The Issue Whether the Florida A&M University's intended action to reject all bids and re-advertise the project to construct "Utilities Improvement-Central Chilled Water Plant, Phase V", known as BR-389, is illegal, arbitrary, dishonest, or fraudulent.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Parties Neel Mechanical Contracting, Inc., is a Georgia corporation authorized to do business in Florida and licensed by the Florida Construction Industry Licensing Board. Its business is air conditioning, and it specializes in larger projects such as the one at issue herein. Robert C. Sullivan is the President of Neel Mechanical. Thomas Gregory Lang is a project manager employed by Neel Mechanical and the chief estimator for Neel Mechanical; Mr. Lang is the person primarily responsible for preparing Neel Mechanical's bid proposal for Project BR-389. The Florida Board of Regents is a corporate body consisting of the Commissioner of Education and thirteen citizens appointed by the Governor and approved by three members of the Cabinet; it is subject to the general supervision and control of the Department of Education. Sections 240.203(2), 240.205, and 240.207(1), Florida Statutes (1999). The Board of Regents is a member of the State University System, is charged generally with overseeing the state universities, and has the authority to approve and execute contracts for "construction for use by a university when the contractual obligation exceeds $1 million." Sections 240.209 and 240.205(6), Florida Statutes (1999). 4/ Florida Agricultural and Mechanical University ("FAMU") is a public university located in Tallahassee, Florida, and is one of ten universities in Florida's State University System. Section 240.2011, Florida Statutes (1999). The university president is the chief administrative officer of the university and is responsible for its operation and administration. Section 240.227, Florida Statutes (1999). At the times material to this proceeding, Frederick S. Humphries was president of FAMU, and Samuel J. Houston was the Director of FAMU's Office of Facilities Planning and Construction. Mr. Houston has primary responsibility for supervising the bid process and the staff that prepared the bid documents and evaluated the bids for Project BR-389. Mr. Houston acts in this capacity on behalf of President Humphries and the Board of Regents. Mr. Houston also is ultimately responsible for the administration of Project BR-389. Bayou Mechanical, Inc. ("Bayou Mechanical") is a mechanical contractor which submitted a bid on Project BR-389. Call for Bids In Volume 25, Number 13, of the Florida Administrative Weekly, dated April 2, 1999, FAMU, on behalf of the Board of Regents, issued a Call for Bids on Project BR-389, which involves construction of a chilled water plant on the FAMU campus. The Call for Bids provided that all bidders must have a valid Florida license to do the work at the time of bid opening and a minimum of five years experience with similar projects. Project BR-389 involves a construction contract and is the fifth phase of the construction of an underground chilled water system on the FAMU campus. The project consists of constructing a portion of the system and connecting it to the existing system. The Call for Bids notified prospective bidders that sealed bids would be received at FAMU on May 4, 1999, until 2:00 p.m., after which time the bids would be opened and the bid tabulations posted. The Call for Bids further provided: "Bids must be submitted in full and in accordance with the requirements of the drawings and Project Manual." The Call for Bids advised that these documents were available at the offices of the Architect/Engineer for the project, Bosek, Gibson & Associates, Inc. ("Bosek, Gibson"), in Tallahassee, Florida. In Addendum #2 to the Project Manual, dated April 30, 1999, the date for submission of bids was changed from May 4, 1999, to May 11, 1999. The Project Manual contains Instructions to Bidders, consisting of pages 6 of 106 through 22 of 106 and dated October 16, 1989; General Conditions of the Contract for Construction, consisting of pages 23 of 106 through 106 of 106 and dated October 16, 1989; Special Conditions of the Contract, consisting of pages I-1 through I-10 and dated October 16, 1989; Supplement J to the Project Manual, consisting of pages 1 through 11 and dated February 13, 1996; Supplement K to the Project Manual, consisting of pages 1 through 5 and identified as the February 1999 Revision; Exhibit L, Supplementary Conditions to the General Conditions of the Contract for Construction, consisting of pages 2 through 16; and the Technical Specifications, which are separately identified and numbered. As noted in the Call for Bids, drawings are also included in the bid documents. Neel Mechanical, Bayou Mechanical, and Council Contracting submitted bids for Project BR-389 on May 11, 1999, the date on which the bids were opened and the price proposals were read. According to the Bid/Proposal Tabulation form that was posted from May 14 through 19, 1999, Neel Mechanical was the apparent low bidder on the base bid and on the two alternates 5/; Neel Mechanical's base bid and its bid on alternates were within FAMU's budget for the project. Bayou Mechanical submitted the second lowest bid on the base bid and the alternates; Bayou Mechanical was within the budget on the base bid but over budget on the alternates. No recommended award or intent to award was indicated on the Bid/Proposal Tabulation form. Shortly after the bids were opened, several issues were raised with respect to the bid process. First, the FAMU staff discovered that Neel Mechanical had failed to affix its corporate seal to the signature page of the bid Proposal Form and to the Bid Bond that was part of the bid submission. Second, York International Company ("York") sent via facsimile on May 11, 1999, a letter advising FAMU's Office of Facilities Planning and Construction that York intended to protest the bid. This letter raised the third issue: Of the two manufacturers identified in the project specifications, York and The Trane Company ("Trane"), only Trane manufactured a chiller that could meet the project specifications. Fourth, Mark A. Daughtery, a project manager for Bayou Mechanical, sent a letter dated May 14, 1999, to Craig Allen at Bosek, Gibson advising him that Bayou Mechanical intended to file a formal protest on Project BR-389 and identifying two issues of concern to Bayou Mechanical: Neel Mechanical's failure to affix its corporate seal to its bid submission and "the Chiller being sole sourced to Trane Company." Each of these issues is discussed in detail below. Corporate Seal The Instructions to Bidders contained in the Project Manual provide: B-16 Preparation and Submission of Bids Each Proposal shall be submitted on the form contained in the Project Manual and bid prices shall be indicated thereon in proper spaces, for the entire Work and for all Alternates. (See B-8) In the event of a discrepancy in the bid amount on the Proposal between the numeric and written quotes, the written amount will govern. Each Proposal must give the full business address of the Bidder and state whether it is an individual, corporation or partnership. Proposals by a corporation must be signed with the legal name and seal of the corporation followed by the name of the state of its incorporation and the manual signature and designation of an officer, agent or other person authorized to bind the corporation. (Emphasis added.) When it was submitted on May 11, 1999, Neel Mechanical's bid did not include the impression of its corporate seal on the bid Proposal Form signature page or on the Bid Bond submitted as part of the proposal. After the bid opening, an employee of Neel Mechanical received a telephone call from Henry Swift, FAMU's Project Manager for Project BR-389, in which he advised Neel Mechanical that its bid had not been sealed. This conversation was followed by a request from Mr. Swift, sent via facsimile transmittal to Neel Mechanical on May 13, 1999, requesting a "Letter of Clarification which confirms your status as a corporation licensed to do business in the State of Florida, registered with the Secretary of State, etc. Finally, please be sure to sign and seal your letter with your corporate seal." A letter to Mr. Swift, dated May 14, 1999, was signed and sealed by Robert C. Sullivan, President of Neel Mechanical. The letter was received in FAMU's Office of Facilities Planning and Construction on May 19, 1999. Shortly after Mr. Sullivan sent the May 14, 1999, letter, Neel Mechanical received another telephone call from Mr. Swift in which he advised Neel Mechanical that the seal needed to be physically affixed to the bid Proposal Form. Peter Lang, a project manager employed by Neel Mechanical, had business in Tallahassee, so Mr. Sullivan asked that he take the seal to Mr. Swift's office and affix it to the bid Proposal Form. When Peter Lang arrived at Mr. Swift's office, someone brought out the file and gave him the bid Proposal Form, and he affixed Neel Mechanical's corporate seal to the signature page of the form. Neel Mechanical's corporate seal was not affixed to the Bid Bond, although the seal of the surety company was on the Bid Bond when the bid was submitted. The Bid Bond was part of Neel Mechanical’s bid submission. FAMU verified on May 13, 1999, that Neel Mechanical was authorized to do business in Florida and held the requisite Florida license to perform the work required by the project. Centrifugal chiller specifications and York's letter of "intent to protest" Section 15685-1 of the Technical Specifications included in the Project Manual contains the specifications for the Centrifugal Chillers - Water Cooled to be installed as part of Project BR-389. Those specifications provide in pertinent part: PART 2 - PRODUCTS MANUFACTURERS Available Manufacturers: Subject to compliance with requirements, provide centrifugal chillers from one of the following: Trane Co., The York Int'l. UNIT DESCRIPTION: * * * Refrigerant: Chiller shall be provided with low pressure refrigerant HCFC-123. The size of the chiller specified for Project BR-389 was 2200 tons. 6/ Lane Jackins is the owner of Applied Mechanical Equipment and is a manufacturer's representative for York. He reviewed the technical specifications for the chiller contained in Part II of Section 15685-1 of the Technical Specifications for Project BR-389 and determined that York could not furnish a chiller that met the specifications. York does not manufacture a chiller of 2200 tons that uses R123 refrigerant, although it uses R123 refrigerant in smaller machines up to 750 tons. The equipment manufactured by York in the 2,000-ton range uses R134A refrigerant, which operates at different pressures than R123. The York equipment using R134A refrigerant is of an entirely different design than that using R123 refrigerant. In addition, York does not manufacture a chiller with the voltage required by the project specifications. Three or four days before the bids were to be submitted, either Mr. Sullivan or Mr. Lang spoke with Mr. Jackins about York's providing Neel Mechanical with a price for the chiller. Mr. Jackins responded that York would not submit a price for the equipment because York did not manufacture a chiller that would meet the technical specifications included in the bid documents. The Instructions to Bidders in the Project Manual provide: B-12 Basis for Bidding - Trade Names For clarity of description and as a standard of comparison, certain equipment and materials have been specified by trade names or manufacturers. To insure a uniform basis for bidding, the Bidder shall base the Proposal on the particular systems, equipment or materials specified and approved substitutes as provided in Paragraph 3.19, Substitutes, of the General Conditions. After bids are received, no equipment or materials will be approved as a substitute for the specified product. Paragraph 3.19 of the General Conditions provides: Substitutions Substitutions for a specified system, product or material may be requested of the Architect/Engineer, and the Architect/Engineer's written approval must be issued as an addendum before substitutions will be allowed. All requests for substitutions must be submitted prior to the opening of bids, and approvals shall be granted no less than seven (7) days prior to the bid date. Substitutions requested after that date will receive no consideration. Substitutions are changes in materials, equipment, methods, or sequences of construction, design, structural systems, mechanical, electrical, air conditioning controls, or other requirements of the Drawings or Specifications. (Emphasis in original.) In the portion dealing with "SPECIFICATIONS AND DRAWINGS," Section 15010 of the Technical Requirements, "MECHANICAL REQUIREMENTS," provides as follows: By submitting a bid for equipment or material other than the "Design Basis Equipment" (i.e., that which is shown on the Contract Drawings), the Contractor: Represents that he has personally investigated the proposed substitute product and determined that it is equal or superior in all respects to that specified and complies with all the requirements set forth in Paragraph 3.19 of the General Conditions; Certifies that the cost data presented is complete and includes all related costs under this Contract but excludes costs under separate contracts, and excludes the Engineer's redesign costs, and waives all claims for additional costs related to the substitution which subsequently become apparent; Will coordinate the installation of the accepted substitute, making such changes as may be required for the work to be complete in all respects; and, Certifies that the proposed equipment meets the requirements of the Contract Documents. Neither York nor any prospective bidder on Project BR-389 requested within the time limits specified in Paragraph 3.19 of the General Conditions that a York product be substituted for the chiller specified for Project BR-389. Mr. Lang contacted Craig Allen at Bosek, Gibson a day or two before bids were to be submitted and told Mr. Allen that York was not able to provide a chiller that met the project specifications. According to Mr. Lang, Mr. Allen responded that he "was totally surprised that they [York] didn't have a machine that was going to meet this spec." 7/ Mr. Lang based Neel Mechanical's bid on pricing information it received from Trane, which manufactures a chiller that meets the project specifications. An additional reason Mr. Lang based Neel Mechanical's bid on the Trane equipment was his belief that, all things being equal, FAMU preferred to have Trane equipment installed in Project BR-389 because other chillers installed at FAMU were manufactured by Trane. Mr. Lang believed that the specifications for the chiller had been deliberately drawn to require use of Trane equipment. In a letter dated May 11, 1999, the day the bids for Project BR-389 were submitted and opened, Mr. Jackins notified FAMU's Office of Facilities Planning and Construction that York intended to protest the bid on Project BR-389. Mr. Jackins stated in the letter: The chiller as specified is a flat specification. There is only one manufacturer that will meet the criteria as spelled out in the contract documents. This is not in the best interest of the University System of Florida or the State of Florida. An official protest outlining all the proprietary items will be forthcoming. The letter was sent via facsimile on May 11, 1999, prior to the time the bids were opened. Mr. Jackins believed that the "flat specification" was not in the best interest of the university because it precluded competitive pricing for the chiller. Mr. Sullivan learned on May 11 or May 12, 1999, that York intended to file a bid protest. Believing that Neel Mechanical would be awarded the contract as the apparent low bidder, Mr. Sullivan met with Mr. Jackins and several employees of Neel Mechanical, including Greg Lang, at which time Mr. Sullivan proposed an alternative to York's filing a bid protest. Mr. Sullivan told Mr. Jackins that, in his opinion, the situation could best be handled through a meeting between Neel Mechanical, Mr. Jackins, Mr. Houston, and the project engineers. According to Mr. Sullivan's plan, Mr. Jackins could present York's pricing, and FAMU, with the engineers’ assistance, could decide if they wanted to switch from the equipment specified in the bid documents to York equipment. If FAMU agreed to accept the York equipment, then, if it were awarded the contract, Neel Mechanical would purchase the York equipment rather than the Trane equipment Neel Mechanical had included in its proposal. After some discussion, Mr. Jackins agreed with Mr. Sullivan's proposed solution. Post-bid activity from the perspective of Neel Mechanical Immediately after the bids were opened, Craig Allen, an employee of Bosek, Gibson telephoned Mr. Lang and asked if Neel Mechanical was still happy with its bid. According to Mr. Lang, Mr. Allen stated that "this is a standard practice of mine on bid day to call the apparent low bidder and just make sure that they haven't found some colossal error in their math or whatever that made them low." 8/ Mr. Lang told Mr. Allen that Neel Mechanical was still happy with its bid. After this conversation, Mr. Lang waited for the letter from FAMU awarding the contract to Neel Mechanical. He was not concerned that the award was not made immediately because, in his experience, some time always passed between bid opening and the time the winning bidder received the contract. However, in anticipation of the award of the contract, Neel Mechanical proceeded to talk with subcontractors, to start scheduling the project, and to line up equipment that it would need to purchase for work on the project. Neel Mechanical employees also made several visits to the site of the project. At some point after the bids were opened, Mr. Sullivan heard that the procurement officials at FAMU were discussing with FAMU's legal department the issues of Neel Mechanical's failure to affix the corporate seal to its bid and the ramifications of York’s threatened bid protest. Mr. Sullivan responded by telephoning the office of FAMU's general counsel. He spoke with Faye Boyce about these issues and told her that he considered his failure to affix the corporate seal to Neel Mechanical's bid to be insignificant. He also advised her that he had worked out an arrangement with the representative of York whereby York would withdraw its protest and Neel Mechanical would talk with the engineers about the York chiller so a decision could be made whether they wanted to use the York equipment or stay with the Trane equipment which met the project specifications. In a subsequent telephone conversation with Ms. Boyce, Mr. Sullivan received the impression that she had looked into the issues he had raised in their previous telephone conversation. Mr. Sullivan could not recall Ms. Boyce's exact words, but had the impression from their conversation that the contract award to Neel Mechanical had been approved and that confirmation would be sent out shortly. At some point after Mr. Sullivan's conversation with Ms. Boyce, Greg Lang telephoned Henry Swift to find out the status of the contract award. Mr. Swift told Mr. Lang that, in Mr. Lang's words, "the problem had been reviewed and found to be insignificant, and . . . that the letter of intent to award had already been made." 9/ According to Mr. Lang, Mr. Swift told him that FAMU would notify the bidders of the intent to award the contract to Neel Mechanical. On the basis of this conversation, Mr. Lang believed that Neel Mechanical would receive a letter "just any day." When Neel Mechanical did not receive a letter, Mr. Lang telephoned Mr. Swift again. According to Mr. Lang, Mr. Swift stated that he did not know why the matter was being held up. After this second conversation with Mr. Swift, Mr. Lang telephoned Mr. Houston several times but did not receive a return call. Mr. Lang then wrote a letter to Mr. Houston, dated July 9, 1999, in which he inquired about the status of the contract award: It has now been almost two months since you received bids for this project, and as the low bidder we have still not received notification of your intent to award. We have had several telephone conversations with the attorney representing the regents in this matter, and we were lead [sic] to believe that we would have received information before this time. Please review this matter and call us. If there are outstanding issues which concern you, we would like to know about them and work with you to get them resolved. Post-bid activity from the perspective of FAMU Mr. Houston and members of his staff considered the omission of the corporate seal to be a minor deficiency in Neel Mechanical's bid proposal. Nonetheless, even though Neel Mechanical had been allowed to seal the bid Proposal Form, Mr. Houston asked FAMU's Office of General Counsel to conduct research and determine if the deficiency was one that could be waived. Mr. Houston was not involved in drawing up the technical specifications for Project BR-389; rather, he relied on the project engineers to be familiar with the products to be used in the project. Mr. Houston advised the project engineers that he wanted a competitive bid, and, because the chiller was a major component of the project, he instructed the engineers to prepare specifications that could be met by equipment produced by at least two manufacturers. In a letter dated May 18, 1999, Craig Allen, the engineer at Bosek, Gibson who prepared the specifications for Project BR-389, notified Mr. Houston that he was not aware until the "notice of protest" was received from York that York could not provide a chiller of the required capacity which used R123 refrigerant. Mr. Allen advised Mr. Houston that Mr. Jackins, the York representative, had indicated that he wanted to meet with Mr. Allen to discuss York's chiller selections for the project. A recommendation that the contract be awarded to Neel Mechanical was signed on June 8, 1999, by Phyllis Nottage, the Assistant Director of FAMU's Office of Facilities Planning and Construction; on June 10, 1999, by Mr. Houston; on June 14, 1999, by Louis Murray, an Associate Vice President of FAMU; and on June 14, 1999, by Robert Carroll, a Vice President of FAMU with supervisory authority over the Office of Facilities Planning and Construction. The recommendation was contained in a document entitled "Award of Construction Contract," which provided as follows: On May 11, 1999, bids were received for the above-referenced project within the approved budget for the Base Bid and Alternates One (1) through (2), in the total amount of $3,996,400. The requirements for the Minority Business Enterprise Plan as set forth in the project specifications have been satisfied by the Contractor. The consulting Architect/Engineer and the University Facilities Planning and Construction Office recommend the award of this contract to Neel Mechanical Contractors, Inc. President Humphries signed the Award of Construction Contract on June 17, 1999. The preparation and signing of the Award of Contract form and the preparation of the Letter of Intended Decision were part of the bid review process, but Mr. Houston considered them preliminary, without effect until the final decision on the contract award was made and the bidders were formally advised of FAMU's intended decision with respect to the award of the contract. On June 21, 1999, Mr. Houston received a telephone call from Kenneth Ogletree, Director of the Board of Regents’ Office of Facilities Planning, 10/ in which Mr. Houston was advised that the Board of Regents had received an inquiry from a legislator in reference to Project BR-389 and requesting that Mr. Houston prepare a response to the legislator's inquiry. Mr. Ogletree sent Mr. Houston, via facsimile on June 21, 1999, a copy of a letter dated May 28, 1999, from Carey Huff, President of Bayou Mechanical, to Durell Peaden, a member of the Florida House of Representatives and a State Representative from District In the letter, Mr. Huff complained that Neel Mechanical, although apparent low bidder for Project BR-389, had failed to seal the bid Proposal Form and the Bid Bond and that, therefore, Neel Mechanical's bid was non-responsive. Mr. Carey requested that Representative Peaden contact FAMU so that Bayou Mechanical would be awarded the contract for the project as lowest responsive bidder. Mr. Carey stated in his May 28, 1999, letter to Representative Peaden that the college had refused to allow Bayou Mechanical to examine Neel Mechanical's bid but that Mr. Houston had informed them that Neel Mechanical had failed to seal its bid properly. 11/ Mr. Ogletree also sent Mr. Houston, via facsimile on June 21, 1999, a copy of a letter from Representative Peaden to Dr. Adam W. Herbert, Chancellor of the State University System. In his letter, Representative Peaden asked that Dr. Herbert look into the matter and "see that all equity was followed in the bid process." In response to the Board of Regents' request that he respond to Representative Peaden's inquiry, Mr. Houston prepared a letter dated June 22, 1999. In this letter, which was directed to Mr. Ogletree, Mr. Houston stated that FAMU wished to award the contract for Project BR-389 to Neel Mechanical as the low bidder on the project. Mr. Houston stated that FAMU considered Neel Mechanical's failure to affix the corporate seal on the bid Proposal Form and the Bid Bond to be a minor discrepancy. Mr. Houston further stated that FAMU's Office of General Counsel agreed with the conclusion regarding the corporate seal issue and recommended that the contract be awarded to Neel Mechanical. Finally, Mr. Houston advised Mr. Ogletree that President Humphries had signed the "Award of Construction Contract" form and that Mr. Houston's office was preparing "Letters of Intended Decision" to be sent to the bidders. The final decision on the contract award had not been made on June 10, 1999, when Mr. Houston signed the recommendation that the contract for Project BR-389 be awarded to Neel Mechanical, nor had it been made on June 22, 1999, when Mr. Houston wrote his letter to Mr. Ogletree. Rather, on June 22, 1999, the issues raised with respect to the bid process for Project BR-389 were still being reviewed by Mr. Houston and his staff and by FAMU's Office of General Counsel. The decision to reject all bids on Project BR-389 was made on June 24, 1999. On that date, Mr. Houston met with Vice President Murray, FAMU's attorney, and the Assistant Director of the Office of Facilities Planning and Construction, and the issues relating to the bidding process for Project BR-389 were reviewed. Mr. Houston identified these issues as Neel Mechanical's failure to seal its bid Proposal Form and its Bid Bond; potential protests from York and from Bayou Mechanical; and the problem relating to the technical specifications for the chiller. Of these issues, Mr. Houston considered the most serious the fact that, of the two manufacturers listed in the bid specifications, only Trane could provide the chiller for Project BR-389. The chiller was a major part of the project, and Mr. Houston wanted at least two sources for the chiller in order to encourage competition so that FAMU would get the lowest possible price for the project. Mr. Houston was also concerned that the specifications for the chiller created a de facto "sole source" bid and that the bid solicitation would, therefore, be illegal because FAMU didn't satisfy the statutory requirements necessary for it to specify that the chiller be purchased from a sole source. 12/ FAMU's attorney advised the participants at the June 24, 1999, meeting that the legal department had found no precedent within the State University System for waiving the requirement in the bid documents that the bid Proposal Form and the Bid Bond be sealed with the bidder's corporate seal. The participants at the meeting considered all of the outstanding issues and decided that it would be in the best interests of FAMU to reject all bids submitted on May 11, 1999, for Project BR-389. After the decision to reject all bids was made, Mr. Houston marked an "X" through the Award of Construction Contract form signed by President Humphries, and he prepared letters notifying the bidders of the intent to reject all bids for Project BR-389. Neel Mechanical's bid protest In a letter to Neel Mechanical dated July 6, 1999, Mr. Houston stated: Bids on the above referenced project were opened May 11, 1999. However, we regret to inform you that all Bids have been rejected as in the best interest of the University. This project is presently being re-advertised in the Florida Administrative Weekly. The University apologizes for the time it has taken to reach this decision. We trust that you will cooperate with our course of action and look forward to receiving a proposal from you at the next opening. Thanks for your continued interest in the State University System's Construction Program. The envelope containing Mr. Houston's July 6, 1999, letter was post-marked July 9, 1999, and the letter was received by Neel Mechanical on Tuesday, July 13, 1999. The Instructions to Bidders in the Project Manual provide: Rejection of Bids The Owner reserves the right to reject any and all bids when in the opinion of the Owner such rejection is in the best interest of the Owner. Paragraph B-1 of the Instructions to Bidders provides that the Board of Regents is the owner of the project. On July 13, 1999, after Neel Mechanical received the letter from Mr. Houston notifying it that all bids on Project BR- 389 had been rejected, Mr. Sullivan and Greg Lang went to Mr. Houston's office to urge him to rescind the decision and award the contract to Neel Mechanical. Mr. Sullivan told Mr. Houston that they felt that the issue regarding the corporate seal was insignificant. At this time, Mr. Sullivan also told Mr. Houston that he and York had reached an agreement whereby York would withdraw its protest and Neel Mechanical would present the York product to the University and let the University decide if it wanted to go with the Trane chiller or switch to a York product. Mr. Sullivan thought that Mr. Houston was sympathetic to Neel Mechanical but that the decision had been made by the administration and the legal department. Mr. Sullivan also got the impression that the decision to reject all bids was based on the corporate seal issue. On July 13, 1999, Neel Mechanical hand-delivered its Notice of Intent to Protest Bid to Samuel J. Houston, Director of the Office of Facilities Planning and Construction at Florida A&M University and to FAMU's Office of General Counsel. There is no dispute that the Notice of Intent to Protest Bid was actually received in Mr. Houston's office on July 13, 1999. On July 23, 1999, Neel Mechanical hand-delivered its Formal Written Protest and Petition for Formal Administrative Proceedings to Sam Houston, Director, Florida A&M University, Facilities Planning Department, Plant Operations Facility, Building A, Room 100, 2400 Wahnish Way, Tallahassee, Florida 32307 and to FAMU's Office of General Counsel. Also on July 23, 1999, a copy of the Formal Written Protest and Petition for Formal Administrative Proceedings was sent by United States Mail to the Board of Regents, Office of General Counsel, 325 West Gaines Street, Suite 1454, Tallahassee, Florida 32399-1950. There is no dispute that the Formal Written Protest and Petition for Formal Administrative Proceedings was actually received in Mr. Houston's office on July 23, 1999. The Instructions to Bidders in the Project Manual dated October 16, 1989, provide: Bid Protest To be considered, a bid protest must be received by the Director, Capital Programs, Florida Board of Regents, 1601 Florida Education Center, 325 West Gaines Street, Tallahassee, Florida 32399-1950, as provided in Section 120.53, Florida Statutes. Failure to file a notice of protest in this manner shall constitute a waiver of the Bidder's right to proceedings under Chapter 120, Florida Statutes. * * * B-26 Special Conditions Bidders shall be thoroughly familiar with the Special Conditions and their requirements. (Emphasis added.) Supplement J to the Project Manual, consisting of pages 1 through 11 and dated February 13, 1996, provides in pertinent part: (This supplement revises portions of the Project Manual for State University System projects dated October 16, 1989, and supersedes any other previously issued supplements related to the referenced topics.) Revise the Instructions to Bidders Section of the Project Manual as Follows: * * * Revise Paragraph B-22, Bid Protest, to read as follows: B-22 Bid Protest Any person who is affected adversely by the Board of Regents decision or intended decision shall file with the Associate Vice Chancellor, Capital Programs, Florida Board of Regents, 1602 Florida Education Center, 325 West Gaines Street, Tallahassee, Florida 32399-1950, a notice of protest in writing within 72 hours, excluding Saturday, Sunday, and State legal holidays, after receipt of the bidding documents if the protest is directed toward the bidding conditions or after the notice of the Board of Regents decision or intended decision on contract award or bid rejection if the protest is directed toward contract award or bid rejection. Thereafter, a formal written protest by petition in compliance with Section 120.53(5), and Section 120.57, F.S., must be filed with the Associate Vice Chancellor, Capital Programs, Florida Board of Regents, 1602 Florida Education Center, 325 West Gaines Street, Tallahassee, Florida 32399-1950, within ten (10) days after the date the notice of protest was filed. Failure to file a timely notice of protest of [sic] failure to file a timely formal written protest petition shall constitute a waiver of protest proceedings. Any protest filed prior to receipt of the notice of the Board of Regents decision or intended decision will be considered abandoned unless renewed within the time limit provided for protests. (Emphasis added.) Supplement K to the Project Manual, consisting of pages 1 through 5, provides in pertinent part: SUPPLEMENT TO PROJECT MANUAL ISSUED BY FLORIDA A&M UNIVERSITY REGARDING PARAGRAPH B-26, SPECIAL CONDITIONS (February 1999 Revision) B-26 SPECIAL CONDITIONS - This supplement modifies paragraph B-26 by adding and clarifying bidding requirements and instructions. * * * PROTEST PROCEDURES: This paragraph supersedes the paragraph (No. B-22) under the general terms and conditions whereby the notice of intended protests or written formal protests including bonding requirements from bidders must be submitted to: Mr. Sam Houston, Director, Florida A&M University, Facilities Planning Department, Plant Operations Facility, Building A, Room 100, 2400 Wahnish Way, Tallahassee, FL 32307. A bid tabulation with the recommended award(s) will be posted at the address indicated in Paragraph B-26, sub- paragraph 6 (Posting of Bid Tabulation). Any notice of protest or formal written protest to the award or intended award which is filed before the bid tabulation posting is null and void. To be considered, a notice of protest or formal written protest must be filed within the time limits set forth in Section 120.57(3)(b), Florida Statutes. Any notice of protest or formal written protest to the specifications issued by the University must be filed within the time limits set forth in Section 120.57(3)(b), Florida Statutes. Any notice of protest or formal written protest to any amendment issued by the University must be filed within the time limits set forth in Section 120.57(3)(b), Florida Statutes. (Emphasis added.) The instructions regarding the filing of bid protests in Supplement K supersede the instructions in Supplement J, which is dated February 13, 1996, and in the Instructions to Bidders in the Project Manual, which are dated October 16, 1989. Summary The evidence presented by Neel Mechanical is sufficient to establish that it timely filed its Notice of Intent to Protest and its Formal Written Protest and Petition for Formal Administrative Proceedings by hand-delivering the documents to Mr. Houston, at his office on the FAMU campus. The evidence presented by Neel Mechanical is not sufficient to establish with the requisite degree of certainty that FAMU acted fraudulently, arbitrarily, illegally, or dishonestly in deciding that it was in the best interest of FAMU to reject all of the bids submitted on May 11, 1999, for Project BR-389. First, FAMU's concerns that, by inadvertently including a technical specification that could be met by only one manufacturer, it had limited competition with respect to the chiller to be used in Project BR-389 and had inadvertently put out an illegal "sole source" specification were legitimate concerns. Mr. Houston instructed the engineer who prepared the technical specifications that he wanted the specifications drawn so that at least two manufacturers could provide the product, and the engineer prepared specifications relating to the "available manufacturers" which clearly contemplated that a chiller meeting the technical specifications could be provided by both York and Trane. FAMU did not act arbitrarily when it considered as one factor underlying the decision to reject all bids the lack of precedent in the State University System for waiving the requirement that the bid Proposal Form and Bid Bond carry the corporate seal of a corporate bidder. The evidence submitted by Neel Mechanical is not sufficient to establish with the requisite degree of certainty that the corporate seal issue was ultimately the only or even the major factor on which FAMU's decision to reject all bids was based. Mr. Houston identified the possibility that bid protests would be filed by York and by Bayou Mechanical as factors which FAMU considered in deciding to reject all bids. Nonetheless, the evidence taken as a whole permits the inference that the focus of the concern about the potential bid protests was not on avoiding the protests but on the validity of the issues raised by York and Bayou Mechanical. Accordingly, FAMU did not act arbitrarily when it considered these potential bid protests as one factor contributing to the decision to reject all bids. The evidence presented by Neel Mechanical is not sufficient to establish that the "Award of Contract" form executed by President Humphries on June 17, 1999, or Mr. Houston’s June 22, 1999, letter to Mr. Ogletree bound FAMU to award the contract to Neel Mechanical or that the subsequent decision to reject all bids defeated the purpose of the competitive bidding process.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Agricultural and Mechanical University enter a final order dismissing the Formal Written Protest and Petition for Formal Administrative Proceedings filed by Neel Mechanical Contractors, Inc., and denying Neel Mechanical's Motion for Assessment of Attorney's Fees, insofar as it is based on the provisions of Section 120.595, Florida Statutes. Based on the foregoing Findings of Fact and Conclusions of Law, Neel Mechanical's Motion for Assessment of Attorney's Fees, insofar as it is based on the provisions of Section 120.569(2)(e), Florida Statutes, is denied. DONE AND ENTERED this 12th day of November, 1999, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of November, 1999.
