The Issue Whether Respondent's determination that the bid submitted by Petitioner was non-responsive, was arbitrary, capricious, or beyond Respondent's scope of discretion as a state agency.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the formal hearing, the following relevant facts are made: A. Background The Department issued a Request For Proposal and Bid Submittal Form (BID) for a full service lease, Lease Number 700:0556, seeking to rent office space in an existing facility located in Polk County, Florida. Responses to the BID were to be filed with the Department by 10:00 a.m. on June 12, 1990. Six proposals were timely submitted in response to the BID, including McCarty's and Fearn's proposal. The Department evaluated the six proposals and made site visits to the properties proposed to be leased. The McCarty proposal received the highest evaluation score of 95.4 points, while the Fearn proposal received the second highest evaluation score of 92.6 points. Because the McCarty proposal had been found responsive to the BID and received the highest evaluation score, the Department awarded the lease contract for Lease No. 700:0556 to McCarty. Fearn filed a timely protest challenging the award to McCarty. The Fearn protest was referred to the Division of Administrative Hearings for hearing. However, after the protest was referred to the Division of Administrative Hearings but before McCarty could intervene or a hearing could be held, the Department reviewed the McCarty proposal and found it to be non- responsive. The Department determined that the McCarty proposal was non-responsive because the McCarty proposal was for more space than authorized by the BID and that not all owners of the property proposed to be leased signed the BID. After determining that the McCarty proposal was non-responsive, the Department rejected the McCarty proposal and awarded the lease contract for Lease No. 700:0556 to Fearn. Upon Fearn withdrawing its protest, the Division of Administrative Hearings closed its file by relinquishing jurisdiction to the Department and the Department entered a Final Order dismissing the Fearn protest. By letter dated July 31, 1990, the Department advised McCarty of its decision to reject his proposal as non- responsive and award the bid to Fearn. By this same letter, the Department advised McCarty of his right to file a protest and his right to a formal administrative hearing. B. Lease Space Requirement Prior to issuing the BID the Department submitted to the Department of General Services (DGS) a Request For Prior Approval of Space Need (BPM Form 4405) wherein the Department justified, through a Letter of Agency Staffing, the need for 3,108 square feet of office space to be located in an existing facility in Auburndale, Polk County, Florida. However, the Department requested approval of only 3,017 net square feet. DGS approved the request for 3,017 net square feet of space and the Department issued the BID referred to in Finding of Fact l. The BID requested bidders to submit proposals to lease 3,017 square feet (plus or minus 3%) measured in accordance with Standard Method of Space Measurement and advised the bidder that the space offered must be within the plus or minus three percent required. The maximum square footage requested by the BID was 3,108 square feet (3017 + 3%). The McCarty proposal was for 3,150 square feet or 42 square feet over the maximum requested. The Department was aware of, and considered, the square feet of rental space proposed by each response to the BID in the initial evaluation since it rejected two proposals for exceeding this requirement by 145 and 392 square feet, respectively. The Department apparently considered the excess 42 square feet of space in the McCarty proposal in its initial evaluation but through an oversight failed to reject the McCarty proposal as it had in the other two proposals. Upon the Fearn protest being filed the Department's legal office reviewed the McCarty proposal and determined that the excess 42 square feet of space was a deviation that should not have been waived. At this point, the McCarty proposal was found to be non-responsive. The price per square foot of the McCarty proposal in all years, one through five, was less than the Fearn proposal. The total price of the lease in the McCarty proposal, including the excess 42 square feet, in all years, one through five, was less than the Fearn proposal. There was no evidence that the cost of the McCarty proposal would exceed the amount budgeted by the Department for this lease. C. Signature of Owner(s) and Transfer of Ownership Requirements. At the time McCarty signed and submitted the BID he was co-owner of the property bid with Adrian Gabaldon. Gabaldon was aware that McCarty was offering the property in question for lease to the Department having witnessed McCarty's signature on the BID and having been involved with the Department personnel concerning the BID. Section D. 4. A, General Provision, page 8 of the BID provides in pertinent part: Each proposal shall be signed by the owner,(s), corporate officer(s), or legal representative(s). The corporate, trade, or partnership title must be either stamped or typewritten beside the actual signature(s). If the Bid Submittal is signed by an agent, written evidence from the owner of record of his/her authority must accompany the proposal McCarty's signature was the only signature, as owner, appearing on the McCarty proposal. Below McCarty's signature the word "owner" was handwritten. Gabaldon signed the McCarty proposal as a witness to McCarty's signature and not as an owner. There is insufficient evidence to establish that at the time McCarty submitted his proposal the property bid was owned by a partnership consisting of McCarty and Gabaldon. There is no printed or typewritten partnership name in the vicinity of McCarty's signature in his proposal or anywhere else in his proposal. Sometime between the date McCarty submitted his BID and the date of the hearing, Gabaldon transferred his interest in the property bid to McCarty. D. General By signing the BID, McCarty agreed to comply with all terms and conditions of the BID and certified his understanding of those terms and conditions. In accordance with Section D.10., General Provisions, page 9 of the BID, all question concerning the specifications were to be directed to C. Donald Waldron. And, although McCarty or Gabaldon may have discussed the space requirement and other matters with certain employees of the Department, they knew, or should have known, that these questions should have been directed to Waldron. Otherwise, the answer could not be relied upon. Neither McCarty or Gabaldon ever contacted Waldron concerning the terms, conditions or specifications of the BID and, more specifically, concerning the space requirement or who was required to sign the BID. Submitted with the Fearn proposal was a letter from Entrepreneur of Tampa as owner of the property bid in the Fearn proposal appointing David Fearn, CCIM and The Fearn Partnership, Inc. as its agent to submit a proposal on behalf of Entrepreneur of Tampa.
Recommendation Pursuant to notice, the Division of Administrative Hearings by its duly designated Hearing Officer, William R. Cave, held a formal hearing in the above- captioned case on October 16, 1990 in Tampa, Florida.
The Issue Whether the Department of Health and Rehabilitative Services (HRS) acted in an arbitrary and capricious manner in determining to award the bid for its district office to Koger Properties, Inc. (Koger) and whether the petitioner submitted the lowest and best bid under the terms of the bid specifications.
Findings Of Fact GENERAL BACKGROUND - STIPULATED FACTS Petitioners received a formal Invitation to Bid on Lease No. 590:1784 from HRS, District V. The purpose of the ITB was to obtain competitive proposals for the leasing of office space by HRS within a specifically defined area. Petitioners timely submitted their bid in response to the ITB. All timely received bids were first evaluated to determine technical responsiveness. Petitioners' bid was determined to be responsive to the technical requirements of the ITB. Responsive bids were then presented to a bid evaluation committee for comparison and formulation of a recommendation for award. In comparing the various responsive bids and formulating a recommendation for award, the members of the bid evaluation committee were required to visit each proposed facility and to apply the evaluation criteria as contained in the ITB package. By memorandum dated July 30, 1986, the bid evaluation committee recommended that the bid be awarded to Koger although petitioners submitted the lowest rental price. On or about August 5, 1986, petitioners received notice from HRS of its intent to award Lease No. 590:1784 to Koger. By letter dated August 6, 1986, petitioners notified HRS of their intent to protest the intended award of Lease No. 590:1784 to Koger. The Notice of Intent to Protest was timely filed pursuant to the provisions of Section 120.53(5), Florida Statutes, and Rule 10- 13.11, Florida Administrative Code. Thereafter, the petitioners timely filed their formal written protest. Petitioners are substantially affected by the decision of HRS to award the lease to Koger. THE BIDDING PROCESS The Department of Health and Rehabilitative Services issued an Invitation to Bid and Bid Submittal Form (ITB) seeking approximately 39,968 net rental square feet of office space in Pinellas County, Florida, to be used as the district administrative offices. The ITB set forth the method in which the bids would be evaluated as follows: EVALUATION OF BIDS Bids received are first evaluated to determine technical responsive- ness. This includes submittal on bid submittal form, inclusion of required information and data, bid signed and notarized, etc. Non responsive bids will be withdrawn from further consideration. Responsive bids are presented to a bid evaluation committee for com- parison and formulation of a recom- mendation for award. This is accomplished by a visit to each proposed facility and application of the evaluation criteria. The committees recommendation will be presented to the department's official having award authority for final evaluation and determin- ation of successful bidder. EVALUATION CRITERIA The successful bid will be that one determined to be the lowest and best. All bids will be evaluated based on the award factors enumerated in the bid submittal form. The ITB also provided that "the department agrees to enter into a lease agreement based on submission and acceptance of the bid in the best interests of the department and the state." In accordance with the ITB a pre-bid conference was held on April 29, 1986; however, neither petitioners nor any representative of petitioners attended the pre-bid conference. Further, petitioners made no oral or written inquiries concerning the ITB or the evaluation criteria to be utilized. Bids received from the following providers were determined to be responsive and presented to the bid evaluation committee for comparison and formulation of the recommendation for award: James P. & Margaret R. Gills (1100 Building) Koger Properties, Inc. (Koger) LTBCLH Partnership (Justice Building) Procacci Real Estate Management Co., Inc. (ICOT Building) Elizabethan Development, Inc. (Handy City Building). BID EVALUATION COMMITTEE The bid evaluation committee was composed of the following people who, along with their staffs, would occupy the leased property: Robert Withrow, Chairman of the Committee and District Administrative Services Director; Samuel Kinsey, Financial and Accounting Director for District V; Patricia Bell, Program Manager for Aging and Adult Services; Fredrick M. O'Brien, General Services, Manager for District V; and Pegi Hollingsworth, Personnel Officer. Each member of the evaluation committee received a bid package consisting of the bid specifications and the bids submitted. Each member also received a bid evaluation sheet which was used to rate each bidder. They received no other instructions with regard to the evaluation criteria. Although each specific evaluation criterion was weighted, i.e., given a comparative value, the committee members were not specifically instructed as to how points should be assigned for each category. The evaluation committee went to each of the proposed buildings for the purpose of making a comparative evaluation based on the evaluation criteria provided. However, the primary focus was on the Koger Building and the petitioners' 1100 Building because they had submitted the lowest rental rates of the five bidders considered. After the viewing process, the members of the committee, except Mr. Withrow, discussed the factors that should be considered in applying each of the evaluation criterion. Although the committee members had not formulated the evaluation criteria to be used, they were uniquely qualified to apply the evaluation criteria provided to the specific needs and requirements of the HRS offices that would occupy the building. Though the committee members were in agreement as to the various factors to be included in each of the criterion listed, they did not discuss the points that would be awarded to each facility. Each member independently assigned points to each facility based on his or her own evaluation of the facility's comparative value in each of the listed categories. Koger received the best evaluation from all five committee members with point totals of 98, 98, 98, 98 and 99 out of a possible 100 points. Petitioners' building was ranked last of the five buildings evaluated by four of the members, with point totals of 75, 77, 71 and 75, and fourth by Mr. Withrow with a total of 81 points. Based on the comparative evaluation of the buildings, the committee recommended that the bid be awarded to Koger. By letter dated July 30, 1986, the District V office received authorization from the HRS Director of General Services to award the bid to Koger as being in the best interest of the department and state. THE EVALUATION CRITERIA The ITB included the evaluation criteria list used by the committee to ascertain the relative value of each building. At the top of the page it is stated: The successful bid will be that one determined to be the lowest and best. All bids will be evaluated based on the award factors enumerated... The evaluation criteria are divided into three general areas: (1) Associated Fiscal Costs, (2) Location, and (3) Facility. Each general area includes subcategories, with each subcategory being given a total maximum value. Each of the criteria disputed by petitioners is discussed below. 1(a) Rental rates for basic term of lease. (Weighting: 45) All of the bids received by HRS were within the rental limits established by the Department of General Services and also much lower than expected. Even the highest bid was lower than anticipated, and Koger's and petitioners' bids were considered especially desirable. The bids received, listed at present value for the ton year basic lease period, are as follows: BIDDER TOTAL COST AMOUNT MORE THAN LOW BID 1100 BUILDING $1,881,690.1 KOGER 1,993,131.4 $111,441.3 JUSTICE 2,473,559.8 591,869.7 ICOT 2,655,306.1 773,616.0 HANDY CITY 3,223,202.0 1,341,511.9 Rental rates for the basic term of the lease were given a weighted value of 45. All of the committee members gave petitioners 45 points, as the low bidder, and all gave Koger 44 points as the next low bidder. However, four of the members simply agreed that the low bid would receive the maximum amount of points with each subsequent low bidder receiving one less point than the one before it, which resulted in the high bidder receiving 41 points even though its bid was 1.7 times greater than the low bid. Only Mr. Withrow made an attempt to prorate the points based on the differences in the amount bid, thus resulting in the high bidder receiving only 20 points. However, even Mr. Withrow awarded Koger 44 points based on the minimal difference between the Koger bid and the petitioners' bid. Both Mr. Withrow and Mr. Kinsey explained the award of 44 points to Koger by comparing the difference in the amounts bid to the HRS District V budget or the budgets of the entities using the facilities. However, the purpose of the evaluation was to compare each facility to the other facilities. Thus, the award of points for rental rates should have been based on a comparison of the rates offered. Although it was reasonable to assign the maximum number of points to petitioners, as the low bidders, the amount of points assigned to the remaining bidders should have been based on a comparison of the amount of each bid to the low bid. This would have made a significant difference in the points awarded to Justice, ICOT, and Handy City; however, even using a strict mathematical computation would not significantly affect the points awarded Koger due to the minimal difference in Koger's bid and petitioners' bid. Koger would receive no less than 42 points, only 2 points less than awarded, regardless of the method of mathematical computation used. 1/ 2(a) Proximity of offered space in central or preferred area of mad boundaries (Weighting: 5) All the members of the committee agreed that Koger is in the most preferred area because its location is more accessible to the employees and the persons who visit the office than any of the other buildings. Koger is in northeast St. Petersburg, minutes from the interstate. The 1100 Building is located in a more congested area in downtown Clearwater on the extreme northern boundary of the designated area. In making a comparison Of the building locations, all of which were located within the map boundary, the committee jusifiably determined that the building that was the most strategically located, in terms of accessibility, would be considered to be in the most preferred area. Thus, Koger was awarded five points by all committee members. The 1100 Building received 2, 0, 1, 3 and 1 points. Although all committee members awarded Koger the highest points, only one committee member resided closer to the Koger Building than the other buildings. Mr. Withrow, who lives closer to the 1100 Building than Koger, gave the 1100 Building only 1 point because it was more inaccessible to the district clients and employees. Further, the District Administrator, who approved the lease to Koger, resides closer to the 1100 Building. 2(b) Frequency and availability of satisfactory public transportation within proximity of the offered space (Weighting: 5) Both Koger and the 1100 Building received the maximum of five points in this category except from Mr. Withrow who gave the 1100 Building four points. The committee members felt that the bus transportation as about the same for each building. Although the 1100 Building had more buses passing the facility due to its location in downtown Clearwater, the committee considered the destination of the buses and concluded that a person would wait the same length of time for a bus to take him to his destination from either the Koger Building or the 1100 Building. Mr. Withrow differed on the points awarded because he considered the Koger location to be better due to its proximity to the airport. The district office has a large number of people that visit from Tallahassee and other districts in the state. 2(c) The effect of environmental factors, including the physical characteristics of the building and the area surrounding it, on the efficient and economical conduct of departmental operations planned for the requested space. (Weighting: 3) Koger received the maximum of 3 points from every committee member in this category; the 1100 Building received 0 points from every member. Although this category is listed within the general area of "Location", the committee members followed the category requirement and considered all environmental factors, including the physical characteristics of the building. In the 1100 Building, committee members noted problems with the air conditioning system and the elevators. The building was not maintained well, and the bathrooms were small and poorly ventilated. The HRS parking at the 1100 Building was not conveniently located. To get to the parking lot from the building an employee would have to cross a parking lot adjacent to the building, cross an intersection and then walk up to a block to get to his or her car. Many of the office employees work late and would be walking to their cars after dark, and there was concern expressed for employee safety considering the parking arrangement offered by petitioners. Koger had none of the problems observed at the 1100 Building. Further, Koger was better suited for the handicapped because there was no need to use a ramp as there was at the 1100 Building. 3(a) Conformance of space offered to the specific requirements contained in the Invitation to Bid. (Weighing: 10) 3(b) Susceptibility of the design of the space offered to efficient layout and good utilization. (Weighting: 10) 3(c) Provisions of the aggregate square footage in a single building. Proposals will be considered, but fewer points given, which offer the aggregate square footage in not more than two locations...within 100 yards of each other. (Weighting: 10) Koger's bid is for a two-story building containing approximately 39,000 square feet. The 1100 Building is a 15-story building. It would provide approximately 39,000 square feet on the second, fourth, fifth, part of the eighth, part of the ninth, and twelfth floors. The space allocation in the 1100 Building, spread over 6 floors, would provide a major problem in efficiently locating the staff. Certain offices could not be placed on certain floors because of space restrictions, and related offices could not be placed in close proximity to each other. Offices that needed to be on the same floor could not be located on the same floor. Because the space offered by petitioners is spread over 12 floors, accessibility to related offices would be much more difficult. Further, the limited space per floor makes it more difficult for HRS to properly utilize the space provided. None of the testimony provided by the committee witnesses related the "conformance of the space offered to the specific requirements contained in the Invitation to Bid" (e.s.) The ITB lists the offices and rooms required, giving sizes for each. Other than the total square footage, which petitioners met, there were no other specific requirements contained in the ITB. None of the committee members compared the conformance of the space offered to the specific room and office requirements. Indeed, the testimony of the committee members indicate that accessibility of the space was considered under criteria 3(a) rather than the conformance of the space to the ITB. Since the space offered by petitioners apparently complied with the requirements of the ITB, petitioners should have received 10 points for that category. The points awarded under 3(b) and 3(c), however, were proper. The space offered by the 1100 Building is not susceptible to an efficient layout or good utilization of the space offered. Further, the committee legitimately differentiated between the single buildings offered by each bidder, under 3(c), by considering where the space was located within the building. Obviously, factor 3(c) reflects a concern that the space offered not be too separated. It clearly provides that proposals for space in two separate buildings will get fewer points than single building proposals, and there is no indication that all single building proposals should receive the same maximum points. This factor clearly relates to the proximity of the spaces offered to one another, with contiguous space getting the most points. 3(d) Offers providing street-level space (Weighting: 2) Approximately half of the space offered by Koger is street-level space. Koger received two points. The 1100 Building provides no street-level space; it received no points in this category. Petitioners do not contend that they should have gotten any points, but assert Koger should only have gotten one point because not all its space was street-level space. THE COMPARATIVE EVALUATION The evaluation committee members were very conscientious in comparing the relative values of the buildings offered based on the criteria provided and their observations. Their evaluations were not made arbitrarily, but based upon the factors set forth in the evaluation criteria. Although errors were made in calculating the values awarded for categories 1(a) and 3(a), these errors were not due to arbitrary action by the committee members. Further, should the appropriate points under 3(a) be added to petitioners evaluations and three points be subtracted from Koger's evaluations (two points for 1(a) and one point for 3(d)), petitioners evaluations would be 79, 80, 76, 80 and 84, and Koger's would be 95, 95, 95, 95 and 96. The strategic plan for HRS, 1986-1991, Goal 12, is to enhance employee morale and job satisfaction in several ways, one of which is to replace or upgrade 90 percent of substandard physical work environments by December 31, 1990. The testimony and evaluations show, and the committee members found, that the Koger Center would provide a better work environment than the petitioners' 1100 Building. Based on the criteria set forth in the ITB, the Koger bid is the "lowest and best" bid.
