The Issue The issue is whether the proposed award of Contract No. E1G23 to DeAngelo Brothers, Inc. d/b/a DBI Services Corporation (DBI) is contrary to the Department of Transportation’s governing statutes, rules, policies, or the specifications in the Request for Proposals (RFP).
Findings Of Fact On June 18, 2007, the Department issued RFP No. E1G23, which solicited proposals for “ultra asset maintenance” for Interstate 75 (I-75) and interchanges in Broward, Collier, Lee, Charlotte, Manatee, Desoto, and Sarasota Counties. The Department issued three addenda to the RFP. The addenda did not make any material changes that are pertinent to the issues in this proceeding. The Scope of Services for the RFP stated that for all roadways and facilities covered by the contract, the contractor will be responsible for performing all of the maintenance activities that would otherwise have been performed by the Department, including but not limited to, mowing the right-of- way, maintaining guardrails, fixing potholes, maintaining stormwater management facilities, cleaning and maintaining rest areas, tree trimming, and incident response and management. In the asset management industry, this type of contract is known as a comprehensive asset management contract because the contractor is responsible for all maintenance activities within the right-of-way “from fence to fence, including the fence.” The RFP states that the contract will be awarded to the responsive and responsible vendor whose proposal receives the highest total score, which is composed of a price score and a technical score. The price score is weighted 30 percent, and the technical score is weighted 70 percent. The vendor proposing the lowest price received the full 30 points for the price score. The other vendors’ price scores were calculated through a mathematical formula based upon the percentage that the vendor’s price exceeded the lowest price. The technical score was based upon a subjective evaluation of the proposals in four broad categories: administration plan (weighted 20 points); management and technical plan (weighted 30 points); operation plan (weighted 30 points); and compliance plan (weighted 20 points). There are sub-categories in each of those categories, with a specific number of points assigned to each sub-category. Five evaluators independently reviewed the proposals. The evaluators –- Jennifer Perry, Howard Summers, David Holden, Lance Grace, and Robert Mannix -- were Department employees selected based upon their familiarity with the areas and services covered by the contract. All of the evaluators attended the pre-bid conference, which was mandatory for prospective bidders. No questions or concerns were raised at the pre-bid conference or at any point prior to submittal of the proposals regarding the evaluators having experience with the prior I-75 contract or having been involved in the preparation of the RFP. Three companies -- ICA, DBI, and VMS, Inc. (VMS) -- submitted responses to the RFP. ICA is a Tennessee corporation. DBI is a Pennsylvania corporation. Both companies provide asset management services in Florida and around the country, but ICA has more experience than DBI in providing comprehensive asset management services. The price offered by ICA -- $89,200,300.01 -- was the lowest of the three vendors that responded to the RFP; the price offered by DBI -- $92,630,739 -- was approximately 3.8 percent higher. As a result, ICA received a price score of 30 and DBI received a price score of 28.89. Three of the five evaluators -- Ms. Perry, Mr. Summers, and Mr. Golden -- scored DBI’s proposal the highest. Two of the evaluators -- Mr. Grace and Mr. Mannix -- scored ICA’s proposal higher than DBI’s proposal, but they scored VMS's proposal the highest. None of the evaluators scored ICA’s proposal the highest. DBI’s proposal received an average score of 85.40 from the evaluators, and ICA’s proposal received an average score of 82.96. As result, DBI received a technical score of 59.78, and ICA received a technical score of 58.07. When the price scores and the technical scores were combined, DBI received the highest total score of 88.67. ICA was the second-ranked vendor with a total score of 88.07. VMS was the third-ranked vendor with a total score of 86.12.3 On August 21, 2007, the Department posted notice of its intent to award the contract to DBI. The initial posting erroneously identified the winning vendor as “DeAngelo Brothers, Inc. T/A Aguagenix, Inc.” rather than DBI. The contract administrator, Cheryl Sanchious, explained that this was a clerical error caused by the Department’s computer system and that it has been corrected in the system. ICA timely filed a notice of protest and a formal written protest challenging the award to DBI. ICA posted a cashier’s check in the statutorily required amount in lieu of a protest bond. After the protest was filed, the Department entered into temporary emergency asset management contracts for the roadways and facilities covered by contract at issue in this case. ICA was given the contract for Broward and Collier Counties because it was already providing asset management in those counties under the predecessor to the contract at issue in this case, No. BC680. DBI was given the contract for the other counties, Sarasota, Lee, Manatee, Charlotte, and Desoto. It is undisputed that ICA’s proposal was responsive to the RFP in all material respects. The focus of ICA’s protest is four-fold. First, ICA contends that DBI’s proposal is not responsive because it did not affirmatively state that it would grant a first right of refusal to RESPECT of Florida (RESPECT). Second ICA contends that DBI is not a “responsible vendor” and that the Department confused the concepts of “responsiveness” and “responsibility” in its review of the proposals. Third, ICA contends that the evaluation committee failed to prepare a technical summary as required by the RFP, and that its failure to do so was material because it would have brought to light the discrepancies in Ms. Perry's scoring. Fourth, ICA contends that Ms. Perry's scoring was flawed and out of sync with the other evaluators in several respects. Each issue is discussed in turn. Responsiveness / RESPECT First Right of Refusal Section 8.2 of the RFP provides that “[a] responsive proposal shall perform the scope of services called for in this Proposal Requirements [sic] and receive a Technical Proposal score of at least seventy (70) percent of the maximum attainable points established for scoring the Technical Proposal.” Section 17.1 of the RFP provides that “[d]uring the process of evaluation, the District Contracts Office will conduct examinations of Proposals for responsiveness to requirements of the Proposal Solicitation. Those determined to be non-responsive will be automatically rejected.” Section 16.5 of the RFP requires the proposal to “[u]se only statements of what the Proposer will or will not accomplish” rather than “words such as may, might, should, etc.” Section 8.5 of the RFP authorizes the Department to “waive minor informalities or irregularities in Proposals received where such is merely a matter of form and not substance, and the correction or waiver of which is not prejudicial to other Proposers.” That section defines “minor irregularities” as “those that will not have an adverse effect on the Department’s interest and will not affect the price of the Proposal by giving a Proposer an advantage or benefit not enjoyed by other Proposers.” The Scope of Services for the RFP requires the contractor to “grant ‘Respect of Florida’ a first right of refusal” to provide maintenance services at rest areas. This was intended by the Department to be a mandatory requirement of the RFP, and was understood as such by ICA and DBI. RESPECT is a not-for-profit organization that employs disabled and disadvantaged individuals. RESPECT