The Issue Whether the Department of Transportation's proposed action, the award of the contract in question to WRS Infrastructure and Environment, Inc., is contrary to its governing statutes, its rules or policies, or the proposal specifications.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: In March 1999, the Department issued a request for proposals, RFP-DOT-99/2000-6026DS ("RFP"), requesting that experienced firms submit proposals "for the purpose of providing district-wide contamination assessment and remediation services" in the Department's District VI, which consists of Miami-Dade and Monroe Counties. The RFP solicited proposals for an indefinite quantity contract, with a term of three years and a maximum value of $5 million. The proposals were to be presented in two separate, sealed packages, one containing the proposer's Technical Proposal and the other containing the proposer's Price Proposal. Pursuant to Section 1.16 of the RFP, the Technical Proposal were to be opened and evaluated before the Price Proposals were opened. Section 1.8.2 of the RFP is entitled "Responsiveness of Proposals" and provides: All Proposals must be in writing. A responsive Proposal is an offer to perform the Scope of Services in accordance with all the requirements of this Request for Proposal and receiving a score of seventy (70) points or more on the Technical Proposal. Proposals found to be non- responsive shall not be considered. Proposals may be rejected if found to be irregular or not in conformance with the requirements and instructions herein contained. A Proposal may be found to be irregular or non-responsive by reasons that include, but are not limited to, failure to utilize or complete prescribed forms, conditional Proposals, incomplete Proposals, indefinite or ambiguous Proposals, and improper or undated signatures. (Emphasis in original.) Eight firms submitted proposals in response to the RFP, including WRS, OHM, and Metcalf & Eddy. A three-member Technical Review Committee was assembled, and the Technical Proposals were submitted to the Technical Review Committee for evaluation; all eight Technical Proposals received a score of 70 points or more. The Price Proposals were then opened and evaluated in accordance with the criteria set forth in the RFP. The Department posted a Notice of Intent to Award on August 26, 1999, in which it stated its intention to award the District VI contract to OHM. OHM was the highest-ranked proposer with a total score of 125.879 points; WRS was the second-highest-ranked proposer with a total score of 125.675 points; and, Metcalf & Eddy was the third-highest-ranked proposer with a total score of 118.569 points. It was noted in the Notice of Intent to Award that all eight proposals were accepted as responsive. On August 31, 1999, WRS filed a notice of its intent to protest the intended award of the District VI contract to OHM, and it filed its Formal Protest and Petition for Formal Administrative Hearing on September 10, 1999. Metcalf & Eddy did not file a protest with regard to the August 26, 1999, Notice of Intent to Award. As a result of information obtained by the Department subsequent to the filing of WRS's protest, OHM's proposal was re-evaluated, and, on October 20, 1999, the Department posted a Notice of Intent to Award (Revised), in which it stated its intention to award the District VI contract to WRS. The scores of WRS and Metcalf & Eddy remained unchanged as a result of the re-evaluation of OHM's proposal, but OHM's score decreased to 124.212 points. As a result, WRS became the highest-ranked proposer, OHM became the second-highest-ranked proposer, and Metcalf & Eddy remained the third-highest-ranked proposer. On October 25, 1999, Metcalf & Eddy filed its Notice of Intent to Protest with the Department, and it filed the Formal Protest of Metcalf & Eddy, Inc., on November 4, 1999. A settlement conference was conducted on November 17, 1999, but the Department and Metcalf & Eddy were unable to resolve the issues raised in Metcalf & Eddy's protest. As a result, the Formal Protest of Metcalf & Eddy, Inc., was referred to the Division of Administrative Hearings on January 28, 1999, and initiated this proceeding. On December 9, 1999, the Department's Awards Committee met to re-consider its decision of October 15, 1999, to award the District VI contract to WRS in light of the issues raised in the protests filed by OHM and Metcalf & Eddy. The Awards Committee decided not to disturb the decision reflected in the October 20, 1999, Notice of Intent to Award (Revised). SPURS Number Section 1 of the RFP provides that the "State of Florida Department of Transportation Request for Proposal Contractual Services Acknowledgement (Pur #7033) . . . will be handed out at the mandatory pre-proposal meeting." The form itself is entitled "State of Florida Request for Proposal, Contractual Services Bidder Acknowledgement" ("Bidder Acknowledgement form"). A box that appears near the top of the Bidder Acknowledgement form is labeled "STATE PURCHASING SUBSYSTEM (SPURS) VENDOR NUMBER."3 The Bidder Acknowledgement form also includes a statement of General Conditions, which provides in pertinent part: Execution of Proposal: Proposal must contain a manual signature of authorized representative in the space provided above. Proposal must be typed or printed in ink. Use of erasable ink is not permitted. All corrections made by proposer to his proposal price must be initialed. The company name and SPURS vendor number shall appear on each page of the bid as required. . . . WRS, OHM, and Metcalf & Eddy included an executed copy of the Bidder Acknowledgement form at the beginning of their proposals. The Bidder Acknowledgement form is not a part of either the Technical Proposal or the Price Proposal. Metcalf & Eddy inserted "042428218-003" in the box reserved for the SPURS number; WRS inserted "P13202"; and OHM inserted "#94-1259053." "042428218-003" is a SPURS number assigned by the Department of Management Services, and Metcalf & Eddy is a vendor registered with that department. "P13202" is not a SPURS number. "#94-1259053" is OHM's federal identification number, and is the number that they commonly use as their SPURS number in the proposals they submit to the Department. Both WRS and OHM are registered as interested vendors with the Department of Management Services, pursuant to Section 287.042(4), Florida Statutes.4 Metcalf & Eddy included its name and its SPURS number on each page of the proposal it submitted in response to the District VI RFP. Neither WRS nor OHM included the name of the company and the SPURS number on each page of their proposals. There is no requirement in the District VI RFP that the name of the company and the SPURS number be included on each page of the proposal. Section 1.8.6 of the RFP is entitled "Waivers" and provides: The Department may waive minor informalities or irregularities in Proposals received where such is merely a matter of form and not substance, and the correction or waiver of which is not prejudicial to other Proposers. Minor irregularities are defined as those that will not have an adverse effect on the Department's interest and will not affect the price of the Proposal by giving a Proposer an advantage or benefit not enjoyed by other Proposers. Paragraph 6 of the General Conditions set forth on the Bidder Acknowledgement form provides in pertinent part: "AWARDS: As the best interest of the State may require, the right is reserved to reject any and all proposals or waive any minor irregularity or technicality in proposals received. " Nancy Lyons is the Contractual Services Unit Administrator for District VI. Ms. Lyons reviews the proposals to determine if they are responsive and to determine if an irregularity or omission is minor and can be waived under the terms of the RFP. It is Ms. Lyons practice to waive as a minor irregularity the omission of a SPURS number or the inclusion of an incorrect SPURS number to be a minor irregularity because, if a vendor is registered with the Department of Management Services, the SPURS number is readily available to the Department. In addition, the SPURS number does not effect either the technical content of the proposal or the price in the proposal. The WRS and OHM proposals were not rejected by the Department's District VI Contractual Services Unit even though WRS and OHM failed to include their SPURS numbers on the Bidder Acknowledgement form and failed to include the company name and SPURS number on each page of their proposals. Disparate treatment. In 1998, Metcalf & Eddy submitted a proposal in response to a Request for Proposals issued by the Department's District IV. In its Price Proposal, Metcalf & Eddy failed to include a price or a zero in three blanks reserved for the daily rate, weekly rate, and monthly rate for an X-Ray Fluorescence (XRF) Spectrum Analyzer; Metcalf & Eddy included as the "Total" for this item "$0.00." Metcalf & Eddy's District IV proposal was rejected as non-responsive as a result of these omissions. Metcalf & Eddy filed a Formal Written Protest and Request for Formal Administrative Hearing and challenged the decision to reject its proposal as non-responsive. After informal efforts to resolve the issue raised in the protest were unsuccessful, Metcalf & Eddy withdrew its protest; the Department entered a Final Order on August 11, 1998, dismissing the protest. Summary The evidence presented by Metcalf & Eddy is not sufficient to establish that the Department's decision to accept the WRS and OHM proposals as responsive is clearly erroneous, contrary to competition, arbitrary, or capricious. The omission of the SPURS number on the Bidder Acknowledgement form is a minor irregularity that did not give WRS or OHM a substantial advantage over Metcalf & Eddy and was of no consequence to the Department because it has ready access to the SPURS numbers included in the database of interested vendors maintained by the Department of Management Services. Furthermore, WRS and OHM were not required to include their company name and SPURS number on each page of the proposal because this requirement was not included in the specifications in the RFP. Finally, Metcalf & Eddy has failed to present evidence to establish that it is the victim of disparate treatment by the Department; the decision of the Department to reject the proposal it submitted to District IV in 1998 is irrelevant to the issues raised in this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation issue a final order dismissing the Formal Protest of Metcalf & Eddy, Inc. DONE AND ENTERED this 30th day of July, 2001, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of July, 2001.
Findings Of Fact The invitation to bid on state Project Nos. 86906-9093, 86906-9094, and 86906-9085 (the "ITB") contained, among other things, 43 pages of Technical Specifications Roadside and Slope Mowing ("Technical Specifications"). Paragraph VI.A. of the Technical Specifications contained the following provision: When mowing areas within ten feet of the travel way, the equipment shall be operated in the direction of the traffic. This provision does not apply when the specific worksite (sic) is protected in accordance with the Florida Department of Transportation Roadway and Traffic Design standards [attached]. 3/ Respondent amended the ITB by letter dated May 1, 1990, which contained Addendum Nos. 1 and 2. Addendum No. 1 amended the invitations to bid on State Project Nos. 86906-9093 and 86906-9094 by deleting the "last" word "attached" from Paragraph VI.A. Addendum No. 2 amended the invitations to bid on State Project No. 86906-9085 by deleting the "last" word "attached" from Paragraph VI.A. No other changes were made in the amendments to the invitations to bid on the three state projects at issue in this proceeding ("Amended ITB"). The ITB contained a requirement that all bidders attend a Mandatory Pre-Bid Conference to allow bidders an opportunity to speak to Respondent's maintenance engineers about any concerns over the ITB. Petitioner attended the Mandatory Pre-Bid Conference conducted on April 26, 1990, for the ITB. 4/ The ITB and the Amended ITB contained a requirement that each bidder visually inspect the roadside areas to be mowed. Petitioner knew of the requirement for visual inspection and complied with that requirement. Petitioner had previous experience in mowing roadside areas for Respondent. The Florida Department of Transportation Roadway and Traffic Design standards ("Standards Index") was not attached to either the ITB or the Amended ITB. Paragraph 9 of the General District Contract Specifications provided that the successful bidder "...shall adhere to the requirements of Part VI of the Manual on Uniform Traffic Control Devices ("MUTCD")." Neither the ITB nor the Amended ITB included a copy of either the MUTCD or Part VI of the MUTCD. Petitioner received the ITB on April 12, 1990, and requested a copy of the Standards Index at that time from Teresa Martin, Assistant District Contracts Administrator, District Four, Florida Department of Transportation. Ms. Martin advised Petitioner on April 12, 1990, that no copies of the Standards Index were available locally and further advised Petitioner of the location and means for obtaining a copy of the Standards Index in Tallahassee, Florida. Petitioner made no attempt to obtain a copy of the Standards Index at that time. Petitioner again requested a copy of the Standards Index from Ms. Martin on May 2, 1990, and was advised again at that time of the location and means of obtaining a copy of the Standards Index. The bid package did not fail to contain any "plan" referred to in: Section 4, Scope of Work, paragraphs 4.1 and 4.2; Section 5, Control of the Work, paragraph 5.2; Section 12, Work Assignment and Planning for Routine Contract Maintenance, paragraphs 2 and 4-6, page 5, paragraph 1.2, page 20, Section II D., III A., page 24, Section IX, and page 64, Proposal. Petitioner presented no evidence or authority describing the applicable standard for defining a "plan". The ITB and Amended ITB contain a description of which roadsides are to be mowed, the manner in which the work should be performed, each pay item and the quantity estimated for each item, the estimated number of mowing cycles, and numerous other detailed provisions regarding mowing operations, operator safety, equipment maintenance, and conversion charts. While the ITB and Amended ITB are standard forms of contract issued by the Department of General Services, they are tailored to meet the specific needs of a mowing contract by means of the Technical Specifications. In the absence of evidence or authority to the contrary from Petitioner, the ITB and Amended ITB are found to include all relevant plans. Respondent failed to include either the "form of Contract" or "Bond" referred to in pages 1, 10, and 64 of the ITB and Amended ITB. Page 64 contained a form of bid proposal which required each bidder to sign a statement that the bidder had "...carefully and to [its] satisfaction examined the...form of Contract and Bond.. The ITB and Amended ITB did not fail to state standards for what is "customary to the mowing operation". The ITB and Amended ITB were prepared on a standard form of contract issued by the Department of General Services and used by Respondent to solicit bids for various types of commodities and services. The ITB and Amended ITB were used to solicit mowing services for specified roadside areas In Broward County, Florida. They were composed of general specifications, bidding documents, technical specifications, and mowing guidelines. The term "custom" by definition refers to the prevailing practice that has been established over time within a geographical area rather than the written terms of a contract. 5/ The definition of grass or vegetated roadside areas to be mowed, which is set forth in Section I, Description A, page 19, excludes certain plants and vines which are present in the areas to be mowed. 6/ Such a definition does not take into account the different toughness and clumping characteristics of each type of grass or weed within the mowing area. Differences in toughness and clumping characteristics of grasses and weeds can adversely alter the uniformity of cutting height. The Technical specifications neither define the term "routine mowing", as used in Sections II.D. and III.A., nor prescribe how high grass or weeds should be allowed to grow before Respondent issues a work order or a notice to proceed. Grass, weeds, plants, and vines in a roadside area that are left for several months without a work order being issued can grow to a height of 10 feet, develop very hard stems, or lay down during mowing and later rebound. The Technical Specifications do not contain a definition of minimum mower size. The frequency with which Respondent issues work orders or notices to proceed depends on growth conditions in the particular roadside area including rain and drought. The topography of the roadside areas to be mowed includes holes, boulders, and un-repaired washouts. The topographical characteristics of the roadside areas and the toughness and clumping characteristics of the grasses and weeds in the roadside areas adversely affect the ability of a successful bidder to comply with cutting height and green streak requirements in the Technical Specifications. 7/ The ITB and Amended ITB were neither arbitrary, capricious, nor beyond Respondent's discretion. The terms of the ITB and Amended ITB were not inherently uncertain or unreasonable. No evidence was presented that Respondent abused its discretion in soliciting the bids, that the accepted bid, if any, was not a reasonable price for the work solicited, that the law was not complied with, or that the contract to be awarded was not fair and capable of just and lawful enforcement. The ITB and Amended ITB were sufficiently precise to protect the public against collusive contracts, prevent favoritism toward contractors, and secure fair competition upon equal terms to all bidders. The ITB and Amended ITB afforded a basis for an exact comparison of bids among all bidders and did not reserve to an officer of the public body the power to make exceptions, releases, and modifications that would afford opportunities for favoritism after the contract is let.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner's written formal protest be DENIED. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 3rd day of August, 1990. DANIEL MANRY 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 3rd day of August, 1990.
The Issue Whether the decision of Respondent, the Florida Department of Financial Services (“DFS”), to award the contract contemplated in its Invitation to Negotiate No. 1819-01 ITN TR, e-Payment Collection and Processing Services, to Intervenor, NIC Services, LLC (“NIC”), is contrary to governing statutes, rules, or policies, or the solicitation specifications; if so, whether that decision was clearly erroneous, contrary to competition, arbitrary, or capricious; and whether Petitioner, PayIt, LLC (“PayIt”), has standing to protest DFS’s decision.