The Issue Whether Respondent, Department of Education's ("Respondent"), Notice of Intent to Award the contract for Request for Proposal No. 2005-01 ("RFP"), for Administration of the Florida Comprehensive Assessment Test ("FCAT"), is contrary to Respondent's governing statutes, rules or policies, or the bid or proposal specifications. Whether Respondent's proposed action was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact On the evidence, it is found and determined that: I. The RFP and Stage I, II and III Evaluation Respondent issued the RFP on August 19, 2004, seeking competitive proposals for a contract for administration of the FCAT. Respondent's intent in this procurement is to contract with a qualified vendor who will be capable of performing the contract at the lowest possible cost to the State. This contract impacts all Florida public schools. The RFP included the following provisions regarding the general scope of the requirements and bidder responsibilities. 1.0 . . . A contract, if awarded, will be awarded by written notice to the qualified and responsive bidder whose proposal is determined to be most advantageous to the state, while taking into consideration price and other criteria specified by the RFP. 1.3 . . . This RFP defines the requirements for implementing the FCAT assessment program. The RFP and the selected contractor's proposal, together with clarifying documents, define the work to be conducted under contract. These documents will be incorporated into the contracts resulting from the FCAT project award. Because the FCAT assessment program is technical and complex, it is possible that a responsive proposal may not totally or clearly reflect RFP requirements in all details. If the proposal of a contractor selected as a result of the bidding process is inconsistent with the RFP, the requirements of the RFP prevail; the selected contractor will be expected to perform all RFP requirements without an increase in cost above the proposed cost. * * * 5.18 Acceptance of a Proposal The Department reserves the right, in its sole discretion, to waive minor irregularities in a proposal. A minor irregularity is a variation from the RFP that does not affect the price of the proposal, or give one bidder an advantage or benefit not enjoyed by other bidders, or adversely impact the interest of the Department. Waivers, when granted, shall in no way modify the RFP requirements or excuse the bidder from full compliance with the RFP specifications and other contract requirements if the bidder is awarded the contract. Rejection of Proposals Proposals that do not conform to the requirements of this RFP may be rejected by the Department. Proposals may be rejected for reasons that include, but are not limited to, the following: The proposal contains unauthorized amendments, either additions or deletions, to the requirements of the RFP. The proposal is conditional or contains irregularities that make the proposal indefinite or ambiguous. The proposal is received late. The proposal is not signed by an authorized representative of the bidder. The bidder is not authorized to conduct business in the State of Florida or has not included a statement that such authorization will be secured prior to the award of a contract. A bid bond is not submitted with the proposal. The proposal contains false or misleading statements or provides references that do not support an attribute, capability, assertion, or condition claimed by the bidder. The proposal does not offer to provide all services required by this RFP. Department Reservations and Responsiveness of Proposals The Department reserves the right to accept or reject any or all proposals received. 5.22 . . . In the event of conflict between the language of a proposal and the language of the RFP, the language of the RFP shall prevail. * * * 7.1 Stage I: Evaluation of Mandatory Requirements (Part I) During the Stage I evaluation, the Office of Agency Procurement and Contracting Services will determine if a proposal is sufficiently responsive to the requirements of this RFP to permit a complete evaluation. In making this determination, the Office of Agency Procurement and Contracting Services will evaluate each proposal according to the process described in this section. The RFP required prospective vendors to submit sealed proposals in two parts, a technical proposal and a price proposal. The technical proposals were reviewed and scored by an evaluation committee prior to opening of the sealed cost proposals. Failure of a bidder to meet every item on the Stage I list would not necessarily result in elimination of the proposal from consideration. A proposal would be eliminated only if it contained a material irregularity. "Stage I" of the process was identified in the RFP and is basically a check list of documents and commitments that are to be included with proposals. In accordance with Section 7.1, the purpose of the Stage I review is to determine whether the proposals are sufficiently responsive to be considered by the evaluation committee. Two of Respondent's employees opened the technical proposals and checked the proposals against the Stage I list to make certain "Mandatory Documents and Statements" required by Section 7.1 of the RFP were present. They did not make any substantive judgments about the extent of compliance. In performing this Stage I review, Respondent's employees followed the department's standard operating procedures. No scoring points were associated with the Stage I check list review. The technical portions of the RFP were categorized into two parts: Part II titled, "Bidder Qualification and Experience"; and Part III titled, "Technical Proposal for Administration." Bidders could receive a maximum of 50 points for Part II and a maximum of 50 points for Part III, a total maximum possible points of 100 for the technical proposals. The RFP is designed to ensure that only qualified, responsible bidders will be eligible for award of the contract. In order to be considered eligible, a bidder was required to receive a minimum of 70 cumulative points for the technical proposals. Each of the two parts of the technical proposals was broken down into ten categories or criteria. The RFP provided that an evaluation committee would assign scores from one to five, with five being the highest possible score, for each of the criteria. The RFP consists of approximately 200 pages of technical specifications, instructions, and guidelines including appendices and addenda issued after the original release date. Each of the bidders submitted technical proposals in excess of 400 pages. The RFP provided that evaluation of proposals would be based on a holistic approach so that the proposals could be scored based on consideration of the whole package proposed by the bidders without artificial limitations on the evaluators' ability to evaluate the entire proposal and score it accordingly. The evaluation process was designed to be as objective as possible, but a degree of subjective judgment is involved in the scoring of the proposals. The 20 scoring criteria for Parts II and III were designed to cover broad categories of qualifications against which the proposals were judged. Because of the holistic evaluation approach, there was no intent to evaluate proposals on the basis of an item-by-item determination. The committee evaluating the proposals was selected to include representatives familiar with various aspects of the FCAT, which were covered in the proposals. It also included a person not employed by Respondent as required by new procurement guidelines and also included a parent representative. The evaluation committee was selected so that each member brought a different expertise or perspective to the process. The evaluation committee was instructed on how the evaluation process was to be accomplished. The evaluators took their responsibility seriously and did a thorough job. For Part II, the rating scale ranged from five (excellent) to one (unsatisfactory). A score of five means the evaluator found that the bidder demonstrated superior qualifications and experience to perform the required tasks. A score of one meant the bidder demonstrated insufficient experience and capability to perform the required tasks or did not establish its qualifications and experience. The RFP stressed in bold typeface that "[t]he evaluation of Overall Bidder Qualifications and Experience will be completed by the proposal evaluation committee using 'holistic' ratings. Each proposal evaluation committee member, acting independently, will assign a single rating for each criterion identified in Appendix M." The "holistic" approach referenced in the RFP means that Respondent looks at the proposal as a whole. The RFP and the administration of the FCAT is very complex and the evaluators are not required to look at each component of the proposal, but are to judge the whole proposal. For Part III, the rating scale also ranged from five to one. The criteria for what merited a five or a one changed, however, from Part II. A score of five means that the bidder proposed superior solutions to the requirement of the RFP and has proposed products and services that are desirable for use in the FCAT administration program and are likely to create a high quality assessment program that meets sound psychometric standards that are clearly feasible to implement. A score of one under Part III means that the bidder proposed inferior or incomplete solutions to the requirements of the RFP or has proposed products and services that would be technically indefensible, would create a flawed assessment program not meeting psychometric standards, or would not be feasible to implement. Again, the RFP stressed in bold typeface that "[t]he evaluation of the Technical Proposal will be completed by the proposal evaluation committee using 'holistic' ratings. Each proposal evaluation committee member, acting independently, will assign a single rating for each criterion identified in Appendix N." The proposals were scored independently based upon the proposal's compliance with applicable RFP criteria; the proposals were not scored based upon how they compared to each other. Indeed, the evaluators were instructed not to discuss their scores so that each evaluator would establish their own internal criteria that was consistent across proposals. Although none of the proposals were deemed non- responsive in this stage, there are indications that failure to meet certain RFP requirements were noticed by the evaluation committed and scored accordingly. Stages II and III of the evaluation process took four days. Representatives of the bidders, including its attorney, attended all of the Stage II and III evaluation sessions. Documentation of Subcontractor Information. The RFP included the following specifications relating to documentation of subcontractors and printers. 4.6.1 Subcontractors The test administration contractor may choose to employ subcontractors for the completion of one or more tasks. If the bidder proposes to employ a subcontractor(s), the qualifications and experience of the subcontractor(s) will be documented in the proposal at the same level of detail as those of the bidder. A separate chart in the proposal will identify all of the subcontractors proposed to be involved in the project and the services they are expected to provide. All subcontractors must be approved by the Department. It is assumed that the contractor will use outside printers for some materials. Printers will be documented as subcontractors, and the management plan will identify the proportion of materials to be printed by the contractor and by outside vendors. Procedures for quality control and security during printing are to be described. Destruction of secure materials is addressed in Section 3.7.4. The contractor will assume responsibility for all services offered in the proposal whether or not they are performed or produced by the contractor or by subcontractors. The Department will consider the selected contractor to be the sole point of contact for contractual matters, including payment of any and all charges resulting from the contract. Other specifications in the RFP contained similar or identical language. The RFP also provided the following in Section 5.31 with respect to subcontractors: Any change of subcontractors must be approved in advance by the Department. In the event of poor performance by a subcontractor, the Department reserves the right to direct the contractor to replace that subcontractor. While Item 10 on Page 77 of the RFP required a representation from the vendors that they had identified all subcontractors and the amount of work to be performed directly by each subcontractor, the only investigation that Respondent undertook to confirm the accuracy of these statements was the Stage I evaluation. The Stage II and Stage III evaluators did not check to ensure that all of the subcontractors had been documented as required by the RFP. The RFP specifically required that all printers be identified and documented as subcontractors. Section 6.3 of the RFP requires the management plan to specifically identify the proportion of materials to be printed by outside vendors. Section 4.6.1 of the RFP on Page 53 states that if a bidder proposes to employ a subcontractor, the qualifications and experience of the subcontractors will be documented in their proposal at the same level of detail as the bidder. That section also provides that "printers will be documented as subcontractors." The timeliness, accuracy, and security of the printing operations are very important to the FCAT program; and the qualifications and experience of the printers, who would actually print the materials, is an important component of this procurement. As it relates to the "back-end" printing of the student and parent reports, there are privacy concerns that are particularly sensitive. The RFP provisions were included to ensure that, if a vendor was going to use outside printers for some of the activities, Respondent would be able to tell from the response who all of those printers were and what services they were going to perform. The RFP was drafted to ensure that Respondent was dealing with vendors who were qualified and experienced and able to deliver the products requested in the RFP. There were specific requirements in the RFP as to how the bidders were supposed to identify prior contracts, provide contact information, and document the printers who were going to do any of the actual printing. Section 6.2 on Page 74 of the RFP required that all vendors were to document contracted services for previous assessment projects similar to the one described in the RFP. For each of those projects, the documentation was supposed to include a description of the services and products delivered, the contract period, the name, address, and telephone of the contract person for each of the contracting agencies. This provision was applicable to all of the printers who were involved in this contract. The printers were also supposed to document how they were going to monitor security and provide quality control during the printing process itself. The intent of the RFP was to have bidders document who was going to do the printing, whether it was subcontractors, sub-subcontractors, or sub-sub-subcontractors. Section 5.27 on Page 65 of the RFP states that "if a bidder proposes to employ a subcontractor, the subcontractor's qualifications and experience will be documented in the proposal at the same level of detail as that of the bidder. Procedures for quality control and security of the work tasks performed by the subcontractors are to be described." These provisions are not discretionary. They are mandatory and require all vendors to provide a description of the quality control and security measures to be employed by all subcontractors, including the printers who must be documented as subcontractors. CTB's proposal identified The Grow Network as the entity that would be responsible for printing requirements. The Grow Network is an affiliate of CTB. CTB's proposal included documentation regarding The Grow Network's qualifications to perform the printing. In its response to the RFP, CTB provided extensive documentation and met all of the requirements of the RFP with respect to its front-end printers. Indeed each of those printers was identified in paragraph 10 of the transmittal letter that accompanied the CTB proposal. The Grow Network was also responsible for providing the back-end printing for the reports to be sent to the parents and students. The Grow Network was identified as doing 20 percent of the printing. However, the Grow Network does not actually do any printing themselves. At the hearing, the Grow Network claimed that it was the "print publisher" of the back-end reports. It stated that the Grow Network utilizes a "distributed printing approach." This, in fact, meant that the printing was going to be subcontracted out. The services that would be subcontracted out by the Grow Network include digital printing, collating, packing, distribution, and tracking. CTB's proposal states that GDS, a digital imaging company, will be the print facility utilized by the Grow Network to perform these aspects of the FCAT report printing requirements. CTB's proposal describes the corporate capabilities and experience of GDS, including descriptions of the California and New Jersey projects where GDS was utilized by the Grow Network as its print facility. The RFP also required bidders to provide examples of materials to demonstrate the quality of the work done on similar projects. Accordingly, CTB included sample reports printed by the Grow Network in conjunction with GDS, for the California and New Jersey projects. Notwithstanding the foregoing detailed documentation of both the Grow Network and GDS, Petitioner asserts that CTB failed to comply with the RFP because the CTB proposal indicates that much of the printing work will be out-sourced without disclosing who is actually going to be providing these services. However, CTB's proposal identifies only one printing facility, GDS, that will be utilized as the print facility under its distributed printing approach. CTB's proposal specifically states that "Grow currently uses GDS to support their California and New Jersey projects, and they will employ GDS' services for the Florida reporting project." CTB's proposal identifies other printing facilities, Delzer, R.R. Donnelley, and Bowne, that Grow could utilize on the FCAT with Respondent's approval. These other companies were potential "backup" printers, which were identified in case Respondent preferred using another printing facility. Otherwise, the Grow Network intended to utilize GDS as the sole printing facility on the FCAT and has a commitment from GDS to perform the tasks required. The RFP does not require commitment letters from subcontractors. The RFP required only the identification of the proposed printers, which could be changed with Respondent's approval. CTB has also indicated in its response that it will utilize 180 employees of Kelly Services, at three different locations, to supervise approximately 3,000 scorers. However, nowhere in the proposal has CTB documented Kelly Services as a subcontractor, nor provided information regarding their experience and qualifications to perform this work. CTB uses Kelly Services as a recruiting service provider. CTB is responsible for the hiring, training, and directing of the Kelly Services personnel and ultimately for the deliverables received from those employees. Kelly Services is not a subcontractor as contemplated in the RFP, because they are not held accountable for their deliverables. Accordingly, CTB's proposal is not deficient for failing to document Kelly Services as a subcontractor. Even if the failure to so document Kelly Services were a deficiency in CTB's proposal, the lack of detail would only lower CTB's score, not make it non-responsive. The Post-submittal Clarification Process. The RFP provided at Section 7.0 that each bidder would be required to make a presentation to the evaluation committee after the technical proposals were opened and that information presented or issues clarified during the presentation might affect the number of points an evaluation committee member assigned to a given proposal. On the first day of the evaluation process, the bidders were required to make separate oral presentations to the evaluation committee. Following those oral presentations, the evaluation committee was to begin the process of scoring the proposals based on the various RFP criteria. This was to be a "closed session" during which the vendors were not permitted to interact with the evaluation committee members; likewise, the evaluation committee members were not permitted to direct any questions to the vendors. RFP Section 7.0 spells out the rules and processes for conducting the oral presentations of the vendors. This includes the imposition of time limits on the presentations and questions from evaluators, which were to be strictly followed. Section 7.0 states, in pertinent part: The purpose of the presentation will be for the bidder to describe its offering of products and services and make any statements that will enhance understanding of its offering. The proposal evaluation committee will NOT evaluate the presentations or otherwise award points for the quality of the of the presentation. Information presented or issues clarified during the presentation MAY affect the number of points a proposal evaluation committee member assigns to a given proposal. . . . The presentation shall not exceed 30 minutes with an additional 15 minutes reserved for proposal evaluation committee member questions. These meetings will be open to the public; however, only members of the proposal evaluation committee may ask questions of the bidder. The above-quoted language in the RFP does not contemplate written submissions by vendors following the oral presentations. Nothing else in the RFP specifically authorizes vendors to clarify information in their proposals after the presentations have concluded. Thus, the oral presentation part of the evaluation process is the only RFP-authorized mechanism available to evaluators for seeking clarification of the proposals. Because clarifications are permissible during the vendor presentations, the RFP expressly states that such clarifications may affect scoring of the proposals. By contrast, nothing in the RFP authorizes the evaluators to seek or consider in scoring the proposals any vendor clarification made in any other form or at any other point, whether before or after the oral presentations. In fact, considering any information received from the vendors outside of the oral presentations would be inconsistent with RFP Section 5.3, which restricts communications by bidders with Respondent's staff. In short, to the extent a clarification of a proposal was needed, under the RFP, it should have been provided orally during the vendor presentations. Each of the bidders made a presentation to the evaluation committee. During the presentations, members of the evaluation committee asked bidders various questions relating to their respective responses to the RFP. One of the members sought clarification regarding the total number of full time equivalent ("FTE") hours for the persons identified in the proposals. Although the evaluation team was not given any specific standards or base lines to utilize in scoring the staffing and personnel commitments submitted by the parties, a bidders' commitment of personnel resources was an important factor for several of the criteria in the RFP. The bidder representatives for CTB and Petitioner were not able to provide the requested FTE information at the time of the presentation. Harcourt's representatives, who had had the benefit of hearing the presentations made by Petitioner and CTB, were able to answer the FTE question at the presentation. Because the evaluators had lingering questions on staffing, Respondent made a decision to send out questions to two of the three vendors following completion of the oral presentations. No scoring was done on any of the proposals prior to the time Petitioner's and CTB's responses were presented to the evaluators. At least some of the evaluation committee members felt that the staffing information was critical. The questions were not based on the presentations by the vendors, but were based on the evaluation committee members' concerns that had not been resolved by the oral presentations. The questions reflected areas that the evaluators were not able to understand from the initial proposals submitted. After the presentations, Respondent delivered letters dated August 30, 2004, to Petitioner and CTB, but not to Harcourt, asking them to provide the requested FTE information by the following day. CTB and Petitioner both promptly provided the information requested. CTB's August 31, 2004, written response to the FTE question included a chart that identified all personnel and the associated FTEs that would be assigned to the project. This FTE chart was prepared by Diane Driessen, CTB's senior program manager who was one of two CTB employees primarily responsible for preparing CTB's response to the RFP. As a format for its written response, CTB utilized the existing chart for Professional Personnel Responsible for Major Contract Activity (Figure 9), which was in its proposal. CTB added to this chart the additional personnel to reflect the total FTEs for the project as a whole. CTB took the material in the proposal and presented it in a consolidated format. CTB combined the monthly activities by program chart, which was Table 9, with the key personnel chart, which was Figure 9, and handscoring resources presented in the proposal. The additional named personnel in its response were not named in the original figure of key personnel because they were not considered responsible for major contract activities. It was an oversight that the chart still retained the heading, "Time Task Chart for Key Project Personnel" when it actually reflected the 330 total FTEs for the whole project team as requested by Respondent. The cover letter to Respondent explained that CTB was listing all personnel, not just "key personnel." All of the unnamed persons added to the chart are identified by position in the original proposal. As part of its written response to Respondent's written requests for additional information, CTB also included a written recap of the questions and answers from its oral presentation. The evidence demonstrated that the information provided by CTB after receiving Respondent's staff's questions included corrections of errors contained in CTB's initial response to the RFP. This information was presented to the evaluators for them to review and consider in the scoring process. No one from Respondent made an analysis to determine whether the information in the supplement was contained in the original proposal before it was presented to the evaluators. The RFP also required the vendors to provide all required information by the deadline that the proposals were to be received. Respondent was obligated to follow these provisions and not accept any information in a manner inconsistent with them. In addition, bidders were required to commit to complying with all requirements of the RFP if awarded the contract: I certify that this Proposal is made without prior understanding, agreement, or connection with any corporation firm, or person submitting a proposal for the same materials, supplies or equipment, and is in all respects fair and without collusion or fraud. I agree to abide by all conditions of this Proposal and certify that I am authorized to sign this Proposal for the Proposer and that the Proposer is in compliance with all requirements of the Request for Proposal including but not limited to, certification requirements. . . . The supplemental information submitted by CTB should have been included in CTB's initial submittal. The fifth bullet point of Section 4.6.2 of the RFP on Page 54 required bidders to indicate by name the professional personnel to be responsible for major contract activities with an estimation of the amount of time and full-time equivalencies each person was going to devote to the tasks under the contract. The proposal was also supposed to include a vitae for all such professional personnel. This bullet point was not limited to only those who had a supervisory role. It was the intention of the bullet point that the individuals should be identified by name, including software development staff. Much of CTB's software development staff was not identified by name in its initial response, but they were identified in the supplement. The RFP required vendors to provide the total time commitment for key personnel in the initial submission and required that the bidders identify by name the professional personnel to be responsible for major contract activities. The time commitment for some of the key project personnel that CTB identified in its initial proposal were significantly "revised" in its supplement. These "revisions" purportedly correct "errors" in the initial response and include changes to the time commitment for "key project personnel," including the project manager for manufacturing, senior research scientists and the scoring director for one of the major scoring sites. There are six new names that appear in CTB's supplement, as well as numerous revisions to the time commitment of key personnel. In its written questions to the vendors, Respondent did not request any revisions or corrections of error with respect to any of these key personnel. The evidence is clear that there are "revisions," corrections of errors and significant reformatting that were tailored to address lingering concerns of the evaluators. CTB's supplemental proposal also included a new chart broken down with many different allocations of days that did not appear anywhere in the original proposal. This submittal also included a number of different "to be assigned" categories that were not specifically included on the chart in the initial submittal and a re-categorization of some of the positions. The evaluation