employees perform janitorial and grounds maintenance functions at rest areas, including one of the rest areas covered by the RFP. ICA’s proposal expressly states that “ICA will grant Respect of Florida first right of refusal on rest area janitorial work consistent with statewide maintenance practices.” DBI’s proposal does not include an affirmative statement that it will grant RESPECT a first right of refusal. However, DBI stated in its proposal that it “is currently in negotiation with [RESPECT] to expand their existing maintenance responsibilities for rest areas within the project limits” and that “DBI Services believes that expanding [RESPECT’s] responsibilities in the project is the right thing to do.” The absence of an affirmative statement in DBI’s proposal that it will grant RESPECT a first right of refusal was not material to the evaluators. For example, evaluator Robert Mannix testified that he “generally looked for more of the intent to give [RESPECT] the opportunity of making a bid rather than the specific language of right of first refusal.”4 Similarly Ms. Perry testified that she considered granting RESPECT a first right of refusal to be a requirement of the contract whether or not the contractor mentioned it in its proposal. Amy Burlarley-Hyland, director of asset management for DBI, testified that DBI intends to provide a first right of refusal to RESPECT and that, consistent with the statement in DBI’s proposal, DBI is “committed to expanding Respect’s responsibilities on this project.” She explained that she did not include an affirmative statement to that effect in the proposal because it is “a known requirement” that will be part of the contract by virtue of it being in the RFP. Mr. Rader, ICA’s executive vice president, testified that it is more costly to contract with RESPECT to provide maintenance services than to contract with another entity to provide those services. Ms. Hyland disagreed with that testimony, as did Ms. Perry. No documentation was provided to support Mr. Rader’s claim that it is more expensive to contract with RESPECT, and the evidence was not persuasive that DBI received a competitive advantage by not affirmatively stating in its proposal that it will grant a first right of refusal to RESPECT. The RFP does not require the vendor to expressly acknowledge and affirmatively agree to meet each and every mandatory requirement in the RFP. Indeed, if this were the test for responsiveness, ICA’s proposal would be nonresopnsive because it failed to expressly acknowledge and affirmatively agree to meet a number of the mandatory requirements in the RFP. DBI’s proposal complies with the intent of the RFP in regards to RESPECT. Its failure to specifically state that it will grant RESPECT a first right of refusal is, at most, a minor irregularity. Failure to Determine DBI’s Responsibility Responsiveness and responsibility are separate, but related concepts in the competitive procurement context. Section 287.012(24), Florida Statutes, defines “responsible vendor” to mean “a vendor who has the capability in all respects to fully perform the contract requirements and the integrity and reliability that will assure good faith performance.” Section 287.012(26), Florida Statutes, defines “responsive vendor” to mean “a vendor that has submitted a bid, proposal, or reply that conforms in all material respects to the solicitation.” In order to bid on certain Department contracts, a vendor has to be pre-qualified under Florida Administrative Code Rule Chapter 14-22. Pre-qualification serves as an advance determination of the vendor’s responsibility. Pre-qualification is generally not required in order to bid on maintenance contracts; bidders are presumed qualified to bid on such contracts. However, as noted in the Bid Solicitation Notice for the RFP, “certain maintenance contracts will contain specific requirements for maintenance contractor eligibility” if deemed necessary by the Department. This is such a maintenance contract. Section 7.1 of the RFP required the Department to determine whether the proposer is “qualified to perform the services being contracted.” That determination was to be made “based upon the[] Proposal Package demonstrating satisfactory experience and capability in the work area.” The RFP did not specify when or by whom this determination was to be made. The Department and DBI contend that the determination required by Section 7.1 is essentially a determination of whether the bidder is responsible, and that the determination is to be made by the evaluators during their scoring of the proposals. In support of that contention, the Department and DBI refer to Section 17.1 of the RFP, which provides that “[p]roposing firms must receive an average technical proposal score of at least (70) percent of the maximum attainable points established for scoring the Technical Proposal to be considered responsive.” Similar language is included in Section 8.2 of the RFP under the heading “Responsiveness of Proposals.” The interpretation of the RFP advocated by the Department and DBI is reasonable, and DBI’s proposal received an average score from the evaluators of 85.40, which exceeds the 70 percent threshold in Section 17.1 of the RFP. Indeed, each of the evaluators gave DBI more than 70 points for its technical proposal. The preponderance of the evidence presented at the final hearing supports the Department's implicit determination that DBI is “qualified to perform the services being contracted,” as required by Section 7.1 of the RFP. DBI has a 29-year history. It employs approximately 700 employees in 34 offices nationwide; it is the largest vegetation management company in the world; and it is ranked in the top five nationally in Pavement Maintenance Magazine. Even though DBI has less experience in comprehensive asset management contracts than does ICA, DBI has extensive experience in managing comprehensive activities under large contracts. DBI has managed over $400 million in performance- based contracts nationwide, including a $9 million comprehensive asset management contract with the Department in District 4 (US 27/Belle Glade area), and DBI’s director of asset management has extensive experience in highway and facility asset management in the private sector with DBI and VMS and in the public sector with the New York Department of Transportation. In sum, a determination that DBI is a responsible bidder was inherent in the Department’s decision to award the contract to DBI, which was based in large part on the technical score of its proposal by the evaluators, and the evidence presented in this de novo proceeding supports that determination. Therefore, even if, as ICA argues, the Department and DBI are improperly construing the word “responsive” in Section 17.1 of the RFP to mean “responsible,” ICA failed to prove that such error is material to the outcome of this proceeding. Failure to Prepare Technical Summary Section 17.1 of the RFP describes the evaluation process as follows: A Technical Evaluation Committee . . . will be established to review and evaluate each Proposal Package submitted in response to this Proposal Solicitation. The Committee will be comprised of at least five persons with background, experience, and/or professional credentials in relative service areas. The District Contracts Office will distribute to each member of the Committee a copy of each technical proposal. The Committee members will independently evaluate the Proposals on the criteria in the section below entitled “Criteria for Evaluation” in order to ensure that the Proposals are uniformly rated. The Committee will then assign points, utilizing the technical evaluation criteria identified herein and complete a technical summary. . . . . (Emphasis supplied). The District Contracts Office and/or the Project Manager/Technical Evaluation Committee will review and