Findings Of Fact The Parties and Claims at Issue DFS, through Florida’s Chief Financial Officer (“CFO”), is authorized to contract with vendors that process and collect electronic payments by credit card, charge card, debit card, and funds transfer (“e-Payment services”). § 215.322(4), Fla. Stat. DFS issued Invitation to Negotiate No. 1819-01 ITN TR (“ITN”) to procure a new contract for those services. NIC, headquartered in Olathe, Kansas, is an e-Payment services company focusing exclusively on government procurements. NIC is the intended recipient of the e-Payment services contract. PayIt, headquartered in Kansas City, Missouri, is also an e-Payment services company focusing exclusively on government procurements. DFS eliminated PayIt from negotiations after the first round. PayIt timely protested the intended award after receiving DFS’s notice of intent to award the contract to NIC. PayIt raises the following four claims: DFS did not make an appropriate best value determination by failing to: (A) consider vendor pricing before eliminating seven vendors during negotiations; (B) understand the pricing of the five remaining vendors before determining that NIC provided the best value to the State; and (C) consider whether making multiple awards would result in the best value to the State; DFS made the following material changes to the ITN during negotiations that improperly gave NIC a competitive advantage: allowing NIC to propose different pricing structures for individual agencies; (B) allowing NIC to waive the limitation of liability and parent company guarantee terms; and (C) allowing NIC to propose pricing based on a promise of exclusivity; DFS violated Florida law and the ITN by awarding the contract to NIC, a non-responsive vendor; and DFS violated Florida law and the ITN by failing to conduct the procurement in a transparent manner by: (A) holding a public meeting where no meaningful discussion occurred as to the reasons the negotiation team members voted in favor of an award to NIC; and (B) failing to prepare a short plain statement detailing the basis of its decision prior to awarding the contract to NIC. E-Payment Services and the ITN DFS is the state agency in charge of procuring contracts for and managing the processing and collection of e-Payment services, which include credit card, debit card, e-Check, and ACH transfer payments made in person via a point-of-sale device (“POS”), over the phone, or online. All state agencies and the judicial branch are required to use the e-Payment services vendor(s) with whom DFS has contracted unless otherwise approved. Local governments may choose to use the vendor(s), too. Approximately 20 state agencies and 95 other government entities use the e-Payment services contract. Each agency has unique needs depending on the type and number of transactions. The Department of Transportation (“DOT”) processes about 80 percent of the State’s e-Payment transactions per year, whereas the Department of Revenue (“DOR”) processes the largest dollar amounts per transaction. Some agencies have more web-based transactions while others have more POS transactions. In 2019, the State processed 1.7 billion transactions in e-Payments totaling about $52 billion. Bank of America (“BOA”) is DFS’s current e-Payment services vendor and its contract expires in 2021. BOA generally provides the services needed, but it uses subcontractors to manage different platforms utilized by the government entities, which has created continuity and reliability issues. BOA also replaced its dedicated team in Tallahassee with employees in Tampa and Orlando, which DFS believes has reduced the level of service it expected. DFS began the competitive procurement process in early 2018 to ensure a smooth implementation of a new e-Payment services contract. In March 2018, DFS conducted a business needs analysis and chose to use an ITN so it could negotiate with multiple vendors to meet the goals of the e-Payments program and provide the best value to the State. DFS wanted the best solution, not the lowest price. That is why it decided against an invitation to bid (“ITB”), as an award would have to go to the lowest bidder rather than the one with the best solution. DFS also decided against a request for proposals (“RFP”), as it could not define the specific services needed. DFS drafted the ITN over three to five months. DFS relied on its own experience, but also received input from DOT, DOR, and other agencies that utilize the contract so it could accommodate their needs and preferences. Based on that process, DFS finalized its primary needs and desires. Specifically, it wanted a single company that would: (1) perform all of the required services, in part to avoid difficulties it experienced by the current vendor’s use of subcontractors and multiple platforms; (2) provide customization to individual agencies and meet their customer service needs, including a year’s worth of data migration to the new platform, at least 15 participant-defined fields, and a dedicated team in Tallahassee; (3) provide contactless-capable POS devices, of which there are currently 600-800 in use; provide interactive voice response software (“IVR”) in at least English and Spanish so that individuals could make payments over the phone, which is consistently used; (5) have experience implementing a contract of this magnitude, given the billions of transactions and dollars processed each year; and (6) ensure the best value to the State. In November 2018, DFS issued the ITN. The ITN specifications detailed the procurement process, the selection methodology, and the award. Numerous sections of the ITN reflected the preferences just discussed, including 1.2 – Solicitation Objective, 1.3 – Background, 1.4 – Questions Being Explored, 1.5 – Goals of the ITN, 3.5.2 – Mandatory Criteria, 3.5.4 – Business References, 3.6.1 – Narrative on Experience and Ability, 3.6.2 – Respondent’s Proposed Solution, and 4.6 – Selection Criteria. The Solicitation Objective stated that DFS intended to make a single award using the Standard Contract, though it reserved the right to make multiple awards or no award at all. The ITN attached the Standard Contract, including a Statement of Work and Standard Terms and Conditions with several provisions of particular relevance: (1) Guarantee of Parent Corporation - requiring the vendor’s parent company (if any) to guarantee the vendor’s obligations under the contract; (2) Limitation of Liability – limiting DFS’s liability for any claim arising under the contract to the lesser of $100,000 or the unpaid balance of any compensation due for the services rendered to DFS under the contract; and (3) Nonexclusive Contract – providing that the contract would not be an exclusive license to provide e- Payment services, as DFS could contract with other vendors to provide similar or the same services. The ITN made clear that vendors had to notify DFS in their responses of any exceptions they had to the Standard Contract or its attachments. The ITN noted that the terms of the Statement of Work, the conditions, costs, different price adjustments, and related services may be negotiated, and required vendors who successfully negotiated such terms and conditions to submit a revised Statement of Work and attach it to their best and final offer (“BAFO”). The ITN also gave DFS discretion to negotiate and finalize terms with the vendor to whom it decided to award the contract. The ITN process involved three phases: solicitation, evaluation, and negotiation. DFS assigned Amy Jones as the procurement officer. She became the sole point of contact during the procurement process. The Solicitation Phase During the solicitation phase and prior to submitting responses, potential vendors could submit questions about the ITN. In response to 90- plus questions, many of which concerned pricing, DFS published answers to the following questions, among others, in a written document (“Q&A”): In response to a question as to whether DFS was open to a more simplified transaction pricing approach that provided a standard/blended rate across all card types and authorization levels, it clarified that it was interested in potential options that may exist and expected responses to propose the solution/approach the vendor believed provided the greatest value to the State. DFS confirmed that if the vendor did not charge a per transaction fee, it should enter a “0” on the spreadsheet but include the cost in the Total Fees. In response to questions concerning the ability to negotiate the terms of the Statement of Work, the contractual documents, or the Guarantee of Parent Corporation, DFS again confirmed that it reserved the right to negotiate the Standard Contract and that vendors had to fully describe any exceptions to such terms in their responses. In response to a question concerning the effective date, DFS indicated that it would be the date of contract execution, which should be in June 2019, but depended on the length of the ITN process. In response to a question as to the start date, DFS stated that the Project, defined in the Standard Terms and Conditions as the activities required to transition all agencies from the current vendor’s platforms to the new vendor’s platforms, should begin immediately upon contract execution. The Evaluation Phase DFS set the deadline for responses and the evaluation stage ensued. The ITN required each response to include three volumes: (1) Response Qualification Documents; (2) Technical Response; and (3) Price Response. The Response Qualification Documents had to contain financial documentation, including three years of audited financial statements, a completed business reference form, and a signed mandatory criteria certification, among others. The Technical Response had to include a narrative on the vendor’s experience, ability, proposed solution, any value-added services offered, any proposed exceptions to the terms and conditions in the Standard Contract, the requisite bond, and a security audit. The ITN stated that a vendor may be rejected if its “past performance, current status, or [r]esponse do not reflect the capability, integrity, or reliability to fully and in good faith perform the requirements of a contract.” The ITN, thus, gave DFS authority to reject a vendor regardless of its price if it could not fully perform the contract. The Price Response detailed the pricing requirements and confirmed that vendors had to complete an Excel spreadsheet provided by DFS. The spreadsheet had sheets for POS pricing, tiered pricing, non-tiered pricing, additional tiered pricing, and additional non-tiered pricing. All fees and pricing for each category, including credit card usage fees, had to be listed and additional rows had to be added if necessary. Tiered pricing represented the transaction-based services whereas non-tiered pricing represented the unit-based services. Pricing had to reflect the cost of the services as described in the Statement of Work. Any additional services had to be included in either the tiered or non-tiered pricing sheets depending on how they would be charged. The tiered and non-tiered sheets automatically populated a summary sheet based on a flat fee-per-transaction model, which would be used to compare the vendors’ pricing. Although the spreadsheet had to be completed as directed, the ITN did not prohibit more detailed explanations as to pricing elsewhere in the response. The Q&A also made clear that DFS encouraged alternative pricing arrangements. DFS received responses from 13 vendors, including BOA, Govolution, Alacriti Payments, NIC, PayIt, Fidelity Information Services (“FIS”), JetPay, JP Morgan, Official Payments, Point & Pay, Suntrust, Hancock Whitney, and Wells Fargo. As the ITN required, many of the vendors listed exceptions to the Standard Terms and Conditions and Statement of Work in their responses. NIC noted that it wanted to revise the language of the limitation of liability term and strike the parent guarantee term in its entirety, among other exceptions. PayIt chose not to list any exceptions in its response. Ms. Jones conducted an administrative review and identified deficiencies with ten of the responses, including PayIt’s. Ms. Jones did not deem NIC’s response deficient. Of particular relevance here, NIC listed four states and two federal agencies as business references to highlight its experience with payment processing services. NIC noted that these partners represented a small sample of the more than 50 governmental agencies that use its payment processing platform. NIC is a wholly-owned subsidiary of NIC, Inc., which has a number of other subsidiaries. Of the agencies listed in its response, NIC has contracts with only two of them. Although the other agencies listed have entered into contracts with NIC-related entities, NIC owns the payment-processing platform and provides e-Payment services to all of the agencies through those related entities. Based on the weight of the credible evidence, NIC accurately listed its experience providing the same e- Payment services at issue here in the states listed in its response. Ms. Jones notified the deficient vendors and gave them an opportunity to cure.1 At the end of the cure period, Ms. Jones deemed all but one vendor (Alacriti Payments) responsive, though the ITN authorized DFS to reconsider responsiveness and responsibility at any time during the procurement. Ms. Jones also reviewed the Price Responses and realized that the spreadsheet formulas had issues that could render the pricing information inaccurate. Several vendors utilized percentage-based pricing per transaction while others put text in the fields. Because the tiered pricing sheet formula only could use fees expressed in dollars and cents, the use of percentages or other text resulted in inaccurate pricing information and rendered the spreadsheet practically meaningless for scoring the Price Responses. 1 As explained later, PayIt’s responsiveness and responsibility (or alleged lack thereof) are not relevant considerations because it challenges the fundamental fairness of the process and seeks a re-bidding. However, for purposes of a complete record, PayIt’s deficiency concerned its failure to include three years of audited financial statements. Upon receipt of the deficiency notice, PayIt timely submitted audited financial statements for 2016 and 2017 (2016 was its first year being audited) and an unaudited financial statement for 2018. PayIt informed DFS that it would submit the audited 2018 statement in April 2019 once the auditors were finished. DFS waived this deficiency as a minor irregularity and moved PayIt on to negotiations. Although PayIt never ultimately submitted the 2018 audited financial statement, DFS ended negotiations with it on other grounds, as detailed below. For instance, PayIt utilized a percentage fee per credit card transaction. When it included the percentage in the tiered pricing spreadsheet, the spreadsheet automatically converted the percentage to pennies and inaccurately reduced its pricing for credit card transactions. NIC also utilized a percentage fee per credit card transaction. Instead of including the percentage in the spreadsheet, it included an “N/A” notation in the description column, which resulted in $0 being calculated for credit card fees in the spreadsheet. Although the Q&A instructed vendors to use $0 if they “would not charge a per-transaction fee for different card types and authorization levels,” it required them to provide “instead a total cost for Total Fees.” NIC failed to include the total fees that it would charge for credit card transactions elsewhere in the spreadsheet, resulting in a tiered pricing sheet that included fees only for ACH transactions and inaccurately reduced its total pricing. That said, NIC explained elsewhere in its response that it charged percentage fees for credit card transactions and described generally how those fees would apply. DFS did not issue deficiency notices to PayIt, NIC, or any other vendor as to the Price Response. However, because the spreadsheet could not accurately depict pricing for many of the vendors, making it impossible to accurately score this component during the evaluation phase, DFS had to make a decision. It could reject all bids and start over, create a revised spreadsheet that could suffer from similar formulaic errors, or issue an addendum that removed consideration of pricing from the evaluation phase. DFS chose the latter because it would allow for and encourage vendors to use creative pricing without having to start the procurement process over. It issued Addendum 4, which confirmed that pricing would not be scored or considered during the evaluation phase. Instead, technical scores would be utilized to establish a competitive range and pricing would be addressed in the negotiation phase. Although Addendum 4 noted that the Price Response would be used, it deleted the form’s instructions and confirmed that vendors did not need to resubmit it. The weight of the credible evidence showed that this decision was reasonable; it ensured that all vendors were treated fairly and equally when it came to pricing, were not excluded from negotiations simply because the spreadsheet was too rigid to accurately score their pricing, and it allowed all vendors to address and answer questions about their specific pricing during negotiations. Addendum 4 provided the requisite notice about filing a specifications challenge within 72 hours. No vendor filed such a protest. Ms. Jones sent the remaining 12 responses to the evaluation team for a qualitative review. The evaluation team reviewed the responses against the evaluation criteria and completed score sheets for each vendor. The scores ranged from 66 to 99 out of 141 possible points. Ms. Jones reviewed the scores to establish a competitive range of vendors that appeared reasonably susceptible to an award. Because there was no natural break in the scoring, Ms. Jones included all 12 vendors within the competitive range and DFS commenced negotiations with all of them. The Negotiation Phase The negotiation team included Jennifer Pelham, Teresa Bach, Tanya McCarty, and Rick Wiseman, who collectively have substantial experience in negotiating contracts, procurement, and e-Payment services. The team also invited subject matter experts, including individuals from the three largest users, DOT, DOR, and the Department of Highway Safety and Motor Vehicles (“DHSMV”), to participate in the negotiation and strategy sessions and provide their input. The ITN required the team to conduct the negotiations and make an award recommendation after determining which vendor presented the best value to the State in accordance with the following Selection Criteria: The Respondent’s articulation, innovation, and demonstrated ability of the proposed solution to meet the Department’s Solution goals and the requirements of this ITN; Experience and skills of the Respondent’s proposed staff relative to the proposed solution; and The Respondent’s pricing and overall cost to the State. The ITN gave DFS substantial discretion. It could eliminate vendors from further consideration, end negotiations at any time and proceed to a contract award, or reject all responses and start the process over. It could request clarifications and revisions to any vendor’s response (including BAFOs) until it believed it had achieved the best value. It could negotiate different terms and related price adjustments if it believed such changes provided the best value. And, it could arrive at an agreement with a vendor and finalize principal terms of the contract. The team conducted its first round of negotiations with the 12 vendors. Prior to the meetings, the negotiation team closely reviewed the vendors’ responses and prepared agendas with questions as to their ability to fully perform the required services, their proposed solutions, and their pricing models, among other things. The agendas asked the vendors to explain their pricing and each had that opportunity during their presentations. The team met immediately after each presentation to discuss the vendor, its ability to meet the Statement of Work and provide all of the required services, its experience, and any other issues that arose during the presentation. The team conducted a strategy session after the first seven presentations to discuss the same issues and tentatively decided with which vendors to move forward. The team conducted a similar strategy session after the final five presentations. Despite responses indicating otherwise, it became clear that several vendors did not fully understand or appreciate the scope of the required services. Several vendors also lacked the capability or demonstrated ability to perform all of the required services. Based on the presentations and strategy discussions, the team ended negotiations with seven vendors—i.e., BOA, JP Morgan, Govolution, Point & Pay, Suntrust, Hancock Whitney, and PayIt—for the following reasons: PayIt – did not offer IVR in Spanish, as required; claimed experience with POS devices, but failed to answer questions about that experience or about the specific types of equipment it could offer; failed to follow the agenda and answer specific questions/concerns raised by the team; experience limited to web and mobile, rather than POS or IVR; limited experience with individual agencies in states, but not an entire state contract, and only had been in business for a few years; lacked adequate resources and staff to handle the contract at the time, with only a promise to hire more staff later. BOA – did not offer IVR; could not provide all requested services, so BOA proposed two contracts with other entities, which would cause additional administrative difficulty. JP Morgan – lacked an understanding of the Statement of Work or the ITN; lacked a detailed implementation plan; could not offer participant defined fields for agencies to customize the platform or the required data migration; offered only a piecemeal solution relying on the current vendor to continue providing services. Govolution – lacked an understanding of the Statement of Work or the ITN; only offered payment technology, but lacked the ability to provide the processing component; lacked a detailed implementation plan; could not offer the required data migration. Point & Pay – lacked experience with both government contracts and contracts of the scope, complexity, and scale of this contract; focused more heavily on payment technology, rather than processing. Suntrust - lacked an understanding of the Statement of Work or the ITN; offered only a piecemeal solution relying on the current vendor to continue to provide services; could not provide data migration for the 15 participant fields needed for agency customization; lacked a plan to replace POS devices. Hancock Whitney - lacked an understanding of the Statement of Work or the ITN, including that the contract included SunPass or that local governments had to be converted during the implementation period; could not provide required data migration or 15 participant fields needed for agency customization. Based on the weight of the credible evidence, the team asked the vendors to discuss their pricing and considered it, but reasonably decided to end negotiations with these seven vendors—who could not offer all of the required services, lacked an understanding of the required services or a solid plan for providing them, failed to follow the agenda and provide the specific information requested, or lacked sufficient experience—consistent with the ITN and Florida law. The team continued negotiations with NIC, FIS, Official Payments, JetPay, and Wells Fargo. The team created agendas for the second round of negotiation sessions so that it could delve deeper into the vendors’ ability to perform all of the required services, their unique solutions for doing so, and their pricing. The team created a chart to conduct a side-by-side comparison of the vendors’ experience, their individual solutions, and their ability to provide the requisite services and value-added services. Although not required by the ITN, the team also created a chart listing the five vendors’ prices for the required services to try to do an apples- to-apples comparison. However, doing such a comparison remained a challenge because of the vendors’ different pricing structures. But, the team generally understood what the vendors charged for the services, including that Wells Fargo and FIS had cheaper transaction fees than NIC. After the second round, the team ended negotiations with JetPay and Wells Fargo for the following reasons: JetPay – Did not meet the information transfer requirements, forcing agencies to undergo extensive programming efforts to switch over; lacked experience with contracts of this size and scope; would not commit to a dedicated staff in Tallahassee. Wells Fargo – Did not use a single platform and had a multi-vendor solution; lacked a plan for replacing POS devices; could not meet the requirements for data migration or copies of batch files for processing payments that agencies requested; elaborate and extensive pricing. Based on the weight of the credible evidence, the team understood and considered the vendors’ pricing, but reasonably decided to end negotiations with JetPay and Wells Fargo—two vendors who lacked the demonstrated ability and experience to perform all of the required services of the ITN— consistent with the ITN and Florida law. The third round of negotiations continued with FIS, Official Payments, and NIC. The team met with each vendor again to obtain additional information about their ability to provide all of the required services, their solutions, and their pricing. In order to focus more closely on pricing, the team provided the vendors with past monthly invoices for DOT, DOR, and DHSMV and each completed the invoices based on their own pricing. This exercise allowed the team to understand the total cost to the State that each vendor would charge based on the services currently provided by BOA and compare those total costs both amongst each other and with BOA. Based on the weight of the credible evidence, the team reasonably decided to do this pricing exercise only with these three vendors because they were the only ones that it believed at the time were reasonably susceptible to an award. Nothing in the ITN required the team to conduct this pricing exercise with all vendors, much less those who already had been reasonably eliminated for failing the other two selection criteria. After the third round, the team ended negotiations with Official Payments for several reasons. First, it could not commit to a deliverable for next-day settlement of transactions, which BOA currently provided to agencies. Second, some of its references confirmed that it had not implemented the number, level, and complexity of services required by the ITN. Third, it offered to provide only one representative in Tallahassee who only had one year of experience with e-Payments. Based on the weight of the credible evidence, the team reasonably decided to end negotiations with Official Payments consistent with the ITN and Florida law. The team continued negotiations with FIS and NIC. It met with both vendors, checked their references, and reviewed their pricing exercises. The team understood that FIS offered lower prices than NIC, but decided to end negotiations with FIS for the following reasons distinct from price: FIS had no contactless payments or IVR services currently available and the team remained concerned that it had never implemented these services before. Although FIS promised to make those services available later in 2020, the team preferred (and, based on the language of the ITN and its answers in the Q&A, believed that the ITN required) that vendors be able to provide the services on the date they signed the contract to ensure implementation could begin immediately and the transition run smoothly. The team had concerns about FIS’s ability to live up to its promises, as it twice delayed meetings during negotiations and its references noted a lack of responsiveness to issues and implementing new services. FIS only offered one representative in Tallahassee and, at that, only during the implementation period. PayIt argues that the team misunderstood how much cheaper FIS was than NIC and ignored merchant fees during the pricing exercise. The weight of the credible evidence showed otherwise. PayIt contends that the team misunderstood FIS’s price because a spreadsheet it utilized contained an error as to FIS’s fee per transaction, which rendered FIS’s costs lower than the team realized. However, the team already knew that FIS’s prices were generally lower than NIC’s and the testimony confirmed that the error had no effect on their decision. Indeed, the team utilized the spreadsheet merely as a tool. It also cannot be ignored that, although NIC charged higher fees per transaction, FIS charged fees for monthly maintenance and equipment replacement, and charged hourly fees for customization development, which NIC offered for free. More importantly, based on the weight of the credible evidence, the team reasonably chose to eliminate FIS from negotiations despite its lower price because it fell short on the other two selection criteria—demonstrated ability and experience to meet the requirements of the ITN—and the team acted within its discretion under the ITN and Florida law in doing so. The team continued negotiations with NIC and solicited a BAFO only from it because no other vendor was reasonably susceptible to an award. NIC submitted its BAFO in December 2019. Consistent with its initial response, NIC proposed adjustments to the limitation of liability term and removed the parent guarantee term, and it attached those changes in its proposed Standard Terms and Conditions, as the ITN required. Although NIC understood that it would be the single awardee, its proposed Standard Terms and Conditions included the original non-exclusivity provision, making it clear that DFS was not granting NIC an exclusive license to provide the e-Payment services at issue. The BAFO also included a pass-through plus pricing model, which NIC proposed back in July 2019 during the pricing exercise. This pricing model passed through banking and merchant fees, reduced its fees per transaction from its original proposal, and included a discounted fee for DOT transactions. These adjustments generated significant savings to the State as compared to what the State currently pays BOA, which is exactly why DFS encouraged vendors to propose creative pricing in the ITN and the Q&A. PayIt argues that the team irrationally ignored merchant fees associated with credit card transactions during the pricing exercise, which would be a pass-through cost to the State. However, the weight of the credible evidence showed otherwise. Unlike processing fees (charged by NIC) and interchange fees (charged by the credit card company), merchant fees are charged by the intermediary that provides security and tokenization for the credit card transaction. Although the sample invoices submitted by FIS, Official Payments, and NIC during the pricing exercise did not itemize merchant fees, the total cost shown on the invoices included those fees. Thus, the team understood how the merchant fees would impact the total cost to the State, even if they did not understand exactly what those fees were. More importantly, agencies have the option to pass through merchant fees to the customer through a convenience fee and many of them do just that. In fact, agencies charged approximately $8.3 million in convenience fees in 2017-2018. By passing those fees through to the customer, they are not costs borne by the State. Because it is up to the agency to choose whether to pass through such fees, it is impossible to determine whether and to what extent the State will be responsible for those fees and how much they would cost the State. The Best Value Determination The team reviewed NIC’s BAFO and determined that it represented the best value to the State. The weight of the credible evidence established the following justifications for that decision: NIC was the only vendor that could provide all of the required services and exceed them, including contactless payments, POS devices, IVR in 21 languages, and next-day settlement with midnight cut-off so payments would be disbursed to the agency within one business day. NIC had over 25 years of government experience with states as large as Florida and had the demonstrated ability to perform all services effectively and immediately. NIC owned a single proprietary platform designed specifically for government entities with over 200 configurable elements that agencies could tailor to their own individual needs. NIC proposed a dedicated four-person team in Tallahassee for the duration of the contract, which was important due to the number of agencies utilizing the contract and the number of moving parts. NIC had a detailed project management plan for implementing the services to the agencies and local governments. NIC offered value-added services exceeding those required by the ITN, such as free replacement of all POS devices, a yearly device allowance, a mobile platform, and payment through text messages, among others. Although the team understood that choosing NIC may be more expensive than FIS, it determined that it was willing to pay more for a better solution that exceeded all of the ITN’s requirements from a more established vendor. The team did not want Florida to be a test case and it had confidence that NIC was battle-ready on day one. Given the importance of this billion- dollar contract and the number of agencies involved, the weight of the credible evidence showed that the team reasonably made this determination. The team’s almost year-long effort culminated in a public meeting on January 3, 2020. At that point, the team had conducted over 30 negotiation sessions with vendors, many of which spanned an entire day, and held over 100 strategy sessions averaging around four to six hours each. At the meeting, Ms. Pelham reviewed the selection criteria and each team member voted in favor of NIC. Although the team members did not detail the reasons for their vote at the meeting, they had spent hundreds of hours meeting with vendors and strategizing about their capabilities, solutions, and pricing, and discussing these issues at length during the strategy sessions. It is true that the team was to arrive at its recommendation by “discussion” during a public meeting, but the ITN did not define that term or require a specific level of detail. In any event, the failure to provide such details during the meeting resulted in no prejudice to any other vendors, all of whom already had been reasonably eliminated from negotiations. After the meeting, Ms. Pelham drafted a memorandum recommending the award to NIC. The memorandum confirmed that NIC provided the best value to the State based on its price and the selection criteria. Although the memorandum did not provide a more detailed explanation, the ITN contained no such requirement. Instead, the ITN stated that the negotiation team would make an award recommendation after determining which vendor presented the best value in accordance with the selection criteria and that the CFO or his designee will make the final determination based on that recommendation. Mr. Fennell, the deputy CFO, was tasked with making the final decision. As the deputy CFO of a large agency, he must rely on the advice of the division directors, deputies, and bureau chiefs who oversee the day-to-day operations of the divisions within his purview; this procurement was no different. Based on his confidence in the team and Mr. Collins, who had been involved throughout the ITN process, participated in some of the strategy sessions, and provided high-level updates to Mr. Fennell about the progress of the procurement, Mr. Fennell approved the team’s recommendation. Based on the weight of the credible evidence, DFS did not contravene the ITN, let alone in a material or prejudicial way, through the process by which it recommended the award. The negotiation team followed the dictates of the ITN by holding the public meeting, at which the selection criteria were reviewed and the team voted for the recommended action, which was then set forth in the team’s memorandum. Mr. Fennell complied with the ITN by making a final decision based on the memorandum and the confidence he had in the negotiation team’s recommendation. On January 13, 2020, DFS issued its notice of intent to award the contract to NIC. Upon receipt thereof, PayIt timely filed its bid protest. Assuming that DFS and NIC are successful in this protest, they will execute the contract. Thereafter, DFS will create a contract file, place the contract in it, and confirm that it contains a short plain statement explaining the basis for the award, as required by section 287.057(1)(c)5., Florida Statutes. The contract itself is often sufficient to meet this requirement. Based on the weight of the credible evidence and the language of the statute, the undersigned finds that DFS has no obligation to create such a file or prepare the statutory statement until the contract is signed, which cannot occur until this protest is finally resolved.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services issue a final order dismissing PayIt, LLC’s Amended Formal Written Protest Petition. DONE AND ENTERED this 6th day of August, 2020, in Tallahassee, Leon County, Florida. S ANDREW D. MANKO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of August, 2020. COPIES FURNISHED: Brittany B. Griffith, Esquire Department of Financial Services Office of the General Counsel 200 East Gaines Street, Room 612B Tallahassee, Florida 32399-0950 (eServed) James A. McKee, Esquire Foley & Lardner LLP 106 East College Avenue, Suite 900 Tallahassee, Florida 32301 (eServed) Eduardo S. Lombard, Esquire Radey Law Firm, P.A. 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) Alexandra Akre, Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 (eServed) Eugene Dylan Rivers, Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32301 (eServed) Erik Matthew Figlio, Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32301 (eServed) Mallory Neumann, Esquire Foley & Lardner LLP 106 East College Avenue, Suite 900 Tallahassee, Florida 32301 (eServed) Marion Drew Parker, Esquire Radey Law Firm, P.A. 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) John A. Tucker, Esquire Foley & Lardner, LLP One Independent Drive, Suite 1300 Jacksonville, Florida 32202 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