committee members would not have had enough time to make an assessment as to whether that information was in the original proposal. Had CTB not provided its supplemental information, the evaluation team would have had a significantly different view point on CTB's staffing. After the oral presentations, Petitioner also received a written question regarding staffing from Respondent. Petitioner's response was a listing of the FTEs taken from the charts already contained in the original proposal. Petitioner was concerned with the procedure that was being implemented, but after seeking advice of counsel, submitted the response nonetheless. Harcourt was not given this opportunity. RFP Section 5.16 does not address proposal clarifications, but it does impose limitations on the consideration of proposal "amendments." Section 5.16 states that, absent a specific request by Respondent, any "amendments, revisions, or alterations to proposals will not be accepted after the deadline for the receipt of proposals." In addition, Section 5.16 does not address when, during the evaluation process, Respondent may request a vendor to amend a proposal. This timing issue is only addressed by statute in Subsection 120.57(3)(f), Florida Statutes (2004), which states that "no submissions made after the bid or proposal opening which amend or supplement the bid or proposal shall be considered." However, the timing of when Respondent could request a proposal amendment under Section 5.16 is not at issue in this case. Respondent acknowledges that it made no such request in this case. Absent a specific request, Section 5.16 precluded Respondent from considering any amendment to a proposal offered by any vendor. CTB's written responses to Respondent's written questions amount to a clarification of their bid proposal, since then were submitted only after Respondent requested the information. The responses do not constitute an amendment or supplement to the proposal. The Evaluation Process Immediately following the bidders' oral presentations and receipt of the bidders' responses to the evaluators' questions, the evaluation committee met as a body and reviewed each of the proposals. Dr. Orr and Dr. Melvin were co-chairpersons of the committee and facilitated the evaluation committee review of the technical proposals. They did not participate in the actual scoring of proposals. The evaluation committee reviewed the three proposals consecutively, evaluating them against the criteria in the RFP. Open discussion about the criteria and the locations within the proposals where criteria were addressed was encouraged and took place. Whether one bidder was slightly better than another bidder was not the basis for determining the contract award. The RFP provided a balanced formula that sought to ensure the competency of the awarded by requiring a minimum technical score of 70 while rewarding the competent bidder that submitted the lowest price. In accordance with the RFP, the evaluation committee assigned holistic ratings to the technical proposals, judging them based on the quality of the proposals as a whole. Each evaluator independently scored the proposals by assigning a score from one to five for each of the 20 criterion in the RFP. The evaluation committee did not compare the proposals to each other. The evaluation committee completed the evaluation of the first proposal before considering the second proposal and completed the evaluation of the second proposal before completing the evaluation of the third proposal. Alternative Proposals. The RFP permitted bidders to propose alternative approaches for meeting Respondent's objectives, but provided that no cost savings or increases for alternative proposals could be referenced in the technical proposal. Any cost savings or increases for alternative proposals were required to be submitted in a separately sealed package and clearly labeled. None of the bidders included any reference to cost savings or increases in their technical proposals. Petitioner's proposal clearly marked its alternatives. CTB sometimes identified its alternatives with a special marker and sometimes simply described them within the text of the RFP. Harcourt generally did not clearly designate its alternatives. During the Stage II and III evaluation process, a committee member raised a question regarding assigning points for alternative proposals. Because the RFP did not provide a mechanism for evaluating the alternatives, an internal decision was made by Respondent not to consider the alternatives at all in connection with scoring the proposals. The members of the evaluation team were told to disregard the references to alternative proposals submitted by each of the bidders. There was no provision in the RFP that was relied upon in making that determination. The evaluators were given no guidance as to which provisions of the various proposals should not be considered. This led to inconsistencies in what was treated as an alternative and not scored, versus what was treated as part of the base proposal and scored. It is clear that the decision not to consider alternatives resulted in confusion and inconsistency in the evaluation process. For example, one evaluator, Clarence Reed, indicated that if a proposal went beyond the requirements of the RFP and offered something that was not required, but was an enhancement, he viewed that as an alternative and would not have considered it. Similarly, the chairperson of the evaluation committee and one of the facilitators for the evaluation process, Dr. Orr, testified that "enhancements" should not have been considered. By contrast, most of the evaluators viewed offerings by vendors that went beyond the requirements of the RFP and did not include a cost to Respondent as "enhancements" that could be considered in their evaluation of the proposals. Likewise, Dr. Melvin, one of Respondent's facilitators for the evaluation team, believed that an "augmentation" was not the same as an "alternative." Thus, in many instances, when a vendor offered something beyond the requirements of the RFP, at no cost to Respondent, and did not identify it as an "option" or "alternative," it was considered in the scoring by at least some of the evaluators. The evidence is clear that there are portions of the proposals submitted by Harcourt and CTB that was essentially the equivalent of no cost "alternatives" that were considered by the evaluators while Petitioner's clearly identified "alternatives" were not. In sum, whether a particular proposal was an "augmentation," "option," "alternative" or an additional clarification created confusion among the evaluators. As a result, there was no consistency in terms of what the evaluators could consider in the proposals and what they could not consider. While it is impossible to quantify the exact impact of the decision not to consider alternatives, it is clear that Petitioner's bid received a disproportionate negative impact because many of its important enhancements, which were being offered to Respondent at no cost were listed as "alternatives" and never factored into the evaluation process. There were several alternatives proposed by Petitioner that would have been enhancements to the current program and would have been made available at no cost to Respondent. Thus, Petitioner's score was artificially influenced in a negative way. By contrast, the evidence is clear that CTB and Harcourt, in many instances presented different ways to accomplish tasks without specifically utilizing the term "alternative" or "option" and such matters were factored into the evaluation. The claim by Respondent and CTB that the decision not to consider alternatives was applied even-handedly is not supported by the evidence. Because there was not a consistent manner in which the various companies presented their "enhancements," "augmentations," "options" or "alternatives," Respondent's determination to exclude consideration of "alternatives" precluded the evaluators from fairly determining what each of the vendors could actually provide to the program. It also meant that the vendors were not evaluated on an equal footing. Thus, the decision was contrary to the bid specifications. In spite of these concerns, the preponderance of the evidence does not demonstrate that Respondent's instruction to evaluators not to consider alternatives rendered the proposed agency action clearly erroneous, contrary to competition, and/or arbitrary and capricious because Respondent was not obligated to accept any of the alternatives offered by a bidder. The Price Proposals. Respondent's evaluation of the three bidders' proposals established that each of the bidders was capable and qualified to perform the work under the contract. The bidders' price proposals remained sealed until after the evaluation committee completed its scoring of the technical proposals. The price proposals were evaluated based on a formula that awarded 50 points to the bidder with the lowest price. The remaining bidders received points based on a proportion or ratio that compared their price to the low bidder's price. The RFP provided at Section 7.4, Page 82, in pertinent part: A total of 50 points will be awarded to the lowest acceptable Cost Proposal. Proposals with higher costs will receive the fraction of 50 points proportional to the ratio of the lowest proposal cost to the higher cost proposal. The fractional value of points to be assigned will be rounded to one decimal place. For example, if the lowest responsive cost were $50,000.00, the bid would receive 50 points. If the next lowest responsive cost proposal were $75,000.00, it would receive 33.3 points. If the highest responsive cost proposal were $100,000.00, it would receive 25 points. Upon opening the three bidders price proposals, it was determined that Petitioner's bid for the base and renewal period was $224,969,699; Harcourt's bid was $167,055,970; and CTB's bid was $140,107,439. On September 23, 2004, Respondent posted a Notice of Intent to Award the contract for the FCAT administration to CTB. The posting showed the final scores of the three vendors as follows: Proposers Mandatory Bidders Technical Total Cost Total Requirement Qualifications/ Quality Points Proposal Points Met Experience Stage III (Stages Stage IV Stage Stage II II&III) V Pearson Yes Educational Assessment 44.6 44.3 88.9 31.4 120.3 Harcourt Yes 42.7 42.2 84.9 42.4 127.3 CTB/McGraw Yes Hill 43.8 44.9 88.8 50 138.8 CTB's price for performing the contract over a five-year period is approximately $85 million less than the price proposed by Petitioner and approximately $27 million less than the price proposed by Harcourt. Over a three year contract period, CTB's price for performing is approximately $53 million less than the price proposed by Petitioner and approximately $14 million less than the price proposed by Harcourt.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commissioner of the Department of Education adopt this Recommended Order and enter an final order awarding the contract for RFP No. 2005-01 to the low bidder, CTB/McGraw-Hill, LLC. DONE AND ENTERED this 8th day of February, 2005, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE 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 8th day of February, 2005. COPIES FURNISHED: J. Stephen Menton, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32301 Cynthia S. Tunnicliff, Esquire Pennington, Moore, Wilkinson, Bell & Dunbar, P.A. 215 South Monroe Street, Second Floor Post Office Box 10095 Tallahassee, Florida 32302-2095 Donna E. Blanton, Esquire Radey, Thomas, Yon & Clark, P.A. 313 North Monroe Street, Suite 200 Post Office Box 10967 Tallahassee, Florida 32302 Jason K. Fudge, Esquire Florida Department of Education 1244 Turlington Building 325 West Gaines Street Tallahassee, Florida 32399-0400 W. Robert Vezina, III, Esquire Vezina, Lawrence & Piscitelli, P.A. 318 North Calhoun Street Tallahassee, Florida 32301-7606 Daniel J. Woodring, General Counsel Department of Education 1244 Turlington Building 325 West Gaines Street Tallahassee, Florida 32399-0400 Lynn Abbott, Agency Clerk Department of Education Turlington Building 325 West Gaines Street, Suite 1514 Tallahassee, Florida 32399-0400
The Issue Whether the recommended decision to award AXA Equitable Life Insurance Company ("AXA Equitable") a contract to provide 403(b) annuity retirement products to employees of Respondent, Broward County School Board ("School Board"), is clearly erroneous, arbitrary, capricious, contrary to competition, contrary to the School Board's governing statutes, rules or policies, or contrary to the specifications within Request for Proposal ("RFP") 15-010P; and, if so, whether Petitioner, Life Insurance Company of the Southwest ("LSW"), should be awarded a contract to provide annuity retirement products to School Board employees pursuant to the RFP.
Findings Of Fact LSW LSW is a life insurance company that sells fixed annuity deferred plans to school districts, hospitals, churches, governments, and other qualified employer plans. LSW is an active supplemental retirement benefit vendor in 5,300 school districts throughout the country. LSW serves 321,000 annuity policyholders with over $12.7 billion dollars invested.3/ LSW is a current provider of supplemental retirement benefits to the School Board, and it has over 3,700 existing School Board employees as policyholders with over $69 million dollars invested. The School Board's RFP for Annuities (RFP 15-010P) On March 4, 2014, the School Board issued its RFP entitled "403(b)/457(b) Program for School Board Employees," RFP 15-010P, for the purpose of soliciting replies from vendors seeking to provide tax sheltered annuity and/or mutual fund retirement products to the School Board's active, full-time employees (approximately 25,139 employees). The School Board issued Addendum No. 1 to the RFP on March 26, 2014. The retirement benefit products offered as a result of this procurement are optional and supplement the retirement benefits available to qualified School Board employees through the Florida State Retirement System. In issuing the RFP, the School Board seeks to "streamline its 403(b) and 457(b) offerings to a limited number of vendors in an effort to generally improve retirement awareness of all eligible employees and improve retirement savings of participating employees." The School Board seeks proposals with competitive fee and expense structures and minimal to no surrender charges and/or sales charges. The RFP does not limit the number of vendors that may be selected for negotiation or award. The RFP was developed by the School Board's Benefit and Employment Services Department in collaboration with its consultant, Gallagher Benefit Services ("Gallagher"). Gallagher has served as the School Board's consultant on insurance matters for over 20 years. The RFP describes the School Board's current landscape of nine current active annuity vendors, which offer fixed annuities, variable annuities, equity indexed annuities, and mutual funds. The current active annuity vendors include the three recommended annuity product awardees under the RFP (ING, VALIC, and AXA Equitable), as well as LSW. In addition, the School Board has 17 current inactive vendors with a total of 690 accounts.4/ The RFP provides that mutual fund proposals and annuity proposals will be evaluated and ranked separately. The RFP further provides that the School Board "at its sole option will then decide based on the top-ranked Proposer(s) in each category, if a sole provider or multiple providers with annuity and/or mutual fund options are more beneficial to SBBC and its employees." Under the RFP: "A sole provider is either one Awardee for both annuity and mutual fund products or is the only vendor for one of the product offerings. A multiple Awardee(s) is one of many vendors for the same product offerings." On or before April 17, 2014, at 2:00 p.m., the School Board's Supply Management and Logistics Department received proposals in response to the RFP. Proposals for the annuity products were submitted by AXA Equitable, Great American, Horace Mann, ING, LSW, MetLife, and VALIC. Six companies submitted proposals for mutual fund products. In addition, a proposal was submitted by Aspire Financial Services, LLC. The proposals for both annuities and mutual funds were delivered to the School Board's Superintendent's Insurance Advisory Committee ("Insurance Committee") members within two or three days of receipt by the School Board on April 17, 2014. Each of the proposals was several hundred pages in length and described as being roughly the size of a telephone book. The proposals were evaluated by the Insurance Committee. The Insurance Committee is a standing committee composed of persons appointed by the superintendent of schools, including representatives of various labor unions and "meet and confer" groups (populations of employees that are not represented by a labor union). The purpose of the Insurance Committee is to make recommendations regarding insurance matters including the subject RFP. The Insurance Committee regularly provides input in the development of the school district's competitive procurements for insurance and employee benefits and evaluates proposals for such services. No member of the Insurance Committee had any special expertise in mutual funds or annuities. There was a training session and review of the RFP at the Insurance Committee meetings on January 9 and 15, 2014. Section 5.1 of the RFP provides that the Insurance Committee: shall evaluate all Proposals received, which meet or exceed Section 4.2, Minimum Eligibility Requirements and Section 7.1 Indemnification, according to the following criteria: CATEGORY MAXIMUM POINTS A. Experience and Qualifications 10 B. Scope of Services 40 C. Cost of Services 40 D. Supplier Diversity & Outreach Program D.1. Participation 3 D.2. Diversity 4 D.3. Community Outreach 3 TOTAL[:] 100 Failure to respond, provide detailed information or to provide requested Proposal elements may result in the reduction of points in the evaluation process. The Committee may recommend the rejection of any Proposal containing material deviations from the RFP. The Committee may recommend waiving any irregularities and technicalities. "Cost of Services" is an integral part of the RFP. Section 4.7 of the RFP addresses Cost of Services and requires proposers of annuity products to submit their Cost of Services by completing the RFP's Attachment B1, Financial Response Form ("B1 form"). The B1 form requires a series of responses to various items relating to the Cost of Services offered for annuity products. The RFP and B1 form solicit two cost proposals, only: one for "Sole Carrier" and one for "Multiple Carrier." The B1 form has two columns: one for "Sole Carrier" and one for "Multiple Carrier." The RFP and B1 form do not allow for proposers to submit more than one multiple carrier proposal and to alter the B1 form to include an additional column for more than one multiple carrier proposal. The B1 form specifically advises proposers in bold letters that: "If you are proposing annuity product(s), please complete the following form for both being a sole carrier or one of multiple carriers." Reproduced below are the two pages of the B1 form included within the RFP: Section 4.7 of the RFP unequivocally warns: "No deviations from this form are permitted. No conditions or qualifications (e.g., participation requirements) to the quoted rates are acceptable." AXA Equitable's Non-Responsiveness Based on Its Alterations to the B1 Form and Two Multiple Vendor Proposals, and the Insurance Committee's Evaluation of AXA Equitable's Proposals, Recommendation, and Award Notwithstanding the RFP's admonition against alterations to the B1 form, AXA Equitable modified the B1 form in responding to the RFP by adding an additional column and providing two separate multiple carrier proposals. Significantly, AXA Equitable labeled its modified B1 form to provide the following three separate cost proposals: (1) "Sole Carrier"; (2) "Multiple Carrier (2-4 Investment Providers)"; and (3) "Multiple Carrier (2-4 Investment Providers)." Reproduced below are the two pages of the B1 form submitted by AXA Equitable: The last two columns of AXA Equitable's B1 form, although labeled the same, offer different costs for certain categories. Significantly, in the second column, AXA Equitable listed "0.50%" for "Mortality, Expense, and Administrative Charges." However, in the third column, AXA Equitable listed "0.70%" for "Mortality, Expense, and Administrative Charges." In the second column, AXA Equitable also listed a "5 year participant level" for "CDSC or Surrender Charges & Terms." However, in the third column, AXA Equitable listed a "10 year participant level" for "CDSC or Surrender Charges & Terms." The form in AXA's proposal for annuities was also mislabeled "Attachment B2," which is the form for mutual fund submissions. Although AXA Equitable provided information on the wrong form (B2 instead of B1), and mislabeled the second and third columns on its Attachment B2, the information within its response to the RFP made it clear to Gallagher that the second column on both pages was intended to contain AXA Equitable's two separate multiple carrier proposals. The second column on both pages was intended to contain AXA Equitable's two-to-four multiple vendor annuity proposal, and the third column on both pages was intended to contain AXA Equitable's five or more multiple vendor annuity proposal.5/ No other proposer altered the B1 form or submitted more than one multiple carrier proposal. At the hearing, the School Board conceded that it expected the proposers to complete the B1 form without deviation, and that no deviation should be permitted that would allow one vendor to obtain a competitive advantage over another vendor. The School Board conceded at the hearing that AXA Equitable deviated from the B1 form by including an additional column in the form for two separate multiple proposals that was unsolicited. Gallagher prepared executive summaries of the annuity and mutual fund proposals which assembled the proposers' verbatim responses in a side-by-side format corresponding to the RFP's evaluation scoring criteria. The Insurance Committee received these summaries about one week prior to their June 11, 2014, meeting at which a decision was to be made on the various proposals. The summaries for the annuity proposals were over 800 pages in length. A similar-sized comparison was prepared for the mutual fund proposals. The Insurance Committee met on June 11, 2014, to evaluate the annuity and mutual fund proposals. The meeting started at 10:30 a.m. and adjourned at 5:30 p.m., with a break for lunch. No proposal scoring was conducted before the meeting. The Insurance Committee determined at the start of its June 11, 2014, meeting that Aspire's proposal was non-responsive because it lacked the most recent three years of independent audited financial statements required by Section 4.2.5 of the RFP. Substantial discussion occurred during the June 11th meeting as to how to score AXA Equitable because of its two multiple vendor proposals. Some of the Insurance Committee members expressed concern over how to score AXA Equitable's annuity proposal because of its three separate proposals and modifications to the B1 form. In response, Gallagher recommended during the June 11, 2014, meeting that AXA Equitable be scored separately and have three separate scores. During the meeting, AXA Equitable was treated differently than all of the other annuity proposals, because each of the other annuity proposals were scored only twice while AXA Equitable receive three separate scores. Gallagher provided the Insurance Committee with a separate scoring sheet just for AXA Equitable because of its three separate proposals: one for sole carrier, another for two-to-four carriers, and the third proposal for five or more carriers. Once the Insurance Committee scored and ranked each of the proposals for all of the proposed annuity vendors, it was recommended that only then should the committee determine whether the award should be given to a sole vendor or to multiple vendors. At the conclusion of Gallagher's presentation on the annuity and mutual fund proposals, the Insurance Committee was given 20 to 30 minutes to score all of the proposals. Thirteen members of the Insurance Committee scored the proposals. The Insurance Committee's scores ranked the annuity proposals as follows: Sole Vendor Total ING 90 AXA Equitable 76.9 VALIC 74.2 MetLife 69.2 LSW 67.5 Great American 64.2 Horace Mann 61.0 Multiple Vendors Total ING 86.9 VALIC 71.2 AXA Equitable (based on its 2-4 vendor proposal) 69.7 LSW 67.0 AXA Equitable (based on its 5+ vendor proposal) 65.2 MetLife 64.7 Great American 61.9 Horace Mann 59.5 Thus, AXA Equitable's proposal was deemed responsive by the Insurance Committee, and it received three separate scores for its annuity proposals: a score of 76.9 for its sole vendor proposal; a score of 69.7 for its two-to-four vendor proposal; and a score of 65.2 for its five or more vendor proposal. The scoring sheets reflect that AXA Equitable received different scores for cost of services under its two multiple vendor proposals. Notably, nine of the Insurance Committee members scored AXA Equitable's two-to-four vendor proposal higher for cost of services than AXA Equitable's five or more vendor proposal for cost of services.6/ After seeing the rankings of the scores during the meeting, the committee proceeded to pass a motion authorizing negotiations between the committee and the top three ranked annuity vendors, only, until a successful negotiation with three annuity vendors is reached. Day two of the Insurance Committee's meeting (held June 12, 2014) consisted of negotiations between the Insurance Committee and the three highest ranked vendors for annuity and mutual fund products. After negotiating with the top three ranked proposers, the Insurance Committee members voted to award the contracts for annuities to ING, VALIC and AXA Equitable (under its two-to-four vendor proposal), as the three top-ranked responsive proposers with whom the Insurance Committee was able to successfully conduct contract negotiations. The Insurance Committee also voted to award the contracts for mutual fund services to ING, MetLife, and VALIC and to reject Aspire's proposal as non- responsive for failure to meet the RFP's minimum eligibility criteria. The superintendent accepted the Insurance Committee's recommendations. On June 16, 2014, the School Board's Supply Management and Logistics Department posted the School Board's intended recommendation for the award of the RFP. The intended decision is to: (a) award contracts for the provision of annuity programs to ING, VALIC, and AXA Equitable (under its two-to-four vendor proposal); (b) award contracts for the provision of mutual fund programs to ING, MetLife, and VALIC; and (c) to reject Aspire's proposal as being non-responsive for failure to meet the RFP's eligibility criteria. On June 17, 2014, LSW timely filed its Notice of Protest. On Monday, June 30, 2014, LSW filed its Formal Written Protest and Petition for Administrative Hearings and bid protest bond with the School Board. Because the School Board was closed on Friday, June 27, 2014, the formal written protest was timely filed on the School Board's next business day. No bid specification protest was filed concerning either the RFP or Addendum No. 1. AXA Equitable's alteration to the B1 form, which adds a third column and offers one sole vendor proposal and two separate multiple cost proposals, is non-responsive to the RFP and a material deviation. AXA Equitable's alteration to the B1 form affected its price by giving it the opportunity to fine-tune its bid and submit a third cost proposal that was not solicited. AXA Equitable's two multiple vendor proposals contained different charges. The charges for "Mortality, Expense, Administrative Charges" and "CDSC or Surrender Charges & Terms" were higher for AXA Equitable's five or more multiple vendor proposal than its two-to-four vendor proposal. AXA Equitable received three separate scores that were evaluated by the committee while all other annuity proposals received only two scores that were evaluated. Most of the committee members gave AXA Equitable higher scores for its two- to-four cost of services proposal than its five or more cost of services vendor proposal. AXA Equitable's two multiple vendor proposals, which contained different cost proposals, and which were scored separately, allowed AXA Equitable to receive an extra bite at the apple not afforded to any of the other vendors competing for the award and allowed AXA Equitable to gain an unfair competitive advantage over all of the other proposers. Nevertheless, the School Board contends there is no provision in the RFP which prohibits AXA Equitable from submitting more than one multiple vendor proposal, and that at best, AXA Equitable's alteration of the B1 form by adding a third column and submitting three separate proposals, each of which were scored separately, is a minor irregularity that can be waived. The School Board did not determine prior to the filing of LSW's bid protest that AXA Equitable's submission of two multiple proposals was a minor irregularity, and not a material deviation. At hearing, the School Board argued that AXA Equitable, or any other vendor for that matter, could have submitted an infinite number of multiple proposals. The School Board relies on the following language within Section 2.1 of the RFP, which states: SBBC is requesting Proposals with competitive fee and expense structures; minimal to no surrender charges and/or sales charges; performance and/or guaranteed returns that exceed objective benchmarks and peer groups; and education resources and tools that will help SBBC employees understand the importance of retirement savings and plan for the future. Proposers should propose an investment lineup that is in line with current trends in the 403(b) and 457(b) market. For example, group versus individual annuity products, open architecture mutual funds, and institutional share-classes. SBBC encourages the proposal of features that may