points The relative creativity, approach, quality and thoroughness of the firm's proposed plan for providing the requested services required by Section 2.3(A). Value: 10 points The relative creativity, approach, quality and thoroughness of the comprehensive artistic representations required by Section 2.3(B). Value: 10 points The relative creativity, approach, quality and thoroughness of the advertising campaign required by Section 2.3(C). Value: 5 points The relative creativity, approach, quality and thoroughness of samples required by Section 2.3(D). Value: 15 points The criteria for evaluating the creativity, approach, quality and thoroughness of above items B-1 through B-4 are as follows: Creativity Were the ideas and approach exciting and interesting? Did the samples evoke positive and appropriate emotions? Did the samples capture and hold attention? Did the samples demonstrate fresh and original thought or were they banal and mundane? Approach Was the approach germane and appropriate? Was the approach unified and integrated? Was the approach clear, direct and unambiguous? Quality Were images crisp, sharp, and distinct except where the intention is clearly otherwise? Was the production professional? Was sound free of distortion and visual free of unnecessary clutter? Thoroughness Did the advertising show an appropriate consideration for all facets of the market? Was the advertising comprehensive and balanced? Did the advertising use a full range of tools and techniques to ensure maximum penetration and retention? By memo to all committee members, entitled "Instructions and Timetable for Evaluation Committee Members," and again at the commencement of their deliberations, all committee members were advised that they must evaluate the proposals based on the criteria set forth in the RFP, and to utilize their own individual expertise in applying the criteria. In this regard, the proof demonstrates that the members of the committee abided such directive, and scored the proposals based on the established criteria, except as hereinafter discussed, as applied through their own background and experience. 3/ At the commencement of their deliberations, the committee members agreed that the format they would follow in evaluating the technical proposals would be to first review all the proposals, and then score the proposals individually. This procedure was followed although, not unexpectedly, some members made preliminary assessments as they progressed through the various proposals. Upon completion of their review, the members then scored each proposal and, as appropriate, made adjustments to preliminary assessments they had made based on the perspective they had acquired after their review of all the proposals. Here, Bozell complains that the RFP did not permit the scoring of proposals relative to each other but, rather, required that the proposals be evaluated and scored solely by applying the criteria independently to each proposal, and that the failure of all committee members to so evaluate the proposals is a fundamental flaw in the evaluation process. Bozell's complaint is not, however, persuasive. Here, the RFP required, among other things, a determination of the relative creativity, approach, quality and thoroughness of a firm's plans for providing the services requested by subsections 2.3A-D of the RFP. Under such circumstances, considering the subjective nature of the evaluation, it would not be unreasonable to assign points based on relative merit. And, considering the fact that the proposals were not scored until all proposals had been reviewed that, more likely than not, is what was done by each committee member, consciously or subconsciously. As importantly, each member of the committee scored the proposals independent of any other member of the committee, and was consistent with the approach he took as to each firm's proposal. 4/ Accordingly, it cannot be concluded, based on the proof in this case, that the evaluation process was fundamentally flawed because of the manner in which points were awarded. However, because points were awarded on a relative basis, the inclusions of non-responsive proposals in the evaluation process could have materially affected the scoring of proposals and the Department's failure to exclude non-responsive proposals from the scoring process, as required by section 5.1 of the RFP, was a material departure from the requirements of the RFP. Bozell also complains that Mr. Johnson evaluated the technical proposals in light of his knowledge about the success of other states' lottery advertising. The application of such expertise to the criteria contained in the RFP was, however, appropriate, as discussed supra. As noted by Mr. Johnson: . . . That's my frame of reference against which I measured all of the companies. I could tell that some of the companies really didn't know what they were talking about, because they were suggesting things that were failing in other states. And I was aware of that from my general information background. [Tr. 471] As heretofore noted, selection of committee members with knowledge of the program area, and the exercise of that expertise in applying the criteria, is most appropriate to a reasoned evaluation of a proposal. Finally, with regard