The Issue The issues in these consolidated cases are: (1) whether the decision by Respondent, Department of Transportation, to reject all bids for the contract at issue was illegal, arbitrary, dishonest, or fraudulent; and (2) if so, whether Respondent's actions in cancelling the notice of intent to award the contract at issue to Cyriacks Environmental Consulting Services, Inc., ("CECOS") and requiring the submittal of new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious.2/
Findings Of Fact The Parties Respondent is the state agency that issued the RFP to procure the Contract for Respondent's District IV. CECOS is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB was granted party status to DOAH Case No. 16-0769 by Order dated February 29, 2016, and by Order dated March 9, 2016, was determined to have standing in that case as a party whose substantial interests were affected by Respondent's decision to reject all proposals. Overview of the Procurement Process for the Contract Respondent issued the RFP on or about October 1, 2015. The RFP sought to obtain support services related to environmental impacts review for projects in Respondent's District IV work program; wetland mitigation design; construction, monitoring, and maintenance; permitting of mitigation sites; exotic vegetation control and removal in specified locations; relocation of threatened, endangered, or rare flora and fauna; permit compliance monitoring; and other services specified in the RFP. The RFP stated Respondent's intent to award the Contract to the responsive and responsible proposing vendor6/ whose proposal is determined to be most advantageous to Respondent. The responses to the RFP were scored on two components: a technical proposal, worth a total of 60 points, that addressed the proposing vendor's experience, qualifications, and capabilities to provide high-quality desired services; and a price proposal, worth a total of 40 points, that addressed the proposed price without evaluation of the separate cost components and proposed profit of the proposing vendor, compared with that proposed by other vendors. The price proposal evaluation was based on the following formula: (Low Price/Proposer's Price) X Price Points = Proposer's Awarded Points. The Special Conditions section of the Advertisement portion of the RFP, paragraph 3, stated in pertinent part: In accordance with section 287.057(23), Florida Statutes, respondents to this solicitation or persons acting on their behalf may not contact, between the release of the solicitation and the end of the 72- hour period following the agency posting the notice of intended award, . . . any employee or officer of the executive or legislative branch concerning any aspect of this solicitation, except in writing to the procurement officer or as provided in the solicitation documents. Violation of this provision may be grounds for rejecting a response. The period between the release of the solicitation and the 72-hour period after posting of the intended award is commonly referred to as the "cone of silence." The Special Conditions section of the Advertisement portion of the RFP, paragraph 19, informed vendors that Respondent reserved the right to reject any or all proposals it received. Exhibit B to the RFP, addressing compensation, limited compensation for all authorizations for work performed under the Contract to a total of $5,000,000. Exhibit B stated that the schedule of rates listed in the Price Proposal Form C (i.e., the rates submitted for the sections comprising Exhibit C to the RFP) would be used for establishing compensation. On October 7, 2015, Respondent issued Addendum 1 to the advertised RFP. Addendum 1 revised Exhibit A to the RFP, the Scope of Services; and also revised Exhibit C to the RFP, the Bid Sheet, to provide it in Excel format. As revised by Addendum 1, Exhibit C consists of an Excel spreadsheet comprised of six sections, each of which was to be used by the responding vendors to propose their rates for the specified services being procured in each section of the Bid Sheet. Section 6 of the Excel spreadsheet, titled "Trees, Schrubs [sic], and Ground Cover, consists of eight columns and 258 rows, each row constituting a plant item on which a price proposal was to be submitted. The columns are titled, from left to right: No.; Scientific Name; Common Name; Unit; Estimated of [sic] number of Unites [sic]; Rate; Extension (Unit X Rate); and Multiplier 2.5 (Price X 2.5). Each row of the spreadsheet in Section 6 identified, as a fixed requirement for this portion of the proposal, the specified type of plant, unit (i.e., plant size), and estimated number of units (i.e., number of plants). For each row of the Section 6 spreadsheet, only the cells under the "Rate" column could be manipulated. Vendors were to insert in the "Rate" cell, for each row, the proposed rate for each plant item. The cells under all other columns for each row were locked, and the RFP stated that any alteration of the locked cells would disqualify the vendor and render its proposal non-responsive. The instructions to Exhibit C, Section 67/ stated: Trees, Schrubs [sic], and Ground Cover Price of plants shall include project management, field supervision, invoicing, installation, mobilization of traffic, water throughout the warranty period, fertilizer and [sic] six (6) month and demobilization, minor maintenance guarantee. Installation of plant material shall be per the Scope of Services. All planting costs shall include the cost to restore area to pre-existing conditions (i.e., dirt, sod, etc.). On October 20, 2015, Respondent issued Addendum 2, and on October 29, 2015, Respondent issued Addendum 3. Both addenda changed Respondent's schedule for reading the technical proposal scores, opening the sealed price proposals, and posting the intended awards. Addenda 1, 2, and 3 were not challenged. However, a key dispute in these consolidated proceedings is whether the Addendum 1 Bid Sheet in Section 6 and the instructions for completing that Bid Sheet were ambiguous, or whether Respondent reasonably believed them to be ambiguous. The vendors were to submit their responses to the RFP, consisting of their technical proposals and price proposals, by October 16, 2015. CECOS, DB, and four other vendors timely submitted responses to the RFP. On November 2, 2015, the scores for the technical proposals submitted by the vendors were presented to the Selection Committee ("SC") at a noticed meeting. DB received the highest number of points on the technical proposal portion of the RFP. The SC met again on November 3, 2015. At that time, Respondent's Procurement Officer, Jessica Rubio, read the total awarded points for each vendor's price proposal, as well as each vendor's total combined points——i.e., total points for technical proposal and price proposal. CECOS received the highest number of points for the price proposal portion of the RFP, and also received the highest total combined points. Respondent recommended, and the SC concurred, that Respondent should award the Contract to CECOS. At 10:00 a.m. on November 3, 2015, Respondent posted the Proposal Tabulation, constituting its notice of intent that CECOS would be awarded the Contract.8/ CECOS submitted a price proposal of $4,237,603.70. DB submitted a price proposal of $9,083,042.50. The other four vendors' price proposals ranged between $4,540,512.90 and $5,237,598.55. The "cone of silence" commenced upon Respondent's posting of the Proposal Tabulation, and ended 72 hours later, on November 6, 2015, at 10:00 a.m. As discussed in greater detail below, after the Proposal Tabulation was posted, Respondent discovered an apparent ambiguity in Exhibit C, Section 6, regarding the instructions to that section and the inclusion of the "2.5 Multiplier" column on the Bid Sheet. After an internal investigation, Respondent decided to cancel its intent to award the Contract to CECOS. On November 5, 2015, Respondent posted a notice that it was cancelling the intent to award the Contract to CECOS. On November 5, 2015, DB filed a Notice of Protest, stating its intent to challenge the award of the Contract to CECOS. Thereafter, on November 9, 2015, DB contacted Respondent by electronic mail ("email") to withdraw its Notice of Protest.9/ Due to the apparent ambiguity in Exhibit C, Section 6, on November 9, 2015, Respondent issued Addendum 4 to the RFP. Addendum 4 required the responding vendors to submit new price proposals for all sections (i.e., sections 1 through 6) of Exhibit C to the RFP. Addendum 4 also established a new timeline for a mandatory pre-bid conference to be held on November 12, 2016; set a sealed price proposal due date of November 19, 2016; and identified new dates for opening the price proposals and posting the Notice of Intended Award of the Contract. On November 12, 2015, Respondent conducted a mandatory pre-bid conference to address Addendum 4. The participating vendors expressed confusion and posed numerous questions regarding the submittal of new price proposals and their technical proposals. Immediately following the pre-bid conference, Respondent issued Addendum 5, which consisted of a revised Exhibit A, Scope of Services; revised Exhibit C, Bid Sheet in Excel format for all six sections; and responses to the questions posed at the pre-bid conference.10/ The Addendum 5 Bid Sheet comprising Exhibit C, Section 6, was substantially amended from the version that was published in Addendum 1. Specifically, the column previously titled "Rate" was changed to "Rate Per Unit"; the "Extension (Unit X Rate)" and "Multiplier 2.5" columns were deleted; and a new column titled "Proposed Cost (Rate per Unit X Est. No. of Units)" was added. Additionally, the instructions for Section 6 were substantially amended to read: "'Rate Per Unit' must include all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, travel, invoicing, labor, maintenance of traffic, mobilization and demobilization, staking and guying, maintenance of planting site throughout the 180[-]day plant warranty." These amendments were intended to clarify that the proposed rate for each plant unit was to include all overhead costs associated with performance of the Contract with respect to that particular unit. On November 13, 2015, CECOS filed a Notice of Protest to Respondent's issuance of Addendum 4, requiring the vendors to submit new price proposals. Thereafter, on November 23, 2015, CECOS filed the First Petition challenging Respondent's decision, announced in Addendum 4, to require the responding vendors to submit new proposals for the price proposal portion of the RFP, and its decision to cancel the notice of intent to award the Contract to CECOS.11/ Once CECOS filed its Notice of Protest on November 13, 2015, Respondent ceased all procurement activity directed toward awarding the Contract. On December 17, 2015, Respondent posted notice that it was rejecting all proposals and that the Contract would be re- advertised through issuance of a new RFP. On December 22, 2015, CECOS filed a Notice of Protest, and on January 4, 2016, filed its Second Petition challenging Respondent's decision to reject all proposals and re-advertise the Contract. Bases for Respondent's Actions Shortly after Respondent posted the Proposal Tabulation noticing its intent to award the Contract to CECOS, Christine Perretta, owner and president of DB, sent an email to Respondent, then called Rubio to inquire about Respondent's decision to award the Contract to CECOS. The evidence shows that these contacts occurred sometime on or around November 3, 2016.12/ In her telephone discussion with Rubio, Perretta inquired about how to file a notice of protest13/ and also asked whether Respondent had reviewed the vendors' price proposals for correctness or accuracy, or had simply chosen the lowest price proposal. In the course of the discussion, Perretta informed Rubio that DB had submitted a "loaded" rate for each plant unit ——meaning that DB's rate proposed for each plant item in the "Rate" column on the Section 6 Bid Sheet consisted not only of the cost of the plant item, but also the cost for all associated overhead services listed in the instructions to Section 6 and in the RFP Advertisement, paragraph 18(v), plus compensation.14/ Rubio could not clearly recall whether, in the course of their discussion, Perretta had inquired about the use of the 2.5 multiplier, and there is conflicting evidence as to whether Perretta related her view that CECOS may not be able to perform the Contract based on the price proposal it had submitted. In any event, as a result of Rubio's discussion with Perretta, Rubio determined that she needed to review Exhibit C, Section 6. In the course of her investigation, Rubio called Wendy Cyriaks, owner and president of CECOS.15/ Cyriaks confirmed that CECOS had submitted an "unloaded" rate for each plant item—— meaning that it had included only the cost of each plant item in the "Rate" column on the Section 6 Bid Sheet, and had not included, in the proposed rate for each plant item, the cost of the associated overhead services listed in the instructions to Section 6 or RFP Advertisement, paragraph 18(v), or compensation. Cyriaks told Rubio that CECOS expected that its overhead costs and compensation for each item would be covered through use of the 2.5 multiplier. Also in the course of her investigation, Rubio asked Bogardus whether he had intended the 2.5 multiplier to be used to cover all costs, including vendor compensation, associated with obtaining, installing, and maintaining the plant items listed in Section 6. Bogardus initially confirmed that his intent in including the 2.5 multiplier on the Section 6 Bid Sheet was to cover all of the overhead costs and compensation. However, the persuasive evidence establishes that Bogardus subsequently agreed with Rubio that the 2.5 multiplier should not have been included in Section 6. Pursuant to her discussions with Perretta and Cyriaks, Rubio realized that the wide discrepancy between DB's and CECOS' price proposals was due to their differing interpretations of the instructions in Section 6 regarding plant item rates and the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet. Rubio testified, persuasively, that the inclusion of the "2.5 Multiplier" column rendered Exhibit C, Section 6, of the RFP ambiguous. To that point, the RFP does not contain any instructions or discussion on the use of the 2.5 multiplier. Therefore, to the extent the multiplier was intended to be used by the vendors to build overhead costs and compensation into their price proposals, the RFP fails to explain that extremely important intended use——leaving the significance and use of the multiplier open to speculation and subject to assumption by the vendors in preparing their price proposals. Rubio reasonably viewed DB's and CECOS' divergent interpretations of the instructions and the inconsistent use of the 2.5 multiplier as further indication that Section 6 was ambiguous. She explained that in order for Respondent to ensure that it is procuring the most advantageous proposal for the State, it is vitally important that the RFP be clear so that responding vendors clearly understand the type of information the RFP is requesting, and where and how to provide that information in their price proposals. Rubio persuasively testified that in her view, the instructions in Section 6 had, in fact, called for a loaded rate, but that CECOS had erroneously assumed, based on the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet, that overhead and compensation for each plant item would be covered through use of the 2.5 multiplier, and that as a consequence, CECOS incorrectly proposed unloaded rates for the plant items. In Rubio's view, CECOS' error was due to the ambiguity created by the unexplained and unsupported inclusion of the 2.5 multiplier in Section 6. Rubio testified that CECOS had been awarded the Contract because it had submitted the lowest price proposal, but that its proposal was based on an unloaded rate for the plant items, contrary to the instructions for Section 6. In Rubio's view, CECOS' price proposal was unresponsive, and CECOS should not have been awarded the Contract. Rubio also testified, credibly and persuasively, that the use of the 2.5 multiplier in Section 6 for compensation purposes rendered the RFP arbitrary. Respondent's District IV historically has not used a 2.5 multiplier for compensation purposes for commodities contracts, and no data or analyses exist to support such use of a 2.5 multiplier.16/ This rendered the RFP both arbitrary and unverifiable with respect to whether it was structured to obtain the most advantageous proposal for the State. To this point, Rubio credibly explained that Respondent's existing environmental mitigation services contract with Stantec was procured through the "Invitation to Negotiate" ("ITN") process. In that procurement, Respondent negotiated to obtain the best value for the State. The ITN bid sheet contained a 2.5 multiplier that was used only for weighting purposes to evaluate and determine which firms would be "short- listed" for purposes of being invited to negotiate with Respondent for award of the contract. Importantly——and in contrast to the RFP at issue in this case——the multiplier in the ITN was not used to determine the final prices, including compensation, to install trees, shrubs, and ground cover under that contract. Rubio also testified, credibly, that the Bid Sheet was structurally flawed because it did not allow the vendor to clearly indicate the "unit price" inclusive of all overhead costs, and that this defect would result in Respondent being unable to issue letters of authorization to pay invoices for the cost of installing the plant items or compensating for work performed. For these reasons, Respondent determined that it needed to cancel the intent to award the Contract to CECOS. As noted above, Respondent posted the cancellation of the intent to award the Contract on November 5, 2015. At a meeting of the SC conducted on November 9, 2015, Respondent's procurement staff explained that the intent to award the Contract had been cancelled due to ambiguity in the instructions and the Bid Sheet for Exhibit C, Section 6. Ultimately, the SC concurred with Respondent's cancellation of the intent to award the Contract to CECOS and agreed that the vendors should be required to submit new price proposals. Thereafter, on November 9, 2015, Respondent issued Addendum 4, announcing its decision to solicit new price proposals from the responding vendors. Respondent conducted a pre-bid meeting with the vendors on November 12, 2015, and immediately thereafter, issued Addendum 5, consisting of a revised Scope of Services and a substantially revised Bid Sheet for all six sections of Exhibit C. As previously discussed, the Section 6 Bid Sheet issued in Addendum 5 was revised to, among other things, delete the "2.5 Multiplier" column and the column previously titled "Rate" was changed to "Rate Per Unit." Also as discussed above, the instructions to Section 6 were revised to clarify that the "Rate Per Unit" provided for each plant unit must contain all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, invoicing, labor, maintenance of traffic, and other costs specified in the instructions——i.e, constitute a loaded rate. All of these changes were made in an effort to clarify, for the benefit of all vendors, the specific information that Respondent needed to be provided in the price proposals. Rubio testified, credibly, that in requiring the vendors to submit new price proposals pursuant to revised Exhibit C, Respondent did not give, or intend to give, any vendor a competitive advantage over any of the other vendors, nor did Respondent place, or intend to place, CECOS at a competitive disadvantage by requiring the vendors to submit new price proposals pursuant to revised Exhibit C. As noted above, once CECOS filed its Notice of Protest, Respondent ceased all procurement activity directed toward awarding the Contract. Consequently, the vendors did not submit new price proposals and the scheduled meetings at which the new price proposals would be opened and the intended awardee announced were cancelled. On December 17, 2015, Rubio briefed the SC regarding the problems with the RFP and described her concerns about proceeding with the procurement. She explained that Respondent's procurement staff was of the view that the instructions in Section 6, as previously published in Addendum 1, were ambiguous because they did not clearly provide direction on how to complete the Bid Sheet for that section. Additionally, the Section 6 Bid Sheet, as structured in Addendum 1, did not allow the vendors to provide a plant unit rate that was inclusive of all overhead costs. To this point, she noted that unless the vendors provided a loaded rate——i.e., one that included all overhead costs——Respondent would not be able to issue work orders for any plant items in Section 6.17/ She explained that these flaws constituted the bases for Respondent's decision, announced on November 9, 2015, to require the submittal of new price proposals. Rubio further explained that in Respondent's rush to issue a revised Scope of Services as part of Addendum 5, mistakes had been made18/ and Respondent's Environmental Office needed more time to carefully review the Scope of Services and Bid Sheet, to ensure the RFP was correctly drafted and structured so that the Contract could be accurately solicited and procured. Additionally, the vendors——including Mark Clark of CECOS——had expressed confusion regarding the revised Bid Sheet and submitting new price proposals, and some vendors had inquired about submitting new technical proposals. Further, under the revised procurement schedule issued as part of Addendum 4 on November 9, 2015, the vendors had a very compressed timeframe in which to prepare and submit their new price proposals, heightening the potential for mistakes to be made. Because of these substantial problems and concerns with the RFP, Rubio recommended that Addendum 5 be rescinded, that all vendor proposals (both technical and price) be rejected, and that the entire procurement process be re-started. The SC concurred with her recommendation. As noted above, on December 17, 2015, Respondent rejected all proposals and announced that the Contract would be re-solicited in the future through issuance of another RFP. CECOS' Position CECOS takes the position that the RFP and the Section 6 Bid Sheet published in Addendum 1 were not ambiguous. Specifically, CECOS contends that the use of the 2.5 multiplier in Section 6 clearly indicated that Respondent was seeking an unloaded rate for the plant items listed on the Section 6 Bid Sheet. In support of this position, CECOS notes that all of the vendors other than DB had submitted unloaded rates for the plant items in Section 6. CECOS contends that this shows that Section 6 was not ambiguous, and that DB simply did not follow the RFP instructions——of which it was fully aware——in preparing and submitting its price proposal.19/ CECOS also contends that Rubio's failure to contact the other vendors to determine if they found the instructions or use of the 2.5 multiplier in Section 6 ambiguous evidences that Rubio's conclusion that Section 6 was ambiguous lacked any factual basis, so was itself arbitrary. CECOS asserts that Bogardus' intent to use a 2.5 multiplier for compensation purposes was evidenced by its inclusion on the Section 6 Bid Sheet, that its use on the Section 6 Bid Sheet did not render the RFP flawed, and that Bogardus' intent to compensate using the multiplier should control the structure of compensation paid under Section 6.20/ CECOS also notes that the use of the 2.5 multiplier on the Section 6 Bid Sheet mirrors the 2.5 multiplier in the existing environmental mitigation support services contract with the current contractor.21/ CECOs further contends that there was no material difference, with respect to structuring compensation for the plant items, between the ITN process used for procuring the existing contract and the RFP process used to procure this Contract. As additional support for its argument that the use of the 2.5 multiplier in Section 6 was valid, CECOS points to a request for proposal for environmental mitigation services issued by Respondent's District VI. In that contract, a 2.5 multiplier was used for compensation purposes, albeit for specific plant items that were not contained in the original list of specific plant items for which rate proposals had been solicited in the request for proposal. CECOS further contends that Respondent——and, most particularly, Rubio——did not conduct a thorough investigation into the historic use of 2.5 multipliers in Respondent's commodities contracts. CECOS argues that as a consequence, Respondent's determination that the use of the 2.5 multiplier rendered the Section 6 Bid Sheet structurally flawed and arbitrary was unsupported by facts, so was itself arbitrary and capricious. CECOS asserts that cancelling the notice of intent to award the Contract to CECOS and requiring the vendors to submit new price proposals placed CECOS at a competitive disadvantage and was contrary to competition because once the Proposal Tabulation was posted, the other vendors were informed of the price that CECOS had bid, so knew the price they had to beat when the Contract was re-solicited. CECOS also points to what it contends are procedural irregularities with respect to Respondent's treatment of, and communication with, CECOS and DB once Respondent decided to cancel the notice of intent to award the Contract to CECOS. Specifically, CECOS contends that Respondent did not respond to its calls or email asking why the intent to award the Contract to CECOS had been cancelled. CECOS also contends that Respondent communicated with DB on substantive matters during the "cone of silence." CECOS further notes that Respondent did not convene a resolution meeting within the statutorily- established seven-day period after CECOS filed its First Petition, but instead held the meeting over 60 days later, on January 28, 2015, and that even then, Respondent did not engage in good faith negotiation to resolve the challenge. Finally, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions (discussed above) that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. CECOS asserts that it followed the instructions in the RFP in preparing its price proposal, submitted the lowest price proposal, and is ready, willing, and able to perform the Contract at the rates it proposed in its response for Section 6. On that basis, CECOS contends that it is entitled to the award of the Contract. Findings of Ultimate Fact CECOS bears the burden in this proceeding to prove that Respondent's decision to reject all proposals was arbitrary, illegal, dishonest, or fraudulent.22/ Even if CECOS were to meet this burden, in order to prevail it also must demonstrate that Respondent's actions in cancelling the intent to award the Contract and requiring the submittal of new price proposals were clearly erroneous, arbitrary, capricious, or contrary to competition. For the reasons discussed herein, it is determined that CECOS did not meet either of these burdens. The Multiplier Rendered Section 6 Ambiguous, Arbitrary, and Structurally Flawed As discussed in detail above, Respondent decided to cancel the intent to award the Contract to CECOS and to require the submittal of new price proposals by the vendors only after it had conducted an extensive investigation that included a careful review of numerous provisions in the RFP and the instructions to Section 6 and had analyzed the structure of Section 6 in relation to other provisions in the RFP. That investigation showed that nowhere in the RFP was the use of the 2.5 multiplier in Exhibit C, Section 6, discussed or explained. Thus, to the extent the multiplier was to be used in determining reimbursement for overhead costs and compensation, the RFP failed to explain this extremely important point, leaving the multiplier's purpose, use, and significance open to speculation and assumption by the vendors in submitting their price proposals. This rendered the multiplier's use in Section 6 ambiguous. This ambiguity is further evidenced by DB's and CECOS's widely divergent price proposals for Section 6, and the credible testimony of Perretta and Cyriaks regarding their differing views of the purpose of the 2.5 multiplier. The credible, persuasive evidence establishes that the ambiguity in Section 6 caused the vendors to have differing interpretations of the manner in which they were to propose plant unit rates in Section 6; that the vendors submitted plant price proposals predicated on differing assumptions; and that this resulted in Respondent being unable to fairly compare the price proposals for purposes of obtaining the most advantageous proposal for the State. On these bases, Respondent reasonably concluded23/ that the inclusion of the 2.5 multiplier in Section 6, rendered that portion of the RFP ambiguous. As extensively discussed above, the credible, persuasive evidence also establishes that Respondent concluded, based on its investigation and review of Section 6, that inclusion of the 2.5 multiplier rendered Section 6 both arbitrary and structurally flawed.24/ The credible, persuasive evidence further establishes that Rubio investigated Respondent's use of multipliers in commodities procurements and contracts to the extent necessary and appropriate for her to reasonably conclude that the use of the 2.5 multiplier in Section 6 rendered this portion of the RFP ambiguous, arbitrary, and structurally flawed.25/ In sum, the credible, persuasive evidence establishes that Respondent engaged in a thorough and thoughtful investigation before concluding, reasonably, that the inclusion of the 2.5 multiplier in Exhibit C, Section 6 rendered that portion of the RFP ambiguous. Respondent's Actions Were Not Contrary to Competition Although the evidence shows that CECOS may suffer some competitive disadvantage because competing vendors were informed of the lowest "bottom line" price they would have to beat, it does not support a determination that Respondent's decisions to cancel the intent to award the Contract to CECOS and require the vendors to submit new price proposals were contrary to competition. To that point, in Addendum 5, Respondent substantially restructured the Section 6 Bid Sheet and also amended the Bid Sheet comprising the other price proposal sections in Exhibit C, so that CECOS' and the other vendors' price proposals submitted in response to Addendum 5 may have substantially changed from those submitted in response to Addendum 1. In any event, it cannot be concluded that Respondent's decisions to cancel the intent to award the Contract to CECOS and require submittal of new price proposals are contrary to competition such that they should be overturned in this proceeding. Procedural Irregularities CECOS also points to certain procedural irregularities in Respondent's treatment of, and communication with, CECOS once Respondent decided to cancel the notice of intent to award the Contract to CECOS and require submittal of new price proposals. CECOS apparently raises these issues in an effort to show that Respondent's actions were clearly erroneous, contrary to competition, arbitrary, or capricious. The undisputed evidence establishes that Rubio communicated with both DB and CECOS during the "cone of silence" following the posting of its intent to award the Contract to CECOS. The undersigned determines that the "cone of silence" applied to Rubio and her communications with DB and CECOS within the 72-hour period following Respondent's posting of the intent to award the Contract. Specifically, she is an employee of Respondent's District IV Office, so is an employee of the executive branch of the State of Florida. Further, the evidence shows that her communications with both DB and CECOS during the "cone of silence" period dealt specifically with substantive, rather than "administrative" issues regarding the RFP and the vendors' price proposals. Accordingly, it is determined that these communications did, in fact, violate the "cone of silence." However, this does not require that Respondent's decision to cancel the intent to award the Contract to CECOS be overturned. The credible, persuasive evidence shows that while DB's conversation with Rubio may have spurred Rubio to decide she should investigate the Section 6 instructions and use of the 2.5 multiplier, it was not the reason why Respondent ultimately determined that the intent to award the Contract should be cancelled. Rather, Respondent's discovery of the ambiguity and structural flaws in Section 6, through Rubio's investigation, was the reason that Respondent determined that the intent to award the Contract to CECOS should be cancelled. In sum, the credible, persuasive evidence shows that notwithstanding Rubio's communications on substantive matters during the "cone of silence" with both DB and CECOS, the integrity of the procurement process was not undermined such that Respondent's decision to cancel the intent to award the Contract to CECOS was clearly erroneous, contrary to competition, arbitrary, or capricious. CECOS failed to present persuasive evidence establishing that other procedural irregularities rendered Respondent's actions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decisions to Cancel Intent to Award the Contract and Require Submittal of New Price Proposals Based on the foregoing, it is determined that CECOS did not meet its burden to show that Respondent's decisions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decision to Reject All Proposals As noted above, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. However, the credible, persuasive evidence shows that Respondent's ultimate decision to reject all bids was factually supported and was reasonable. As discussed above, Respondent initially decided to cancel the intent to award the Contract to CECOS and to require the vendors to submit new price proposals after it discovered the ambiguity and structural flaws resulting from the use of the 2.5 multiplier in Section 6. At that point, rather than rejecting all proposals, which would require the vendors to go to the time and expense of preparing completely new proposals, it decided to instead only require the vendors to submit new price proposals. Due to the interrelated nature of the six sections of Exhibit C comprising the complete price proposal for the RFP, Respondent determined revision of Section 6 would also require revision of the other five sections of Exhibit C, in order to ensure that they were internally consistent with each other. At the mandatory pre-bid meeting preceding the issuance of Addendum 5, the participating vendors had numerous questions about the sweeping revisions to all six sections of Exhibit C, and they expressed confusion about the revisions and their effect on preparation of new price proposals. Some vendors also expressed concern that they may have to change their personnel in order to be able to accurately prepare new price proposals, raising the question whether the technical proposals needed to be revised. As a result of vendor confusion and concern, and also because Respondent's Environmental Office needed additional time to carefully review and revise the RFP as needed, Respondent decided to reject all proposals and to start the procurement process anew. Respondent's decision to reject all bids was made after fully considering all of the pertinent information regarding the ambiguity and structural flaws in Section 6, vendor confusion and concern caused by Respondent's revisions to Exhibit C needed to address the ambiguity and flaws in Section 6, and Respondent's need for additional time to ensure that its RFP accurately and clearly solicited the needed environmental mitigation support services. Accordingly, Respondent did not act arbitrarily in deciding to reject all bids. Further, no persuasive evidence was presented to show that Respondent's decision to reject all bids was illegal, dishonest, or fraudulent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Transportation: Issue a final order in Case No. 16-0769 finding that the rejection of all proposals in response to Request for Proposal RFP-DOT-15/16-4004PM was not illegal, arbitrary, dishonest, or fraudulent; and Issue a final order in Case No. 16-3530 finding that the decisions to cancel the award of the Contract for Request for Proposal RFP-DOT-15/16-4004PM to CECOS and to require the vendors to submit new price proposals for Request for Proposal RFP-DOT-15/16-4004PM were not clearly erroneous, contrary to competition, arbitrary, or capricious. DONE AND ENTERED this 30th day of December, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 2016.