or may not be offered today, such as designated Roth accounts, investment advice, managed portfolios, etc. At its sole option, SBBC reserves the right to annually review each Awardee and its product offerings for such things including, but not limited to: enrollment; fees and expenses; performance; and benchmarks. This language requests the submission of competitive cost proposals. In no way, however, does this language allow for the submission of more than one multiple vendor proposal and AXA Equitable's modifications to the B1 form by including an additional column and second multiple vendor proposal. The School Board also contends that AXA Equitable's alteration to the B1 form and submission of two multiple vendor proposals is authorized by language within Section 4.7 of the RFP that requires a proposer to complete a B1 form "for each program offered." This language, however, pertains to the requirement to disclose the costs for each type of annuity product offered. It does not allow the submission of a second multiple vendor proposal and AXA Equitable's modification to the B1 form by including an additional column and second multiple vendor proposal. The School Board also relies on Section 5.1 of the RFP, which states that the Insurance Committee "shall evaluate all Proposals received, which meet or exceed Section 4.2, Minimum Eligibility Requirements and Section 7.1 Indemnification." Section 4.2 of the RFP, entitled "Minimum Eligibility," provides as follows: Minimum Eligibility In order to be considered for award and to be further evaluated, Proposer must meet or exceed the following criteria as of the opening date of the Proposal. Proposer is responsible for providing the following information in its response. The Proposer must also include a statement of acknowledgement for each item below. Proposer must agree to the language in Section 7.1, Indemnification. Proposer must be licensed in the State of Florida. Provide a copy of the current license and/or certificate that allows Proposer to provide the services proposed. If Proposer is an insurance carrier, Proposer must be licensed to provide the proposed services in the State of Florida with an AM Best rating of A- or higher and financial size category of VI or larger. In the alternative to the foregoing AM Best and financial-size category, a licensed carrier may satisfy the requirements of 4.2.4. If Proposer is not an insurance company or lacks an AM Best or financial size category, Proposer must provide the most recent three (3) years available of independent, audited financial statements. Each Awardee will agree to provide SBBC an annual fee of $10 per active and inactive participant. Each Awardee will agree to provide an annual fee of $12 per active and inactive participant to fund third-party administrative services. The plain reading of Section 4.2 is that the phrase "following criteria" as used therein pertains to the critera within Section 4.2 (4.2.1, 4.2.2, 4.2.3, 4.2.4, 4.2.5, and 4.2.6), only. To accept the School Board's position would render meaningless the admonitions in Section 4.7 of the RFP and the B1 form against submitting more than one multiple vendor proposal and deviating from the form. Contrary to the School Board's contention, nothing in the RFP allows the alterations to the B1 form and submission of more than one multiple vendor proposal, as submitted by AXA Equitable. In fact, Section 4.7 of the RFP and the B1 form unequivocally prohibit it. To accept the School Board's argument would have allowed AXA Equitable or any other proposer to submit any number of separate multiple proposals with different costs of services and have each of them scored separately. Under the School Board's view, AXA Equitable could have submitted separate multiple vendors of say, for example, one-to-three providers; two-to-four providers; three-to-five providers; four-to-six providers; five-to-seven providers; eight-to-nine providers, etc. (each with different costs of services), until one of them hits and is a winner. The School Board's argument fails to consider that each multiple proposal allowed the committee to give AXA Equitable an extra look and opportunity to fine-tune its bid with the hope that one of its proposals would stand out to the committee and be chosen as a winner. That is precisely what happened in the instant case. Indeed, the Insurance Committee viewed each of AXA Equitable's multiple proposals as a separate proposal and scored them separately with different results. Only after each of the multiple proposals were viewed and scored did the committee then choose to negotiate with the companies that submitted the three topped-ranked proposals. The committee had the opportunity to view AXA Equitable's five or more proposal alongside its two-to-four proposal and sole provider proposal, view the scores from all the proposals, and then determine which way it wanted to go in terms of the number of vendors. After observing that AXA Equitable provided higher costs of services for its five or more proposal than its two-to- four proposal, most of the committee members gave AXA Equitable higher scores for its lower two-to-four cost proposal, and then the committee chose to go with the top three ranked proposals. The Insurance Committee had the opportunity to view AXA Equitable's two-to-four proposal and its five plus proposal separately, rank each of these proposals separately along with the one multiple proposals submitted by each of the other vendors, and then the committee was able to stack each of the proposals against each other, compare them, and decide to go with the top three. This clearly gave AXA Equitable a competitive advantage over the other proposals, which was prohibited by the RFP, and constitutes a material deviation that cannot be waived. AXA Equitable's Non-Responsiveness for Failure to Provide Cost Information Required by the RFP In addition, one of the questions asked in the B1 form was: "What is the Net Revenue Pricing for this plan in basis points?" For the sole carrier proposal, AXA Equitable stated that its net revenue pricing is 1.70. For each of its two multiple carrier proposals, however, AXA Equitable stated: "This would be higher than 1.70 if we are not the single provider." AXA Equitable failed to commit to a specific pricing in basis points for net revenue pricing in each of its two multiple carrier proposals. Net revenue pricing is material to the evaluation of a proposer's cost of services, yet AXA Equitable failed to sufficiently respond to this question on the B1 form in response to the RFP. Some of the Insurance Committee members did not understand what the phrase "net revenue pricing" meant or appreciate the significance of this omission from AXA Equitable's multiple vendor proposals. The evidence presented at hearing failed to establish that any of the committee members deducted points because AXA Equitable failed to provide net revenue pricing for its multiple vendor proposals. AXA Equitable's failure to provide net pricing in basis points in the B1 form for its multiple proposals constitutes a material deviation from the RFP, provided AXA Equitable with a competitive advantage, and is not a minor irregularity that can be waived. The proposers were required to provide the net revenue pricing for their annuity product cost offerings. Net revenue pricing is material to the cost of the services. Thus, AXA Equitable was non-responsive to the RFP by failing to include its net pricing in basis points for its multiple vendor proposals. Nevertheless, the School Board contends that AXA Equitable's omission of net revenue pricing is simply a factor that the committee could consider when scoring its cost proposal. The School Board relies upon Section 5.1 of the RFP, which provides that a "failure to respond, provide detailed information or to provide requested Proposal elements may result in the reduction of points in the evaluation process" and does not require a rejection of AXA Equitable's proposal. The School Board's reliance on Section 5.1 of the RFP is misplaced. The Insurance Committee members did not understand what the phrase "net revenue pricing" meant or appreciate the significance of this omission from the proposal. The evidence did not show that any of the members deducted points because of AXA Equitable's failure to provide net revenue pricing for its multiple carrier proposals. The School Board did not determine prior to the filing of LSW's bid protest that AXA Equitable's failure to provide net pricing in basis points in the B1 form for its multiple proposals was a minor irregularity, and not a material deviation. The Existence of Legacy Carriers Did Not Preclude Negotiations with the Three Top Ranked Annuity Vendors Alternatively, LSW contends that even if AXA Equitable's two-to-four vendor proposal is not rejected as non- responsive, the Insurance Committee lacked the authority to choose to negotiate with the three top-ranked annuity vendors given the number of "legacy carriers" (more than four) that can continue to participate in the payroll deduction even if not selected as a vendor going forward pursuant to the instant RFP. Although it is unnecessary for the undersigned to reach this issue, LSW's contention in this regard is without merit. A selection of the top three vendors in response to the instant RFP does not mean that the legacy carriers must be counted toward the number of vendors ultimately allowed to offer products under the instant RFP. Simply put, the legacy carriers and inactive vendors may continue to provide products to its existing employees alongside the top three vendors chosen pursuant to the instant RFP.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Broward County School Board enter a final order rescinding the proposed award to AXA Equitable for annuity products in favor of an award to LSW as the third-ranked responsive and responsible vendor for supplemental annuity retirement benefits. DONE AND ENTERED this 31st day of December, 2014, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ 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 31st day of December, 2014.
The Issue Whether the School Board of Seminole County's, notice of intent to award Bid No. 102589, for air filter maintenance, service, and replacement to Filter Service and Installation Corporation was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact The Seminole County School District is a political subdivision of the State of Florida, created by Article IX, Section 4, Florida Constitution. The powers and duties of the school board are enumerated in Chapter 230, Florida Statutes. The Superintendent of the Seminole County School District is a constitutional officer, whose office is created by Article IX, Section 5, Florida Constitution. The powers and duties of the Superintendent are enumerated in Chapter 230, Florida Statutes. The Seminole County School Board issued a call for bids for air filter maintenance service and replacement under Bid No. 102589 on September 14, 1998. Bids were submitted by Con-Air Industries, Inc., the protester, and Filter Service & Installation Corp., the apparent low bidder. The bids were opened on September 28, 1998, and were evaluated. Each bidder was determined to be a responsible bidder to the CFB. Intervenor submitted the lowest numerical bid. On October 1, 1998, Respondent's staff recommended that the CFB be awarded to Intervenor. The decision to recommend the award of the filter service Bid No. 102589 complies with the bid specifications. The instructions to bidders, as stated on the Proposal Form, direct a bidder to total lines A-C and to enter the total at line D. The instructions state that a bidder is not to include the cost as stated at lines E & F in the total. The proposal form then states that the total cost, as stated at line D shall be used to determine the apparent low bidder. The bid proposal document stated that the total of the prices stated at items A, B, and C would be used to determine the lowest numerical bid. The bid proposal document stated that the Respondent reserves the right to negotiate unit cost proposed for item E. The line D total submitted by the Petitioner is stated at $3.45. The line D total submitted by the apparent low bidder, is stated at $2.60. Intervenor submitted the lowest numerical bid. Intervenor does business under the fictitious name Filter Sales & Service. That fictitious name has been registered with the Secretary of State for the State of Florida. Filter Service & Installation Corp., and Filter Sales & Service are one and the same. The reference by Intervenor at line F to "Per Price Sheet" and the failure of Filter Service & Installation Corp. to attach a price sheet to its proposal form is not a material deviation from the requirements of the bid specifications. The total at line D is the total used to determine the lowest bidder. Filter Service & Installation Corp. is the lowest and best bid from a responsive and responsible bidder. The Petitioner followed the procedure set forth in the bid proposal document in making a determination that the Intervenor was the lowest numerical bidder. Petitioner reserved the right to reject all bids and to waive any informalities. Petitioner failed to prove that the notice of intent to award the bid to Intervenor was clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Respondent award the contract for filter maintenance, service, and replacement under Bid No. 102589 to the Intervenor, Filter Service and Installation Corp., as recommended by its staff. DONE AND ENTERED this 11th day of December, 1998, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 11th day of December, 1998. COPIES FURNISHED: Robert N. Hering, President Con-Air Industries, Inc. 3055 Pennington Drive Orlando, Florida 32804 Ned N. Julian, Jr., Esquire Seminole County Public Schools Legal Services Department 400 East Lake Mary Boulevard Sanford, Florida 32773-7127 Robert W. Smith, Esquire 430 North Mills Avenue, Suite 1000 Orlando, Florida 32803 Dr. Paul J. Hagerty, Superintendent Seminole County Public Schools 400 East Lake Mary Boulevard Sanford, Florida 32773-7127
The Issue Whether Petitioner's and Intervenor's protest should be sustained?
Findings Of Fact FCH is a Florida Corporation authorized to do business in the State of Florida. At all times material to this case, Leo Young, Sr., was president of FCH. FCH the bid protester herein, previously was under contract with the Respondent under a 1994-95 RFP. While the business relationship started in a collegial manner, over time disputes arose between FCH and the Respondent involving FCH's performance and course of dealings under the subject contract. The Respondent received several holder complaints about FCH's behavior. The parties attempted to work out these differences in good faith, though near the end of the relationship, communications did "break down" between the two. Despite these differences, there is no evidence that the Department allowed the contracting problems to interfere with the RFP or evaluation process. Nothing in the record suggests that the evaluators improperly, illegally, unfairly, arbitrarily, or discriminatorily exercised their reasonable discretion and judgment in scoring the proposals to the best of their ability based upon the specifications and requirements set forth in the RFP. On April 11, 1997, the Department issued and advertised RFP BF 12/96-97, "Request for proposal for auditing, processing, collecting and delivering of unclaimed property held outside the State of Florida." An offeror's conference, was held on the initial RFP. After the conference a revised RFP was developed and delivered to each potential offeror. The RFP required offerors by May 2, 1997, to file a letter of intent to submit proposals. Petitioner did not submit such a letter with the Department by the May 2 deadline. After May 2, 1997, the Petitioner attempted to submit written questions regarding the subject RFP to the Department. These questions were returned to FCH because of FCH's failure at that time to file a letter of intent by the May 2, 1997, deadline. On May 9, 1997, the Petitioner filed with the Department a Notice of Intent to protest the RFP specifications. On May 19, 1997, the Department and the Petitioner entered into a stipulation resolving the Petitioner's protest of the RFP specifications. As part of the stipulation, the Department extended the filing date for the Petitioner to file its letter of intent to submit a proposal in consideration for the Petitioner's withdrawing its protest of the bid specifications. As a consequence of the stipulation, Petitioner was permitted to participate in the RFP process and submit a proposal on the RFP. Four proposals were submitted to the Department by FCH, State Street, NAPPCO, and Florida Property Recovery Consultants. The RFP was titled "Request for proposal for auditing, processing, collecting and delivering of unclaimed property held outside the State of Florida." The purpose of the RFP is to hire contractors to locate abandoned property for the state by doing audits of out-of-state companies holding property considered abandoned pursuant to Chapter 717, Florida Statutes. The RFP contained the following provisions relevant to this case. WRITTEN QUESTIONS AND OFFEROR'S CONFERENCE * * * (b) Offeror's Conference Upon request by a prospective offeror, the Department shall conduct an offeror's conference in accordance with the calendar of events in Room 334 of the Fletcher Building, Tallahassee, Florida at 2:00 P.M. (EST). Please send meeting request to Andrew Grosmaire, Contract Manager, as listed on the cover of this RFP. The purpose of the conference is to provide additional clarification regarding written questions previously submitted by the prospective offeror. Attendance is not mandatory. EVALUATION OF PROPOSALS Evaluation Information The contract will be awarded to the offeror(s), at the sole discretion of the Department whose proposal(s) is determined to be the most advantageous to the Department as formulated by the rating sheet. Evaluation Process The Department will conduct a comprehensive fair, and impartial evaluation of proposals received in response to this RFP. The process to be followed is described in the following sections and is to be conducted in four phases: Phase I - Evaluation of Mandatory Requirements Phase II - Evaluation of Technical Proposals Phase III - Evaluation of Fee Schedule Phase IV - Evaluation of Phases I - III Evaluation Committee An Evaluation committee will be established to assist the Department in selecting a Provider for services set forth in this RFP. The Committee will have a minimum of three members and at least one member external to the Department. The Committee will be responsible for proposals evaluation including reference checks and other verifications. The proposal evaluators may require an on site demonstration of the offeror's ability to provide the services at a level commensurate with the proposal and the Department's needs. RFP Rating Sheet The RFP rating sheet which lists evaluation criteria and specific indicators of criteria will be used to assess the degree to which the offeror's response meets those criteria as identified in Section 13. These criteria and the specific indicators of the criteria will be weighted so that each response to the RFP can be numerically valued and ranked. Phase I - Evaluation of Mandatory Requirements The purpose of this phase is to determine if each proposal is sufficiently responsive to the RFP to permit a complete evaluation. The Contract Manager will review the proposals for the mandatory requirements. Any proposal failing to meet any of the mandatory requirements of this RFP will be disqualified. Phase II - Technical/Services Proposal References, Resources, Prior Experience, and Procedures Each offeror shall have all of the following minimum qualifications; sufficient experience, sufficient and competent resources to perform the services, and sufficient procedures to enable the provider to perform the services The Committee members will evaluate the RFP to enable the provider to perform the services. The Committee members will evaluate the RFP for content and feedback from references in determining the offeror's past experience/ability in providing the scope of services outlined in this contract. A maximum of ninety points (out of a total of 100 points) can be awarded. Failure to submit the minimum references will disqualify a proposal from further consideration. Phase III - Evaluation of Fee Schedules For each proposal received acknowledging the services outlined in this RFP, the corresponding Fee Schedule will be examined. All fee proposals must be expressed solely in the form of a percentage of the dollar amount of the property delivered or value thereof. A total maximum value of ten (10) points will be awarded (out of a total of 100 points) to the lowest proposed fee percentage submitted. A provider shall not submit a proposal in excess of 13 percent. All other proposals equal to 13 percent or lower will be awarded points based on the following formula: (Lowest percentage proposal\other proposer's percentage) x 10. Calculation of points awarded to other proposals will use the lowest percentage amount proposed as a constant numerator and the percentage amount of the offeror being scored as the denominator. The result will always be less than one (1.0). The ratio is then multiplied by the maximum number of points given to the fee schedule of the RFP. This formula only includes valid proposals. If the answer to the formula results in a number with decimals, the decimals will be rounded to the nearest whole number when awarding points for Phase III; .5 points will be rounded upward and less than .5 will be rounded downward. Phase IV - Evaluation of Phases I - III The Contract Manager will combine those points assigned by each committee member and average all scores to determine the offeror submitting the highest rated proposal. A minimum averaged score of 80 points must be obtained by the offeror. If the minimum score is not obtained, the offeror will be disqualified. SUBMISSION OF PROPOSALS Prospective offerors shall submit two clearly identified separate sealed packages (proposals) which will be opened and evaluated in two stages. PACKAGE #1 - Technical and Proposed Services This separate package marked "RFP BF 12/96-97, Technical and Proposed Services" shall contain one original and five copies of all responses to this RFP as identified in Section 13 below, other than the "Fee Schedule." PACKAGE #2 - Fee Schedule This separate package, identified as the "RFP BF 12/96-97, Fee Schedule" shall contain one original and five copies and which shall include the offeror's proposed bid for all services set forth in the RFP including any additional services over and above the minimum set forth by the Department in this RFP. The proposed cost shall be expressed as a percentage of the dollar amount of the property delivered or value thereof. Failure to submit the bid cost data in a separate package shall result in a disqualification of the offeror. Sealed proposals must be received by the Florida Department of Banking and Finance, Purchasing Office, Room 252-D, Fletcher Building, Tallahassee, Florida 32399-0350, on or before the date and time indicated in the section entitled "Calendar of Events." All proposals must be plainly marked on the outside of the package to indicate date and time of proposal opening and RFP number. Proposals shall be prepared simply and economically. The Department is not liable for any cost incurred by an offeror in responding to this RFP. DOCUMENTS REQUIRED IN SUBMITTING PROPOSAL The documents required in submitting the technical and services proposal package are identified below. These items identified are the minimum requirements acceptable by the Department. Any proposal which does not meet these requirements will not be considered. offeror must follow the proposed format outlined below. This will produce uniform formatting of proposals which ensures fairness in rating by the Evaluation Committee members in locating information quickly when questions arise. Each heading of the outline must be addressed and in proper order. The proposal should provide a complete and detailed description of the offeror's ability to meet the requirements of this RFP. Signed State of Florida Request for Proposal, Contractual Services, Form PUR 7033 (An original form is required.) The offeror must designate, in writing, the official spokesperson of their organization authorized to sign all applicable documents required in this RFP. The offeror shall designate the location of its office within the USA to be used during the duration of this contract. An offeror must provide evidence that the organization is a legal entity. Incorporated providers must provide as an attachment to the proposal either a copy of the corporation's most current annual report on file with the appropriate state agency, or, if incorporated during the past 12 months, a copy of the corporation's articles of incorporation and charter number assigned by the appropriate state agency. Businesses which are not incorporated must provide as an attachment to the proposal a copy of their business or occupational license. Partnerships shall submit documentation of compliance with the applicable provisions of Chapter 620, Florida Statutes. The proposal must include a notarized and sworn statement indicating that the offeror will comply with all of the terms and conditions stated in the RFP. The proposal must include a notarized and sworn statement indicating that the offeror has not had any prior involvement with this RFP. This contract is subject to Chapter 112, Florida Statutes, regarding conflict of interest. The proposal must include a notarized and sworn statement indicating the offeror does not have a conflict of interest described in this RFP or Chapter 112, Florida Statutes. The offeror must disclose the name of any State employee who owns, directly or indirectly, an interest of ten percent or more in the offeror's firm or any of its subsidiaries. No Department staff shall have any interest or receive any compensation, directly or indirectly, in the offerors firm or any of its subsidiaries. This shall be an ongoing requirement and failure to comply will subject the contract to cancellation. The offeror shall provide the following for its designated custodian as described in this RFP; name, address, contact person, telephone number, proof of licensure by applicable governmental agencies, and the account number where the funds will be deposited. The offeror shall provide a sample of the indemnification agreement to be used between the Department and the holder. The offeror shall provide a sample of the monthly work report detailing the number of examinations being performed for the Department and the status of each examination. The offeror shall provide a proposal on training the Department's staff and examiners in the field of abandoned property in the first year of this contract as described in this RFP. The offeror shall provide a proposal on hosting a holder seminar for the Department before April 1, 1998, as described in this RFP with details such as location, date, and time, duration, topics, guest speakers, etc. The offeror must either supply at least three (3) references showing the offeror has previously conducted abandoned/unclaimed property examinations pursuant to Chapter 717, Florida Statutes, or to any other state's abandoned/unclaimed property law or must demonstrate the ability to perform the services specified herein. The offeror shall provide a listing of the states, the contact person and their telephone where the offeror has a valid contract to perform similar services as described in this RFP. If there are no current contracts, please indicate. The offeror must include a list of organizations of which the offeror is a member that would promote compliance with Chapter 717, Florida Statutes and abandoned property laws throughout the United States. An example of organizations would include various stock transfer associations, corporate secretary chapters, UPHLC, NAUPA, etc. If there are no current memberships, please indicate. The offeror shall provide a written summary of the experience of the organization in examining holders for unclaimed property. The offeror must include a chart of the organization, indicating how its staff will fit into the total organization, and how each member of the staff will relate to one another. The offeror must include a resume/vita for each principal of the business who will perform professional services for the RFP. The offeror shall describe its experience in interpreting various state laws and case law relating to the unclaimed property including a resume/vita and a written summary of their counsel's legal experience in dealing with unclaimed property and/or Chapter 717, Florida Statutes. The offeror shall detail the procedure to be used in processing records from a holder once the records are received from the holder. The procedure shall include a process to ensure records are processed in a timely fashion. The offeror shall provide a written summary of the examination process to be used in examining for unclaimed property. The offeror shall provide an examination manual to be used in examining holders detailing the process of examining for unclaimed property. The offeror shall provide the procedures which will allow the Department to direct, coordinate, and participate in the examination of holders of unclaimed property holders as outlined in this RFP. The offeror shall describe its database and the ability to maintain a compatible database with the Department's database. The offeror must describe the security procedures to be implemented to ensure all personnel working in the examination process will maintain the security and confidentiality of examinations at all times. Within forty-five days of the execution of the contract, the Provider shall acquire a fidelity bond, financial guaranty bond, fidelity insurance, or other financial guaranty providing protection to the Department against theft, loss, or other illegal diversion of funds from an