to the evaluation of the technical proposals, Bozell offered proof that some committee members failed to apply specific criteria mandated by the RFP, or otherwise scored the proposals in a manner at variance with that called for by the RFP. In this regard, the proof demonstrates that while proposals were to be evaluated, at least in part, based on the different games and formats that were presented in the technical proposals (see subsection 2.3B of the RFP), Mr. Ruchalski did not do so because he had no knowledge upon which to base a decision. Regarding subsections A5-8 of Attachment F (the scoring criteria), Mr. Johnson did not award points in the manner mandated by each subsection. Finally, notwithstanding that an evaluation of the overall ability of the applicant, as set forth in section A of Attachment F to the RFP, required an examination of the "financial stability of the firm and financial capability to provide the entire scope of services," no evaluation of the financial integrity and responsibility of any of the firms was made, and such criteria were not applied in the evaluation process. 5/ In its proposed recommended order, the Department suggests that it would be unnecessarily burdensome to require a detailed financial review by the agency at the initial bid analysis stage since, ultimately, only one firm will be awarded the contract, and because security and financial investigations will be done before a contract is awarded. While such may be the case, it was the Department's election to provide for an analysis of financial stability and capability as part of the review criteria. Oral presentation evaluation The second phase of the evaluation process was the scoring of the oral presentations. Pertinent to this case, section 5.3 of the RFP provided: . . . The oral presentations must be made by the account service, creative and media personnel who would work on the account. There will be no limitation on the information and materials pertinent to this RFP which may be utilized . . . . Section 5.5 of the RFP provided that presentations would be scored based on the following general criteria: Understanding of services requested -- up to 20 points, account team -- up to 25 points, responsiveness to questions -- up to 15 points, and overall impression -- up to 20 points. Finally, Attachment G to the RFP provided that the evaluation relative to the account team would be scored as follows: Account Team = 25 points maximum Did the proposed account team participate? Creativity, quality, uniqueness demonstrated by account team? Respondent's advertising philosophy demonstrated, long term image building? Did account team members prepare samples submitted? EPB's oral presentation was made by Jeb Brown, the chief executive officer of EPB; Craig Davis, the president of EPB's Florida operations; Mike Knaisch, account group head; Kandi Kirkland, account supervisor; Bruce Ayers, media director; Scott Mackey, associate creative director; Pat Hanlon, creative director; Tom Hall, chairman of EPB; and Jeff Tucker, president of public relations. Each of the presenters were identified by EPB as key personnel to be assigned to the Florida lottery account, except Jeb Brown and Tom Hall. As part of its oral presentation, EPB utilized a video tape, which presented favorable comments by the head of the Virginia lottery concerning EPB's performance for it. Addition-ally, EPB included in such video a character it utilizes for the Virginia lottery, "Lady Luck," who also said "nice things" about EPB. Here, Bozell complains that the participation of Jeb Brown and Tom Hall, in the oral presentation, as well as the use of the video which included comments by the head of the Virginia lottery and "Lady Luck," was improper under the provisions of the RFP because they were not members of the account team. Such compliant is, however, unpersuasive. While section 5.3 of the RFP did require that the oral presentation be made by the account, creative, and media personnel who would work on the account, it did not expressly preclude others from participating, and the RFP placed no restrictions on the information and materials pertinent to the RFP that could be utilized. Accordingly, EPB's oral presentation was not at variance from the RFP and, if it were, it was not shown to be a significant deviation. As heretofore noted, the evaluation relative to the account team allowed an award of up to 25 points, and required, among other things, a determination of whether the account team participated; the creativity, quality and uniqueness demonstrated by the account team; and whether the account team members prepared the samples that were submitted. The committee members did not, however, make any specific inquiry regarding whether the account team participated or prepared the samples, although the bidders generally made it a practice to introduce the account team members, but assumed such to be the case for purposes of scoring the presentations. Here, Bozell contends that the committee's failure to expressly inform itself as to whether the account team participated and prepared the samples, as opposed to indulging the assumption that they did, constitutes a significant failing in the evaluation process. However, Bozell failed to demonstrate, at