The Issue Whether the Department of Children and Family Services' (FDCF) notice of intent to award the contract for RFP No. MF650TH was contrary to the agency's rules or policies, or the proposal specifications and whether the Petitioner established that FDCF's decision was clearly erroneous, contrary to competition, arbitrary or capricious.
Findings Of Fact 1. The parties' Joint Prehearing Stipulation specified, in pertinent part, as follows: ADMITTED FACTS The following facts are admitted by all parties and will require no proof at hearing: On or about January 23, 1998, the Department issued RFP No. MF650TH ("the RFP"), Automated Fingerprint Identification System (AFIS). The purpose of the RFP was to solicit proposals from qualified proposers to design, develop and implement an automated fingerprint identification system, or AFIS, and to procure a statewide fingerprint identification capability for applicants and recipients of public assistance. The RFP was subsequently amended by Addendums 1, 2, 3, and 4 dated February 18, February 26, March 9, and March 16, 1998, respectively. Two vendors, Lockheed Martin and Sagem Morpho, submitted proposals in response to the RFP on March 23, 1998. The Department posted notice of its intent to award the contract described in the RFP to Morpho on April 17, 1998. On April 22, 1998, Lockheed Martin timely submitted a notice of intent to protest the proposed award to Sagem Morpho, pursuant to the terms of the RFP and Section 120.57(3), Florida Statutes. On May 1, 1998, Lockheed Martin filed its Formal Written Protest and Petition for Formal Administrative Proceeding. Jayne Paris served as Procurement Manager for the AFIS RFP. Connie Reinhardt served as Project Manager for the AFIS project. AGREED UPON ISSUES OF LAW The parties have agreed on the following issues of law: The Administrative Law Judge shall conduct a hearing pursuant to Section 120.57(3), Florida Statutes. All parties have standing to participate in this proceeding. ISSUES OF FACT WHICH REMAIN TO BE LITIGATED. The following issues of fact remain to be litigated: Whether Morpho's AFIS proposal was responsive to the RFP. Whether Lockheed Martin's AFIS proposal was responsive to the RFP. Lockheed Martin contends that the following additional facts remain to be litigated: What the Department's policy is with respect to evaluation of cost proposals on RFPs. Whether and when the Department altered its method of evaluating the AFIS cost proposals. The reason the Department decided not to use the cost proposal ranking and fatal criteria checklist which had been previously prepared. Whether the addenda to the RFP provided supplemental RFP instructions and incorporated clarifications in response to questions submitted by potential proposers. ISSUES OF LAW WHICH REMAIN FOR DETERMINATION BY THE JUDGE The following issues of law remain for determination by the Court: Whether Morpho's AFIS proposal was materially responsive to the RFP. Whether Lockheed Martin's AFIS proposal was materially responsive to the RFP. Lockheed Martin contends that the following additional issues of law remain for determination by the Judge: Whether any minor irregularities waived by the Department in evaluating and scoring the AFIS proposals met the definition of a "minor irregularity" under Rule 60A- 1.002(16), F.A.C. Whether the Department may alter its proposal evaluation methods after proposals have been received by it. Whether the Department's proposed award of the AFIS contract to Morpho is contrary to the Department's governing statutes, rules, or policies, or the AFIS RFP specifications. Whether the Administrative Law Judge shall conduct a de novo proceeding pursuant to Section 120.57(3), Florida Statutes, to determine whether the Department's proposed action is contrary to its governing statutes, rules, or policies, or the AFIS RFP specifications. Lockheed's unilateral statements of issues do not bind the parties or the undersigned but are included so that the pending Motion to Strike may be addressed in the Conclusions of Law, infra. At formal hearing, Petitioner Lockheed contended that Morpho's proposal was not responsive to the RFP and that Lockheed should be awarded the contract. Intervenor Morpho contended that its proposal was responsive and that Lockheed's proposal was not responsive. FDCF contended that both proposals were responsive and that the proposed final agency action to award the contract to Morpho should be carried out. The RFP solicited proposals from qualified proposers to design, develop and implement an Automated Fingerprint Identification System (AFIS) and to procure a statewide fingerprint identification capability for applicants and recipients of public assistance. (Agreed Facts). AFIS is intended to support the client certification process for the benefit programs delivered through the Department's electronic Benefits Transfer program (EBT). The current EBT programs include Food Stamps, Temporary Assistance to Needy Families -- Work and Gain Economic Self-Sufficiency (TANF-WAGES), and the Refuge Assistance (RA) programs. The Department had determined that AFIS is the only acceptable biometric technology. The RFP included the following pertinent provisions: General Provisions – The procurement process will provide for the evaluation of proposals and selection of the winning proposals according to applicable state and federal laws and administrative regulations. All responses received by the closing deadline, unless determined to be non-responsive will be evaluated by an evaluation team. (Exhibit P-1. pp. 66-67). Statement of Purpose The objective of this Request for Proposals (RFP) is to obtain proposals from qualified proposers to design, develop and implement the AFIS in accordance with the requirements defined in Section B of this RFP. FDCF intends to procure a statewide fingerprint identification capability for applicants and recipients of public assistance programs as stated above. Through this competitive solicitation, the FDCF desires to obtain a comprehensive identification service which represents the best value for the state, and which provides all hardware, (with the exception of existing administrative terminals as discussed in RFP Section B, subsection 6), software, communications networks, central site operations, terminal operations training, system administration training, operational support, maintenance, and other services. State personnel will be utilized to operate the system's imaging, fraud investigation, and administrative workstations located at state facilities. The system will include a central identification system to maintain fingerprint and photographic identification records and perform duplicate fingerprint record search and verification. It will also include workstations for creation of the fingerprint and photo identification records and for support of administrative and fraud investigation activities. Evaluation of Technical Proposals Part A Fatal Criteria Failure to comply with all Fatal Criteria will render a proposal non-responsive and ineligible for further evaluation. For a list of Fatal Criteria, see Appendix XIX. Any technical proposal that is incomplete, non-responsive, contains cost or pricing data, or in which there are significant inconsistencies or inaccuracies will be rejected by the FDCF. No points will be awarded for complying with the Fatal Criteria. 1.7 Acceptance of Proposals . . . Untimely proposals will be rejected as unresponsive. * * * All responsive proposals timely submitted will be evaluated. No proposed changes to the terms and conditions set out in this RFP, its appendices and any addenda will be accepted and submission of a proposal which purports to do so will make the proposal non- responsive. The FDCF may waive minor irregularities, but need not do so. Where the FDCF waives minor irregularities, such waiver shall in no way modify the RFP requirements or excuse the proposer from full compliance with the RFP specifications and other contract requirements if the proposer is awarded the contract. * * * The FDCF reserves the right to reject any or all proposals, cancel the RFP, or waive minor irregularities when to do so would be in the best interest of the State of Florida. Minor irregularities are those which will not, in the opinion of the contact person, have significant adverse effect on overall competition, cost or performance. 2. Proposal Format * * * The proposal should be prepared concisely and economically, providing a straightforward description of services to be provided and capabilities to satisfy the requirements of this RFP. Emphasis should be on completeness and clarity of content. In order to expedite the evaluation of proposals, it is essential that proposers follow the format and instructions contained herein. For purposes of this section, the terms "shall, will and must" are intended to identify items that are required to be submitted as part of the proposal. Failure to comply with all such requirements will result in the proposal being rejected as non-responsive. 3.3 Tab 3. Transmittal Letter Each copy of the proposal must include a transmittal letter in the form of a standard business letter and must be signed by an individual authorized to legally bind the proposer. It shall include at a minimum: * * * A statement indicating that the proposer and any proposed subcontractors are corporations or other legal entities and that each satisfied all licensing requirements of state or federal law and that they are authorized to do business within the State of Florida. All subcontractors must be identified. A statement indicating the percentage of work to be done by the proposer and by each subcontractor as measured by the percentage of total proposed price. A statement identifying the proposer's and any proposed subcontractor's federal tax identification number(s). 3.12 Tab 11. Technical Proposal: Corporate Qualifications . . . This section must also identify and describe the corporate capabilities of any proposed subcontractors and must include three (3) references for each subcontractor including names, addresses, and telephone numbers, and a description of the services which are being provided. Subcontractors not identified in the proposal will not be permitted to perform any work under any contract which results from the RFP. Cost Proposed Format The following information is intended to provide proposers with instructions and a format for submitting cost quotations. Cost quotations must be submitted using the provided pricing schedules. Responses that do not provide cost proposals in the required format will be rejected. Unless otherwise noted, the costs quoted shall apply for the entire term of the contact. Proposers are encouraged to identify means to reduce the cost of AFIS services in Florida. As part of the cost proposal, proposers should identify cost reduction factors, the rationale for costs savings, and any options in service that would produce such cost savings. In order to assess FDCF options, proposers are requested to submit AFIS system costs in two ways—as a bundled price per add transaction and as an unbundled price. The selection of the contract pricing method— either bundled or unbundled—shall be at the sole discretion of the FDCF. The FDCF will not make any corrections to arithmetic or other errors in the cost proposal. All numbers submitted will be assumed by the FDCF to be accurate even if an error appears likely. Proposers are cautioned to assure the accuracy of any amounts submitted because they will be held to the amounts which appear in the cost proposal throughout the term of any contract which results from this RFP as well as any extension or renewals of that contract. The RFP provided blank pricing schedules in the required format for submitting bundled and unbundled proposals. The RFP required proposers to submit prices based on alternative bundled and unbundled methods. Under the first method, proposers were to provide one lump sum price per record added to the AFIS database. An "add" is the function by which a fingerprint image is programmed into the computer and no match is found, indicating that fingerprint is not already in the system. Under that method, the provider was to be paid based on the number of fingerprints added to the database. (Schedules 1A and 1B). Under the second method, proposers were to provide a price per add, a price per inquiry (when the system searches the existing database), and prices for all hardware, broken down by type of hardware. This is called unbundled pricing. (Schedules 2A and 2B). As to unbundled pricing, the RFP specifically provided: Proposers must also provide unbundled pricing under the two communications network assumptions. Unbundled pricing includes a unit price per record added to the database, a unit price per workstation, and a unit price per printer. The cost of system development, implementation and operations must be reflected in the unit prices per add or inquiry. Schedule 3 applied to a POS Verification Study. The RFP also required a way to resolve smudged print identifications: 5.3.7. Identification Searching c) Workstations must provide the capability to launch identification search transactions using selected client records with or without minutiae editing. The RFP also required proposers to submit a thumb print option: Option to Add Thumb Prints . . . The department is also considering the option of capturing and storing both thumb prints, in addition to both index fingers, for each applicant household member required to comply. In order to help the department assess this option, the proposer shall provide an incremental price per record added to the database. . . There is no guarantee that the department will exercise the option to capture and store thumb prints. However, should the department decide to exercise this option, the successful proposer's system must be capable of supporting this option. The proposer was to provide the incremental price to capture and store thumb prints in Schedule 4. The RFP required proposers to submit a technical proposal and a separate sealed cost proposal. The RFP contemplated FDCF doing a completeness review against the "Fatal Criteria" provided in the RFP before the agency technically evaluated the proposals. The RFP presumed that those proposals which failed the completeness review would not be technically evaluated. No points were to be assigned via the completeness review. The RFP also contemplated that the cost proposals would remain sealed unless, and until, a proposer had passed the technical evaluation with at least 400 points. The evaluation system set out in the RFP provided for ranking proposals based on 600 possible points for the technical proposals and 400 possible points for the cost proposals. Any score less than 400 points on the technical proposal would mean the proposer could not be evaluated for cost. On March 23, 1998, the day of submittal, the technical responses were opened by Jayne Paris. She was FDCF's Procurement Manager and contact person for this RFP. In doing the completeness review, Ms. Paris compared the technical proposals with the Fatal Criteria checklist for completeness. She also reviewed each proposer's Supplemental Proposal Sheet for completeness and to be sure each proposer had promised compliance with all RFP requirements. She also reviewed each proposer's transmittal letter to be sure neither proposer intended to deviate from the RFP requirements. This completeness review was witnessed by Project Director, Connie Reinhardt, to assure the integrity and accuracy of the process. Although a consultant's checklist geared to federal contract review of cost proposal compliance was in the contract file which FDCF is required to maintain on every project, this checklist was only a suggestion which FDCF had rejected and had not included in the RFP. Ms. Paris did not apply it. Both Morpho and Lockheed used conditional language in their respective transmittal letters. Morpho's transmittal letter stated, "In the event that these stated requirements and assumptions are subsequently altered by the issuing agency, or are proved [sic] to be invalid due to actual experience, Sagem Morpho, Inc. reserves the right to make appropriate modifications to its scheduling or pricing." Lockheed asserts that by this language Morpho attempted to change the terms of the RFP, condition Morpho's prices, and include "pricing information" contrary to the RFP. The RFP required that each proposer identify in its transmittal letter all proposed subcontractors by name, corporate status, eligibility through licensure for state projects, the percentage of subcontract work each subcontractor would be doing, and federal tax identification number, and also provide three references for each contractor. It also provided that any subcontractors not identified by the proposer could not work on the contract. Lockheed's transmittal letter did not propose any subcontractors. It merely stated that Lockheed anticipated the need for a maintenance subcontractor beginning in June 1999, approximately 13 months after the start of the contract, and that Lockheed anticipated submitting a request for approval of a subcontractor by March 1999. Lockheed stated as its reason for the absence of subcontractor information that waiting until June 1999 would result in selection of a subcontractor that would provide the service levels demanded by Lockheed and FDCF. FDCF concedes that if a proposer intended to deviate from the RFP requirements, i.e. if the transmittal letter created a significant variance from the RFP specifications, that variance would have rendered that proposal substantively unresponsive at the completeness review, and no further evaluation of that proposal should have taken place. (TR-133; Exhibits P-2; P-3; DCF's PRO at page 7) However, in her initial completeness review of the respective proposals for the Fatal Criteria, signed management summary material checklist, and transmittal letter, Ms. Paris, in fact, only considered whether all necessary parts of each proposer's response were included. The Fatal Criteria only applied to the technical response. Ms. Paris deferred consideration of the content or effect of each proposer's "extraneous language" related in Findings of Fact 18-20 to the subsequent technical and cost evaluations. Therefore, Lockheed and Morpho were treated equally at the completeness review, because neither was disqualified as non-responsive nor docked any points on the basis of their respective transmittal letters. Ms. Paris' reason for not finding the transmittal letters unresponsive was apparently based at that stage on Section 1.7 of the RFP, which would hold the proposer to the RFP specifications despite waivers of irregularities. The next day, March 24, 1998, Ms. Paris provided the technical evaluation team with Sections I and III of an Evaluation Manual, which included the introduction and the substantive Evaluation Criteria Parts C-K. Ms. Paris also conducted a training session during which she provided a briefing on the evaluation process and instructions to the evaluation team members. The evaluation team was to evaluate only the technical merit of each proposal. Sections II and IV of the Evaluation Manual, which had been prepared for FDCF by outside consultants, were removed before the manual was distributed to the evaluation team on the basis that these sections were cost-related and the technical evaluation team members, whose duties did not include consideration of cost, were not to use them. The technical evaluation team members individually and independently evaluated the technical portion of each proposal and scored each technical response using a scale of 0 to 4 points, as instructed in Part I of the Evaluation Manual. With the exception of questions requiring a "yes" or "no" answer, scores were assigned as follows: 0 = no value; proposer demonstrated no capability to satisfy the Department's needs, ignored this area, or has so poorly described the proposal for this criteria that understanding it is not possible. 1 = poor; proposer demonstrated little or no direct capability to satisfy the Department's needs, or has not covered this area, but there is some indication of marginal capability. 2 = acceptable; proposer demonstrated adequate capability to satisfy the department's needs 3 = good; proposer demonstrated more than just adequate capability and good approach to satisfy the Department's needs. 4 = superior; proposer demonstrated excellent capability and an outstanding approach to satisfy the Department's needs. This scoring concept comports with the RFP, pp 67-68. A proposer had to receive a minimum score of 400 technical points before FDCF would open, review, and rank that proposer's cost proposal. FDCF determined that both Petitioner and Intervenor met this requirement. Morpho received 582.99 points out of a possible 600 points. Lockheed received 559.88 points. Under the scoring system, neither the Fatal Criteria nor the management summary were entitled to any points, so neither proposer was scored any points on those bases during the technical evaluation. "Minutiae editing" is the process of correcting misinformation details in an original fingerprint image which is smudged. Under Section 5.3.7 of the RFP, the system's workstations were required to have the capability to launch identification searches of fingerprint images "with or without minutiae editing." Morpho's system as proposed can launch a search and find a match after minituae editing. Lockheed's system could search, but its proposal candidly admitted that the Lockheed system could not match prints after minutiae editing. FDCF waived this technical problem with Lockheed's proposed system as an "immaterial irregularity" because the RFP expressly provided that proposers would be bound by the terms of the RFP. The RFP required submittal of a thumb print option but reserved the right of FDCF to unilaterally exercise the option. Lockheed submitted Schedule 4, providing for the thumb print identification option, quoting a cost of $0. However, Lockheed conditioned that $0 quote on FDCF accepting Lockheed's proposal at the time of the initial contract. Morpho did not submit any Schedule 4, and Morpho's technical proposal shows this omission was probably inadvertent. FDCF waived as "immaterial" Lockheed's extraneous language conditioning the thumb print option in its proposal and likewise waived Morpho's complete failure to submit a Schedule 4 for the thumb print option pursuant to the RFP. The optional thumb print function had no impact on ultimate scoring of the respective proposals because no value was assigned to it. FDCF has taken the position that since the technical evaluation team did not consider either proposal to be technically "nonresponsive," then all flaws or omissions were properly waived. The cost proposals remained sealed until after the technical proposals were scored by the technical evaluation team. At formal hearing, FDCF personnel testified that it was never FDCF's intent to enter into a contract for the thumb print option at the time of the initial contract and that the thumb print option was purely for future informational purposes. The RFP used mandatory language to ensure that cost proposals would be submitted in two ways -- a bundled price and an unbundled price. The bundled and unbundled pricing schedules were mutually exclusive, and the point system set up in the RFP assigned equal weight to the scoring of the bundled and unbundled price schedules. FDCF reserved the unilateral right to select either bundled or unbundled pricing as its procurement method. Cost proposals were to be scored using a formula which compared each proposer's price to the lowest price proposal. Of the 400 points possible for cost proposals, 195 points were allocated by the RFP to the bundled pricing schedules (Schedules 1A and 1B), 195 points were allocated to the unbundled pricing schedules (Schedules 2A and 2B), and 10 points were allocated to the POS Verification Study (Schedule 3). The RFP clearly indicated that both bundled and unbundled prices were required to be submitted on the provided Schedule format "in order to assess FDCF options." FDCF did not decide until after scoring the cost proposals and immediately before it was ready to post the Notice of Intent to Award to Morpho, that it would elect to contract based on the bundled cost proposals. Up until that moment, the bundled and unbundled price schedules had some significance to FDCF, if only for flexibility in procurement. The RFP specified that FDCF would not own any of the equipment (hardware) for which it was seeking single unit prices in the unbundled schedules. Nonetheless, on the unbundled pricing schedules provided in the RFP, proposers were required to provide an unbundled unit price per workstation and unit price per printer. On Schedules 2A and 2B, "Unbundled Pricing," Morpho did not provide an entry in dollars and cents for fraud workstation printers or administrative workstation printers. Rather, Morpho's schedule inserted in those spaces, "included in w/s (workstation) price" or "included above." Lockheed also had some extraneous language on one of its schedules as opposed to just a dollar amount, but cost breakout was clear. Morpho considered the printers part of the imaging and fraud investigation workstations because the RFP required a dedicated printer for each workstation and the RFP specified FDCF would not own or maintain any hardware. Ms. Paris reviewed each cost proposal for compliance with Section C of the RFP. She was concerned about whether Morpho's "unbundled" schedules complied with the RFP. The RFP defined waiveable "minor irregularities" as "those which will not, in the opinion of the contact person, have significant adverse effect on the overall competition, cost or performance." Upon advice of her supervisor, Connie Reinhardt, and FDCF's General Counsel, Ms. Paris determined both proposals to be responsive, and substituted a price of "zero" in the questionable spaces on Morpho's "unbundled" schedules, despite the absence of a pricing break-out between the fraud workstations and printers or between the administrative workstations and printers on Morpho's "unbundled" schedules. Ms. Paris conceded that she was never referred to Rule 68-1.001(16) Florida Administrative Code,1 which defines "minor irregularity" in terms of effect on cost. Ms. Paris was told that only items which had an effect on the overall scores of the responding proposers' cost proposals could not be waived. The cost proposals were not evaluated and scored subjectively as the technical proposals had been. No Fatal Criteria applied to this third review phase. Scoring was to be based on a purely mathematical formula devised prior to distributing the RFP. The RFP drafters had contemplated ranking the respective cost proposals by simply inserting the dollar values each proposer placed on the unbundled unit price list into a computer program. Ms. Paris attempted to rank the cost proposals. To assure the integrity of the process, Chris Haggard, Automation Specialist, physically entered cost proposal figures into the computer program. Ms. Paris instructed him to ignore any "extraneous language" on the schedules of both proposers. The computer program would not accept the "zeros" inserted by FDCF. Without any substitutions by Ms. Paris, Morpho had bid "zero" in the space indicating there would be no charge for the unbundled unit price per inquiry, thereby intending to signify that there would be no charge for this function. The record does not suggest that this proper use of "zero" had any effect on the computer program. Ms. Reinhardt viewed the problem with FDCF's imputed zero components as a purely technical problem with the computer program and not an "irregularity" under the RFP. The computer program was adjusted to accommodate the imputed zeroes and produce a spreadsheet. On unbundled Item 14, FDCF ranked Morpho with a score of one and Lockheed with 15, the maximum. On Item 15, the fraud workstation color printer, Morpho was ranked 15 and Lockheed was ranked zero. On Item 16, the administration workstation, Morpho was ranked three; Lockheed was ranked 15. On Item 17, the administration workstation printer, Morpho was ranked 15 and Lockheed was ranked zero. Pursuant to the adjusted spreadsheet, Morpho received a score of 343 for its cost proposal, and Lockheed received a score of 240. Even if Morpho had received zero points for the printers and work stations (lines 14-17 of the Unbundled Schedules), and if Lockheed had received the maximum number of points available on these items, Morpho still would have received the higher score for its cost proposal. At the disputed fact hearing, FDCF gave as its justification for imputing "zero" for bundling language in Morpho's "unbundled" schedules the following reasoning: because FDCF had requested unbundled prices purely for future contracts, not the contract to arise out of this RFP, for informational purposes, or for a cost benefit analysis for state budget purposes; because the RFP specified that FDCF would neither own nor maintain any of the hardware proposed for this RFP; because Morpho's failure to conform to the unbundled price format was not "irregular" if Morpho did not sell printers independently and Morpho used the unbundled schedules in a manner consistent with Morpho's offer; because the zero imputed by FDCF reflected accurately the integrated costs in effect; because Morpho was not charging separately for the printers; because FDCF's insertion of "zero" constituted no unfair economic advantage to Morpho; and finally, because having chosen the bundled option, FDCF believed the Morpho proposal will save a great deal of money and "represent the best value for the state."2 The RFP specified that the successful proposer would be responsible for the "cost of system development, implementation, and operations" for the contract term as well as any extensions and include that cost in either the unbundled unit price per record added (per add) or the price per inquiry (per inquiry) in Schedules 2A and 2B. There is no RFP requirement that the maintenance portion be "unbundled" further. "Cost of . . . operations" meant "cost of maintenance." According to Richard Woodard, who was responsible for the Morpho cost proposal, including Item 9, Morpho's price per add of $6.70 on Schedule 2A included $.80 for maintenance. However, at formal hearing, Lockheed elicited from Ms. Paris testimony that even though Morpho had indicated that maintenance was not included in its unbundled schedules, FDCF had decided to hold Morpho to the prices shown in their per add or per inquiry line item (TR-61), and that because of Morpho's own extra schedule attached to the bottom of unbundled pricing Schedule 2A, Morpho's maintenance price over 5 years could be calculated on current maintenance prices. (TR-62) When the prices are calculated mathematically over the life of the contract they do not correspond to the $.80 per add testified to by Mr. Woodard.3 Morpho's maintenance cost schedule and the provisions within Morpho's "Comments on Unbundled Pricing" indicated that only 12 months of warranty were included with the equipment identified in Morpho's unbundled pricing schedules and that after 12 months, maintenance contracts would be negotiated. FDCF ignored this as "extraneous language," and did not consider it to be a material irregularity. The Morpho bundled cost proposal was calculated on an average of 2.2 persons per file who would require finger imaging and matching. Morpho asserted that these calculations had been made on a "worst case scenario" based on RFP Addendum 3's specification that an actual number cannot be provided. It is expected that less than 2.2 persons per case will be printed. Lockheed selected a number less than 2.2 per file, and asserted that Morpho's "worst case" scenario is, in effect, a "best case" scenario because the higher the number of prints, the less Morpho can afford to charge per add; that by selecting the 2.2, Morpho has materially failed to comply with the RFP specification which estimated less than 2.2 persons per file, and that because Morpho also inserted the extraneous language in its transmittal letter as set out in Finding of Fact 19, supra., Morpho's proposal not only varied the express terms of the RFP by the use of "2.2" but also included "pricing information" in its transmittal letter and conditioned its prices on the potentially false assumptions stated or on a figure greater than a figure "less than 2.2," as required by the RFP.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Department of Children and Family Services enter a final order rejecting all proposals. DONE AND ENTERED this 21st day of December, 1998, in Tallahassee, Leon County, Florida. ELLA JANE P. DAVIS 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 December, 1998.