entity duly licensed in the State of Florida in the amount of $100,000 in a form acceptable to the Department. The offeror shall submit a separate package clearly identified as "Fee Schedule" and marked on the outside with the RFP number and opening date as described in the section entitled "Calendar of Events." The Fee Schedule shall be submitted in terms expressed as a percentage of the dollar amount of property delivered or value thereof. (emphasis supplied) As indicated, the RFP also contained an evaluation sheet for use by each evaluator, which categorized the areas of review and the point scoring applicable to each. Andrew Grosmaire, Financial Examiner Analyst Supervisor for the Abandoned Property section, was the contract manager for the Division. In that capacity, he was responsible for the principal drafting of the RFP for handling the logistics of the evaluation process and for completing the Phase I review of the proposals. Additionally, he had been the contract manager over FCH's current contract with the Department. In the past, Mr. Grosmaire had had numerous conflicts with FCH over some of FCH's practices. In fact Mr. Grosmaier considered some of FCH's practices to be unethical. The opinions held by Mr. Grosmaier are debatable depending on one's philosophy on how aggressive a business should be in auditing an entity. Additionally, Mr. Grosmaier believed FCH had submitted a false statement requesting payment for work it had performed. The issue was eventually forwarded by the Division for criminal investigation by the Department. In short, the relationship between Mr. Grosmaier and FCH was highly strained and was generally known throughout the Division. However, the evidence did not show that the low opinions of Mr. Grosmaire had any impact on the Department's RFP process. Mr. Grosmaire conducted the threshold determination of whether the proposals contained the minimum documentation required by the RFP and necessary to pass on to the evaluation stage. To that end, Mr. Grosmaire determined FCH and the other offerors met the RFP's threshold requirements. Mr. DeVries is the Bureau Chief for the Abandoned Property section. He was responsible for putting together the evaluation committee according to the terms of the RFP and the requirements of Florida Statues. Mr. DeVries decided to populate the evaluation committee with individuals outside the abandoned property section in order to diminish any bias arguments he anticipated would be raised as a result of prior disputes with FCH. Additionally, he wished to capitalize on certified public accounting and auditing experience held by individuals outside the abandoned property section. The intent was for the evaluators to be able to determine whether the offerors' proposals — in particular their manuals and methodology — met American Auditing Institute standards. Additionally, the Comptroller wished to have persons outside the agency participate in RFP evaluations. Therefore, at least one of the members of the evaluation committee would not be an employee of the Department. Up to the time of posting the award, The evaluation team utilized by the Department relative to the RFP consisted of the following individuals: Rick Sweet, a Financial Examiner with the Abandoned Property section of the Department of Banking and Finance. Bob Dearden, a Financial Administrator with the Department of Banking and Finance, Division of Accounting and Auditing, with a background in auditing. Richard Law, a certified public accountant and a member of the accounting firm, Law, Redd, Crona, and Munroe located at 2727 Apalachee Parkway, Tallahassee, Florida 32301. Peter DeVries appointed Mr. Sweet, a non-CPA, abandoned property financial analyst, to the evaluation committee. Mr. DeVries also contacted William Monroe, Division Director for the Comptroller's Division of Accounting and Auditing, and requested that Mr. Monroe appoint an individual from his section to evaluate the proposals. Mr. Monroe chose Mr. Dearden to serve on the evaluation committee. Mr. Grosmaire contacted the Florida Institute of Certified Public Accountants in order to obtain the name of a non-departmental, CPA qualified to serve on the evaluation committee. The Florida Institute referred Mr. Law to the Division and he was placed on the evaluation committee. All of the initial committee members had sufficient knowledge of auditing procedures and were qualified to evaluate this RFP. Mr. Grosmaire provided the evaluators with copies of the submitted proposals, the revised RFP, and the evaluation sheets for their use in scoring. Mr. Grosmaire informed the evaluators that in performing their evaluations they were to only consider the RFP and the documents submitted by the offerors. No other instructions were given to the initial committee members. The evaluators kept the materials provided for approximately one week and performed their respective evaluations. During that time no other significant contact relative to this proceeding occurred between the evaluation committee members and Mr. Grosmaire. There is simply no evidence that Mr. Grosmaire improperly attempted to adversely influence the independent evaluations of the various evaluators. As indicated, each evaluator individually reviewed the RFP, the scoring criteria, and scored each proposal against the RFP requirements. Each evaluator placed their scoring numbers on their respective rating sheets. Mr. Sweet, a financial examiner with the Abandoned Property section, as noted, evaluated the proposals, Mr. Sweet has had training in both abandoned property and in auditing. In performing his evaluations, he exercised his best discretion and judgment in arriving at his scores. In sum, his explanations for scoring as he did were reasonable. Mr. Sweet had previous experience in evaluating similar RFP's in that he was on the evaluation team for the previous year's RFP concerning the same subject matter. Neither Mr. Young or FCH objected to Mr. Sweet's involvement as an evaluator on the previous RFP. Additionally, Mr. Sweet, in performing his evaluation, telephoned a reference, an employee of the State of Maine, listed by FCH. He wrote her responses regarding FCH down on a reference check sheet. The reference noted to Mr. Sweet that they "were contacted by nearly every holder contacted by FCH with complaints." In terms of what strengths the reference would recommend as to FCH, the reference responded "none." Mr. Dearden, a financial administrator for the Department of Banking and Finance, Division of Accounting and Auditing, also served as an evaluator of the proposals. Prior to and during his activity as an evaluator, Mr. Dearden had no prior contact or involvement with any of the offerors, including FCH. In addition, he had little contact with either Mr. Grosmaire or Mr. DeVries and was not influenced by anyone in the agency relative to the manner in which he scored the various proposals. Mr. Dearden had also previously been an evaluator on an abandoned property RFP dealing with the collection of in-state property. Mr. Dearden utilized his best efforts to review each RFP, the evaluation standards, and score each proposal on its terms. The explanations for his scoring were reasonable. While Mr. Dearden had limited prior experience in abandoned property, his experience in auditing as well as his review of the RFP requirements and previous experience as an abandoned property evaluator allowed him to adequately evaluate the proposals. According to the RFP specifications, a minimum average score of 80 was required in order for an offeror to be awarded a contract. Based upon the averaged scoring, State Street and NAPPCO scored over 80 points; FCH and Florida Property Recovery Consultants scored under 80 points. In particular, State Street's overall scores were 89, 88, and 90; NAPPCO's scores were 87, 81, and 86. FCH's scores were 66, 71, and 60 and those of Florida Property Recovery Consultants, Inc., were 42, 57, and 49. Based on these scores, the Department posted the award sheet, indicating the award of a contract to State Street and NAPPCO. The proposal tabulation and notice of award was posted on June 18, 1997. On June 20, 1997, FCH filed a Notice of Intent to Protest with the Department. The notice was timely filed within 72 hours of posting the bid/proposal tabulation. On June 30, 1997, FCH filed a formal written protest of the RFP. The formal protest was timely filed within 10 days of the filing of the Notice of Intent to Protest. Subsequent to the posting of the intent to award and the filing of this bid protest, the Department learned that Florida Statutes required that at least three employees of the Department who "have experience and knowledge in the program areas and service requirements for which contractual services are sought" serve on the evaluation committee. Section 287.057(15), Florida Statutes. The initial committee only had two such employees on the evaluation committee. In order to correct this oversight, Mr. Devries requested that Mr. Monroe, Division Director of Accounting and Auditing, appoint another employee to the evaluation committee. Mr. Monroe appointed Michael Gomez, a state employee, to the committee to additionally evaluate the proposals. Mr. Gomez has an extensive background in auditing and accounting and was qualified to evaluate the proposals. In fact, the evidence showed that all the committee members were familiar with the program and auditing requirements of the abandoned property section. He had no prior dealings or communications with FCH or any other bidder prior to the time of his evaluation of the proposals. Mr. Gomez received the evaluation materials from Mr. Grosmaire. Mr. Grosmaire also instructed Mr. Gomez as he had the other three committee members. Mr. Gomez reviewed the RFP and the proposals and submitted his scores on June 9, 1997. Mr. Gomez scored the proposals as follows: Florida Property Recovery Consultants, Inc.: 59; State Street Bank: 98; FCH: 76; and NAAPCO: 94. Mr. Gomez, in performing his evaluations, exercised his best discretion and judgment and felt comfortable evaluating the RFP auditing proposal based upon his auditing background. His explanations for the scores he gave were reasonable and did not change the original rankings of the initial committee. The evidence did not demonstrate that the Department's belated compliance with the statute caused any prejudice to the offerors or undermined the goals of the RFP process. Moreover, the evidence did not demonstrate that the department acted arbitrarily, capriciously or in bad faith in either its process, evaluation or intended award of the contract outlined in this RFP. Therefore, the protest should be dismissed.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That the Office of the Comptroller, Department of Banking and Finance, enter a Final Order awarding contracts to State Street and NAPPCO and denying Petitioner's and Intervenor's request for relief and dismiss their protests. DONE AND ENTERED this 25th day of November, 1997, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 25th day of November, 1997. COPIES FURNISHED: Will J. Richardson, Esquire Richardson Law Offices, P.A. Post Office Box 12669 Tallahassee, Florida 32317-2669 H. Richard Bisbee, Esquire Office of the Comptroller 101 East Gaines Street, Suite 526 Tallahassee, Florida 32399-0350 Stanford P. Birnholz, President Florida Property Recovery Consultants, Inc. 8090 Atlantic Boulevard, F-79 Jacksonville, Florida 32201 Harry Hooper, Esquire Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Robert F. Milligan, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350
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.
Findings Of Fact Prior to May 26, 1993, FDOT issued an invitation to bid (ITB) on a contract for landscaping approximately 3.6 miles of roadway in St. Lucie County, State Project No. 94030-3502. The ITB required bidders to submit unit prices for 31 items of work. Bidders were to multiply the unit price by the estimated quantity of the item to arrive at a total quote for each item. The item totals were to be added together to arrive at the total bid. FDOT provided the estimated quantities upon which the bids were to be based. In preparing its ITBs, FDOT utilizes standard unit price designations. These standard unit price designations are not altered on a job-by-job basis and are not altered after bids are opened. The ITB herein included two bid items for mulch work: item no. 580-173 for bed preparation and mulching, and item no. 580-326-3 for shredded cypress bark mulch. The two mulching items result in one task: spreading the mulch under the landscaping plants. FDOT always designates item no. 580-326-3, mulch shredded cypress bark, to be paid on a square yard basis. This is not an uncommon procedure. FDOT never pays contractors on this item in other than square yard computations. FDOT's Basis of Estimates Manual (FDOT Exhibit 3) contains all the measurement units for all bid items and lists shredded cypress bark mulch as being measured and paid for in square yards. None of the mulch items are paid for in cubic yards. FDOT considers itself bound by this Manual as to method of payment (unit of measure). See Findings of Fact 17 and 24-25 infra. Project plans, typically prepared by consultants, may designate units of measurement differently from FDOT's standard unit price designations. It is not unusual for a unit of measurement to be expressed one way on the project plans and another way on the ITB. It is not unusual for a bidder to be required to adjust a plan quantity in order to arrive at a different unit price. Bidders are expected to convert measurements of items to correlate with how the item will be paid. With regard to ITB 94030-3502, four certified landscape contractors submitted bids. Among them were Intervenor Hayslip, Weekly Asphalt, Inc. (Weekly), Central Florida Landscaping of Tampa, Inc. (Central), and Petitioner Vila. Bids were opened on May 26, 1993. After the bids were opened, each bid was reviewed by FDOT's Technical Review Committee to determine whether the bid was mathematically and materially unbalanced, contained all appropriate signatures, contained all appropriate documents, and otherwise met the technical requirements of the ITB. In essence, the Technical Review Committee reviews each bid to determine whether it is responsive to the ITB and, if not responsive, whether the bid's lack of responsiveness is immaterial and waiveable by FDOT. Only after reaching that determination does the Technical Review Committee make a recommendation to FDOT's Contract Awards Committee as to whether or not a bid should be rejected for material nonresponsiveness to the ITB. As a result of the responsiveness review, Central's bid was declared irregular due to an altered bid bond and was rejected. Central filed no protest and no petition and has not moved to intervene herein. The thrust of the instant proceeding involves item no. 580-326-3, mulch shredded cypress bark, stated in the ITB as "500 square yards." All the bidders utilized the consultant's plans which specified the correct quantity of mulch contrary to the ITB. Hayslip's bid for item no. 580-326-3 was $2.50 per square yard. Weekly's bid for that item was $2.25 per square yard. Central's bid for that item was $2.12 per square yard. Petitioner's bid for that item was $8.50 per square yard. Clearly, Petitioner's bid on this item was mathematically unbalanced since Petitioner's unit price bid of $8.50 per square yard far exceeded each of the other bidders' responses on that item on this ITB. Petitioner's bid was also exceptionally high in comparison with its own usual bid price in square yards of mulch, averaging $1.95 to $2.50 per square yard and unaccountably low in comparison with its own usual bid price in cubic yards of mulch, averaging $20.00 to $30.00. Mr. Ricardo Leal, Petitioner's General Manager and Chief Estimator, prepared Petitioner's bid herein and testified with regard to how its mathematical imbalancing occurred. When Mr. Leal received the ITB package approximately fourteen days before the May 26, 1993 bid date, he performed some preliminary work on the bid, such as getting prices from subcontractors, obtaining a bond for the job, and making copies of the plans. He then did nothing with the bid until approximately two days before the May 26 bid letting. Despite Mr. Leal's testimony that crucial discrepancies between the consultant's plans and the ITB could not have been discovered within 72 hours of receiving the ITB, it is clear that his decision to delay concentrated work on this bid was based on extensive experience with a constant cycle of bidding. In preparing Petitioner's bid during the last two days before the letting, Mr. Leal formed the opinion that the plans' 500 cubic yard requirement for cypress bark mulch was correct and the ITB's 500 square yard requirement was a typographical error and that the project would probably require 6,000 square yards of cypress bark mulch. He based his calculations on 6,000 square yards (which equals 500 cubic yards from the plans) but expressed the unit price on Petitioner's bid according to the square yard unit FDOT had used in the ITB. Despite testimony concerning confusion arising from the ITB and plans, Mr. Leal candidly stated that he consciously bid in that manner to protect Petitioner in case FDOT required the successful bidder to provide 500 cubic yards (6,000 square yards) instead of 500 square yards, and he then split the final number he came up with between the two items so as to bid $.95 per square yard on item 580-173 and $8.50 per square yard on item 580-326-3. In so doing, he relied on his own judgment. The ITB also contained other questionable items including meter fees and contradictory specifications on plant size and color. Despite testimony that Vilma Croft, FDOT Project Manager was not helpful, it appears that in preparing Petitioner's bid, Mr. Leal asked Vilma Croft to clarify a concern about local meter fees, which she did late on the day before bid letting. He also asked her three additional questions about plant list specification discrepancies, and she told him he must use his own judgment. However, he then did not ever pose his prepared question with regard to the mulch discrepancy (TR-47-54). Unbalancing to some extent is discernible in virtually all bids. FDOT does not, therefore, reject all bids that are unbalanced. Only when unbalancing results in reasonable doubt that an award to the mathematically unbalanced bidder will result in the lowest ultimate cost to the state does FDOT consider the unbalancing "material." Unbalancing in a bid is determined by computerized program. The FDOT computer program figures in the bids on every item, does a bell curve distribution, keeping a center of 1 and 1/2 deviations and then discards the high and low bids. It then re-averages the remaining bids to determine a reasonable cost for any particular pay item. Any bids falling outside a certain tolerance window, either above or under, are flagged as mathematically unbalanced. FDOT's computer assessment identified as mathematically unbalanced five items in Petitioner's bid, among them the mulch item already referenced, and three items in the Intervenor's bid. FDOT's computer for purposes of determining imbalancing is programmed according to FDOT's interpretation of its Basis of Estimates Manual and its Standard Specifications for Roadway and Bridge Construction, which interpretation is to the effect that the agency may not alter the method of payment (unit of measure) without letting a new ITB/contract but may alter quantities without such a new bid letting procedure. (TR 159-160; 271-272. FDOT Exhibits 3 and 4). The square yard pay unit is entered in the computer program for these reasons and is standard FDOT practice. (See Findings of Fact 5 and 24-25.) When a mathematical unbalancing is discovered, FDOT analyzes the bid further for purposes of discovering whether the bid is materially unbalanced. FDOT personnel conducted further investigation to determine whether there was a likelihood of an overrun in the quantity of shredded cypress mulch which would be sufficient to change the order of the bidders. Vilma Croft, FDOT's Project Manager, acted as a conduit between FDOT's design consultant and Robert Griner, FDOT's Preliminary Estimating Engineer. At her request, the consultant who had designed the project plans, filled in unbalanced review sheets stating that the quantity of 500 square yards for cypress bark mulch was not correct in the ITB and that the correct quantity was 6,000 square yards. Croft relayed the adjusted quantity to Griner's office, noting that page LD28 of the plans had expressed 500 cubic yards. Thus, the quantity of cypress mulch to be placed on the project was not 500 square yards but 500 cubic yards which translates into 6,000 square yards, amounting to a likely overrun of 5,500 square yards. After multiplying the likely quantity overrun by the Petitioner's unbalanced unit price of $8.50 per square yard, FDOT personnel adjusted Petitioner's contract price by $46,750.00, reaching an adjusted total contract price of $793,351.45. FDOT made similar adjustments for mathematically unbalanced items in both Intervenor's and Weekly's bids. After those adjustments, the contract prices were $763,346.15 and $920,278.45, respectively. FDOT's further investigation and reconciliation of the remaining unbalanced items in Petitioner's bid and the unbalanced items in the Intervenor's bid and Weekly's bids are not at issue here. Mr. Griner made a presentation to FDOT's Technical Review Committee that there would be an overrun of 5,500 square yards of cypress bark mulch and that the overrun had resulted in a switch in the order of the bids. Again, square yards is FDOT's standard unit of calculation. The Technical Review Committee recommended rejection of Petitioner's bid as materially unbalanced and award of the contract to Intervenor. The Contracts Award Committee followed this recommendation. It voted to reject Petitioner's bid and declared FDOT's intent to award the bid to Intervenor. Intervenor was declared to be the apparent low bidder. Petitioner timely protested. Intervenor timely moved to intervene and was granted intervention. Both have standing in this proceeding. Weekly filed no protest and no petition and has not moved to intervene. It is not unusual for a mistake to be made in the estimated quantity of a project. FDOT routinely corrects mistakes that show up in quantities after bids are opened. FDOT does not assume responsibility that final quantities in a project will remain in accordance with quantities as "estimated" in its ITBs. Put in layman's terms, ITBs are created upon FDOT's "best estimates," but FDOT reserves the right to pay only for actual work done. Sometimes, this means contractors get more work/pay than they initially anticipated and sometimes they get less. ITBs do not guarantee successful bidders a dollar amount of work. (TR 271-272; FDOT Exhibits 3 and 4). Specifically, FDOT's "Contract Bible," the Standard Specifications for Roadway and Bridge Construction (FDOT Exhibit 4), which is incorporated by reference in its agency rules and in its ITBs, provides as follows: 2-3 Interpretation of Estimated Quantities. For those items which are to be constructed within authorized plan limits or dimensions, the quantities shown in the plans and in the proposal form are given as the basis of bid and also for final payment as limited by the provisions for the individual items. For those items having variable final pay quantities which are dependent on actual field conditions, use and measurement, the quantities shown in the plans and in the proposal form are approximate and are given only as a basis of calculation upon which the award of the contract is to be made. Where items are listed for payment as lump sum units and the plans show estimates of component quantities, the Department's responsibility for the accuracy of those quantities is limited to the provisions of 9-3.3. Where items are listed for payment as lump sum units and the plans do not show estimates of component quantities, the contractor shall be solely responsible for his own estimates of such quantities. The Department does not assume any responsibility that the final quantities will remain in accordance with estimated quantities, nor shall the contractor claim misunderstanding or deception because of such estimate of quantities. The estimated quantities of work to be done or materials to be furnished may be increased, decreased, or omitted as hereinafter provided. FDOT interprets this specification/rule to permit the agency to adjust quantities under the circumstances of this case with regard to its ITBs.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Transportation enter a final order dismissing the Petitioner's protest and awarding the contract to the Intervenor. RECOMMENDED this 22nd day of October, 1993, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of October, 1993. APPENDIX TO RECOMMENDED ORDER 93-4556BID The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's (Vila's) PFOF: Accepted. (Findings of Fact 1, 4). Accepted but subordinate material not adopted. (Findings of Fact 4- 6, 11-12, 14, 18). Accepted but subordinate material not adopted. (Findings of Fact 5, 6, 11, 12, 14, 18). Accepted. (Findings of Fact 13- 14). Accepted in part in Finding of Fact 13. Remainder rejected as not supported by the record as a whole. Covered in the conclusions of law as legal argument. Accepted but subordinate material not adopted. (Findings of Fact 6, 12, 14). Accepted. (Findings of Fact 5, 6, 12, 13, 14, 17, 24-25). Accepted in part in Findings of Fact 5, 12, 14, 18. Rejected in part as unnecessary, subordinate or cumulative to the facts as found. The last sentence is rejected as not supported by the record and as argument contrary to law. Accepted. (Findings of Fact 14- 15). Accepted in part and rejected in part as not supported by the record as a whole. (Findings of Fact 14- 15). Rejected as immaterial and/or not supported by the record as a whole. Accepted that Petitioner usually bids in cubic yards, but the record demonstrates that mulch items are bid in all variety of ways and that FDOT typically requires bids in square yards for payment purposes. (Findings of Fact 2-3, 5-7, 13, 17, 21, 24-25). Accepted. (Findings of Fact 12, 14). Accepted but not dispositive or adopted. Accepted. (Findings of Fact 6, 18). Accepted but not adopted because unnecessary, subordinate, or cumulative to the facts as found, or immaterial. (Finding of Fact 18). Accepted. (Finding of Fact 16). Accepted. (Finding of Fact 16). Accepted. (Findings of Fact 16, 18). Accepted. (Finding of Fact 16). Accepted. (Findings of Fact 16, 20). Accepted. (Findings of Fact 16, 19-20). Rejected as irrelevant and immaterial. Accepted. (Finding of Fact 18). Accepted but unnecessary, subordinate, or cumulative material. Not adopted. (See Finding of Fact 18). Accepted in Finding of Fact 18 except to the degree unnecessary, subordinate, or cumulative to the facts as found. Also, the motivations of the project manager and the fact that this has not occurred before, is deemed irrelevant and immaterial. Accepted but not adopted to the degree unnecessary, subordinate, or cumulative to the facts as found. (See Finding of Fact 18). The first sentence is accepted but not adopted to the degree unnecessary, subordinate, or cumulative to the facts as found. The second sentence is rejected as out of context and contrary to the greater weight of the evidence as a whole. (Findings of Fact 2-3, 5-7, 17, 21, 24-25). Rejected as stated because not supported by the record as a whole. There is no secret in this case as to the discrepancy between the plans and ITB. (Findings of Fact 12, 18). Accepted. (Findings of Fact 18, 21-22). Accepted but not adopted because immaterial. Covered in the Conclusions of Law. Rejected as misleading and contrary to the record evidence supporting Findings of Fact 2-3, 5-7, 17, 21, 24-25. Covered in the Conclusions of Law. Rejected as not material, as speculative, and as not dispositive. Also rejected as use of isolated testimony as legal argument. FDOT is entitled to alter quantities. The substance is discussed in Findings of Fact 18, and 21-25 and the Conclusions of Law. Accepted. (Finding of Fact 21). Accepted but not adopted because unnecessary to disposition. Accepted but not adopted because unnecessary to disposition. Accepted but not adopted as cumulative. See Findings of Fact 4-5, 17, 24-25. Rejected as stated. Covered in substance in Findings of Fact 3, 11-12, 18 and the Conclusions of Law. Rejected as legal argument. Covered in substance in the Conclusions of Law. Rejected as use of isolated testimony for argument. Rejected as not supported by the record evidence as a whole. (Findings of Fact 5, 17, 24-25). Rejected as legal argument. Not dispositive. See Findings of Fact 2-4, 14 and Conclusions of Law. Accepted but not dispositive. See Findings of Fact 2-4, 14, 18, and the Conclusions of Law. Accepted. (Findings of Fact 12, 14, 18). Rejected as stated as not supported by the record evidence as a whole. Covered in Finding of Fact 14 and Conclusions of Law. Rejected as not supported by the record and as argument contrary to law. See Finding of Fact 14 and the Conclusions of Law. Rejected as Immaterial. Rejected as Immaterial. Respondent's (FDOT's) PFOF: Accepted. (Findings of Fact 1, 10). Accepted. (Finding of Fact 14). Accepted except to the degree unnecessary, subordinate, or cumulative to the facts as found. (Finding of Fact 14). Accepted except to the degree unnecessary, subordinate, or cumulative to the facts as found. (Finding of Fact 2, 4, 11, 14). Accepted except to the degree unnecessary, subordinate, or cumulative to the facts as found. (Finding of Fact 2-3, 5-7, 13, 17, 21-25). Accepted except to the degree unnecessary, subordinate, or cumulative to the facts as found. (Finding of Fact 16). Accepted. (Finding of Fact 16). Accepted except to the degree unnecessary, subordinate, or cumulative to the facts as found. (Findings of Fact 2-3, 5-7, 13, 17, 24-25). Accepted. (Finding of Fact 18). Accepted. (Finding of Fact 18). Accepted. (Findings of Fact 6-7). Accepted as modified to better conform to the record. (See Findings of Fact 5, 17, 24-25 and Conclusions of Laws). Accepted as modified to better conform to the record and eliminate mere argument. (Findings of Fact 24-25). Accepted. (Findings of Fact 18- 22). Accepted. (Findings of Fact 9, 16, 21-22). Accepted. (Findings of Fact 9, 16- 18, 21-22). Accepted. (Finding of Fact 2, 4, 14). Intervenor (Hayslip's) PFOF: 1 Accepted. (Finding of Fact 1). 2 Accepted. (Findings of Fact 2). 3 Accepted. (Findings of Fact 8). 4 Accepted. (Findings of fact 9, 21- 22). 5 Accepted. (Finding of Fact 10). 6 Accepted. (Finding of Fact 11). 7 Accepted. (Finding of Fact 13). 8 Accepted. (Finding of Fact 13). 9 Accepted. (Finding of Fact 13). 10 Accepted. (Finding of Fact 13). Accepted as modified to eliminate mere argument. (Finding of Fact 13). Accepted. (Finding of Fact 13). Accepted as modified to better conform to the record. (Finding of Fact 16). Accepted as modified to better conform to the record and eliminate cumulative material. (Finding of Fact 18). Accepted. (Findings of Fact 18, 21-22). Accepted. (Findings of Fact 21- 22). Accepted. (Finding of Fact 19). Accepted. (Finding of Fact 3). Accepted. (Finding of Fact 5). Accepted. (Finding of Fact 6). Accepted. (Finding of Fact 7). Rejected as unnecessary, subordinate, or cumulative to the facts as found or immaterial. COPIES FURNISHED: F. Alan Cummings, Esquire, Mary Piccard, Esquire, and Jeffrey V. Nelson, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589 Tallahassee, Florida 32302-0589 James W. Anderson, Esquire Savlov & Anderson Post Office Drawer 870 Tallahassee, Florida 32302-0870 William H. Roberts, Esquire Assistant General Counsel Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Floirda 32399-0458 Thornton J. Williams, Esquire Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458