hearing, that the committee's assumption was misplaced. Finally, Bozell offered proof that Dr. Sawyer awarded Bozell 21 points and EPB 22 points for "overall impression," when 20 points were the maximum contemplated by the RFP. Such error was, however, inadvertent, it simply being the intention of Dr. Sawyer to award EPB one more point than Bozell, and was harmless since it did not affect the overall outcome. Cost proposal evaluation Section 5.6 of the RFP provided the criteria for evaluation of the cost proposals and provided that: Finalists' cost proposals will be given points based on an evaluation of the proposed compensation and the experience and qualifications of the proposed staff. A maximum value of 40 points was established for this part of the evaluation. The cost proposals, which the committee members were to evaluate, were contained in a "sealed cost proposal envelope" and were, pursuant to subsection 2.4B of the RFP, to contain: The cost proposal shall include a calculation of the Respondent's proposed compensation for undertaking and completing all phases of the services requested and outlined in this RFP. The cost proposal shall be prepared in the same format as illustrated on Attachment "E" and shall be completed as follows: The Respondent shall provide an aggregate gross salary by work category and position classification for all personnel who will work on the Lottery's account. The aggregate gross salary shall include only that portion of each individual staff member's time that will be attributable to the Lottery account. The portion of time proposed in the cost proposal shall match the labor hour percentages proposed for each individual as required in Section 2.3(E)(4). The Respondent shall also include a proposed multiplier of the type described in paragraph A above. The Respondent shall multiply the aggregate gross salary by the multiplier and the product shall be included in the cost proposal. The Respondent shall also include, in the sealed cost proposal envelope, resumes for all personnel whose salary, or portion thereof, was included in the calculation of the proposed aggregate gross salary resumes shall be included regardless of whether the resumes have also been included in the technical proposal envelope. While the RFP contemplated that all three sections of the proposal (technical, oral presentation, and cost) would be evaluated and scored independent of each other, and that the evaluation of the cost proposal would be limited to an evaluation of the information contained in the "sealed cost proposal envelope," not all committee members so limited their evaluation. Rather, some committee members utilized the knowledge they had gleaned from evaluating the technical proposals and oral presentations, as well as the scores they had assigned during the course of those evaluations, to assist them in assessing the qualifications and experience of the proposed personnel and weighing the firms' proposed compensation. Indeed, it is difficult to imagine how any committee member could ignore the knowledge he had acquired during the course of his evaluations that was reflective of the quality and experience of the proposed staff, any more than he could ignore the expertise he had acquired through his life experiences, in evaluating the cost proposal. Notably, the RFP, as it related to the cost proposals, provided that "the portion of time proposed in the cost proposal shall match the labor hour percentages proposed for each individual as required by section 2.3(E)(4)" of the RFP [the key personnel], and the committee had, as part of their evaluation of the technical proposal, previously evaluated the proposed account team, as well as the relative creativity, approach, quality and thoroughness of their proposals relative to subsections 2.3A-D of the RFP. At the oral presentation, the committee had an opportunity to put faces with names, and broaden their knowledge of the individuals involved. Accordingly, when it came time to evaluate the cost proposals, which involved a consideration of staffing and salary, the members of the committee had certainly formulated opinions regarding the quality of the staff proposed by the respective firms, and balanced that opinion against the proposed compensation to derive the most cost effective proposal. While it may seem unreasonable to restrict the committee to the bare resumes and costs set forth in the cost proposal, as the basis for their evaluation, the reasonableness of the provisions the Department formulated are not at issue in this proceeding. Accordingly, it is concluded that by going beyond the information contained within the cost proposal, the members of the committee materially deviated from the requirements of the RFP. This conclusion prevails, since those bidders who were favored in the evaluation of the technical proposals or oral presentation were, by the consideration of the opinions derived from such evaluations, accorded an unfair advantage over other bidders.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered which rejects all bids, and that a new invitation to bid be extended. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 25th day of July 1991. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of July 1991.