The Issue The ultimate issue presented in this part of the bifurcated proceeding is whether the Petition should be dismissed as an untimely protest to the RFP specifications. Subsidiary issues presented are whether any such timeliness defect could be cured by allowing Petitioner to amend its Petition, and whether the points of entry provided to Petitioner with the RFP, as amended, were ineffective to operate as clear points of entry because Respondent did not also post the RFP and addenda amending the RFP on the MyFloridaMarketPlace vendor bid system.
Findings Of Fact By this action, Petitioner seeks to reverse Respondent’s intended decision to award a contract to Intervenor for a design- build project to widen Kanner Highway from four lanes to six lanes over a 4.3 mile stretch in Martin County (the Kanner Highway Project). Instead of awarding a contract to Intervenor, Petitioner contends that Respondent should reject all proposals and conduct a new procurement. Petitioner’s complaint is directed to Respondent’s issuance of one or more addenda as RFP amendments after the three shortlisted vendors submitted technical proposals, but before they submitted price proposals. Adjusted Score Design-Build Process for Kanner Highway Project DOT is the state agency authorized to contract for the construction and maintenance of roads designated as part of the State Highway System, the State Park Road System, and other roads placed under DOT’s supervision by law. § 337.11(1), Fla. Stat. When DOT determines, as it did for the Kanner Highway Project, “that it is in the best interests of the public [to] combine the design and construction phases” of certain projects into a single contract, DOT is authorized to use the design-build contract procurement procedures generally outlined in section 337.11(7) for competitive selection of a design-build firm. Section 337.11(7)(b) authorizes DOT to “adopt by rule procedures” that detail the processes and procedures by which design-build projects are publicly announced, qualified design- build firms are selected to submit bid proposals, and the firm to receive the contract award is selected. DOT’s rules carrying out the authority conveyed in section 337.11(7)(b) are codified in Florida Administrative Code Chapter 14-91.2/ The solicitation for the Kanner Highway Project began with the posting of a Notice to Contractors/Consultants on DOT’s website, which set forth a general description of the project, identified required submittals, and provided a draft RFP, as specified in rule 14-91.005 (“Public Announcement Procedures”). The notice with draft RFP was first posted on September 22, 2014, on the “planned advertisement” webpage, to give a heads-up to the vendor community that a public announcement was forthcoming for this project. The official announcement was posted on October 6, 2014, on DOT’s design-build “current advertisement” webpage. As required by rule 14-91.005, the posted notice advised that for the Kanner Highway Project, DOT would use the adjusted score design-build (ASDB) process. The notice also described the ASDB process, which is a two-phase process. In the first phase, interested design-build firms were required to file an expanded letter of interest (ELOI) by October 27, 2014, demonstrating their qualifications to perform the work contemplated by the project, as generally described in the notice and preliminarily detailed in the draft RFP. The notice specified the required ELOI contents and supporting documents, the minimum qualification requirements by work class, and the criteria for evaluating and scoring the ELOIs. The notice provided that ELOIs and supporting documents “shall be submitted electronically” in .pdf format attached to a single electronic mail (email) transmission. In turn, each ELOI was to designate and give contact information, including email address, for the design-build firm’s contact person. As authorized by section 337.11(7)(b)9., and rule 14- 91.007(8), the posted notice also provided the criteria by which DOT would pay stipend compensation to certain design-build firms who are not ultimately awarded the contract. Both public announcements (posted on September 22, 2014, and on October 6, 2014), contained the following: Pursuant to Sections 120.57(3) and 337.11, Florida Statutes, and Rule Chapter 28-110, Florida Administrative Code, any person adversely affected by the agency decision or intended decision shall file with the agency both a notice of protest in writing and bond within 72 hours after the posting of the notice of decision or intended decision, or posting of the solicitation with respect to a protest of the terms, conditions, and specifications contained in a solicitation and will file a formal written protest within ten days after the filing of the notice of protest. The required notice of protest and bond, and formal written protest must each be timely filed with the Florida Department of Transportation, Clerk of Agency Proceedings, 605 Suwannee St, Mail Station 58, Tallahassee, FL 32399-0458. Failure to file a notice of protest or formal written protest within the time prescribed in section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120 Florida Statutes. There were no notices of protest filed within 72 hours of the posted solicitation, nor formal written protests within 10 days after a notice of protest, to contest the terms, conditions, or specifications in the Kanner Highway Project solicitation. Four design-build firms submitted ELOIs for the Kanner Highway Project, were determined to be responsive, and were scored. The ELOI scores were posted on DOT’s website on the procurement office’s page for design-build selection results. At the top of this webpage, an all-bold point of entry is provided in the same language contained in the public announcement notice. There were no notices of protest filed within 72 hours after the ELOI scoring results were posted, nor any formal written protests within 10 days after a notice of protest. Consistent with rule 14-91.007(2)(a) and the process described in the public announcements, design-build firms whose ELOIs were responsive and scored were required to provide DOT with written affirmation by December 10, 2014, of the firms’ intent to proceed to phase two. Three of the four firms--the three with the best ELOI scores--provided written affirmation: Petitioner, Intervenor, and Prince Contracting, LLC. In accordance with rule 14-91.007(2)(a), those three firms were shortlisted and, thereby, eligible to proceed to phase two, receive the final RFP and addenda, and submit technical and price proposals. For design-build projects using the two-phase ASDB process, the RFP developed by DOT serves the purpose of “furnish[ing] sufficient information for Design-Build Firms to prepare technical and price proposals,” and the RFP is provided only to shortlisted firms, because only the shortlisted firms are eligible to submit technical and price proposals. Fla. Admin. Code R. 14-91.007(2)(a) and (3). Thus, while a “draft” RFP for the Kanner Highway Project was attached to the public announcement posted on DOT’s website, the “final” RFP was not posted on DOT’s website. Instead, DOT followed the procedure in rule 14-91.007(3), by providing the final RFP directly to the three shortlisted firms.3/ As is apparently common practice with design-build procurements, the so-called “final” Kanner Highway Project RFP was not actually final; it was amended by several addenda.4/ RFP addenda are posted on DOT’s website. The Contracts Administration page for design-build projects identifies the addenda by number, and the addenda themselves are linked and can be accessed by clicking on each number. The addenda are also transmitted by email to an email list of contact persons for the shortlisted firms. In addition, each time an addendum is issued that amends the “final” RFP, the entire RFP, as amended, is reissued and transmitted with the same email message. A redlined version of the reissued RFP is also transmitted with the same email message, to highlight the addendum changes and put them in context with the whole RFP. Emails transmitting the Kanner Highway Project addenda, the reissued RFPs as amended by the addenda, and the redlined versions of the reissued RFPs, as amended by the addenda, were sent to the three shortlisted firms with a “high importance” flag and a request to confirm the receipt of the email. Petitioner’s designated representative--its president, Bob Schafer--confirmed in his deposition testimony that this was the procedure followed for the Kanner Highway Project. Mr. Schafer confirmed that Petitioner received the emails transmitting each of the six addenda, and Petitioner confirmed receipt within minutes of the transmittals. The Kanner Highway Project RFP, in its “final” form and in each reissued form as amended by addenda, is a 62-page document, not counting attachments. The first two pages of the RFP is a Table of Contents. Page one of the RFP lists a section called “Protest Rights,” which appears at page nine. Beginning on page nine of each version of the RFP, as reissued and amended by the addenda, a separate section identified as “Protest Rights” provides as follows: Any person who is adversely affected by the specifications contained in this Request for Proposal must file a notice of intent to protest in writing within seventy-two hours of the posting of this Request for Proposals. Pursuant to Sections 120.57(3) and 337.11, Florida Statutes, and Rule Chapter 28-110, Florida Administrative Code, any person adversely affected by the agency decision or intended decision shall file with the agency both a notice of protest in writing and bond within 72 hours after the posting of the notice of decision or intended decision, or posting of the solicitation with respect to a protest of the terms, conditions, and specifications contained in a solicitation and will file a formal written protest within ten days after the filing of the notice of protest. . . . [Agency Clerk address provided for filing] Failure to file a notice of protest or formal written protest with the time prescribed in section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120 Florida Statutes. No notices of protest were filed within 72 hours of the electronic transmittal of each reissued RFP, as amended by addenda, nor were formal written protests filed within 10 days after a notice of protest, to protest the terms, conditions, and specifications in any of the reissued RFPs, as amended by addenda. After Addenda 1 and 2 were issued, the three shortlisted firms submitted technical proposals by the deadline on March 16, 2015. Addendum 3, the reissued RFP, and the redlined reissued RFP were transmitted by a single email sent to the shortlisted firms on April 27, 2015, at 5:03 p.m. Petitioner confirmed receipt of the email transmittal 20 minutes later, at 5:23 p.m. Petitioner knew of its objections to Addendum 3 as soon as it was read, which was within hours of its electronic transmittal on April 27, 2015. Petitioner took steps to notify DOT of its objections regarding Addendum 3, but those steps did not include filing a notice of protest to the amended RFP specifications within 72 hours after its transmittal or receipt. Instead, Mr. Schafer, Jason Daley (Ranger’s designated contact person for the project), David Wantman of the Wantman Group (engineering firm that is a member of Petitioner’s design- build team), and Randy Cropp with Cone & Graham (bridge contractor team member) had a telephone conference with John Olsen (described by Mr. Schafer as DOT’s design-build coordinator), and “two or three people from the Department, I’m not sure other than John.” (Schafer deposition at 17). Mr. Schafer said he believed the conference call was the day after Addendum 3 was received, which was April 28, 2015. On April 29, 2015, at 10:23:55 a.m., Mr. Schafer sent an email to Gerry O’Reilly, P.E., the DOT District Four Secretary, with copies to Jim Boxold (DOT Secretary, the agency head), and Bob Burleson with the Florida Transportation Builders’ Association. The email text was as follows: Guys, I’m extremely disappointed. What is going on in D-4 with releasing Team’s cost saving ideas. For the second time in two projects, either an ATC [Alternative Technical Concept] or concept in our Technical Proposal, one of our cost saving ideas has been released to the other bidders by the Department. For this $20+M project, a drainage concept that would’ve saved about $1.2M has been released by Addendum to all the bidders, after the Technical Proposals were submitted and 2 weeks prior to the submission of the numbers. Why has that happened??? I have partners on this project in Cone & Graham and Wantman Group that, along with Ranger, have spent a lot of money and man- hours trying to “design a better mouse trap” to give us a competitive advantage. If we’re not successful on this one, we may not have a choice but to protest. This has got to Stop. Two subsequent emails, from representatives of the Wantman Group and Cone & Graham, echoed Mr. Schafer’s complaints. All three emails were sent on April 29, 2015, with the last transmittal being made at 6:20 p.m., approximately 49 hours after Petitioner received the email transmittal with Addendum 3. Addendum 4, the reissued RFP, and the redlined reissued RFP were transmitted by a single email sent to the three shortlisted firms, including Petitioner, on May 4, 2015, at 4:11 p.m. Petitioner confirmed receipt of the email transmittal three minutes later, at 4:14 p.m. Addendum 5, the reissued RFP, and the redlined reissued RFP were transmitted by a single email message transmitted to the three shortlisted firms, including Petitioner, on May 5, 2015, at 12:10 p.m. Petitioner confirmed receipt of the email transmittal two minutes later, at 12:12 p.m. The three shortlisted firms, including Petitioner, submitted sealed lump-sum price proposals and proposed contract time (number of calendar days to complete the project) for the Kanner Highway Project by the May 6, 2015, deadline. Petitioner’s price proposal acknowledged that as of May 6, 2015, Petitioner had received Addenda 1 through 5 during the bidding period, and specified the dates of receipt of each addendum.5/ Thereafter, Respondent calculated the “adjusted scores,” using the following components: the technical score (combination of the ELOI score and the technical proposal score), the proposed contract time, the time value costs provided in the RFP ($7,093 per day), and the bid price proposal. The formula, set forth in the RFP, is the bid price proposal plus the product of the proposed contract time in number of days times the time value cost per day, divided by the technical score (ELOI, or phase one, score, plus technical proposal, or phase two, score). As provided in the RFP, the design-build firm to be selected is the one whose adjusted score is the lowest. The adjusted score calculation components and results, announced at a public meeting and posted on the DOT website, were as follows: If We Are Not Successful, We Might Have To Protest: The Petition As forewarned, within 72 hours after DOT announced and posted the results on its website, showing that Intervenor had the lowest adjusted score and was the intended awardee, and that Petitioner’s proposal was in third place, Petitioner filed its notice of protest and protest bond. Within 10 days thereafter (as extended to the following Monday, day 12, by virtue of the uniform rules of procedure), Petitioner filed its Petition. The Petition sets forth the objections to Addendum 3 voiced in the April 29, 2015, emails, alleging in pertinent part: Technical proposals had already been submitted by the time Addendum 3 was released. Thus, the Department changed the proposal requirements after submission of vendors’ proposals. (Petition, ¶ 11). In Addendum 3, which was issued one day after the Q&A – after Ranger submitted its drainage concept as part of its technical proposal – the Department adopted Ranger’s drainage concept, significantly revising the plan for SMF 4, utilizing a smart box drainage control structure, and Basin 4’s piping system, including relocating SMF 4 structures and retaining existing pipes. That is, the Department gave the other vendors Ranger’s design for use by the other vendors after the technical proposals had been submitted and opened. (Petition, ¶ 15). Although none of the other vendors had included this design in their original technical proposals, they each improperly benefitted from Ranger’s efforts to develop a unique, substantially improved, more cost efficient plan: in violation of Florida law, the Department disclosed Ranger’s proposal concept to these firms, and, by mandating through Addendum 3 that all vendors use Ranger’s design concept, effectively allowed the other vendors to revise their own proposals after the technical proposal submission deadline and base their pricing on Ranger’s concept. (Petition, ¶ 16). The end result of the Department’s improper reveal of Ranger’s design concept was the posting of an intended award of the contract to another vendor instead of Ranger . . . making no attempt whatsoever to compensate Ranger for handing others the benefits that Ranger had earned. (Petition, ¶ 17). The complaint that Addendum 3 changed the RFP after submission of the technical proposals is a complaint directed to the RFP specifications as reissued on April 27, 2015. As to Petitioner’s complaint about not being compensated, it is not clear whether the Petition’s references are to stipend compensation or to some other asserted basis for compensation. The references to Petitioner not being compensated are not tied to the relief sought, which is a rejection of all bids (and not payment of compensation). To the extent Petitioner is attempting to assert a right to stipend compensation, such a request would be premature and would not be grounds for rejection of all bids. The RFP provides that non-selected shortlisted firms are eligible for stipend compensation if they have executed the Design-Build Stipend Agreement, and if they submit an invoice “after the selection/award process is complete.” (RFP at 62). By virtue of this proceeding, the selection/award process is not complete. Any other claim of a right to compensation would not be cognizable in a bid protest proceeding, as apparently Petitioner recognizes by not actually seeking compensation as relief. The Proposed Amended Petition In reaction to Respondent’s motion to dismiss the Petition as an untimely specifications challenge, on October 13, 2015, Petitioner offered the proposed Amended Petition. The proposed Amended Petition seeks to add to the claim that Addendum 3 modified the RFP’s specifications after the technical proposals were submitted, by extending that same claim to Addenda 4 and 5; that is, that Addenda 3, 4, and 5 modified the RFP’s specifications after the technical proposals were submitted. (Amended Petition, ¶ 11). With regard to the suggestion that Petitioner’s protest was an untimely challenge to the RFP’s specifications, the proposed Amended Petition adds the following: The Department did not electronically post any of the procurement documents – the RFP, the addenda, or the notice of intended award decision – as required by section 120.57(3)(a), Florida Statutes, and Florida Administrative Code Rule 60A-1.021. Amended Petition, ¶ 12. The Amended Petition also seeks to evoke the impression of a scoring challenge by alleging that “on information and belief” the technical proposals were not scored on the basis of the RFP amendments that were issued after the technical proposals were submitted. (Amended Petition, ¶ 18). In explaining the grounds for Petitioner’s protest, Petitioner’s president described this challenge to the “scoring” as follows: Petitioner is “protesting that the – how could the technical scores reflect all of the addendums that were submitted after the technical proposal[s].” (Schafer deposition at 10). In other words, this is not a scoring challenge, but a process challenge: Petitioner’s objection is to the issuance of one addendum (per the Petition) or three addenda (per the Amended Petition) that amended the RFP after technical proposals were submitted, but before price proposals were submitted. The proposed Amended Petition does not cure the Petition’s timeliness problem. Petitioner’s notice of protest with protest bond was not filed within 72 hours of the electronic transmittal or receipt of Addendum 3, Addendum 4, or Addendum 5. Petitioner received the reissued RFPs, incorporating these addenda, on April 27, May 4, and May 5, respectively. The notice of protest was not filed until May 20, a full 15 days after Addendum 5 was received. Proposed Second Amended Petition Putting aside the argumentative portions of the proposed Second Amended Petition,6/ the proposed new allegations include pleading in the alternative that either the technical proposals were evaluated and scored without consideration of the RFP addenda that were issued after the technical proposals were submitted; or, in the alternative, that the RFP addenda were considered in evaluating the technical proposals, but the awarded scores must be improper because the technical proposals did not address the RFP addenda. (Second Amended Petition, ¶¶ 20-22). By pleading in the alternative this way, the proposed Second Amended Petition confirms that the Petition and both proposed amended petitions only challenge the RFP specifications as amended by Addendum 3, or by Addenda 3, 4, and 5. Petitioner complains that the process was rendered flawed by virtue of the issuance of RFP addenda after the technical proposals were submitted, and that--one way or another--this must have undermined the evaluation and scoring of the technical proposals. The proposed Second Amended Petition seeks to add an allegation directed to Intervenor’s technical proposal, alleging that it “did not address the changes to SMF 4 that were required by Addendum 3.” (Second Amended Petition, ¶ 22). A corollary disputed issue of fact alleged is “[w]hether Community’s proposal complied with the requirements of the addenda[.]” (Second Amended Petition, ¶ 31.e.). While these allegations single out Intervenor, in substance they are no different than the other process challenges. While perhaps they are directed to the intended awardee in an effort to appear as if Petitioner is raising grounds to challenge the award decision, that effort would give rise to another problem. Petitioner, as the third- ranked firm, would lack standing to protest a contract award on grounds that the highest ranked firm should not have been highest ranked or should have been found non-responsive (not alleged by Petitioner in any petition). How Clear Were the Points of Entry? Neither the proposed Amended Petition nor the proposed Second Amended Petition would cure the Petition’s timeliness problem. However, they raise as a defense to Respondent’s timeliness challenge (which itself is in the nature of a defense, that of waiver of a clear point of entry) that the points of entry relied on were ineffective to operate as clear points of entry. It is not necessary to amend the Petition to consider this argument, as it is responsive to the issues raised by the Motion to Relinquish. Petitioner, and members of its design-build team, are hardly newcomers to DOT design-build procurements.7/ Petitioner’s president acknowledged that the Kanner Highway Project is not Petitioner’s first involvement in a DOT design-build procurement. Petitioner has successfully responded to a number of design-build proposals, including several in District Four, the results of which were that Petitioner was awarded the contracts. Petitioner is familiar with the DOT website and uses that website as a tool to stay abreast of design-build project advertisements and procurement information. Petitioner’s president could not identify any other tool, on the internet or otherwise, used by Petitioner for those purposes. In particular, although Petitioner is aware of the MyFloridaMarketPlace vendor bid system on myflorida.com, Petitioner could not say whether, for any of the design-build projects in which Ranger succeeded as the contract awardee, DOT posted RFPs, addenda, or notices of intended award on that myflorida.com system. DOT’s representative confirmed that DOT does not use the MyFloridaMarketPlace vendor bid system on myflorida.com for design-build procurements that are conducted pursuant to section 337.11(7) and DOT’s implementing rules, or for other road/bridge construction procurements under section 337.11. DOT uses the MyFloridaMarketPlace vendor bid system for procurements of commodities and contractual services. Petitioner’s president acknowledged that he was aware of the protest rights provision set forth in each version of the RFP for the Kanner Highway Project, as reissued to incorporate each of the addendum amendments. Petitioner also acknowledged that none of the email communications with DOT officials regarding the objections of Petitioner and its team members to Addendum 3 were filed as a notice of protest or formal written protest of the terms, conditions, or specifications of the RFP as amended by Addendum 3.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner’s Formal Written Protest be DISMISSED. DONE AND ENTERED this 20th day of November, 2015, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of November, 2015.
The Issue Whether Respondent Department of Transportation’s intended decision to conduct negotiations with Xerox State and Local Solutions, Inc., under ITN-DOT-13/14-8001-SM is contrary to the Department’s governing statutes, rules, or policies or to the solicitation specifications.