evaluate the price packages and prepare a summary of its price evaluation. Points will be assigned based on price evaluation criteria identified herein. During the process of the evaluation, the District Contracts Office will conduct examinations of Proposals for responsiveness to requirements of the Proposal Solicitation. Those determined to be non- responsive will be rejected. ICA contends that the evaluation committee failed to prepare a “technical summary,” which would have brought to light the scoring issues discussed below concerning Ms. Perry. The RFP does not define “technical summary” nor does it specify the form that the summary must take. The RFP does not specify how the evaluation committee as a whole would assign points to the proposals in light of the independent scoring mandated by Section 17.1 of the RFP. The evaluators did not assign points to the proposals as a committee, but rather independently scored the proposals. The evaluators did not meet as a committee to prepare a “technical summary.” Several of the evaluators testified that they considered the evaluation form that they completed for each proposal to be their “technical summary” for the proposal because the form included the scores assigned in each technical review category and summary comments about the proposal. The evaluators did not collectively discuss their scoring of the proposals after they completed their independent evaluations; they simply submitted their completed evaluation forms to Ms. Sanchious. Ms. Sanchious’ office prepared a spreadsheet summarizing the evaluators’ technical scoring of the proposals. The spreadsheet -– Joint Exhibit 33, titled “Proposal Evaluation/Breakdown Sheet” -- lists the scores awarded by each evaluator in each technical review category; calculates the total points awarded by each evaluator for each proposal; and calculates an “overall score” for each proposal by averaging the five evaluators’ scores for each proposal. This spreadsheet is more akin to a “technical summary” than is Joint Exhibit 21, which DBI and the Department contend is the “technical summary.” Indeed, Joint Exhibit 21 only includes the “overall score” and not the underlying data that was used to calculate that score. It was not unreasonable for the Department to calculate an “overall score” for each proposal by simply averaging the five evaluators’ scores for each proposal, and ICA failed to prove that the averaging being done by Ms. Sanchious’ office (instead of the evaluation committee) was a material deviation from the RFP. Indeed, ICA’s contention that discussion amongst the evaluation committee members to prepare the “technical summary” would have changed Ms. Perry’s scoring of ICA’s or DBI’s proposal is speculative, at best, in light of the findings below. In sum, the evaluation committee’s failure to prepare a “technical summary” as required by Section 17.1 of the RFP does not undermine the proposed award to DBI. Scoring by Jennifer Perry Ms. Perry was one of the five evaluators who reviewed the technical proposals submitted in response to the RFP. Ms. Perry is a licensed professional engineer. She has 10 years of work experience with the Department, and she currently serves as the assistant maintenance engineer for District 1. In that capacity, she is responsible for all forms of maintenance contracting in District 1, including routine maintenance and asset maintenance. Ms. Perry served for a time as the project manager for the existing asset management contract for I-75, which was held by ICA. As a result, she had the occasion to work with ICA employees and become familiar with ICA’s performance under that contract. There is no evidence that Ms. Perry is biased against ICA in any way. Indeed, she credibly testified that she had a good working relationship with ICA; that she had no major issues with ICA’s performance under the existing contract; and that she would have had no hesitation recommending that the contract be awarded to ICA if its proposal had received the highest score. Ms. Perry was heavily involved in the preparation of the RFP as a result of her position as assistant maintenance engineer for District 1. She was also involved in the selection of the evaluators. There is no Department rule or policy that prohibits a person from serving as an evaluator if he or she was involved in the preparation of the RFP. Likewise, the fact that Ms. Perry served as the project manager for the asset management contract held by ICA does not preclude her from serving as an evaluator. Indeed, Section 17.1 of the RFP specifically contemplates that the evaluators will have “background, experience, and/or professional credentials in relative service areas.” Similar language is contained in Section 287.057(17)(a), Florida Statutes. Ms. Perry spent between 10½ and 11 hours reviewing and scoring the proposals. She made detailed notes while she was scoring in order to capture her general impressions of each proposal and to serve as a reminder of issues to address with the vendor who was ultimately awarded the contract. Ms. Perry gave ICA’s proposal a score of 74. She gave DBI’s proposal a score of 86. Ms. Perry double-checked her scores before submitting her completed score sheets. She specifically went back over her scoring of ICA’s proposal after she noticed that she scored ICA lower than DBI and VMS because she thought she may have added wrong or overlooked something. She decided not to make changes to give ICA additional points just because she liked working with ICA. The main difference in Ms. Perry’s scoring of DBI's and ICA's proposals relates to Plan for Compliance with Standards (Plan for Compliance) section. She gave ICA 10 points for that section, and she gave DBI 20 points, which is the maximum available for that section. Each of the other evaluators gave ICA and DBI very similar scores in the Plan for Compliance section. The Plan for Compliance section describes the programs that the proposer intends to implement to ensure compliance with the applicable statutes, rules and Department policies. A proposer’s quality assurance/quality control (QA/QC) program is an important component of its plan for compliance. DBI gave the Plan for Compliance section significant emphasis because of the weight assigned to the section in the RFP. Ms. Burlarly-Hyland rewrote the section to make it more detailed because of her perception of its importance to the Department. ICA did not place as significant of an emphasis on the Plan for Compliance section in its proposal as did DBI. Indeed, ICA’s position in this case is that “a plan for compliance is quite standard and one would expect to see very similar plans and therefore very similar scores among the proposals.” DBI references its QA/QC program several times in the Plan for Compliance section, but the detailed description of the QA/QC program is included in the Management and Technical Plan section of DBI’s proposal. Ms. Perry relied on the description of the QA/QC program in the Management and Technical Plan section of DBI’s proposal in her scoring of the Plan for Compliance section. Similarly, in her scoring of the ICA and VMS proposals Ms. Perry did not limit her scoring of a particular section of the proposal to information presented in that section. Instead, she looked at the proposals in their entirety and “gave them credit . . . in any section that [she] felt it applied to because . . . [i]f they have a good idea, they need credit for it.” Ms. Perry explained that that she scored DBI higher than ICA in the Plan for Compliance section because, even though both proposals discussed their QA/QC program, DBI went into much greater detail about its program and its plan for compliance generally. Ms. Perry viewed the level of detail provided by DBI regarding its QA/QC program and its plan for compliance generally as an indication of the importance