The Issue The issue in these cases is whether the Agency for Health Care Administration's (AHCA) proposed award of a contract to Caremark, Inc., based on evaluations of proposals submitted in response to a Request for Proposals (RFP), is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact AHCA is the single state agency in Florida authorized to make payments for medical assistance and related services under Title XIX of the Social Security Act (the "Medicaid" program). In order to participate in the federal Medicaid program, AHCA is required to maintain a state plan for Medicaid in compliance with Title XIX of the Social Security Act. AHCA is required to operate the Florida Medicaid program in compliance with the state plan. AHCA is apparently concerned by costs associated with the Florida Medicaid program's hemophilia population. Florida's Medicaid hemophilia beneficiaries constitute a relatively small, but costly population to serve. Hemophilia is a bleeding disorder caused by a deficiency in one of numerous "clotting factors," which normally causes a persons' blood to coagulate. Hemophilia is treated by administration of the deficient clotting factor to the person with the disorder. AHCA seeks to control the cost of providing hemophilia-related services to this population through a combination of case management and medication discounts known as the Medicaid Comprehensive Hemophilia Management (MCHM) program. AHCA believes that a single vendor responsible for operation of the MCHM program can provide managed care to the population while achieving significant drug-cost savings. Through a federal requirement referred to as "freedom of choice," Florida's Medicaid program state plan must provide that any individual eligible for medical assistance (including drugs) may obtain such assistance from any institution, agency, community pharmacy, or person qualified to perform the service and who undertakes to provide such services. The freedom of choice requirement is subject to being waived in accordance with applicable federal law. Such waiver requires approval by the Centers for Medicare and Medicaid Services (CMS). AHCA began seeking approval from CMS for an amendment to an existing "Managed Care Waiver" to implement the MCHM program in October 2002. By letter dated May 22, 2003, CMS approved AHCA's request to amend the existing waiver to permit implementation of the MCHM program. Subsequent correspondence between the agencies has further established AHCA's authority to implement the MCHM program. AHCA issued the RFP ("RFP AHCA 0403") on October 1, 2003. The RFP seeks to implement the MCHM program. There were no timely challenges filed to the terms and specifications of the RFP. Section 287.057, Florida Statutes (2003), requires that an agency must make a written determination that an invitation to bid is not practicable for procurement of commodities or contractual services prior to issuance of an RFP. AHCA did not make such a written determination prior to issuance of the RFP. Under the terms of the RFP, AHCA will contract with a single provider for a period of two years, with an option to extend the contract for an additional two-year period. RFP Section 10.2 sets out an extensive list of vendor requirements designed to provide care to Medicaid hemophilia beneficiaries and better management of related costs. The RFP provides that the successful vendor will be paid only on the basis of the factor products dispensed to eligible Medicaid beneficiaries. All other services required by the RFP must be delivered within the revenue provided by AHCA's reimbursement for factor product costs. No additional payment beyond payment of factor product costs will be provided. The RFP stated that the successful vendor would be reimbursed for factor product cost based on the average wholesale price (AWP) of the factor product minus a minimum discount of 39 percent. The RFP provided that vendors may offer a greater discount than 39 percent. An Addendum to the RFP indicated that if a vendor proposed a discount greater than 39 percent, the increased discount must apply to all factor products and that vendors could not propose varying discounts for individual factor products. The RFP contains language in the background section referencing budget "proviso" language adopted by the Legislature and referring to the MCHM program as a "revenue enhancement program." HHS asserts that because this RFP does not create a revenue enhancement program, AHCA had no authority to proceed with the RFP. The evidence fails to establish that this program will enhance revenue. The evidence fails to establish that based on the "proviso" language, AHCA is without authority to issue the RFP. RFP Section 20.11 sets forth the "proposal submission requirements." The section included a number of requirements set in capital letters and highlighted in boldface. The terms of each requirement indicated that failure to comply with the requirement was "fatal" and would result in rejection of the proposal submitted. None of the proposals submitted by the parties to this proceeding were rejected pursuant to RFP Section 20.11. The evidence fails to establish that any of the proposals submitted by the parties to this proceeding should have been rejected pursuant to RFP Section 20.11. RFP Section 20.16 provides that AHCA may waive "minor irregularities," which are defined as variations "from the RFP terms and conditions, that [do] not affect the price of the proposal or give one applicant an advantage or benefit not enjoyed by others or adversely affect the state's interest." RFP Section 20.17 provides as follows: Rejection of proposals Proposals that do not conform to all mandatory requirements of this RFP shall be rejected by the Agency. Proposals may be rejected for reasons that include, but are not limited to, the following: The proposal was received after the submission deadline; The proposal was not signed by an authorized representative of the vendor; The proposal was not submitted in accordance with the requirements of Section 20.11 of this RFP; The vendor failed to submit a proposal guarantee in an acceptable form in accordance with the terms identified in Section 20.12 of this RFP or the guarantee was not submitted with the original cost proposal; The proposal contained unauthorized amendments, deletions, or contingencies to the requirements of the RFP; The vendor submitted more than one proposal; and/or The proposal is not deemed to be in the best interest of the state. None of the proposals submitted by the parties to this proceeding were rejected pursuant to RFP Section 20.17. The evidence fails to establish that any of the proposals submitted by the parties to this proceeding should have been rejected pursuant to RFP Section 20.17. RFP Section 30.1 provides that the "total cost of the contract will not exceed $36,000,000 annually." RFP Section 30.2 provides in part that the "total cost for the contract under any renewal will not exceed $36,000,000 per year." The RFP's contract amount apparently was based on historical information and assumed that some level of cost control would occur through case management. The contract amount cannot operate as a "cap" because Medicaid hemophilia beneficiaries are an "entitled" group and services must be provided. If the amount of the contract is exceeded, AHCA is obliged to pay for necessary factor products provided to the beneficiaries; however, in an Addendum to the RFP, AHCA stated that if the contract fails to contain costs "there would be no justification to renew or extend the contract." The RFP required vendors to submit a performance bond based on 20 percent of the $36 million contract amount. The RFP stated that proposals could receive a maximum possible score of 2000 points. The proposal with the highest technical evaluation would receive 1340 weighted points. The proposal with the lowest cost proposal would receive 660 weighted points. The combined technical and cost proposal scores for each vendor determined the ranking for the proposals. The RFP set forth formulas to be used to determine the weighted final score based on raw scores received after evaluation. AHCA conducted a bidder's conference related to the RFP on October 8, 2003. All parties to this proceeding attended the conference. At the conference, AHCA distributed a copy of a spreadsheet chart that listed all factor products provided to Florida's Medicaid hemophilia beneficiaries during the second quarter of 2003. The chart identified the amount of each factor product used and the amount paid by AHCA to vendors for the factor product during the quarter. The chart also showed the amount that would have been paid by AHCA per factor product unit had the vendors been paid at the rate of AWP minus 39 percent. AHCA received six proposals in response to the RFP. The proposals were received from Caremark, HHS, Lynnfield, PDI Pharmacy Services, Inc., Advance PCS/Accordant, and Coram. RFP Section 60 contained the instructions to vendors for preparing their responses to the solicitation. As set forth in RFP Section 60.1, the technical response was identified as "the most important section of the proposal with respect to the organization's ability to perform under the contract." The section requires vendors to include "evidence of the vendor's capability through a detailed response describing its organizational background and experience," which would establish that the vendor was qualified to operate the MCHM program. Vendors were also directed to describe the proposed project staffing and the proposed "technical approach" to accomplish the work required by the RFP. Vendors were encouraged to propose "innovative approaches to the tasks described in the RFP" and to present a detailed implementation plan with a start date of January 10, 2003. The technical responses were opened on October 29, 2003. AHCA deemed all six proposals to be responsive to the technical requirements of the RFP and each technical proposal was evaluated. For purposes of evaluation, AHCA divided the technical requirements of the RFP into 50 separate criteria. AHCA assembled the technical evaluators at an orientation meeting at which time an instruction sheet was issued and verbal instructions for evaluating the technical proposals were delivered. The instruction sheet distributed to the evaluators provided that the evaluators "should" justify their scores in the "comments" section of the score sheets. The five AHCA employees who evaluated the technical proposal were Maresa Corder (Scorer "A"), Bob Brown-Barrios (Scorer "B"), Kay Newman (Scorer "C"), Jerry Wells (Scorer "D"), and Laura Rutledge (Scorer "E"). AHCA employees Dan Gabric and Lawanda Williams performed reference reviews separate from the technical evaluations. Reference review scores were combined with technical evaluation scores resulting in a total technical evaluation score. Reference review scores are not at issue in this proceeding. Kay Newman's review was limited to reviewing the financial audit information provided by the vendors. Technical evaluators reviewed each technical response to the RFP and completed evaluation sheets based on the 50 evaluation criteria. Other than Mr. Wells, evaluators included comments on the score sheets. Mr. Wells did not include comments on his score sheet. The technical proposal scoring scale set forth in the RFP provided as follows: Points Vendor has demonstrated 0 No capability to meet the criterion 1-3 Marginal or poor capability to meet the criterion 4-6 Average capability to meet the criterion 7-9 Above average capability to meet the criterion 10 Excellent capability to meet the criterion Each evaluator worked independently, and they did not confer with each other or with anyone else regarding their evaluations of the responses to the RFP. Janis Williamson was the AHCA employee responsible for distribution of the technical proposals to the evaluators. She received the completed score sheets and evaluation forms from each of the technical evaluators. The RFP set forth a process by which point values would be assigned to technical proposals as follows: The total final point scores for proposals will be compared to the maximum achievable score of 1340 points, and the technical proposal with the highest total technical points will be assigned the maximum achievable point score. All other proposals will be assigned a percentage of the maximum achievable points, based on the ratio derived when a proposal's total technical points are divided by the highest total technical points awarded. S = P X 1340 N Where: N = highest number of final points awarded to t technical proposal P = number of final points awarded to a proposal S = final technical score for a proposal According to the "Summary Report and Recommendation" memorandum dated December 4, 2003, after application of the formula, Caremark received the highest number of technical points (1340 points). Of the parties to this proceeding, HHS was ranked second on the technical proposal evaluation (1132.30 points), and Lynnfield was ranked third (1101.48 points). Lynnfield and HHS assert that the scoring of the technical proposals was arbitrary based on the range of scores between the highest scorer and the lowest scorer of the proposals. Review of the score sheets indicates that Scorer "A" graded "harder" than the other evaluators. The scores she assigned to vendor proposals were substantially lower on many of the criteria than the scores assigned by other evaluators. The range between her scores and the highest scores assigned by other evaluators was greater relative to the Lynnfield and the HHS proposals than they were to the Caremark proposal, indicating that she apparently believed the Caremark technical proposal to be substantially better than others she reviewed. There is no evidence that Scorer "A" was biased either for or against any particular vendor. The evidence fails to establish that her evaluation of the proposals was arbitrary or capricious. The evidence fails to establish that AHCA's evaluation of the technical proposals was inappropriate. After the technical evaluation was completed, cost proposals were opened on November 21, 2003. Section 60.3 addressed the cost proposal requirements for the RFP. RFP Section 60.3.1 provides as follows: The cost proposal shall cover all care management services, hemophilia specific pharmaceuticals dispensing and delivery, and pharmacy benefits management activities contemplated by the RFP. The price the vendor submits must include a detailed budget that fully justifies and explains the proposed costs assigned. This includes salaries, expenses, systems costs, report costs, and any other item the vendor uses in arriving at the final price for which it will agree to perform the work described in the RFP. The maximum reimbursement for the delivery of services and factor products used in factor replacement therapy (inclusive of all plasma-derived and recombinant factor concentrates currently in use and any others approved for use during the term of the contract resulting from this RFP) will be at Average Wholesale Price (AWP) minus 39%. Proposals may bid at a lower reimbursement but not higher. All other drugs not otherwise specified in factor replacement therapy will be paid at the normal Medicaid reimbursement. RFP Section 60.3.2 provides as follows: A vendor's cost proposal shall be defined in terms of Average Wholesale Price (AWP) and conform to the following requirements: The first tab of a vendor's original cost proposal shall be labeled "Proposal Guarantee" and shall include the vendor's proposal guarantee, which shall conform to the requirements specified in this RFP, Section 20.12. Copies of the cost proposal are not required to include the proposal guarantee. The second tab of the cost proposal shall be labeled "Project Budget" and shall include the information called for in the RFP, including the total price proposed, a line item budget for each year of the proposal, a budget narrative, and other information required to justify the costs listed. The RFP does not define the "detailed" budget mentioned in RFP Section 60.3.1 and does not define the "line item" budget mentioned in RFP Section 60.3.2. No examples of such budgets were provided. RFP Section 80.1 provides as follows: Evaluation of the Mandatory Requirements of the Cost Proposal Upon completion of the evaluation of all technical proposals, cost proposals will be opened on the date specified in the RFP Timetable. The Agency will determine if a cost proposal is sufficiently responsive to the requirements of the RFP to permit a complete evaluation. In making this determination, the evaluation team will review each cost proposal against the following criteria: Was the cost proposal received by the Agency no later than time specified in the RFP Timetable? Did the vendor submit an original and ten copies of its cost proposal in a separate sealed package? Was the vendor's cost proposal accompanied by a proposal guarantee meeting the requirements of the RFP? Did the cost proposal contain the detailed budget required by the RFP? Does the proposal contain all other mandatory requirements for the cost proposal? The AHCA employee who opened the cost proposals apparently determined that each proposal met the requirements of RFP Section 80.1, including providing a "detailed" budget. The RFP set forth a process by which point values would be assigned to cost proposals as follows: On the basis of 660 total points, the proposal with the lowest total price will receive 660 points. The other proposals will receive a percentage of the maximum achievable points, based on the ratio derived when the total cost points are divided by the highest total cost points awarded. Where: S = L X 660 N N = price in the proposal (for two years) L = lowest price proposed (for two years) S = cost points awarded The cost proposal scoring process clearly required comparison of each vendor's total price for the initial two-year portion of the contract. Caremark's proposal included estimated total costs of $44,797,207 for FY 2002-2003, $43,245,607 for FY 2003-2004, and $44,542,975 for FY 2004-2005. According to RFP Section 30.1, the maximum annual contract was not to exceed $36,000,000. All of Caremark's estimated annual costs exceeded the contract amount set forth in the RFP. Caremark's proposal also provided as follows: The above budget includes all salary expenses for Caremark employees involved in providing services for the program including the Contract Manager, Clinical Pharmacist, Care manager, additional pharmacist(s), Client Service Specialists in Florida for the expanded hemophilia program. Also included are the support staff such as pharmacy technicians, materials management, field service representatives, warehouse, reimbursement, marketing, sales and administrative staff. Also included are all delivery, data and report development, educational and marketing communication expenses. Product costs including medically necessary ancillary supplies, medical waste disposal and removal, protective gear and therapeutic devices. Caremark's proposal did not include information sufficient to assign specific costs to any of the items that Caremark indicated were included in its annual cost estimate. The HHS proposal projected estimated costs identified by month and year. The HHS proposal estimated total first-year costs of $14,261,954 and second-year costs of $27,333,389. HHS did not propose to assume responsibility for serving all Medicaid hemophilia beneficiaries at the start of the contract, but projected costs as if beneficiaries would "migrate to our service at a rate of 20 per month" during the first year and that full service provision would begin by the beginning of year two. RFP Section 10.2 provides as follows: The purpose of this RFP is to receive offers from qualified vendors wishing to provide the services required by the Florida Medicaid Comprehensive Hemophilia Management Program. The contract resulting from this RFP shall be with a single provider for up to two years commencing on the date signed, with an option to renew for two additional years. Otherwise stated, all Medicaid hemophilia beneficiaries would be served though the program's sole provider from the start of the contract period. The RFP provides no option for a vendor to gradually increase service levels through the first half of the two-year contract. The HHS proposal also included a breakdown of costs by factor product unit, identifying the AWP for each listed factor product and applying a discount of between 39 percent and 45 percent to indicate the product cost-per-unit that would be charged to AHCA. In Addendum 2 to the RFP, AHCA stated that it has received a written inquiry as follows: Knowing that the minimum accepted discount is AWP less 39%, can different products have different discounts. AHCA's response to the inquiry was as follows: No. The proposed discount will apply to all factor products. As to the costs included in the proposal annual total, the HHS proposal provided as follows: The product price above will include the following costs incurred in servicing the patients: The cost of the product dispensed to the patient. The cost of freight and other delivery expense of transporting the product to the patient. Pharmacy, warehouse and patient supplies. Cost incurred for patient protective gear and education materials Salary costs for the following: o Project/Contract Manager Clinical Pharmacist Staff Pharmacist Case Management Coordinator Pharmacy Care Coordinators Shipping Clerk Warehouse Coordinator Community Advocates Insurance Reimbursement Specialist The cost of Information Technology support for systems and reporting The cost of rent, office supplies, equipment, postage, printing. The HHS proposal did not include information sufficient to assign specific costs to any of the items that HHS indicated were included in its annual cost estimate. Lynnfield's proposal estimated total costs of $34,000,000 for calendar year 2004 and $36,000,000 for calendar year 2005. Lynnfield's budget proposal included information identifying the specific expense lines which form the basis for the cost estimation, including salary costs by position, travel costs, employee insurance, postage, equipment costs, and various office expenses. Lynnfield's budget proposal included a significantly greater level of detail than did either the Caremark or the HHS proposals. Jerry Wells was assigned the responsibility to evaluate the cost proposals. Mr. Wells failed to review the RFP or the related Addenda prior to evaluating the cost proposals submitted by the vendors. Mr. Wells asserted that it was not possible, based on the information submitted by the vendors, to perform an "apples- to-apples comparison." Each vendor set forth information in its proposal sufficient to calculate a total price for the initial two-year portion of the contract. Mr. Wells testified at the hearing that his cost review was intended to determine what AHCA would be paying for each of the individual factor products that AHCA provides hemophiliacs through Medicaid because the cost of the products was all AHCA would be paying to the vendors. The RFP did not require vendors to include a detailed list of, or unit prices for, factor products. The RFP specified only that factor products be provided at a minimum of AWP minus 39 percent. AHCA employees, under the direction of Mr. Wells, created a cost comparison chart which purported to identify the price proposed by each vendor for certain factor products and which projects an estimated quarterly factor product cost for each vendor. HHS's cost proposal included a listing of specific prices to be charged for factor products. The list was based on products being used by existing HHS patients. Caremark offered to provide all products at the AWP minus 39 percent cost required by the RFP. Caremark also suggested various "innovative cost savings," which specified use of factor products and indicated discounts greater than the 39 percent required by the RFP. Lynnfield did not include a product-specific listing of factor costs in its proposal, but offered to provide all products at the AWP minus 39 percent cost required by the RFP. The AHCA employees used the HHS cost proposal, including the HHS range of discounts, as the basis for preparation of the cost comparison chart that included the other vendors. The factor products listed on the AHCA cost comparison mirror those listed in the HHS cost proposal. AHCA employees apparently applied the factor product usage information from the second quarter of 2003 that was included on the spreadsheet distributed at the bidder's conference to the HHS factor product list. The AHCA spreadsheet distributed at the bidder conference lists 29 factor products by name and dosage. Of the 29 products, 15 are listed in the HHS cost proposal. The AHCA cost comparison created at Mr. Wells' direction includes only the 15 factor products listed on the HHS cost proposal. AHCA's cost comparison assumed no costs would be incurred, where the AHCA spreadsheet information indicated no usage of the factor product that had been included on the HHS cost proposal. AHCA's cost comparison did not include factor products which have been supplied by AHCA to Medicaid beneficiaries, but which do not appear on the HHS list. Mr. Wells relied on this cost comparison to determine that the cost proposal submitted by HHS offered the lowest cost to the agency and was entitled to the 660 points. Lynnfield and Caremark were both ranked according to cost proposals of AWP minus 39 percent, and according to the Summary Report and Recommendation memorandum, were awarded 652.74 points. Calculation of the points awarded to Lynnfield and Caremark in the Summary Report and Recommendation memorandum does not appear to comply with the formula set forth in the RFP. The AHCA cost comparison spreadsheet identifies the HHS proposed cost as $10,706,425.66 and identifies the AWP minus 39 percent cost as $10,795,477.48 (assigned as the Lynnfield and Caremark cost proposal). The Summary Report and Recommendation memorandum states the lowest cost proposal to be $10,706,405.66 (perhaps a typographical error). The methodology applied by AHCA assumed that all vendors would utilize identical quantities of identical factor products (based on historical usage in Quarter 2 of 2003 of those listed in the HHS cost proposal) and that there would be no cost savings related to disease management. The application of methodology to compare vendor cost proposals outside the process established by the RFP is clearly erroneous, arbitrary, and capricious. The vendors who are party to this proceeding assert that each other vendor's budgetary submission is insufficient, flawed, or unreliable for varying reasons. It is unnecessary to determine whether the budgetary information submitted by the vendors meets the requirements of the RFP because, despite having requested the information, AHCA has no interest in the data. There is no evidence that in making an award of points based on the cost proposals, AHCA relied on any of the budgetary information required by the RFP or submitted by the vendors.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order rejecting all proposals submitted in response to the RFP AHCA 0403. DONE AND ENTERED this 29th day of April, 2004, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 29th day of April, 2004. COPIES FURNISHED: Anthony L. Conticello, Esquire Thomas Barnhart, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Geoffrey D. Smith, Esquire Thomas R. McSwain, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Linda Loomis Shelley, Esquire Karen A. Brodeen, Esquire Fowler, White, Boggs, Banker, P.A. 101 North Monroe Street, Suite 1090 Post Office Box 11240 Tallahassee, Florida 32301 J. Riley Davis, Esquire Martin R. Dix, Esquire Akerman & Senterfitt Law Firm 106 East College Avenue, Suite 1200 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
The Issue The issue is whether Respondent's notice of intent to award a contract for a Prescription Drug Monitoring System (PDMS) to Intervenor is, under section 120.57(3)(f), Florida Statutes, contrary to governing statutes, rules, policies, or solicitation specifications due to the nonresponsiveness of Intervenor's proposal or flaws in the scoring.