Findings Of Fact The ITN The Department is an agency of the State of Florida charged with planning, acquiring, leasing, constructing, maintaining, and operating toll facilities and cooperating with and assisting local governments in the development of a statewide transportation system. § 334.044(16)-(22), Fla. Stat. (2013).1/ The Department is authorized to enter contracts and agreements to help fulfill these duties. See §§ 20.23(6) and 334.044(7), Fla. Stat. FTE is a legislatively created arm of the Department and is authorized to plan, develop, own, purchase, lease, or otherwise acquire, demolish, construct, improve, relocate, equip, repair, maintain, operate, and manage the Florida Turnpike System. § 338.2216(1)(b), Fla. Stat. FTE is also authorized to cooperate, coordinate, partner, and contract with other entities, public and private, to accomplish these purposes. Id. The Department has the express power to employ the procurement methods available to the Department of Management Services under chapter 287, Florida Statutes.2/ § 338.2216(2), Fla. Stat.; see also Barton Protective Servs., LLC v. Dep’t of Transp., Case No. 06-1541BID (Fla. DOAH July 20, 2006; Fla. DOT Aug. 21, 2006). OOCEA (now known as the Central Florida Expressway Authority), MDX, and THEA are legislatively created or authorized agencies of the State with the power to fix, alter, charge, establish, and collect tolls, rates, fees, rentals, and other charges for the services and facilities system. §§ 348.0003(1)- .0004(2)(e), Fla. Stat. Each of these authorities has the power to enter contracts and to execute all instruments necessary or convenient for the carrying on of its business; to enter contracts, leases, or other transactions with any state agency or any other public body of the State; and to do all acts and things necessary or convenient for the conduct of its business and the general welfare of the authority in order to carry out the powers granted to it by law. § 348.0004(2)(g), (h), (k), Fla. Stat. On November 1, 2013, the Department advertised the ITN, soliciting proposals from vendors interested in participating in competitive negotiations for the award of a contract to provide a CCSS and associated operations and maintenance. The ITN was issued pursuant to section 287.057, Florida Statutes. The purpose of the ITN is to replace the existing customer service center systems of FTE, OOCEA, THEA, and MDX with a CCSS that can be expanded over time to include other tolling and transit agencies in the State of Florida. The CCSS is expected to process nearly all electronic toll transactions in Florida. The successful vendor will enter a contract directly with the Department. The Department will then enter agreements with the other authorities to address coordinated and joint use of the system. Generally, the ITN sets forth a selection process consisting of two parts. Part one involves: (a) the pre- qualification, or shortlisting, of vendors in order to determine a vendor’s eligibility to submit proposals; and (b) the proposal submission, evaluation, and ranking. Part two is the negotiation phase. The instant proceeding relates only to part one. Part two -- negotiations -- has yet to occur. The TRT and Selection Committee – The Evaluators Cubic alleges that “not all of the members of either [the Technical Review or Selection Committee] teams had the requisite experience or knowledge required by section 287.057(16)(a)1., Florida Statutes.” Accenture alleges that “the Selection Committee did not collectively have expertise in all of the subject areas covered by th[e] ITN.” Section 287.057(16)(a) provides in part that the agency head shall appoint “[a]t least three persons to evaluate proposals and replies who collectively have experience and knowledge in the program areas and service requirements for which commodities or contractual services are sought.”3/ In accordance with the requirements of section 287.057(16)(a), the ITN established a Technical Review Team (TRT) that would be “composed of at least one representative from each Agency and may include consultant (private sector) staff.” The ITN also provided for a Selection Committee that would be “composed of executive management at the Agencies.” Each agency executive director appointed two individuals from their agency to the TRT. Each agency director was familiar with the background and qualifications of their appointees, who had experience in various aspects of tolling operations including tolling, software, finance, and procurement. The following individuals were appointed to serve on the TRT. Bren Dietrich, a budget and financial planner for FTE, has an accounting degree and has worked at FTE for 12 years in budget and financial planning. Mr. Dietrich has been a technical committee member for seven or eight procurements. Mohamed Hassan, a senior operations manager for FTE, has been in information technology for nearly 40 years and with FTE for 22 years handling all aspects of software development and maintenance for the state’s largest tolling authority. Mr. Hassan’s expertise is in software development and maintenance. Mr. Hassan oversees staff that is responsible for maintaining the database application systems, hardware, communications coming in and going out of the customer service center, and any development projects such as transaction processing or account management system upgrades. Steve Andriuk is a deputy executive director for MDX and oversees all tolling operations within MDX’s jurisdiction. Mr. Andriuk’s tolling background goes beyond his tenure at MDX, as he previously was an executive director at Chesapeake Bay Bridge Authority. Jason Greene, MDX’s comptroller of financial controls and budget manager, has a background in finance and accounting and in project management. Mr. Greene has been with MDX for 11 years. Lisa Lumbard, who has been with OOCEA for 16 years, is the interim chief financial officer and previously was the manager of accounting and finance. Ms. Lumbard runs OOCEA’s finance and accounting office and has both procurement experience and substantial experience in the financial aspects of back- office tolling. David Wynne is the director of toll operations of OOCEA and is responsible for the overall collection of all tolls and for the violation enforcement process. Mr. Wynne has held some iteration of this position for approximately 11 years and worked for OOCEA for 16. He also has both procurement and substantial tolling experience. Robert Reardon, THEA’s chief operating officer, is responsible for THEA’s day-to-day operations, including tolls. Mr. Reardon has been with THEA for six years and has experience as a technical evaluator for public procurements. Rafael Hernandez is THEA’s manager of toll operations and oversees all toll operations within THEA’s jurisdiction. The TRT members collectively have the requisite knowledge and experience in tolling, software, finance, and procurement. The following individuals constituted the Selection Committee. Diane Gutierrez-Scaccetti has been FTE’s executive director since 2011 and worked for the New Jersey Turnpike Authority for over 20 years, the last two as executive director and the previous 14 as deputy executive director. Laura Kelley is OOCEA’s deputy director over finance administration and the interim executive director. Ms. Kelly has 30 years’ experience in transportation finance and management, 15 of which occurred at the Department and eight of which occurred at OOCEA overseeing information technology, finance, and procurement. Javier Rodriguez, MDX’s executive director, oversees all MDX operations, including planning, finance, operations, and maintenance functions. Mr. Rodriguez has been with MDX for seven years and was with the Department for over 15 years prior to his employment with MDX. Joseph Waggoner has been THEA’s executive director for approximately seven years. Prior to joining THEA, he was with the Maryland Department of Transportation for nearly 30 years, six of which were in tolling operations. ITN section 2.6.2 provides as follows: Following Proposal Oral Presentations by all short-listed Proposers (see section 2.25 Proposal Oral Presentations for additional details) the Technical Review Team members will independently evaluate the Proposals based on the criteria provided in Section 2.5.2 and will prepare written summary evaluations. There will then be a public meeting of the Selection Committee at the date, time and location in Table 1-2 Procurement Timeline. The Technical Review Team’s compiled written summary evaluations will be submitted to the Selection Committee. The Technical Review and Selection Committee will review and discuss the individual summary evaluations, and the Selection Committee will come to consensus about ranking the Proposers in order of preference, based on their technical approach, capabilities and best value. In addition to the Technical Review Team, the Selection Committee may request attendance of others at this meeting to provide information in response to any questions. The ITN is structured such that both the TRT and the Selection Committee have shared responsibility for evaluating proposals, with the Selection Committee having ultimate responsibility for ranking the Proposers for the negotiations stage of the procurement process. Combining the eight members of the TRT with the four members of the Selection Team means that there were a total of 12 individuals tasked with the responsibility of evaluating the proposals prior to the negotiations stage of the process. Pre-Qualification and Rankings In the pre-qualification portion of the ITN, interested vendors initially submitted reference forms to demonstrate that the vendors met the minimum project experience set forth in the ITN. Vendors meeting this requirement were invited to give a full-day Pre-Qualification Oral Presentation to the TRT in which each vendor was given the opportunity to demonstrate its proposed system. Under ITN section 2.6.1, A Technical Review Team will attend the Pre- Qualification Oral Presentations and will develop scores and written comments pertaining to the reviewed area(s) identified in Section 2.5.1. The Technical Review Team will be composed of at least one representative from each Agency and may include consultant (private sector) staff. The scores provided by each Technical Review Team member for each area of the Pre- Qualification Oral Presentations will be totaled and averaged with the scores of the other Technical Review Team members to determine the average score for an area of the Pre-Qualification Oral Presentation. The average score for each area of a Pre- Qualification Oral Presentation will then be totaled to determine a total Pre- Qualification Oral Presentation score. Each vendor’s Pre-Qualification Oral Presentation was then scored based on criteria set forth in ITN section 2.5.1. Any vendor that received a score of 700 or higher was “short- listed” and invited to submit proposals. Put differently, those receiving a score of at least 700 were deemed qualified to submit formal proposals. ITN section 2.5.1 provides that the “review/evaluation of the Pre-Qualification Oral Presentations will not be included in decisions beyond determining the initial short-list of Proposers to proceed in the ITN process.” Accordingly, the scores assigned in the pre-qualification phase were irrelevant after the short-listing. Six vendors submitted pre-qualifications responses, including Xerox, Accenture, and Cubic. On January 21, 2014, the Department posted its short-list decision, identifying that all six vendors, including Xerox, Accenture, and Cubic, were deemed qualified to submit formal written proposals to the ITN (the “First Posting”). As required by section 120.57(3)(a), Florida Statutes, the posting stated, “Failure to file a protest within the time prescribed in Section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120, Florida Statutes.” This posting created a point of entry to protest, and no vendor initiated a protest. After the First Posting, short-listed vendors submitted technical and price proposals and made Proposal Oral Presentations. ITN section 2.24 provides detailed instructions for technical and price proposal preparation and submission. ITN section 2.25 (as amended by Addendum 8) sets forth the process for short-listed vendors to make Proposal Oral Presentations to the TRT. Short-listed Proposers will each be scheduled to meet with the Technical Review Team for Proposal Oral Presentations of their firm’s capabilities and approach to the Scope of Work and Requirements within the time period identified in Table 1-2 Procurement Timeline. Short-listed Proposers will be notified of a time and date for their Proposal Oral Presentation. Proposal Oral Presentation sessions are not open to the public. The Selection Committee will attend these Presentations. In advance of the Proposal Oral Presentations Proposers will be given detailed instructions on what the format and content of the Proposal Oral Presentation will be, including what functionality shall be demonstrated. The Department may also provide demonstration scripts to be followed. Proposers should be prepared to demonstrate key elements of their proposed System and Project approach and to respond to specific questions regarding their Proposals. These Proposal Oral Presentations will be used to present the Proposer’s approach and improve understanding about the Department’s needs and expectations. The Technical Review Team will participate in all Proposal Oral Presentations. After each Oral Presentation, each individual on the Technical Review Team will complete a written summary evaluation of each Proposer’s technical approach and capabilities using the criteria established in Section 2.5.2 in order to assure the Technical Proposal and Oral Presentations are uniformly ranked. The evaluation will consider both the Technical Proposal and the Oral Presentations. ITN section 2.5.2 is titled “Best Value Selection” and provides as follows: The Department intends to contract with the responsive and responsible short-listed Proposer whose Proposal is determined to provide the best value to the Department. “Best value,” as defined in Section 287.012(4), F.S., means the highest overall value to the state, based on objective factors that include but are not limited to . . . . ITN section 2.5.2 goes on to delineate seven “objective factors,” or evaluation criteria, on which proposals would be evaluated: Company history Project experience and qualifications Proposed Project approach to the technical requirements Proposed approach to the Project plan and implementation Proposed approach to System Maintenance Proposed approach to Operations and performance Price ITN section 2.6.2 explains the process for evaluation of technical proposals and Proposal Oral Presentations and states that: Following Proposal Oral Presentations by all short-listed Proposers (see Section 2.25 Proposal Oral Presentations for additional details) the Technical Review Team members will independently evaluate the Proposals based on the criteria provided in Section 2.5.2 and will prepare written summary evaluations. There will then be a public meeting of the Selection Committee at the date, time and location in Table 1-2 Procurement Timeline. The Technical Review Team’s compiled written summary evaluations will be submitted to the Selection Committee. The Technical Review Team and Selection Committee will review and discuss the individual summary evaluations, and the Selection Committee will come to consensus about ranking the Proposers in order of preference, based on their technical approach, capabilities and best value. In addition to the Technical Review Team, the Selection Committee may request attendance of others at this meeting to provide information in response to any questions. Of the six short-listed vendors, five submitted proposals and gave Proposal Oral Presentations, including Xerox, Accenture, and Cubic. The Department then undertook a ranking using the evaluation criteria delineated in ITN section 2.5.2. To perform this ranking, TRT members individually evaluated the proposals and prepared detailed, written evaluations that tracked the evaluation criteria factors. The TRT’s evaluations, together with proposal summaries prepared by HNTB, were provided to the Selection Committee in preparation for a joint meeting of the TRT and Selection Committee on April 9, 2014. At the April 9th meeting, the TRT and Selection Committee members engaged in an in-depth discussion about the bases for and differences between the individual TRT members’ rankings and evaluations. Thereafter, the Selection Committee made its ranking decision. On April 10, 2014, the Department posted its ranking of vendors, with Xerox first, Accenture second, and Cubic third (the “Second Posting”). The Second Posting also announced the Department’s intent to commence negotiations with Xerox as the first-ranked vendor.4/ If negotiations fail with Xerox, negotiations will then begin with second-ranked vendor Accenture, then Cubic, and so on down the order of ranking until the Department negotiates an acceptable agreement. Accenture and Cubic each timely filed notices of intent to protest the Second Posting and timely filed formal written protest petitions and the requisite bonds. Negotiations are not at Issue ITN section 2.26 provides: Once Proposers have been ranked in accordance with Section 2.6.2 Proposal Evaluation, the Department will proceed with negotiations in accordance with the negotiation process described below. Proposers should be cognizant of the fact that the Department reserves the right to finalize negotiations at any time in the process that the Department determines that such election would be in the best interest of the State. Step 1: Follow the evaluation process and rank Proposals as outlined in Section 2.6 Evaluation Process. Step 2: The ranking will be posted, in accordance with the law (see Section 2.27), stating the Department’s intent to negotiate and award a contract to the highest ranked Proposer that reaches an acceptable agreement with the Department. Step 3: Once the posting period has ended, the Negotiation Team will undertake negotiations with the first-ranked Proposer until an acceptable Contract is established, or it is determined an acceptable agreement cannot be achieved with such Proposer. If negotiations fail with the first-ranked Proposer, negotiations may begin with the second-ranked Proposer, and so on until there is an agreement on an acceptable Contract. The Department reserves the option to resume negotiations that were previously suspended. Negotiation sessions are not open to the public and all negotiation sessions will be recorded by the Department. Step 4: The Negotiation Team will write a short plain statement for the procurement file that explains the basis for Proposer selection and how the Proposer’s deliverables and price will provide the best value to the state. Step 5: The Department will contract with the selected Proposer. As Accenture and Cubic protested the decision by the Department to enter negotiations with Xerox (and because of the automatic stay provision of section 120.57(3), Florida Statutes) the negotiation phase of the procurement never commenced. Thus, this proceeding concerns the Department’s actions up to the Second Posting, and not what may happen during future negotiations. Second Posting and Intended Award Section 1.2 of the ITN sets forth the procurement timeline for the CCSS project. The ITN originally indicated that the “Posting of Ranking/Intended Award” would occur on March 31, 2014. By addendum issued on February 13, 2014, the date for “Posting of Ranking/Intended Award” was changed to April 10, 2014. Section 1.3.1 of the ITN provides an agenda for the April 10, 2014, “Meeting to Summarize and Determine Ranking/Intended Award.” Section 2.27 of the ITN is labeled “POSTING OF RANKING/INTENDED AWARD.” Section 2.27.1, Ranking/Intended Award, provides that “[t]he Ranking/Intended Award will be made to the responsive and responsible Proposer that is determined to be capable of providing the best value and best meet the needs of the Department.” Section 2.27.2 is labeled “Posting of Short- list/Ranking/Intended Award” and provides in part that “[a]ny Proposer who is adversely affected by the Department’s recommended award or intended decision must . . . file a written notice of protest within seventy-two hours after posting of the Intended Award.” Joint Exhibits 10 and 12 are copies of forms used to announce the rankings of the Proposers. It is not clear from the record if these forms are a part of the ITN. Nevertheless, the forms are identical in format. Each form has three boxes that follow the words “TYPE OF POSTING.” The first box is followed by the word “Shortlist,” the second box is followed by the word “Ranking,” and the third box is followed by the words “Intended Award.” The form also has three columns that coincide with the three boxes previously referenced. The three columns are respectively labeled, “X indicates shortlisted vendor,” “ranking of negotiations,” and “X indicates intended award.” With respect to the last two columns, explanatory comments appearing at the bottom of the form read as follows: ** Ranking: The Department intends to negotiate separately and will award a contract to the highest ranked vendor that reaches an acceptable agreement with the Department. The Department will commence negotiations with the number one ranked vendor until an acceptable contract is agreed upon or it is determined an acceptable agreement cannot be reached with such vendor. If negotiations fail with the number one ranked vendor, negotiations may begin with the second-ranked vendor, and so on down the order of ranking until the Department is able to negotiate an acceptable agreement. *** Intended Award: “X” in the Intended Award column indicates the vendor whom the Department intends to award the contract to, but does not constitute an acceptance of any offer created by the vendor’s proposal or negotiations. No binding contract will be deemed to exist until such time as a written agreement has been fully executed by the Department and the awarded vendor. If irregularities are subsequently discovered in the vendor’s proposal or in the negotiations or if the vendor fails to submit required [b]onds and insurance, fails to execute the contract, or otherwise fails to comply with the ITN requirements, the Department has the right to undertake negotiations with the next highest vendor and continue negotiations in accordance with the ITN process, reject all proposals, or act in the best interest of the Department. On April 10, 2014, the Department issued a posting wherein the “Ranking” box was checked and the “Intended Award” box was not. According to Sheree Merting, it was a mistake to have only checked the “Ranking” box because the box labeled “Intended Award” should have also been checked. Petitioners contend that by not simultaneously checking both the “Ranking” and “Intended Award” boxes that the Department materially changed the process identified in the ITN. Protesters’ arguments as to this issue appear to be more related to form than substance. In looking at the plain language of the ITN, it reasonably appears that the Department intended to simultaneously announce the “Ranking” and “Intended Award.” The fact that the Department failed to combine these two items in a single notice is of no consequence because neither Cubic nor Accenture have offered any evidence establishing how they were competitively disadvantaged, or how the integrity of the bidding process was materially impaired as a consequence of the omission. In other words, Sheree Merting’s confessed error of not checking the “Intended Award” box contemporaneously with the “Ranking” box is harmless error. See, e.g., Fin. Clearing House, Inc. v. Fla. Prop. Recovery Consultants, Inc., Case No. 97-3150BID (Fla. DOAH Nov. 25, 1997; Dep’t of Banking & Fin. Feb 4, 1998)(applying harmless error rule to deny protest where agency initially violated provisions of section 287.057(15), Florida Statutes, by selecting two evaluators instead of three required by statute, but later added required evaluator). Sequential Negotiations As previously noted, section 2.26 of the ITN provides that following the ranking of the short-list proposers, the “Negotiation Team will undertake negotiations with the first- ranked Proposer until an acceptable Contract is established . . . [and] [i]f negotiations fail with the first-ranked Proposer, negotiations may begin with the second-ranked Proposer, and so on until there is an agreement on an acceptable Contract.” Petitioners assert that the Department has abandoned the sequential negotiation process set forth in section 2.26 and has announced “that it will conduct the procurement negotiations only with Xerox as the number one ranked proposer” and that the process of negotiating with only one proposer is contrary to the law because section 287.057(1)(c) “requires that the Department negotiate with all proposers within the competitive range.” Diane Gutierrez-Scaccetti testified as follows (T: 1119): Q: Now, you understand that as a result of the rankings that were posted on April 10th, negotiations under this ITN are to proceed with only a single vendor, is that right? A: I believe the ITN provided for consecutive negotiations starting with the first-ranked firm and then proceeding down until we reached a contract. Contrary to Petitioners’ assertions, the evidence establishes that the Department intends to follow the negotiation process set forth in section 2.26. Petitioners’ contention that section 287.057(1)(c) does not authorize sequential negotiations is a challenge to the terms, conditions, and specifications of the ITN and should have been filed within 72 hours after the posting of the solicitation as required by section 120.57(3)(b). Petitioners have waived their right of protest with respect to this issue. Petitioners’ waiver notwithstanding, section 287.057(1)(c) does not preclude the type of sequential negotiation process set forth in section 2.26 of the ITN. Section 287.057(1)(c) provides in part that “[t]he invitation to negotiate is a solicitation used by an agency which is intended to determine the best method for achieving a specific goal or solving a particular problem and identifies one or more responsive vendors with which the agency may negotiate in order to receive the best value.” (Emphasis added). Section 287.057(1)(c)4. provides that “[t]he agency shall evaluate replies against all evaluation criteria set forth in the invitation to negotiate in order to establish a competitive range of replies reasonably susceptible of award [and] [t]he agency may select one or more vendors within the competitive range with which to commence negotiations.” (Emphasis added). The opening paragraph of section 287.057(1)(c), which is essentially the preamble portion of the ITN provisions, expresses the purpose for which the ITN process was developed, to wit: “to determine the best method for achieving a specific goal or solving a particular problem.” In furtherance of the stated purpose, the Legislature instructs, in the preamble, that the process should “identif[y] one or more responsive vendors with which the agency may negotiate in order to receive the best value.” If the preamble is read in statutory isolation, then one could reasonably conclude that if the agency identifies more than one responsive vendor then the agency should negotiate with each of the vendors “in order to receive the best value.” Arguably, the preamble merely looks at vendor “responsiveness” as the guidepost for determining with whom the agency shall negotiate. Mere “responsiveness” however, is clearly not the only standard for selecting a vendor through the ITN process and illustrates why this portion of the statute cannot be read in isolation. As previously noted, subparagraph four of section 287.057(1)(c), provides that the agency “shall . . . establish a competitive range of replies reasonably susceptible of award,” and once this is done, “[t]he agency may select one or more vendors within the competitive range with which to commence negotiations.” (Emphasis added). By using the word “may” in subparagraph four, the Legislature is authorizing agencies to exercise discretion when selecting vendors with whom to negotiate. In exercising its discretion, agencies can decide to negotiate with a single vendor or with multiple vendors. An agency’s exercise of its discretion is not absolute and the “check” on the exercise of its discretion, in the context of the instant case, is a bid protest whereby an unsuccessful bidder can attempt to prove that the procurement process was impermissibly tainted. Contrary to Petitioners’ allegations, the sequential negotiation process utilized by the Department in the present case does not run afoul of section 287.057. Petitioners forcefully argue that they have been shutout of the negotiation process because neither of them was ranked first. This assertion mischaracterizes the nature of the sequential negotiation process used by the Department. The evidence shows that if the Department fails to come to terms with Xerox, then negotiations may begin with the second-ranked vendor, and so on down the order of ranking until the Department negotiates an acceptable agreement. The truth of the matter is that neither of the protesters has been shutout of the negotiations. It is simply the case that neither occupies the preferred position of being the highest ranked, short-listed vendor. Petitioners also argue that the Florida Department of Transportation Commodities and Contractual Services Procurement Manual – 375-040-020, prohibits sequential negotiations. For invitations to negotiate, the manual provides: There are two general negotiation methods used: Competitive Method A – Vendors are ranked based on technical qualifications and negotiations are conducted commencing with the first ranked vendor. Competitive Method B – Vendor qualifications are evaluated and vendors may be short-listed. Negotiations of scope and price will be conducted with short-listed or all vendors. An award is made to the vendor with the best combination of proposal, qualifications, and price. According to Petitioners, the ITN does not comport with either Method A or Method B. Again, Petitioners failed to timely challenge the ITN specifications regarding sequential negotiations and thus have waived this argument. Even if the merits of the argument are considered, Petitioners’ argument fails. The methods described in the manual are not the only methods available to the Department; in fact, the manual, by stating that “there are two general negotiation methods used (emphasis added),” recognizes that the methods are subject to refinement or modification as the Department deems best to meet the perceived needs of a particular solicitation as long as the final method complies with section 287.057(1), Florida Statutes. Further, the procurement manager for the ITN, Sheree Merting, testified that the shell, or template, provided by the Department’s central office, and used when drafting an invitation to negotiate, contains a combination of the manual’s methods A and B, which is referred to as A/B. The order of negotiations provided for in the ITN and reiterated in the First and Second Postings is not, therefore, inconsistent with the Department’s policies or procedures. Best Value Decision Petitioners contend that the Department, via the Second Posting, has already (and improperly) determined which vendor will provide the best value to the State even though negotiations have not yet occurred. This contention is not supported by the evidence. ITN section 2.5.2 states the Department’s intent to contract with the vendor whose proposal is determined to provide the best value and sets forth the statutorily mandated objective factors, or criteria, on which proposals will be evaluated. ITN section 2.6.2 provides that the TRT and Selection Committee will review and discuss the TRT members’ individual summary evaluations and the Selection Committee “will come to consensus about ranking the Proposers in order of preference, based on technical approach, capabilities and best value.” The evidence reflects that the evaluation factors were applied during the evaluation process to formulate a best value ranking, but the question of which vendor ultimately provides the best value to the State will not be conclusively determined until after negotiations are concluded. See § 287.057(1)(c)4., Fla. Stat. (“After negotiations are conducted, the agency shall award the contract to the responsible and responsive vendor that the agency determines will provide the best value to the state, based on the selection criteria.”). As testified by Ms. Gutierrez- Scaccetti, “[t]he Selection Committee agreed upon the ranking of firms. It has not made an award.” This is consistent with the ITN and Florida law, which require award to the best value proposer after negotiations. Evaluation Criteria Properly Followed As explained