of these matters to DBI. Some of the material differences identified by Ms. Perry were DBI’s commitment to do its first QA/QC within the first three months instead of waiting six months as ICA proposed; DBI’s identification of a high-level person, the project manager, as being responsible for compliance; DBI’s commitment to provide its QA/QC reports directly to the Department; DBI’s “corporate culture concept” program that is similar to the Department’s “grassroots” program; DBI’s more detailed description of its training programs; and DBI’s commitment to have all of its herbicide applicators licensed by the state, not just in compliance with state law. Ms. Perry’s rationale for her scoring differences on the Plan for Compliance section is generally consistent with another evaluator’s “overall impression” that “the ICA proposal did not offer a lot of new innovation or continuous quality improvement over the level of performance that we had already experienced and . . . we were hoping to have in reletting the new contract rather than renewing the existing contract ”5 ICA also takes issue with Ms. Perry’s scoring of the ICA and DBI proposals in the DBE/RESPECT/Agency Participation section; the Proposed Facilities Capabilities section; the Routine/Periodic Maintenance Operations section; and the Rest Area Maintenance Operations section. Ms. Perry gave DBI’s proposal five points and ICA’s proposal three points for the DBE/RESPECT/Agency Participation section. She explained that she scored DBI higher than ICA in this section because DBI provided more detail on how it would help develop disadvantaged business subcontractors, including training them on compliance with Department standards and helping them obtain work. She recognized that ICA also had a subcontractor development program, but she was more impressed with DBI's proposal because “DBI really went into a lot more detail in what they were going to do.” Ms. Perry gave DBI’s proposal five points and gave ICA’s proposal three points for the Proposed Facilities Capabilities section. She explained that she scored DBI higher than ICA in this section because of the amount and type of equipment that DBI was going to make available for the contract and because of DBI’s commitment to put an office on the Alligator Alley corridor. Ms. Perry felt that the Alligator office was “very important” because that area is isolated and having an office in the area would make it easier for the contractor to respond quickly to problems. ICA’s proposal did not commit to put an office on the Alligator Alley corridor. Ms. Perry gave DBI’s proposal ten points and gave ICA’s proposal six points for the Routine/Periodic Maintenance Operations section. She explained that she scored DBI higher than ICA in this section because DBI’s proposal included a week- by-week maintenance plan that detailed the specific activities that DBI would be working on each week and it also included detailed charts identifying the efforts that DBI would undertake to meet the requirements of the Department’s maintenance program. The description of the maintenance plan in ICA’s proposal was not nearly as detailed, and Ms. Perry was so impressed with DBI’s maintenance plan that she provided copies of the plan to the other districts’ operation centers as an example of the type of detained planning that she felt the Department should move towards. Ms. Perry scored ICA and DBI the same for the Rest Area Maintenance Operation section. She explained that even though the proposals focused on different aspects of their rest area maintenance plans, the plans were roughly equivalent overall. For example, DBI committed to maintain the rest areas in accordance with the Department’s standard maintenance requirements and, like ICA, DBI will handle customer comment cards from rest areas through its QA/QC program. Ms. Perry scored ICA higher than DBI in areas that she found ICA’s proposal to be better than DBI’s proposal. For example, in the Identification of Key Personnel Section, she gave ICA four points and DBI three points; in the Contractor Experience section, she gave ICA the maximum five points and DBI two points; in the Bridge Inspection section, she gave ICA the maximum 10 points and DBI seven points; in the Incident Response Operations section, she gave ICA nine points and DBI eight points; and in the Bridge Maintenance Operations section, she gave ICA the maximum five points and DBI three points. Ms. Perry’s explanation of her scoring decisions was reasonable and supported by the preponderance of the evidence presented at the final hearing. The evidence fails to establish that Ms. Perry's scoring of the proposals was arbitrary, capricious, or otherwise improper.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department issue a final order dismissing the Formal Protest Petition filed by ICA, and awarding Contract No. E1G23 to DBI. DONE AND ENTERED this 14th day of December, 2007, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II 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 14th day of December, 2007.
Findings Of Fact Petitioner was, at all times pertinent to these proceedings, an employee of Respondent in its Miami District Office. Petitioner began her employment with Respondent on September 18, 1974, in the position of Secretary During her employment, she was promoted to Secretary II and then to Secretary III. The position of Secretary III was subsequently reclassified to the position of Secretary Specialist. Petitioner's immediate supervisor since 1982 was Dr. Arnold Cortazzo, Respondent's District Program Administrator. At the time of the alleged event of discrimination, Petitioner was employed as a Secretary Specialist and was under the immediate supervision of Dr. Cortazzo. On January 30, 1987, Respondent published a Job Opportunity Announcement for the position of Staff Assistant in the Miami District Office. Dr. Cortazzo prepared the Position Description which included the following descriptions of duties and responsibilities, and the respective percentages of time for each: 15% - Conducts client satisfaction surveys and reports on results to Program Manager. 15% - Conducts follow-up studies on Vocational Rehabilitation clients, compiles and analyzes results, and submits findings to Program Manager. 10% - Performs special assignments for Program Manager such as monitoring the action plans, surveys, and requests for information. 15% - Coordinates the work flow of the District XI Division of Vocational Rehabilitation Office. 05% - Orders forms and supplies of the District Program Office. 10% - Checks for accuracy monthly attendance and leave reports for District Program Office. Also keeps record of accumulative leave earned and used. Distributes monthly leave report to district offices. 25% - Acts as liaison to Support Staff Council, assists the training coordinator in training support and clerical staff. 05% - Other related duties as required. The Position Description for the Staff Assistant position set forth the following as being the knowledge, skills, and abilities necessary to perform the job: Knowledge of office procedures and practices. Knowledge of the principles and techniques of effective verbal and written communication. Knowledge of the methods of data collection. Knowledge of basic arithmetic. Ability to understand and apply applicable rules, regulations, policies, and procedures. Ability to deal with the public in a tactful and courteous manner. Ability to perform basic arithmetical calculations. Ability to work independently. Ability to utilize problem solving techniques. Ability to plan, organize, and coordinate work assignments. Ability to communicate effectively verbally and in writing. Ability to establish and maintain effective working relationships with others. The Position Description for the Secretary Specialist position held by Petitioner in 1987 contained the following duties and responsibilities and the percentage of time for each: 35% - Transcribes dictation from dictating equipment or rough drafts from Program Manager. Types documents for Program Manager. 