Findings Of Fact RFP On October 14, 2010, Respondent issued the RFP. RFP Section 3.1 states that the purpose of the RFP is to acquire and implement a customizable, commercial, off-the-shelf PDMS, in accordance with section 893.055, Florida Statutes. RFP Section 3.1 states that this statute provides for the establishment of a comprehensive, electronic database securely to collect and store data of the dispensing of Schedule II-IV controlled substances by prescribers and dispensers. Section 3.3 defines a commercial, off-the-shelf program as "computer software or hardware, technology, or computer products that are ready-made and available [to] the general public, which includes systems that are manufactured commercially, and then tailored for specific uses." RFP Section 3.2 states that the initial term of the PDMS contract is November 30, 2010, through September 30, 2011. The November 30 start date for this ten-month contract anticipated the posting of the intent to award on November 16, 2010 and no challenge to the proposed award. Section 3.2 states that the proposed PDMS should be delivered and accepted by Respondent within 90 days after execution of the contract. RFP Section 4.1 states: To participate in this solicitation the Proposer must provide documentation to answer all the qualification questions listed in Attachment I. Each mandatory question requires a "Yes" or "No" answer. Proposals that have any "No" answer to these mandatory requirements will be deemed non- responsive and will not be given further consideration. Proposers should use care and integrity in preparing their documentation supporting responses to the qualification questions, since these are mandatory requirements. The RFP contains a detailed statement of the scope of services,1 specific tasks,2 projected staffing profiles,3 qualifications,4 technical approach and implementation timelines,5 and other matters.6 Many of these provisions, such as the scope of services and specific tasks, are requirements imposed upon proposals. Among the requirements incorporated into the RFP is PUR 1001, which is the state of Florida "General Instructions to Respondents" to bid solicitation documents. Paragraph 4 of PUR 1001 states: "Failure to comply with terms and conditions, including those specifying information that must be submitted with a response, shall be grounds for rejecting a response." RFP Section 4.21 states that each proposer must submit a cost proposal, using the Cost Proposal Form that is Attachment XI. The cost proposal depicts the costs for the term of the contract plus three, one-year renewals. Of especial significance to this case, RFP Section 4.21 contains four bullet points and two flush paragraphs. Section states: The cost proposal must include the following items: The proposer must submit a cost proposal using the worksheet provided in Attachment XI, covering the entire period of the contract, including potential renewals. The cost proposal must show the cost for implementing the system, the cost for the maintenance of the system, the cost for hosting of the date through September 11, 2011, and the cost for providing operational support to the PDMS. The cost proposal shall include the costs necessary for the proposer to fully comply with the contract terms and conditions, RFP requirements including amendments, and the proposer's proposal. . . . Only costs incurred after the resulting contract's effective date specifically related to the implementation, maintenance, hosting, and operational support of contracted services should be included in the cost proposal. Proposers shall provide a firm fixed price for the tasks and deliverables outlined in this RFP. The fixed price shall take into consideration, including but not limited to, all staff hours, equipment, travel costs, overhead, and any profit or fees required for that deliverable. Immediately following these four bullet points, the first flush paragraph of RFP Section 4.21 provides: The Proposer must submit a narrative itemizing the costs included in the cost proposal. The narrative must specifically address the comprehensiveness of the proposed PDMS and any tasks or services that are excluded and are considered enhancements that may be implemented in the future. Proposed costs for prospective enhancements should be included. RFP Section 4.21 concludes with the second flush paragraph, which describes the scoring of the cost proposals. Section 4.21 provides that 50 points will be awarded to the lowest cost proposal. For higher cost proposals, the proposers will receive a score that results from multiplying 50 points times a fraction whose numerator is the lowest proposed cost and whose denominator is the proposed cost of the proposer under review. RFP Section 4.22 provides: Each qualified proposal will be evaluated and scored based on the criteria defined in Attachment II. Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring. . . . The proposer receiving the highest score will be selected for the award. RFP Section 5.8 provides: [Respondent] reserves the right to accept or reject any and all proposals, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if [Respondent] determines that doing so will serve the State's best interests. [Respondent] may reject any response not submitted in the manner specified by the solicitation documents. Attachment I is "Qualifying Criteria." This attachment states at the top: . . . All proposals will be screened for compliance. Failure to comply shall render a proposal non-responsive and ineligible for further evaluation. . . . The nine qualifying criteria in Attachment I are stated as questions, and the form implies that Respondent will evaluate each proposal by answering "yes" or "no" to each of the questions. The qualifying criteria are: Does the proposal include a fully executed Statement of Financial Capability, including all supporting documentation? Attachment I. Does the proposer certify that they [sic] will comply with the Harold Rogers Grant #2009PM-BX-4004? (See Required DOH Certifications Attachment III) Does the proposal provide documentation that the prospective proposer currently hosts a PDMS as defined in this RFP in at least one other state for at least one year? See Section 3.2 Does the proposal provide documentation that the proposed system is a customizable, commercial-off-the-shelf data base system? See Section 4.6.1 Does the proposal provide documentation that the proposed system is compatible with existing PDMS used nationally? See Section 4.6.1 Does the proposal provide documentation that the proposed system collects electronic data in the format established by the American Society for Automation in Pharmacy (ASAP) 2007, version 4.1, Rules Based Implementation Guide for Prescription Monitoring Programs or its successor? See Section 4.2 Will the proposed system be hosted offsite and operate independently of any other systems or networks of the Department or the State of Florida? Does the proposed system comply with Health Insurance Portability and Accountability (HIPPA) as it pertains to protected health information, electronic protected health information (EPHI), and all other relevant state and federal privacy and security laws/regulations? See Section 4.2 Does the submitted Statement of Financial Capability and supporting documentation demonstrate the Proposer has the financial capability to complete the tasks of this RFP? For the last qualifying criterion, Attachment I adds: The Statement of Financial Capability . . . will be evaluated by an evaluator designated by the Department as having the knowledge and experience to determine if the Proposer is financially capable of completing all the services and tasks contemplated by this RFP. Failure to receive "YES" shall render a proposal non-responsive and ineligible for further evaluation. Attachment II is "Evaluation Criteria." These are the technical scoring items of this RFP. Attachment II states: Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring. The proposer receiving the highest score will be selected for award. Point Value: Unless otherwise indicated, zero is lowest possible and the number indicated in this column is the highest possible. Attachment II lists 19 items to be scored. For each item, Attachment II prescribes what is to be scored, identifies the section of the RFP to which the item relates, and states the maximum available points. The RFP does not contain further guidance for the evaluators in terms of the meaning of the maximum score or a score less than the maximum. The 19 scoring items carry a maximum of 500 points. The scoring dispute in this case focuses largely on one evaluator's scores of Items 15-19, each of which has a maximum score of 20 points.7 The five, 20-point items in dispute are stated below, with the item number on the left. The RFP reference for each items is RFP Section 4.21. The five items are: How well does the cost proposal narrative explain the costs of the customization and the necessity of the costs for delivery of the proposed PDMS? How well does the cost proposal narrative explain the operational support costs and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the system maintenance costs and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the costs for hosting and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the need for and the cost of prospective enhancements? In contrast to the first 14 items, which require the evaluator to assess "the proposal," Items 15-19 direct the evaluator to assess "the cost proposal narrative." Four of the five challenged items require the proposer to explain the costs for a particular PDMS cost category and the necessity of these costs. The final item requires the proposer to explain the need for, and costs of, enhancements. Attachment XI, which is the Cost Proposal Form, identifies five categories of costs on a single page. The form requires the proposer to state a total cost for the commercial, off-the-shelf product, which is complete on delivery at the start of the contract, and a total cost for the customization required to conform the off-the-shelf product to the technical specifications in RFP Section 4.6. The RFP defines customization to include implementation, hosting, and maintenance through September 30, 2011. Attachment XI calls for a total cost for each of the remaining three categories of costs, which are maintenance support, operations support, and hosting for each of the three one-year anticipated renewal periods ending September 30, 2012, 2013, and 2014. The form requires the itemization of these three categories of costs into monthly amounts, which are merely the total annual costs of each category of cost divided by twelve. Lastly, the form requires the totaling of these five categories of costs, so that the proposer states at the bottom of the completed Attachment XI its "grand total cost proposal." Responses Cost Proposals Petitioner's Attachment XI shows no cost for the commercial, off-the-shelf program. The total cost of customization is $94,380. The annual costs for maintenance, operations, and hosting are, respectively, $40,440, $66,912, and $49,536, and these costs remain unchanged over the three anticipated renewal years. Petitioner's grand total cost proposal is therefore $565,044. Petitioner Response, p. 190. Intervenor's Attachment XI shows the total cost for the commercial, off-the-shelf program is $96,730, and the total cost of customization is $115,068. The annual costs for maintenance, operations, and hosting are, respectively, $50,665, $132,976, and $41,455, and these costs remain unchanged over the three anticipated renewal years. Intervenors grand total cost proposal is therefore $887,059. Intervenor Response, p. 126. Item 15: Customization Costs and Their Necessity Petitioner Response For its narrative of the cost of customization and the necessity of this cost, Petitioner's response explains that the first part of the customization cost is $15,015. Petitioner Response, p. 191. This is the labor cost of customization. Petitioner Response, p. 192. The narrative explains that most of the features described in RFP Section 4.6.1 are already in the commercial, off-the-shelf program. The labor in customizing the off-the-shelf program includes: Time spent in requirement analysis meetings to arrive at the Requirements Definition for customization of the software. We propose to have two sessions. To customize the software such that application security can be configured per user to assign security roles to authorized department staff, dispensers, prescribers, and any other users authorized by law. To make necessary changes and modifications to the application software such that all of the web pages are tuned to comply with the business rules of the State of Florida as agreed upon in the requirements sessions. To include a statement in the software indicating that Florida's PDMS was made available using funds from a federal grant . . .. Provide for a method that allows the department to suspend the 15 day requirement during emergency events (e.g., hurricane) Provide a method that allows registered dispensers to request an extension to the reporting requirement (e.g., per individual or per pharmacy) in accordance with proposed Rule 64K-1, F.A.C. Create a method to coordinate and implement the initial mass registration of dispensers and prescribers. Petitioner Response, pp. 192-93. To customize its off-the-shelf program, Petitioner stated that it must perform requirements analysis; perform analysis, study, and design; perform design documentation and review; make changes to the database; make changes to the user interface; make changes to the business logic; conduct quality assurance and quality control; prepare user documentation; and perform project management. In documenting $15,010 in total labor for customization, Petitioner's response itemizes the labor costs by hourly rate and number of hours for the following positions: systems analyst, database administrator, senior programmer analyst, programmer analyst, quality analyst, technical writer, and project manager. Petitioner Response, p. 193. The second part of Petitioner's customization cost is $14,000. This is for all costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. Petitioner breaks down these costs into skilled labor and travel expenses. The skilled labor covers individual tasks--e.g., hardware and server setup, data collection help desk setup, and implementation of customized PDMS--by position type, hourly rate, and hours. The travel expenses show airfares, food and per diem for particular tasks, such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days. The total is $28,000, but Petitioner discounts this item by half for what it anticipates will be a long-term relationship. Petitioner Response, p. 191. The third part of the customization cost is $65,370. This is for the hosting, maintenance, and operations support from the "go-live" date of April 8, 2011,8 through September 30, 2011, or five months. The monthly cost for each of these components is, respectively, $3370, $5576, and $4128. Petitioner Response, p. 192. 2. Intervenor Response For its narrative of the cost of customization and the necessity of this cost, Intervenor's response states: all associated start-up costs for development, configuration, and integration are part of the total proposed implementation price. [Intervenor] will fully host the RxSentry solution for [Respondent] utilizing our state-of-the-art co-location data center, AtlantaNAP. Hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract. Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements. A one-time licensing fee for RxSentry is included in the implementation pricing. Ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry are included in the total pricing for the initial contract period. [Intervenor] project management, clinical, and technical support staff are provided to ensure a seamless transition from implementation to daily operations. Personnel costs include a primary contact as the PDMP Account Manager Ms. Sheila McCollough, access to clinical expertise from our Training Manager, Mr. Steve Espy, RPh, technical writing expertise for customized user guides and training materials, quality and contractual compliance oversight, and a highly skilled technical and customer service staff to maintain the RxSentry solution and provide customer service and support to both [Respondent] staff and the prescriber/dispenser population. [Intervenor] performs regular monitoring and maintenance for all our clients, including routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections to ensure that RxSentry continues to meet our clients' needs and standards. Expense categories used in pricing the project include all line item costs shown in the following table [no costs are shown]: [Technical Lead] Information Systems Manager . . . Customer Support Manager [Training Coordinator] . . . Technical Support Manager . . . Technical Help Desk Staff Technical Writing Staff Operating Expenses: Travel Training Office Supplies Printing fees Mailings Administrative fees . . . System Expenses: Hardware leasing Software purchase (one time) RxPert License Fee (one time) AtlantaNAP Data Center Fees Communication Fees Software Maintenance Hardware Maintenance Intervenor Response, pp. 123-24. Under the heading, "Customization," Intervenor's response states that Intervenor will work with Respondent during the implementation requirement sessions to document all specifications for collecting and reporting controlled substance data. This includes: dentifying required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens per [Respondent] request. The next section of Intervenor's response is "Assumptions." This section states: No inflationary increase has been added to ongoing operational pricing. Standard technical hours and support for data submitters and requestors will be provided Mon-Fri, EST, from 9:00 AM - 5:00 PM; excluding state and national holidays. Training materials for dispensers and practitioners will be hosted online along with computer-based training as required by [Respondent]. Notification letter mailing costs for uploaders is based upon 8,322 active pharmacies and approximately 7,312 active dispensing healthcare practitioners. All tasks and activities will be performed at the [Intervenor's] Corporate Office in Auburn, AL. Proposed pricing and annual maintenance for PMIX Hub is not included in the cost proposal but is provided in the following narrative section, "System Enhancements." Intervenor Response, p. 125. Item 16: Operational Support Costs and Their Necessity Petitioner Response For its narrative of the cost of operational support and the necessity of this cost, Petitioner's response states that the operational support costs are $5576 per month for each of the three one-year renewal terms. These costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner Response, p. 195. Petitioner breaks down the operational support costs by position, hourly rate, and hours per month. The positions are data collection help desk analyst and data collection senior help desk analyst. Other expenses include infrastructure and office space and telephone. Petitioner's response describes the positions in terms of work experience. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 17: System Maintenance Costs and Their Necessity Petitioner Response For its narrative of the cost of system maintenance and the necessity of this cost, Petitioner's response notes that the system maintenance costs are $3,370 per month for each of the three one-year renewal terms. These services are to respond to all emails from Respondent. For system-down calls, Petitioner will respond within four hours; for severely impaired-impact calls, Petitioner will respond within 24 hours. For the remaining calls, Petitioner will respond within 72 hours. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 18: Hosting Costs and Their Necessity Petitioner Response For its narrative of the cost of hosting and the necessity of this cost, Petitioner's response notes that the hosting costs are $4128 per month for each of the three one-year renewal terms. Hosting is at a secure facility with redundant power and redundant data carriers. Petitioner breaks down the hosting costs by the single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 19: Need for, and Cost of, Prospective Enhancements Petitioner Response For its narrative of the need for and cost of prospective enhancements, Petitioner's response notes that its software has an available PMIX interface software module. Because PMIX "is beyond the scope of the current proposed project," Petitioner's response proposes the module as a prospective future enhancement. Petitioner breaks down the cost of the PMIX enhancement into a one-time cost of $10,600, which consists of $7800 for customization and implementation, and $2800, which consists of travel costs for training. Monthly costs would increase $1000, which consists of $750 for maintenance and $250 for operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours, and the travel costs for two persons for one day in Tallahassee. Additionally, Petitioner's response offers a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work. 2. Intervenor Response The final section of the cost worksheets in Intervenor's response is "System Enhancements." This section states that Intervenor "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor's response warns: "Pricing for PMIX Hub is not included in the proposed contract pricing but is provided below as a prospective enhancement to the RxSentry solution." The following table lists "PMIX Implementation" at a cost of $40,035 and "PMIX Hub Annual Maintenance" at a cost of $15,000. Assessment and Scoring of Proposals Respondent received only the two proposals of Petitioner and Intervenor. After the submittal deadline had passed, Respondent's Chief of Bureau of Operations, Lola Pouncey, examined each of the two proposals for compliance with the first eight of nine mandatories contained in Attachment I. Respondent hired CPA Richard Long to examine each proposal for compliance with the ninth mandatory, which requires an assessment of demonstrated financial capability. Ms. Pouncey and Mr. Long determined that both proposals met all of the mandatories in Attachment I. These determinations are not at issue. Likewise, one of Respondent's representatives calculated the cost scores for both proposals--50 points for Petitioner and 31.85 points for Intervenor--and these determinations are not at issue. The five evaluators had been trained by Respondent's Administrative Lead Janice Brown. By memorandum dated December 7, 2010, she advised them to "evaluate each proposal individually" and not to meet with other evaluators to discuss a proposal. Providing a little more guidance for scoring than is found in the RFP, the memorandum adds: The maximum possible score for each category should only be awarded if the vendor addressed each element we requested for that section thoroughly. If a vendor does not address elements in that section, their scores should be reduced accordingly. The five evaluators scored all of the Evaluation Criteria of Attachment II. The technical scores for Petitioner averaged 409.2 points--ranging from Ms. Poston's score of 266 to another evaluator's near-perfect score of 496. The technical scores for Intervenor averaged 448.6 points--ranging from scores of 360 to a perfect score of 500. Ms. Poston's total score for Intervenor is 430. Her score for Intervenor is its second lowest. Two of the evaluators scored Petitioner's proposal higher by 21 and 18 points. Two of the evaluators scored Intervenor's proposal higher by 40 and 32 points. Ignoring Ms. Poston's scores, which favored Intervenor by a lusty 164 points, Intervenor would have emerged from the technical scoring with an 8.25-point advantage. Because Petitioner earned a 18.15-point advantage from its superior cost proposal, Ms. Poston's scores, in this sense, dictated the outcome of the procurement. However, if Ms. Poston had assigned Petitioner's technical proposal the average of the scores of the other four evaluators or even the score of Petitioner's second-lowest evaluator, Petitioner would have prevailed on total points. Combining the technical scores with the cost scores, Respondent determined that Intervenor earned 480.45 points, and Petitioner earned 459.20 points. After confirming that Intervenor's references were acceptable, on December 21, 2010, Respondent posted its intent to award the contract to Intervenor. Except for the above-described examination of the proposals for compliance with the nine mandatories of Attachment I, at no time while Respondent processed the proposals did anyone determine whether each proposal was responsive to all of the other requirements of the RFP. On December 23, Petitioner timely filed a notice of intent to protest the intended award to Intervenor. On or before January 3, 2011, Petitioner timely filed the Formal Written Protest with a proper and sufficient bond. Respondent transmitted the file to the Division of Administrative Hearings on January 19, 2011. Determinations Concerning Responsiveness Respondent misreads the RFP in arguing that Attachment I is an exhaustive list of the requirements of the RFP to which a proposal must respond in order to be responsive. Attachment I lists nine requirements that, if unmet, will render a proposal unresponsive.9 But nothing in Attachment I implies that its nine requirements are an exhaustive list of the requirements of the RFP, or an exhaustive list of the RFP requirements that a proposal must satisfy to be responsive. Respondent's strained interpretation of its RFP creates an unnecessary conflict between Attachment I and paragraph 4 of PUR 1001, which warns proposers that Respondent may reject a proposal for a failure to comply with any RFP condition. On the basis of paragraph 4 of