above, ITN section 2.5.2 sets forth the evaluation factors that the TRT and Selection Committee were to use in evaluating proposals. Petitioners allege that the TRT and Selection Committee did not follow the ITN and based their evaluations and rankings on factors other than those listed in ITN section 2.5.2. The evidence establishes that the TRT did in fact use these factors, as evidenced by the detailed evaluation summaries prepared by each of the eight TRT members, which almost uniformly tracked these factors. Seven of these summaries are organized by headings that mirror the seven criteria of section 2.5.2. The remaining summary, prepared by TRT member Mohamed Hassan, was formatted in terms of pros and cons, but nonetheless addressed all of the section 2.5.2 evaluation criteria. Reflective of the TRT’s approach, TRT member David Wynne prepared detailed, typed proposal summaries that are four pages long and single-spaced for each proposal. Mr. Wynne’s summaries capture his deliberate thought process in ranking the proposals and include headings that directly tie back to the evaluation criteria in the ITN. His summaries include specific details from each proposal justifying his qualitative assessment of the proposals. For example, he discusses the benefits of Xerox’s Vector 4G tolling platform, Xerox’s proposed project schedule, and maintenance. Mr. Wynne even included a breakdown of the pricing and his thoughts on how the pricing compared to the other vendors. The other TRT members had equally detailed summaries. When read as a whole, these summaries demonstrate that the TRT engaged in a rational, deliberative, and thoughtful evaluation of the proposals based on the ITN criteria. Additionally, the TRT members testified that they applied the ITN section 2.5.2 factors in conducting their evaluations. Thus, the evidence demonstrates that the TRT members did as instructed in the ITN and evaluated proposals based on ITN section 2.5.2’s factors. There is no credible basis to find that the section 2.5.2 criteria were not the bases of the TRT’s evaluations, rankings, and narratives. The evidence also establishes that the Selection Committee applied ITN section 2.5.2 factors in reaching its decision. The Selection Committee reviewed the TRT summaries, along with a detailed notebook prepared by HNTB, the Department’s consultant. The HNTB notebook was a comprehensive summary of information compiled from the vendors’ voluminous proposals and organized in a digestible format to aid the Selection Committee’s review, including helpful summaries providing head-to-head objective comparisons of vendor pricing, software development, and vendors’ exceptions and assumptions. The HNTB notebook of materials objectively compiled the content taken directly from the vendors’ own proposals and included no editorial comments or opinions by the Department’s consultants. Moreover, the HNTB notebook contained a chart summarizing the TRT’s rankings by TRT member, along with copies of each TRT member’s detailed written summaries. It also contained a detailed, 36-page pricing summary that pulled price information directly from the vendors’ proposals and summarized the information in a manner that allowed for easy side-by-side comparison. The notebook also included a systems matrix summary that was prepared by taking proposed systems information directly from the vendors’ proposals and combining it in a format that could be easily processed. In fact, the notebook even included pages copied directly from the proposals. Armed with the comprehensive TRT summaries and the HNTB notebook, the Selection Committee then engaged the TRT in a thoughtful and detailed discussion and analysis of the qualitative merits of each vendor’s proposal -- all within the bounds of the section 2.5.2 criteria. Petitioners contend that during the TRT and Selection Committee’s discussions, issues such as risk were improperly considered. Although “risk” was not a separately labeled criterion under section 2.5.2 (“risk of solution” is, however, referenced as a sub-bullet), risk is inherently a significant consideration in each of the evaluation factors. Stated differently, the concept of risk is integral to the ITN section 2.5.2 factors, and the Department properly considered such risks. For example, a vendor’s prior project experience -- whether it has successfully completed similar projects before -- was a listed criterion, which is directly relevant to the risk the Department would take in selecting a vendor, that is, the risk that the vendor’s experience is or is not sufficient to assure a timely project completion and quality services under the ITN. Indeed, section 287.057(1)(c) requires that the Department consider prior experience. Another example of risk considered by at least one Selection Committee member was the potential that Accenture’s project manager would not be assigned solely to this project, but might be shared with Accenture’s Illinois tolling project (“local presence commitment” is referenced as a sub-bullet in section 2.5.2). The evidence shows that Accenture stopped short of saying without qualification that its project manager would be released from Illinois and solely assigned to CCSS. This uncertainty raised a risk concern whether the critical project implementation would be properly managed. Considerations such as these are rational and reasonable. There is a Reasonable Basis for the Department’s Ranking Petitioners further contend that there was no reasonable basis for the Department’s intended decision to begin negotiations with Xerox. However, as explained above, the evidence demonstrates the opposite as the TRT and Selection Committee collectively discussed and considered the evaluation criteria and the Selection Committee reached consensus on moving forward to negotiations with Xerox. Moreover, there is ample evidence that the Selection Committee’s decision was rational and reasonable. The TRT and Selection Committee’s discussion at the April 9, 2014, meeting where the ranking decision was reached, demonstrates the studied analysis by which the evaluations were conducted. At the meeting, the four Selection Committee members, who had already reviewed the TRT members’ individual rankings and evaluations, each questioned the TRT members about their assessments of the proposals. Selection Committee members asked about the bases for the differences between the individual TRT members’ evaluations, and the TRT members explained why they ranked the vendors the way they did. The discussion revolved around the top three ranked vendors, Xerox, Accenture, and Cubic, which one TRT member described as being “head and shoulders above the rest” -- that is, above the vendors ranked fourth and fifth. As noted above, the Selection Committee members’ primary focus in these discussions was on risk assessment -- the financial risks, operations risks, and information technology risks that the TRT members believed accompanied each proposal. Major Selection Committee items of discussion included modifications to the existing systems, proprietary versus off- the-shelf software issues, and the vendors’ proximity to Florida. Additional discussion points included the risk associated with Accenture’s use of multiple subcontractors and Cubic’s lack of experience with certain tolling systems. From these discussions, it appears that the overriding factor behind the Selection Committee’s ranking decision at the April 9 meeting was Xerox’s proven experience with other similar and large tolling projects, including some of the country’s largest tolling systems, which Accenture and Cubic simply did not possess.5/ As one Selection Committee member expressed, Xerox brought a “comfort level” that did not exist with Accenture and Cubic. Moreover, Xerox, with 78 percent, is the leader in the evaluative category that looks at the percentage of the company’s existing baseline system that meets the CCSS requirements -- more than Accenture’s and Cubic’s combined percentages. As the percentage of existing baseline system compliance increases, the implementation risks decrease. Selection Committee members Diane Gutierrez-Scaccetti and Joseph Waggoner expressed the importance of this based on their firsthand experience with existing tolling systems in use for their respective agencies. In sum, this analysis and assessment is a valid and reasonable basis for the Department’s decision. Cubic also contends that such analysis is improper because the ITN allowed transit firms to submit proposals, thus making tolling experience an irrelevant evaluative factor. This contention fails because by prequalifying transit firms to bid, the Department was not precluded from considering a vendor’s specific tolling experience as part of the evaluative process. Contrary to Cubic’s allegation, the factors listed in ITN section 2.5.2, including “Project Experience and Qualifications,” contemplate tolling experience as being part of the relevant analysis. Therefore, the Selection Committee was fully authorized under the ITN to consider the benefits of a proven commodity -- a firm with Xerox’s extensive tolling experience. The Selection Committee’s qualitative assessment that, on the whole, Xerox was the better choice for commencing negotiations was supported by reason and logic and was wholly consistent with the ITN specifications. Petitioners further argue that the Department’s ranking decision is inconsistent with the pre-qualification scoring, where Accenture and Cubic each scored slightly higher than Xerox. This argument fails as ITN section 2.5.1 expressly provides that the evaluations and scoring of the Pre-Qualification Oral Presentations will not be included in decisions beyond determining the initial short-list. Regardless, these three vendors were essentially tied in that scoring: Accenture’s score was 885.38, Cubic’s was 874.75, and Xerox’s was 874.00. Petitioners also contend that the Selection Committee’s ranking decision is inconsistent with the ranking decision of the TRT majority. The ITN is clear, however, that the Selection Committee would be the final arbiter of ranking. No Demonstrations Were Cancelled The procurement timeline in the original ITN allotted ten business days for Proposal Oral Presentations. The revised timeline in Addendum 8 allotted two days. Cubic asserts that this reduction in presentation time occurred because the Department, without explanation, cancelled planned vendor demonstrations that were to occur during Proposal Oral Presentations, thus placing Cubic at a disadvantage as it was unable to present its demonstrations to Selection Committee members. Cubic also asserts that the cancellation of demonstrations is an indication that the Department had already made up its mind to select Xerox. The ITN and the testimony are unequivocal that no demonstrations were “cancelled.” ITN section 2.25 contemplates that the Department may request demonstrations in the proposal evaluation phase but in no way states that demonstrations will be held. Section 2.25 also provides that if any demonstrations were to be held, they would be as directed by the Department. Thus, the ITN did not guarantee Cubic any presentation, as Cubic suggests. Moreover, all vendors were treated equally in this regard. Further, the evidence reflects that the decision to hold demonstrations only during the Pre-Qualification Presentations was made when the ITN was released and that the Department never planned to have vendor demonstrations at the Proposal Oral Presentations. Indeed, during the mandatory pre- proposal meeting, the Department informed all vendors of the planned process, to include one demonstration at the pre- qualification phase and an oral presentation and question-and- answer session during the proposal and ranking phase. In short, Cubic presented no credible evidence in support of its allegations regarding the alleged cancellation of the demonstrations or any resulting harm. Exceptions and Assumptions were properly considered The ITN required vendors, in their technical proposals, to identify assumptions and exceptions to contract terms and conditions. Significantly, the ITN states that the Department is not obligated to accept any exceptions, and further that exceptions may be considered at the Department’s discretion during the evaluation process. ITN Technical Proposal Section 9 provides, in its entirety: Technical Proposal Section 9: Exceptions and Assumptions If Proposers take exception to Contract terms and conditions, such exceptions must be specified, detailed and submitted under this Proposal section in a separate, signed certification. The Department is under no obligation to accept the exceptions to the stated Contract terms and conditions. Proposers shall not identify any exceptions in the Price Proposal. All exceptions should be noted in the certification provided for in Proposal Section 9. Proposers shall not include any assumptions in their Price Proposals. Any assumptions should be identified and documented in this Section 9 of the Proposal. Any assumptions included in the Price Proposals will not be considered by the Department as a part of the Proposal and will not be evaluated or included in any Contract between the Department and the Proposer, should the Proposer be selected to perform the Work. Failure to take exception in the manner set forth above shall be deemed a waiver of any objection. Exceptions may be considered during the Proposal evaluation process at the sole discretion of the Department. Petitioners allege that the ITN did not clearly set forth how vendors’ exceptions and assumptions would be treated and that the Department accordingly failed to consider such exceptions and assumptions. This is a belated specifications challenge and therefore has been waived. Regardless, the evidence demonstrates that both the TRT and Selection Committee did, in fact, consider the exceptions and assumptions in the evaluation and ranking of proposers. The TRT and Selection Committee were instructed to consider exceptions and assumptions and to give them the weight they deemed appropriate subject to staying within the confines of the ITN’s section 2.5.2 criteria. Consistent with these instructions, some TRT members included comments regarding exceptions and assumptions in those members’ evaluation summaries, reflecting that exceptions and assumptions were considered during the evaluation process. Other TRT members considered the exceptions of minimal significance given that the Department would address them during negotiations and was not bound to agree to any. Indeed, the evidence was that it was the Department’s intent to sort out the exceptions and assumptions in the negotiation process and, again, that the Department need not agree to any exceptions initially set forth by the vendors. Thus, the Department acted rationally and within the bounds of the ITN and its discretion when considering exceptions and assumptions. The Selection Committee Reached Consensus Accenture alleges that the Selection Committee failed to carry out its duty to reach a “consensus” in ranking vendor proposals. The evidence establishes the exact opposite. The ITN provides that the Selection Committee will come to “consensus” about ranking the vendors in order of preference, based on technical approach, capabilities, and best value. A consensus does not require unanimity. According to the testimony of Selection Committee member Javier Rodriguez, who was the only Selection Committee member who voted for Accenture as his first choice, “at the end, Xerox got three votes from the Selection Committee; Accenture got one. So for me, consensus meant: Are we in consensus to move forward with Xerox? And as I said at the selection meeting, I didn’t object. So from a consensus standpoint, we’re moving on to starting negotiations with Xerox, and that was the intent.” Therefore, the unrebutted evidence is that the Selection Committee did, in fact, reach consensus. Subject Matter Experts Accenture contends that the TRT and Selection Committee made use of subject matter experts in the course of the evaluation and ranking in violation of Florida statutory requirements and governing procurement policies. The record, however, is void of any substantial competent evidence in support of these allegations. Tim Garrett is the tolls program manager for HNTB under the General Engineering Consulting contract for FTE. Mr. Garrett was the overall project manager assigned to support FTE in the development and execution of the ITN. He and other HNTB employees, such as Wendy Viellenave and Theresa Weekes, CPA, provided support to both TRT and Selection Committee members in regards to summarizing proposals and defining the process. There is no evidence that any employee of, or sub-consultant to, HNTB communicated qualitative assessments or opinions about any of the competing proposals to TRT or Selection Committee members. Rather, the evidence shows that HNTB facilitated the TRT’s and Selection Committee’s evaluation work by presenting to the committee members data in the form of summaries, charts, and recapitulations pulled from the voluminous technical and price proposals submitted by the five competing vendors. Other than the support provided by HNTB, the record is essentially devoid of evidence that proposal evaluators made use of subject matter experts.6/ But in any event, neither Petitioner has made a showing that the use of subject matter experts is proscribed by governing statutes, rules, policies, or the specifications of the ITN. Although the use of subject matter experts was not addressed in the ITN itself, the Department, before the Pre- Qualification Oral Presentations in early January 2014, issued written “Instructions to Technical Review Committee.” These instructions authorized TRT members to confer with subject matter experts during the procurement process on specific technical questions and subject to certain additional parameters, as follows: Subject Matter Experts Subject matter experts are authorized to support the TRC on specific technical questions that the TRC members may have throughout the procurement process. Subject matter experts may respond to questions on any aspect of the procurement or proposal, but may not be asked to, nor will they support, the evaluation of proposals, which is the responsibility of each TRC member. A subject matter expert can discuss the specific elements of the ITN and a vendor’s proposal with a TRC member, but they cannot meet with more than one TRC member at a time, unless in a public meeting – subject to the Procurement Rules of Conduct stated above. The subject matter experts are fact finders. A subject matter expert cannot disclose the specific questions asked by another TRC member. No evidence has been presented to establish that the Instructions to Technical Review Committee, as to the use of subject matter experts, violated Florida law or the terms of the ITN, or that any subject matter expert -- whether affiliated with HNTB or not -- failed to perform within the parameters set forth in the Instructions.7/ Both Petitioners devoted significant hearing time to the FTE consultancy work of John McCarey, McCarey Consultants, LLC, and John Henneman, an employee of Atkins Engineering, Inc., and sub-consultant to HNTB. There has been no showing by Petitioners that either Mr. McCarey or Mr. Henneman served as a subject matter expert to any member of the TRT or Selection Committee or that either had improper contacts in regards to the evaluation or ranking of the vendors. The undisputed evidence is that Mr. McCarey did not serve as a subject matter expert for any of the evaluators. As for Mr. Henneman, although one TRT member testified in deposition that he “believe[d]” Mr. Henneman was a technical expert or considered one of the subject matter experts, there is no evidence that Mr. Henneman served as a subject matter expert for any of the evaluators -- TRT or Selection Committee. In sum, there is simply no evidence that any of the subject matter experts had any improper influence on the TRT or Selection Committee members.8/ No Improper Contacts, Attempts to Influence, or Bias Cubic alleges that there was improper contact between the Department and Xerox during this protest that violates the statutorily imposed “cone of silence” for procurements. Cubic also asserts that there were attempts by Xerox to influence the evaluations or rankings based on the Department’s, or the other agencies’, past or existing relationships with Xerox or Xerox’s acquired entities. There simply is no record support for the assertions that there was any improper contact or any attempt by any person to influence the Department’s evaluations or rankings based on past or existing relationships between the Department and Xerox or Xerox’s acquired entities. Xerox’s counsel did not have any contact with the TRT or the Selection Committee prior to the filing of the protests and the attendant “stop” of the procurement process pursuant to section 120.57(3)(c), Florida Statutes. The only contact Xerox’s counsel had with TRT or Selection Committee members was as a participant with the Department’s counsel in pre-deposition meetings with some witnesses designated by Petitioners -- all in the context of ongoing litigation following the filing of Accenture’s and Cubic’s protest petitions. This contact is essentially no different than Petitioners’ contact with Department personnel in depositions and the trial, as well as during the section 120.57(3)(d)1., Florida Statutes, settlement conference with the Department. Furthermore, all such contact was after both the TRT’s and the Selection Committee’s work under the ITN was completed and the said contact was of no import to the procurement process. In short, there is no evidence of attempts by Xerox to influence the process, improper contact between Xerox and the Department, or Department bias in favor of Xerox. Responsiveness of Xerox’s Proposal The evidence, at best, is that the Department has yet to fully vet the representations made in the proposals by the respective Proposers, including Xerox. Protesters suggest that such a full vetting is a condition precedent to negotiations. Such an argument, however, ignores ITN section 2.12, which has to be reconciled with ITN section 2.9.1 b). ITN section 2.9.1 b) provides in part that “[t]he Proposer shall have Key Team members with the following experience at the time of Proposal submission.” The section then goes on to list several positions that fall within the “Key Team Personnel” category. Petitioners contend that the Contract Project Manager, Quality Assurance Manager, and Human Resources Manager proposed by Xerox fail to meet the “Qualifications of Key Team Personnel” set forth in ITN section 2.9.1 b), thus rendering the Xerox proposal nonresponsive. ITN section 2.12 provides in part that “[a]fter the Proposal due date and prior to Contract execution, the Department reserves the right to perform . . . [a] review of the Proposer’s . . . qualifications [and that] [t]his review will serve to verify data and representations submitted by the Proposer and may be used to determine whether the Proposer has an adequate, qualified, and experienced staff.” Xerox’s omission, at this point in the process, amounts to a non-material deviation from the ITN specifications given that ITN section 2.12 reserves in the Department the right to review key personnel representations made by Xerox, and any other short-listed Proposer, at any time “prior to Contract execution.” Cubic also contends that Xerox and Accenture submitted conditional Price Proposals rendering their proposals non- responsive under ITN section 2.16. The analysis turns on the provisions of Technical Proposal Section 9: Exceptions and Assumptions, which provides a detailed description of how exceptions and assumptions are to be provided by vendors, and explains that “[e]xceptions may be considered during the Proposal evaluation process at the sole discretion of the Department.” As provided by the ITN, all vendors included a detailed listing of exceptions and assumptions in their Technical Proposal. Consistent with the discretion afforded to the Department under ITN Technical Proposal Section 9 to consider listed exceptions during the Proposal evaluation process, the Department then made the following inquiry of each of the Proposers: Please identify whether your price proposal is based on the Department’s acceptance of the Exceptions in Section 9 of your technical proposal? Please identify whether your price proposal is based on the Department’s acceptance of the Assumptions in Section 9 of your technical proposal? Xerox responded to both inquiries as follows: “The Xerox price proposal is based on the assumptions and general risk profile created by the inclusion of Section 9. We assume the parties will reach mutual agreement on the issues raised in Section 9 without a material deviation in the price proposal.” In addition to providing written answers to the questions, the vendors also addressed these issues in the Proposal Oral Presentations in response to questions by the Department. By the end of the Proposal Oral Presentations, all three vendors had made clear to the Department that resolution of exceptions and assumptions would not affect the proposed price. For example, Xerox’s senior executive in charge of the procurement, Richard Bastan, represented that there is no financial implication to any of the exceptions and that Xerox would honor the terms and conditions and the scope of services in the ITN for the price set forth in the Price Proposal. Accordingly, none of the proposals were improperly conditioned, and Xerox, Accenture, and Cubic were treated equally. Cubic also contends that Xerox’s proposal was nonresponsive as Xerox allegedly failed to meet the stated experience minimums for transactions processed and accounts maintained. There is, however, no credible evidence to support this contention. Indeed, the evidence is that the Department, through its consultant HNTB, verified these requirements by calling the referenced projects. Moreover, Xerox met or exceeded the stated minimums with its New York project reference. The Department’s decision that Xerox was responsive on this issue is logical, reasonable, and supported by the evidence. Price Proposals ITN section 2.5.2 lists “price” as a factor to consider in determining “Best Value.” The vendors’ price proposals were presented to the TRT members for purposes of conducting their evaluations. Price was also an appropriate factor for consideration by the Selection Committee. Accenture argues that “[t]he ITN does not indicate how pricing will be considered by FDOT during the selection process.” Accenture’s contention that the ITN failed to disclose the relative importance of price is a challenge to the terms, conditions, and specifications of the ITN and should have been filed within 72 hours after the posting of the solicitation, as required by section 120.57(3)(b). Accenture has waived its right of protest with respect to this issue. Conflict of Interest Accenture complains that “[n]either Mr. Henneman nor Mr. McCarey submitted conflict of interest forms as required under the Department’s Procurement Manual . . . [because both] were present during the oral presentations made by the vendors in connection with this procurement.” Accenture also complains that Wendy Viellenave never disclosed that her husband works for TransCore, a company that is a subcontractor for Xerox. Ms. Viellenave’s husband currently works for TransCore as a maintenance and installation manager in California and has not worked in Florida in nearly twenty years. There is no credible evidence that Ms. Viellenave, through the relationship with her husband, has any “significant” direct or indirect -- financial or otherwise -- interest in TransCore that would interfere with her allegiance to the Department. The fact that Ms. Viellenave is married to an individual that works for a Xerox subcontractor is insufficient, in itself, to establish a real or potential conflict of interest. Jack Henneman currently runs the back office operation for FTE at its Boca Raton facility. His future role for the CCSS is as project manager for the implementation of the CCSS. Mr. Henneman became aware of the CCSS procurement through his work on a Florida Transportation Commission Report that culminated in 2012. This report documented the cost efficiencies for all of the tolling authorities in Florida. Mr. Henneman attended some of the Pre-Qualification Demonstrations as his schedule would permit because he is the “go-forward” project manager for the CCSS implementation. Mr. Henneman formerly worked for ACS from 2002 – 2009, and met Ms. Gutierrez-Scaccetti during his employment with the company. Mr. Henneman was the transition manager for the transfer of the back office operation of the New Jersey Turnpike from WorldCom to ACS. Mr. Henneman did not have any contact with Ms. Gutierrez-Scaccetti from approximately 2009 to 2012. In his capacity as the “go-forward” project manager, Mr. Henneman reviewed the technical proposals submitted by the vendors in the instant proceeding but he did not have any discussions with the TRT members or the Selection Committee members about the proposals. He reviewed the technical proposals for the purpose of educating himself so that he would be better prepared to carry out his functions as the “go-forward” project manager. John McCarey is a sub-consultant to FTE general engineering contractor, Atkins. Mr. McCarey has a future role as being a part of the negotiations group for the CCSS. Mr. McCarey formerly worked for Lockheed for approximately 25 years and then spent 5 years working for ACS. Mr. McCarey was the chief financial officer for ACS’s State and Local Solutions Group at one time. Mr. McCarey left the employment of ACS in 2006. Mr. McCarey currently assists with various functions, including work on issues with the consolidation of the back office systems of OOCEA and FTE. For approximately 10 years before becoming a sub-consultant, Mr. McCarey had not had any contact with Ms. Gutierrez-Scaccetti. As it relates to the CCSS project, there is no persuasive evidence that Mr. McCarey provided recommendations to the TRT or the Selection Committee.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is recommended that Petitioners’ protests be dismissed. DONE AND ENTERED this 4th day of September, 2014, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of September, 2014.
The Issue Whether Petitioner's bid protest should be dismissed for failure to state with specificity the underlying facts of the protest or facts sufficient to form a basis for a bid protest.
Findings Of Fact The Petitioner filed a bid protest of Invitation To Bid (ITB) No. 13- 550-002-A for raised pavement markers. Petitioner was disqualified from award of the bid due to the failure to meet the requirement that the products bid must be on the Florida Department of Transportation Qualified Products List at the time of the bid opening. Petitioner's Formal Protest contains no specific allegations of fact and as such is not in conformance with Rule 60Q-2.004(3), Florida Administrative Code, and Section 120.53(5)(b), Florida Statutes. On December 20, 1995, the Hearing Officer, sua sponte, entered an order requiring Petitioner to file an amended Formal Protest stating with specificity the facts and law which form the basis for its protest. The document filed by Petitioner in response to the order in essence: States there are on-going discussions with the Florida Department of Transportation, ("FDOT") District V Secretary and the Florida Department of Transportation Secretary that should preempt any further litigation. Complains that Section 316.0745(4), of the Florida Statutes is being improperly interpreted by FDOT so that the State is being forced to purchase a highway safety product at a cost far in excess of prudent purchasing practices. Alleges that the Petitioner meets all the qualifications of laboratory and field testing required by the Florida Department of Transportation Materials Laboratory . . . The formal protest filed in this case by Pac-Tec does not provide such notice to the Department of Management Services. Therefore the Department of Management Services cannot prepare an adequate defense to the protest. The response does not cure the deficiencies in the formal protest.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That the Department of Management Services issue a Final Order dismissing the Formal Protest filed by Petitioner. DONE and ENTERED this 24th day of January, 1996, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER, 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 24th day of January, 1996. COPIES FURNISHED: Cindy Horne, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 David H. Smith, Esquire Post Office Box 279 Astor, Florida 32101 Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589 Tallahassee, Florida 32302-0589 William H. Linder, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Paul A. Rowell, Esquire Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