12% - Receives and reads incoming mail for Program Manager, screens items which can be handled personally, and forwards the rest to Program Manager. Screens Program Manager's incoming calls. 05% - Maintains calendar tickler file for Program Manager on important correspondence and documents, follows up on work in process to insure timely reply or action. 03% - Acts as office receptionist in the absence of other secretarial/clerical staff. 35% - Assembles and summarizes information upon request of Program Manager from files and documents in the office or other available sources. 05% - Composes and signs routine correspondence of a nontechnical nature from verbal instructions of Program Manager. 02% - Keeps Program Manager's calendar by scheduling appointments and conferences with or without prior clearance. 03% - Files Program Manager's correspondence and other materials and maintains the Program Manager's file. The following were listed as the knowledge, skills, and abilities required for the Secretary Specialist position: Knowledge of the techniques for handling telephone calls in a courteous and efficient manner. Skill in typing. Ability to transcribe dictation using notes or a dictating machine. Ability to organize files and other records. Ability to perform basic arithmetical calculations. Ability to use correct spelling, punctuation, and grammar. Ability to type letters, memoranda and other standar business forms in correct format. Ability to operate general office equipment. Ability to handle telephone calls in a courteous and effective manner. Ability to plan, organize, and coordinate work assignments. Ability to communicate effectively verbally and in writing. Ability to establish and maintain effective working relationships with others. At the times pertinent to this proceeding, Dr. Cortazzo was the Program Manager referred to by the job descriptions for both the Staff Assistant position and the Secretary Specialist position. The deadline for the filing of applications to fill the Staff Assistant position was set for February 12, 1987. Prior to the deadline, six applications for the position were received for the position. One applicant withdrew her application prior to the interview stage. Included among the applications received in a timely manner were the application of Petitioner and the application of Eulalia Diaz. The applicants were asked to resubmit their applications because the original applications were misplaced. Consequently, the applications in Respondent's files are replacement applications that were received after the advertized deadline. Dr. Cortazzo prepared a list of criteria to be used in the ranking of the applicants and a list of interview questions. Dr. Cortazzo thereafter interviewed the remaining five applicants and asked each of them the same interview questions. Dr. Cortazzo then selected three finalists for the position. Both Petitioner and Ms. Diaz were among the three finalists. Prior to his interviews, Dr. Cortazzo had asked that the four Human Services Program Administrators employed by Respondent in the District interview the top three candidates and to recommend to him their top candidate for the position. Dr. Cortazzo made no effort to influence the interview process followed by these administrators. These administrators were unanimous in their recommendation of Eulalia Diaz as the top candidate for the position. After receiving the recommendation from the four Human Services Program Administrators, Dr. Cortazzo ranked the three finalists using the criteria he had previously developed. Ms. Diaz received the highest ranking of the three finalists. Dr. Cortazzo thereafter made the decision to employ Ms. Diaz as the Staff Assistant. Petitioner's alleged handicap had no bearing on Dr. Cortazzo's decision to hire Ms. Diaz as the Staff Assistant. Petitioner has a congenital deformity of the right leg which resulted from her umbilical cord being wrapped around her right leg at birth. As a consequence, her right leg did not fully develop. She has circulation problems in her right leg and her right leg is both shorter and weaker than her left. Petitioner cannot sit, stand or walk for long periods of time. She wears an orthopedic shoe and walks with a slight limp and an unsteady gait. During the course of her employment with Respondent, she has had to utilize crutches on two occasions for brief periods of time after her right leg had become infected from a cut. Her condition has had, at most, a minimal impact on her ability to perform her job. During the period of time of July 1977 to October 1986, Petitioner received thirteen job evaluations. For each of these evaluations, Petitioner received an overall evaluation of either outstanding or exceeds performance standards. The last six of these evaluations were by Dr. Cortazzo. There was a conflict in the testimony as to the duties Petitioner was actually performing. Petitioner contends that the job description for the Secretary Specialist position does not adequately describe the duties she was actually fulfilling. Petitioner contends that she was essentially performing the duties and responsibilities of the Staff Assistant before the position was created. Respondent contends that the duties Petitioner was performing were primarily secretarial and that the job descriptions and the skills required to fill these positions are separate and distinct. This dispute is resolved by finding that the Secretary Specialist job description adequately describes the job Petitioner was performing and that she was not essentially performing the duties and responsibilities that were expected of the Staff Assistant.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Commission on Human Relations enter a Final Order dismissing Petitioner's charge of discrimination against Respondent. DONE AND ENTERED this 1st day of October, 1990, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of October, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-6823 The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner. The proposed findings of fact in paragraphs 1 and 2 are rejected as being conclusions of law. The proposed findings of fact in paragraph 3 are adopted in part by the Recommended Order and are rejected in part as being conclusions of law. The proposed findings of fact in paragraph 4, 5, and 8 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 6 and 7 are rejected as being contrary to the greater weight of the evidence. The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent. The proposed findings of fact in paragraphs 1-2, 4, 7, 9-11, and 13-19 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 3-6, 8, 12, and 20-21 are rejected as being unnecessary to the conclusions reached. (There are two paragraphs numbered 3, both of which are rejected as being unnecessary to the conclusions reached.) Copies furnished: Edward A. Dion, Esquire Assistant General Counsel Department of Labor and Employment Security 2562 Executive Center Circle West, Suite 131 Tallahassee, Florida 32399-0657 Margaret Jones, Clerk Commission on Human Relations 325 John Knox Road, Building F Suite 240 Tallahassee, Florida 32399-1570 Hugo Menendez, Secretary Department of Labor and Employment Security Berkeley Building Suite 200 2590 Executive Center Circle, East Tallahassee, Florida 32399-2152 Stephen Barron, Esquire General Counsel 307 Hartman Building 2012 Capital Circle S.E. Tallahassee, Florida 32399-0658 Gladys Laroche 455 N.E. 159th Street North Miami Beach, Florida 33162 Arnold Cortazzo Department of Labor and Employment Security 401 N.W. Second Avenue, Room S221 Miami, Florida 33128 Donald A. Griffin Executive Director Florida Commission on Human Relations 325 John Knox Road --Suite #240 Building F Tallahassee, Florida 32399-1570