PUR 1001, as well as the authority cited in the Conclusions of Law, requirements contained in other RFP provisions, including Section 4.21, if unmet, may result in a determination that the proposal is nonresponsive, regardless of whether a proposal meets all of the mandatories set forth in Attachment I. As quoted above, Section 4.21 requires a "narrative itemizing the costs included in the cost proposal." (Emphasis supplied.) Intervenor's proposal does not itemize the costs of customization, operations, maintenance, and hosting. Intervenor's proposal minimally itemizes the costs of enhancement--$40,035 for PMIX Implementation and $15,000 for PMIX annual maintenance. The unitemized costs in Intervenor's cost proposal are: 1) $96,730 for the off-the-shelf program; 2) $115,068 for customization; 3) $50,655 for maintenance; 4) $132,976 for operations; and 5) $41,455 for hosting. The costs included in Petitioner's cost proposal are: 1) nothing for the off-the-shelf program; 2) $94,380 for customization; 3) $40,440 for maintenance; 4) $66,912 for operations; and 5) $49,536 for hosting. Petitioner's cost narratives itemize these costs in detail. The $94,380 for customization comprises $15,010 for customization labor, $14,000 for implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations through September 30, 2011, which is defined by the RFP as part of customization. Petitioner further itemizes the $15,015 of labor, $14,000 of implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations, which is merely the monthly costs for these items, as shown in Petitioner's Attachment XI, during the three annual renewal periods. Additionally, Petitioner's proposal itemizes the $3,370 per month for maintenance by showing hourly rates and number of hours by four positions; the $4,128 per month for hosting by showing the hourly rate and number of hours for one position plus various other monthly costs; and the $5,576 per month for operations by showing the hourly rate and number of hours for two positions and various other monthly costs. Lastly, for the PMIX enhancement, Petitioner itemizes the one- time customization costs of $7,800, which themselves are broken down; travel costs for training of $2,800, which themselves are broken down; and additional monthly costs of $1,000 for maintenance and operations. However, Intervenor's failure to itemize the costs in the cost proposal gave it no competitive advantage. Despite some unclear comments about a "cost-plus" proposal, Intervenor's proposal contains an unambiguous, enforceable statement of costs, as does Petitioner's. Each proposal locks in its proposer in terms of what it is agreeing to provide and at what cost. Nor did the requirement of itemization likely chill the bidding, so as to discourage potential vendors from competing for the PDMS contract. Attachment XI requires each proposer to identify the costs of customization and ongoing operations, maintenance, and hosting. To arrive at these broader category of costs, a diligent vendor probably would have had to assemble the underlying subcosts, so it would be easy to add them to the proposal. The effort in constructing the itemization appears minimal. The monthly costs of maintenance, operation, and hosting are relatively modest, so they do not have many subcosts, and the process of extending these costs for the term of the contract, plus renewals, is a simple matter of multiplication. In its proposed recommended order, Petitioner argues that Intervenor gained competitive advantage as follows: [Petitioner] recognized that this additional level of detail would enable [Respondent] to understand the level of commitment of resources of each respondent, and to hold the ultimate contract awardee accountable for the provision of the promised level of performance as reflected in the itemized costs. If a competitor fails to provide the detailed, itemized costs required by Section 4.21, it will enjoy a competitive advantage relative to bidders that do comply with that requirement. By failing to commit to any particular itemized cost, a bidder such as [Intervenor] may provide less training, and enjoy less expense, than another provider that itemized its costs. Failing to comply with Section 4.21 allows a bidder the flexibility not only to reduce its costs, but to also reduce the level and quality of services provided, without violating a commitment made to [Respondent.] Petitioner's proposed recommended order, p. 9. These arguments are that cost itemization: 1) enables Respondent to understand the level of commitment of each proposer; 2) enables Respondent to hold the selected proposer accountable for the promised level of performance; and 3) prevents a nonitemizing proposer from providing less services by reducing the level and quality of services provided. The second argument misses the purpose of itemization. Itemization breaks down the overall costs shown in Attachment XI. The accountability function that Petitioner mistakenly assigns to the itemization requirement is actually served by numerous other provisions of the RFP, such as the undertaking of to satisfy the scope of services, including specified data fields, data, and training10; the undertaking to provide the detailed tasks and services11; the specification of proposed staffing levels, which are enforceable conditions12; the detailed description of the design, capacity, and other features of host facility13; the detailed description of the proposer's approach to providing the technical services that demonstrates a thorough understanding of the project and includes a detailed description of the PDMS and how general maintenance and support services will be performed14; and the focus of the other 14 technical scoring items on various features of the PDMS.15 The first and third arguments are also unpersuasive. Respondent rejected the first argument in its preparation of the RFP. Omitting the Section 4.21 requirement of itemization from the five technical scoring items related to cost, Respondent implicitly decided that it did not need the additional insight into a proposer's level of commitment. This is not a complicated procurement. Each proposer has implemented at least one monitoring system of this type in another state. For the same reason that itemization may have been omitted from the scoring items, so it is not especially important in understanding the level of commitment of resources of each proposer. Also, the worries sometimes attendant to the association of underbidding with the failure to include all of the solicited goods and services do not apply here, at least based on the relative cost proposals of both proposers. The third argument implies that the cost narratives will be elevated into the contract itself. But nothing in the RFP compels a proposer to pay a help-desk employee or data programmer the rate of pay specified in any cost itemization. Perhaps, in a deflationary economy, the rate of pay of these employees may decline, as may the office rent and travel costs. The selected vendor may pocket these savings, just as it must absorb the additional expenses, if, in an inflationary economy, these items increase in cost during the term of the initial contract or three annual renewal terms. The floor on services is not provided by a few cost itemizations, but by enforceable contract provisions and the selected vendor's incentive to keep the contract for the three one-year renewal periods, and perhaps beyond. Determinations Concerning Scoring General Petitioner objects to Ms. Poston's scoring--in general, all of it, but, in particular, her scoring of Items 15-19. In its proposed recommended order, Petitioner seems to make two arguments about Ms. Poston's scoring of its proposal. First, Ms. Poston favored Intervenor's proposal by such a wide margin as to call into question all of her scores. Second, Ms. Poston offered startlingly odd reasons, such as noncompliant formatting, for the relatively low scores of Petitioner's proposal. However, as in the Formal Written Protest and the hearing, Petitioner analyzes Ms. Poston's scoring of Items 15-19 only. Preliminarily, Petitioner's approach to the scoring issue raises two problems. First, absent analysis of Ms. Poston's scoring of the other items, Petitioner fails to prove flawed scoring of these items under the Clearly Erroneous Standard, which is explained in the Conclusions of Law. For this reason, this recommended order will not otherwise consider Ms. Poston's scoring of these items. Second, Petitioner's challenge to Ms. Poston's scoring of Items 15-19 suffers from a misreading of what these items require to be evaluated. Specifically, Petitioner misreads Items 15-19 to require the evaluators to evaluate how well the cost narratives itemize costs, among other things. One example of this misreading occurs at the last sentence of paragraph 18 of its proposed recommended order, which states: "In fact, the Section 4.21 requirement that each proposer submit an itemization of its costs . . . received twice as much weight as the cost proposal itself." Itemization of costs actually receives no weight in the five scoring items that pertain to the cost narrative. None of these five scoring items uses the word, "itemize" or "itemization." RFP Section 4.21 requires the itemization of various costs, and this requirement, as discussed in the preceding section, serves as a basis on which to determine the responsiveness of proposals. But Respondent did not include the itemization requirement of Section 4.21 in the scoring items for the cost narrative. In preparing the RFP, Respondent included some, but not all, of the requirements of Section 4.21 in these five scoring items, which are drawn from the first bullet and first flush paragraph of this section. The first flush paragraph requires a narrative that: 1) itemizes the costs in Attachment XI; 2) specifically addresses the comprehensiveness of the proposed PDMS; and 3) specifically addresses any excluded tasks or services that may be enhancements. The first flush paragraph encourages--through the use of the word, "should"--the inclusion within this narrative of a fourth element: proposed costs for prospective enhancements. The first four scoring items focus exclusively on the four cost categories--customization, operation, maintenance, and hosting--identified in the first bullet of Section 4.21. The five scoring items authorize scoring of the narratives only as to how well they explain the costs and their necessity. When compared to RFP Section 4.21, the five scoring items omit the requirements of an itemization of costs, a specific description of the comprehensiveness of the proposed PDMS, and a specific description of excluded tasks that may be enhancements, although this last requirement is covered to some degree by the fifth scoring item. At minimum, then, the narrative's itemization of costs and specific description of the comprehensiveness of the proposed PDMS receive no direct weight in scoring, except, as noted below, for the indirect value of each of these elements when scoring the cost narrative for its explanations of costs and their necessity. Further distinguishing RFP Section 4.21 from the five scoring items covering the cost narrative, the scoring items add two elements not found in RFP Section 4.21: 1) an explanation of the costs and 2) an explanation of the necessity of the costs. These elements are closely related to the provisions of Section 4.21, but are not explicitly required in this section. Petitioner's misreading of Items 15-19 undermines its scoring argument. This misreading attaches great significance to Petitioner's compliance with the itemization requirement of RFP Section 4.21 and Intervenor's noncompliance with this requirement--facts of some importance to the responsiveness issue discussed in the preceding section, but of no direct importance to the scoring issue discussed in this section. Also unhelpful to Petitioner's scoring argument is the fact that Ms. Poston's scores of Items 15-19 do not stand out among the evaluators. She gave each proposal 60 points, although she was the sole evaluator to score Intervenor's proposal higher than Petitioner's proposal on Item 15. One other evaluator scored the two proposals a tie on these five items, although his score was 100 points each. Another evaluator scored the two proposals a near-tie, with Petitioner's proposal earning 100 points and Intervenor's proposal earning 98 points. The remaining two evaluators scored these five items substantially in Petitioner's favor, with advantages of 39 and 20 points. The proper analysis of Ms. Poston's scores is based on the actual language of Items 15-19. The impact of the inclusion or omission of the itemized costs from these cost narratives is more nuanced than Petitioner argues in its scoring argument. A cost narrative may explain the cost of, say, customization and the necessity of this cost without itemizing or identifying the subcosts of customization, although a cost narrative that starts by itemizing these subcosts may facilitate its explanation of the overall cost and its necessity. Understandably, Petitioner stresses Ms. Poston's testimony at the hearing that she reduced Petitioner's scores in general, at least in part, for the failure of its proposal to conform to various stylistic requirements in the RFP. These nonconformities include excessively small font size, inadequate margins, other unidentified formatting errors, numerous typographical errors, poor organization in which information was just "dropped" into various places, and inconsistency in style where sometimes the proposal uses bullet points and sometimes it uses narrative. Ms. Poston's testimony in the preceding paragraph is problematic for two reasons. First, Ms. Poston's testimony attempts to justify, in part, her scoring on grounds that are not authorized by the provisions of Attachment II. Second, this testimony is inapt. As to Petitioner's cost narrative, at least, the Administrative Law Judge did not measure font size, but did not notice any problems with font size, legibility, margins, formatting, typographical errors, or inconsistencies in style. And the organization of Petitioner's cost narrative permitted the Administrative Law Judge to find the relevant information much more readily than he could find it in Intervenor's cost narrative, which, as seen above, combined most of its responses to Items 15-18 in one section. Ms. Poston's typewritten scoring notes offer more support than her testimony, although her notes for Item 15 incorrectly report that Petitioner's response explained only the labor costs of customization. But her notes for Item 17 suggest that she captured more detail from Intervenor's proposal's explanation of system maintenance costs. However, nothing in the record suggests in any way that Ms. Poston was guilty of bias, fraud, or collusion in scoring, nor does Petitioner suggest as much. When asked, Ms. Poston freely explained her scores on items, using her typewritten notes when she could. She testified candidly and matter-of-factly about her scoring. Although not at all apologetic, Ms. Poston never appeared unduly invested in her scores or Respondent's proposed award. While testifying, she never acted adversarially, as an ally of Intervenor or opponent of Petitioner. Nor are Ms. Poston's scores of Items 15-19 arbitrary or capricious. Notwithstanding her comments about formatting, proofreading errors, and organization, Ms. Poston's scoring of these items is neither illogical nor irrational. Her typewritten notes reveal a clear understanding of the RFP and Petitioner's proposal, suggest an organized pattern to her thoughtful approach to scoring the items in question, and dispel any randomness in the scoring. The sole remaining question is whether Ms. Poston's scores of Items 15-19 are within the range of the reasonable. Consideration of the reasonableness of Ms. Poston's scoring must start with the acknowledgement that the phrasing of Items 15-19 invites a wider range of scores than would questions imposing on evaluators a task requiring more precision. These open-ended scoring items ask only "how well" a response "explains" certain costs and their necessity or, in the case of Item 19, "how well" a response explains the necessity and cost of prospective enhancements. Scoring of Item 15: Customization For Item 15, Petitioner first explains the labor in terms of the communications with Respondent's staff to obtain particularized information about what Respondent needs, programming to customize the off-the-shelf program to ensure that it delivers these communicated needs, and specific methods to allow registered dispensers to request extensions for reporting events and the mass registrations of dispensers and prescribers required on the initiation of the PDMS. Detailing this explanation of the labor involved in the customization of the off-the-shelf program, Petitioner's response outlines the tasks, which largely comprise the expected activities of analysis, design, design review, quality assurance and control, user documentation, and project management, but also identify changes to user interface and business logic. Petitioner's response further explains the costs of customization by detailing, by numbers of hours, the work to be done by systems analysts, database administrators, senior programmer analysts, programmer analysts, quality analysts, technical writers, and project managers. Second, Petitioner explains the costs of customization by discussing the costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. This discussion shows individual tasks, such as hardware and server setup, data collection help desk setup, and implementation of customized PDMS, but distinguishes itself by identifying the hours of work by position type. The travel expenses show airfares, food and per diem for particular tasks, such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days. Petitioner's explanation of costs is particularly relevant for this topic because it further explains that it has halved these projected costs. Third, Petitioner explains the costs of customization with respect to the operational support, hosting, and maintenance costs from the "go-live" date through the end of the original term of the contract. Petitioner's explanation of these costs is ample. For Item 15, Intervenor explains that it starts with an off-the-shelf program that necessitates the payment of a one- time license fee. From there, Intervenor's proposal states that it will perform "all associated start-up costs for development, configuration, and integration [that] are part of the total proposed implementation price." "Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements." Intervenor's proposal identifies some "line item costs" by position type, but this table omits hours or total costs and pertains largely, if not entirely, to operational support, hosting, and maintenance. Intervenor's proposal addresses customization costs explicitly in a relatively brief section devoted to this component. Intervenor explains that it will identify required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens, as requested by Respondent. Ms. Poston assigned 15 points to Intervenor's conclusory explanation of customization costs and their necessity and 10 points to Petitioner's detailed explanation of these costs and their necessity. A score that assigns more points to Intervenor than to Petitioner for Item 15 is outside the range of the reasonable by five points. Scoring of Item 16: Operational Support For Item 16, Petitioner explains that operational support costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner identifies two positions--two help desk analysts--and breaks down the operational support costs by hourly rate and hours per month. Petitioner's response describes these positions in terms of work experience. For Item 16, Intervenor explains ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry, all of which are included in the total pricing for the initial contract period. Intervenor explains that project management, clinical, and technical support staff will assist Respondent in the transition from implementation to daily operations. Intervenor identifies available personnel by name and position--although not the expected extent of availability or use. Ms. Poston assigned each proposal 10 points for Item Petitioner's explanation of hours per month is of some utility, but the range of personnel--two help desk analysts-- limits the value of this response when compared, say, to the wider range of labor tasks involved in customization. Although more explanation might have been expected of Intervenor on this item, given the large difference between the two proposals for operations costs, the two explanations of operations costs and their necessity are roughly comparable, and Ms. Poston's scores for Item 16 are within the range of the reasonable. Scoring of Item 17: System Maintenance For Item 17, Petitioner explains that these costs involve email responses to service calls from Respondent, and Petitioner provides call-back deadlines based on the severity of reported problems. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide. For Item 17, Intervenor explains that maintenance is included in hosting and it will undertake all software and hardware maintenance. Additionally, Intervenor explains that it will perform routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections necessary for the PDMS. Ms. Poston gave Intervenor 15 points and Petitioner 10 points for Item 17. She may legitimately have valued Intervenor's emphasis on system solutions over Petitioner's emphasis on customer service, so Ms. Poston's scores for Item 17 are within the range of the reasonable. Scoring of Item 18: Hosting For Item 18, Petitioner explains that the hosting is at a secure facility with redundant power and redundant data carriers. Petitioner breaks down the hosting costs by a single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server. For Item 18, Intervenor explains that the hosting is at its "state-of-the-art" data center. Intervenor explains that hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract. Ms. Poston gave both proposals a 10 for Item 18. She understandably found no difference between a secure facility with redundant power and redundant data carriers and a state-of- the-art data center, so Ms. Poston's scores for Item 18 are within the range of the reasonable. Scoring of Item 19: Prospective Enhancements For Item 19, both parties identified the PMIX hub as a prospective enhancement. For this item, the RFP requires an explanation of the need for, and costs of, any enhancement. Neither party addressed the need for the enhancement in any detail, but perhaps that is because the PMIX hub is in the RFP Scope of Services, at RFP Section 4.2, although it is not in the Tasks and Services, at RFP Section 4.6.1. Petitioner explains that its software has an available PMIX interface software module. Petitioner further explains this cost by breaking the PMIX enhancement into one-time costs of customization and implementation and travel costs for training and monthly costs for maintenance and operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours. Petitioner further explains this cost by describing a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work. Intervenor warns that it "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor identifies the implementation and maintenance costs of a PMIX hub. Ms. Poston assigned Petitioner 20 points and Intervenor 10 points for Item 19. Contrasted to Petitioner's detailed explanation of enhancement costs, Intervenor's proposal acknowledges a present inability to provide this service, which certainly limits its ability to explain the costs that will eventually go with this service, once it is developed. Ms. Poston's scores for Item 19 are within the range of the reasonable. Summary of Scoring Findings Another shortcoming in Petitioner's scoring challenge is its failure to explain why the flaws in Ms. Poston's scoring of Items 15-19 should result in the rejection of all of her scores. To outpoint Intervenor, Petitioner needs over 100 more points from Ms. Poston. Items 15-19 are worth a total of 100 points, and Petitioner already received 60 points from her on these items, so Petitioner's scoring challenge, despite its focus on Items 15-19, necessarily seeks to overturn more than Ms. Poston's scores on these five items in Petitioner's proposal. But Petitioner does not seek more points from Ms. Poston. The gist of Petitioner's complaint with the scoring starts with the fact that it won or lost, by narrow margins, with the other four evaluators, but Ms. Poston's overall scoring margin--430 for Intervenor and 266 for Petitioner--determined the outcome of the scoring. Petitioner argues that Ms. Poston's scoring of Items 15-19 was illogical, irrational, and so outside the range of the reasonable that its effect cascades through all of her scores and, to preserve the integrity of the subject procurement, her scores must be thrown out in their entirety, resulting in a recommendation that Respondent rebid the PDMS contract or award it to Petitioner. Whatever the exact form of this argument, after close analysis of the five scoring items that Petitioner challenged, the Administrative Law Judge has found nothing arbitrary or capricious in Ms. Poston's scoring and only one item that falls outside the range of the reasonable--by only five points. As discussed in more detail in the Conclusions of Law, this finding provides no platform for Petitioner's larger attack on the reliability of Ms. Poston's overall scoring and its role in Respondent's overall evaluation of the two proposals.
Recommendation It is RECOMMENDED that the Department of Health enter a final order dismissing the Formal Written Protest. DONE AND ENTERED this 8th day of March, 2011, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 8th day of March, 2011.