Conclusions An Administrative Law Judge of the Division of Administrative Hearings has entered an Order Closing File in this proceeding. A copy of the Order is attached to this Final Order as Exhibit A.
Other Judicial Opinions OF THIS FINAL ORDER PURSUANT TO SECTION 120.68, FLORIDA STATUTES, AND FLORIDA RULES OF APPELLATE PROCEDURE 9.030(b)(1)(C) AND 9.110. TO INITIATE AN APPEAL OF THIS ORDER, A NOTICE OF APPEAL MUST BE FILED WITH THE DEPARTMENT'S AGENCY CLERK, 2555 SHUMARD OAK BOULEVARD, TALLAHASSEE, FLORIDA 32399-2100, WITHIN 30 DAYS OF THE DAY THIS ORDER IS FILED WITH THE AGENCY CLERK. THE NOTICE OF APPEAL MUST BE SUBSTANTIALLY IN THE FORM PRESCRIBED BY FLORIDA RULE OF APPELLATE PROCEDURE 9.900(a). A COPY OF THE NOTICE OF APPEAL MUST BE FILED WITH THE APPROPRIATE DISTRICT COURT OF APPEAL AND MUST BE ACCOMPANIED BY THE FILING FEE SPECIFIED IN SECTION 35.22(3), FLORIDA STATUTES. YOU WAIVE YOUR RIGHT TO JUDICIAL REVIEW IF THE NOTICE OF APPEAL IS NOT TIMELY FILED WITH THE AGENCY CLERK AND THE APPROPRIATE DISTRICT COURT OF APPEAL. MEDIATION UNDER SECTION 120.573, FLA. STAT., IS NOT AVAILABLE WITH RESPECT TO THE ISSUES RESOLVED BY THIS ORDER. FINAL ORDER NO. DCA09-GM-273 CERTIFICATE OF FILING AND SERVICE I HEREBY CERTIFY that the original of the foregoing has been filed with the undersigned Agency Clerk of the Department of Community Affairs, and that true and correct copies have been furnished to the persons listed below in the manner described, on this ye day of July, 2009. U.S. Mail: The Honorable J. Lawrence Johnston Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-3060 The Honorable Linda Cain, Mayor City of Chipley 1442 Jackson Avenue Chipley, Florida 32428 Hand Delivery: Matthew Davis, Esquire Assistant General Counsel Department of Community A ffairs 2555 Shumard Oak Blvd. Tallahassee, Florida 32399 Paula Ford gency Clerk Florida Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100 Sheila Engum, Esquire City of Chipley Attorney Post Office Box 237 Vernon, Florida 32462-0237
The Issue The issue presented is whether the Department acted fraudulently, arbitrarily, illegally, or dishonestly in determining that the Intervenor, rather than Petitioner, should be awarded the contract for child support enforcement legal services for Martin and Okeechobee Counties.
Findings Of Fact On July 1, 1994, the Department of Revenue (hereinafter "Department") assumed responsibility for the State of Florida's Child Support Enforcement (hereinafter "CSE") Program, taking over those responsibilities from the Department of Health and Rehabilitative Services (hereinafter "HRS"). As part of that program, HRS had in place for most counties in Florida contracts with private attorneys to establish and/or enforce child support obligations. Petitioner Douglas Reymore was, by contract, the legal services provider for Martin, Okeechobee, Indian River, and St. Lucie Counties. The Department renewed that contract for an additional year. The Department determined to rebid the legal service provider contracts for some of the counties in Florida for the 1995-1996 fiscal year. The contract for Martin and Okeechobee Counties was one of those contracts. The Department prepared a Solicitation Package and distributed it to the Department's regional offices. The Department also distributed to its regional offices a document entitled Instructions to CSE Regions for Handling the Solicitation for Legal Services Providers (hereinafter "Instructions") to govern the solicitation, evaluation, and award of the CSE contracts. The stated purpose of the Solicitation Package was to "obtain the highest possible level of legal representation at the lowest possible cost while ensuring free and open competition among prospective proposers." The solicitation was advertised in Martin and Okeechobee Counties in a timely manner from April 1 through April 5, 1995, as required in the Instructions. Upon their requests, copies of the Solicitation Package were sent by the Department to both Petitioner Douglas Reymore and to Intervenor Thomas & Associates. The Department did not provide a copy of the Instructions to any proposers prior to the opening of the proposals. Proposals were required to be received by the Department by 3:00 p.m. on Friday, May 12, 1995. Both Reymore and Thomas & Associates timely submitted proposals. The proposals were opened in the Program Administrator's Office in West Palm Beach at 4:00 p.m. that same day. The proposals timely submitted were forwarded, after opening, to the Evaluation Committee established by the Department. The Evaluation Committee was required to conduct its review and evaluation consistent with the Evaluation Committee procedures set forth in the Instructions, including attachments. Members of the Evaluation Committee for the Martin/Okeechobee Counties contract were Elaine Rosnow (Chair), Terrie Almond, Janice Blount, Donna Hilley, and Henry Smith. The names of the members of the Evaluation Committee were not disclosed to proposers prior to the opening of the timely submitted proposals. None of the members of the Evaluation Committee is an attorney, and none is considered an expert in computer technology. The Child Support Enforcement Solicitation of Proposals Evaluation Sheet, included with the Instructions, identified nine Mandatory Requirements. Those same Mandatory Requirements were also identified in the Solicitation Package sent to Reymore and to Thomas & Associates. If any of the Mandatory Requirements identified in the Evaluation Sheet and the Solicitation Package were not met by a proposal, the proposal was not to be considered further by the Evaluation Committee. The Evaluation Committee reviewed and evaluated the proposals. The proposal of Thomas & Associates was rated highest, and the Reymore proposal was rated second highest. The Evaluation Committee forwarded its scores on the proposals to the Program Administrator, who was required to award the contract to the highest ranking proposer. The Department issued its notice of award for the CSE contract for Martin and Okeechobee Counties to Thomas & Associates on May 22, 1995. The term of the contract was to be for an annual period to begin on July 1, 1995, and end on June 30, 1996. Thomas & Associates was also named as the Department's intended recipient for two other CSE contracts, those for Palm Beach County (intrastate) and Palm Beach County (interstate). A CSE legal practice under state contract, such as that for which proposals were solicited in the instant case, is high volume in nature. Currently, approximately 200 cases in Martin County and approximately 65-70 cases in Okeechobee County go to court each month. These court cases are handled by using three docket days in Martin County and one docket day in Okeechobee County each month. The Solicitation Package for the Martin/Okeechobee Counties contract projected 156 referrals to the legal services provider each month. Upon the receipt of a referral from the Department's Child Support Office, the legal services provider under contract with the Department must take the appropriate legal action to collect child support from the non-custodial parent. These legal actions include establishing paternity, obtaining support orders, and enforcing support orders. The greatest, and a substantial, difference between a private family law practice and a CSE legal practice under state contract is the caseload. Another difference is the limited funds available for expenses, such as for taking depositions and for service of process. There are also legal issues, concepts, and terms encountered in a CSE practice which are not encountered in a private family law practice. Petitioner Reymore has practiced CSE law under a state contract for three years in Martin, Okeechobee, St. Lucie, and Indian River Counties. No attorney employed by Thomas & Associates has ever practiced CSE law under a state contract. The Solicitation Package, on page four, provided as follows: Each proposal will be reviewed for responsiveness to the mandatory requirements set forth in Attachment V. Proposals that fail to satisfy all of the mandatory requirements will not be considered further. No points will be awarded for the mandatory requirements. Above the listing of Mandatory Requirements on Attachment V, similar language appears, specifically: "If any of these requirements are not met, your proposal will not be considered further." The Mandatory Requirements set forth in Attachment V include the following: The attorney/attorneys assigned to per- form contract services shall be members of The Florida Bar. A certificate of good standing from The Florida Bar shall be attached for each designated attorney. A resume for each attorney designated to do child support work shall be included with proposal. Page one of the Solicitation Package also recites that any proposal submitted must include: 1) Resumes on all attorneys who will be assigned to this contract. 4) Certificates of good standing from The Florida Bar on all attorneys who will be assigned to this contract. The Thomas & Associates proposal included resumes and certificates of good standing from The Florida Bar for the following attorneys: Jeffrey F. Thomas, Mary Bobko Thomas, L. Denise Coffman, and Charles Willoughby. In the section of its proposal entitled Time and Personnel, Thomas & Associates specifically represented that two lawyers would be assigned to the contract: Charles Willoughby and Denise Coffman. It further represented that Jeffrey Thomas would directly supervise the lawyers and that he would also personally attend all hearings where the other party was represented by counsel. The proposal then represented that Thomas & Associates was also bidding on the Palm Beach interstate contract and the Palm Beach intrastate contract. As to the Palm Beach interstate contract, the proposal represented that Jeffrey Thomas would directly supervise the lawyers and would also personally attend all hearings where the other party is represented by counsel. The proposal then represented that the following attorneys would be assigned to Jeffrey Thomas to work on the Palm Beach interstate contract: Charles Willoughby and Denise Coffman; John C. Thomas and Kim Nutter would serve as "back ups." As to the Palm Beach intrastate contract, the Thomas & Associates proposal represented that four attorneys would staff that contract full time, and Jeffrey Thomas would directly supervise all attorneys and personally appear at all hearings where the other party is represented by an attorney. The proposal then stated that the following attorneys would be assigned to Jeffrey Thomas for that contract: Charles Willoughby, Denise Coffman, John C. Thomas, and Kim Nutter. The Thomas & Associates proposal then represented that if Thomas & Associates were awarded more than one contract, two additional lawyers would be hired. The proposal failed to identify or include any information about the two additional attorneys Thomas & Associates would hire in the event it was awarded more than one contract. The Department awarded all three contracts to Thomas & Associates. The date of the award of the other contracts is not part of the record in this cause. However, since Charles Willoughby and Denise Coffman are to be assigned full time to the Palm Beach intrastate contract and are also to be assigned to the Palm Beach interstate contract, and since Thomas & Associates represented to the Department that it would hire more lawyers if awarded more than one contract, Charles Willoughby and Denise Coffman are either not available to be assigned to the Martin/Okeechobee Counties contract, or are not the only attorneys who will perform contract services. The Solicitation Package precludes a proposer from assigning attorneys to perform services under the contract without identifying those attorneys in the proposal and submitting their resumes and certificates of good standing as part of the proposal made to the Department. The representations of Thomas & Associates committing to hire additional attorneys if it received more than one contract, as well as Thomas & Associates' commitment to assign attorneys to work on the contracts as represented in the Thomas & Associates proposal, would become conditions of any contract entered into with the Department as would all other representations in the proposal. The Thomas & Associates proposal failed to meet all of the mandatory requirements set forth in the Solicitation Package due both to the failure of Thomas & Associates to identify all attorneys to be assigned to work on the contract and Thomas & Associates' failure to include resumes and certificates of good standing for those attorneys as part of its proposal. Accordingly, the Evaluation Committee should have rejected any further consideration of the proposal submitted by Thomas & Associates and should not have gone forward with scoring the proposal submitted. The Evaluation Committee members were aware that Thomas & Associates had submitted proposals for all three contracts, that the proposal pledged the same attorneys to work on one contract full time while pledging them to work on two additional contracts, and that the proposal represented that additional lawyers would be hired if Thomas & Associates received more than one contract. Yet, the Evaluation Committee members did not consider the multiple mutually- exclusive assignments of the same attorneys in the Thomas & Associates proposal and did not consider the representation that additional unidentified attorneys would be hired. The Evaluation Committee members specifically marked their Evaluation Sheets to reflect that Thomas & Associates had met all mandatory requirements for having its proposal evaluated and scored when Thomas & Associates had not done so. Page seven of the Solicitation Package provides as follows: The proposer must provide three references for whom the proposer has rendered services similar to those being proposed. Proposals must include the name, address, telephone number, and the Name and Title of the primary and alternate contacts for each reference. The Thomas & Associates proposal failed to comply with this requirement. No references were provided in the proposal for the firm of Thomas & Associates, the proposed legal services provider. The only references provided were for Jeffrey Thomas, one of three identified attorneys designated by the Thomas & Associates proposal to perform work under the contract. No references were provided for Willoughby and Coffman, the other two attorneys identified to be assigned to the contract, and no references were provided for the two unidentified attorneys to be assigned to the contract should Thomas & Associates receive more than one contract. The Thomas & Associates proposal contained four references for Jeffrey Thomas. However, only two of those references were clients. No references were provided in the Thomas & Associates proposal from clients for whom high-volume child support or family law legal services had been provided. Accordingly, the Thomas & Associates proposal failed to include three references for whom the proposer has rendered services similar to those being proposed, as required by the Solicitation Package. The Thomas & Associates proposal also failed to include alternate contacts for each reference, as required by the Solicitation Package. Alternate contacts should have been provided for individual references in case the Evaluation Committee was unable to make contact. For Jeffrey Thomas' individual references, only office telephone numbers were provided. Alternate contacts for Jeffrey Thomas' individual references could have been provided in the form of home telephone numbers. For Jeffrey Thomas' individual references, alternate references could have been provided in lieu of alternate contacts, but were not. Due to Thomas & Associates' failure to provide alternate contacts for Jeffrey Thomas' references, or even the required number of references, the Evaluation Committee was able to reach only one of Jeffrey Thomas' references for the purpose of conducting an interview. The requirement of three references for whom the proposer has rendered services similar to those being proposed is a material requirement for the personal services contract under consideration in this cause. Thomas & Associates' failure to meet this requirement also made its proposal non- responsive to the Department's solicitation. Rather than declaring the proposal non-responsive, the Evaluation Committee members awarded points to the Thomas & Associates proposal for providing sufficient and appropriate references. No points should have been awarded to Thomas & Associates for its references. Page four of the Solicitation Package advises that any proposal must contain a detailed written Plan clearly demonstrating the proposer's ability to process referrals or case establishment activities, and identifying existing resources and proposed resources. Pages 17-20 set forth the criteria for the provision of legal services. The Plan contained in the Thomas & Associates proposal is, for the most part, simply a verbatim recitation of the language on those pages of the Solicitation Package. The few portions of the Thomas & Associates Plan which were not copied verbatim from the Solicitation Package cannot be implemented or, if implemented, would delay the processing of the Department's high-volume caseload. The Thomas & Associates Plan commits to obtaining a court date for all enforcement hearings which is no later than 45 days after receipt of a referral. The Plan further commits to using interrogatories and requests to produce in each enforcement case. Due to the time necessary for the sheriff to serve pleadings on a CSE respondent and the applicable discovery response times, it is not possible to utilize interrogatories and requests to produce in each enforcement action within the time frames asserted by Thomas & Associates in its Plan. Further, interrogatories are not necessary in many cases, and the information that can be obtained through them can also be obtained from the non- custodial parent at the final hearing. Thomas & Associates' Plan also commits to scheduling a support hearing within 45 days of receipt of a case referral from the Department when paternity is in dispute and a Human Leukocyte Antigen Test or other DNA test is requested. This schedule cannot be achieved since DNA test results are not received until four to eight months after the court orders such a test to be performed. The Thomas & Associates Plan also commits to ensuring that the judge signs appropriate income deduction orders at the time of hearing. This is not possible in Martin and Okeechobee Counties because hearings are conducted by hearing officers who then submit their written recommendations to the judge before the judge will enter an income deduction order. It is usually not possible to have a hearing, get the hearing officer's written recommendation, and have the judge review that recommendation and issue an income deduction order all in a single day. The Thomas & Associates proposal asserts that Jeffrey Thomas would appear at all hearings where the non-custodial parent is represented by an attorney under the Palm Beach County intrastate contract, the Palm Beach County interstate contract, and the Martin/Okeechobee contract. That commitment would be a special condition of any contract between the Department and Thomas & Associates, as would all provisions of the Thomas & Associates proposal. Charles Willoughby graduated from law school in 1994 and became licensed to practice in the State of Florida some time thereafter. His resume reflects no experience in any facets of marital and family law. The Thomas & Associates proposal commits that Jeffrey Thomas will "personally train" and "supervise" Willoughby in the performance of his duties. The Thomas & Associates proposal also represents that Jeffrey Thomas will personally attend all meetings with Department child support staff. It is common for the non-custodial parent to come to a hearing in a CSE case represented by an attorney without that attorney having made a prior appearance in the case or having notified anyone that the attorney will be making an appearance in the case. In Martin and Okeechobee Counties, when the non-custodial parent is represented by an attorney, the attorney first appears on the day the hearing is set in approximately 40 percent of the cases. It is impossible for a single attorney to attend every hearing under the Martin/Okeechobee Counties, Palm Beach County intrastate, and Palm Beach County interstate CSE contracts where the opposition is represented by counsel because often hearings occur simultaneously before multiple domestic relations commissioners, hearing officers, and judges at multiple courthouses. It would be inappropriate for a CSE attorney under state contract to request a continuance of a hearing to allow a more experienced attorney to appear on behalf of the Department. Further, there is no basis for believing that such a motion would be granted. Accordingly, given the Thomas & Associates commitment that Jeffrey Thomas will personally train and supervise attorney Willoughby and personally attend all meetings with Department staff, and given the numerous courthouse locations where hearings will be conducted under the three contracts awarded Thomas & Associates, it would not be physically possible for Jeffrey Thomas to personally attend all hearings where the opponent is represented by counsel. Consequently, it is not possible for Thomas & Associates to perform under the CSE contracts awarded to it in accordance with the representations made in the proposal. Members of the Evaluation Committee knew that Jeffrey Thomas could not attend all hearings where the other parties are represented by counsel at the time they were scoring the Thomas & Associates proposal. Yet, they believed that the Instructions given to them for scoring proposals did not permit them to consider the impossibility of performance. Points were awarded to the Thomas & Associates proposal for the staffing ratio of attorneys and paraprofessionals proposed. The proposal represented that each attorney will have one paralegal and one legal secretary assigned to work on the contract. The proposal, like the letterhead used by Thomas & Associates for the purpose of submitting proposals to the Department, represented that Jacquelynne O. Benefield, a certified legal assistant, would supervise the paralegal department. Her resume was also included in the proposal. Benefield is not a certified legal assistant. The Thomas & Associates' misrepresentation regarding her credentials was not known to the Evaluation Committee members when they scored the proposal. The Department's evaluation mechanism provided for extra points for minority ownership of a proposer. Page one of the Solicitation Package specified that a copy of the certificate of minority business enterprise, if applicable, must be included with the proposal. However, page six provided different information by specifying that a copy of the certification must be attached to the proposal if a business has been certified as a minority business enterprise. However, if the business has not been certified, but has at least 51 percent minority ownership, such minority ownership must be documented. The Thomas & Associates proposal asserted that Mary Thomas, Jeffrey Thomas' wife, is an American woman and owns 60 percent of Thomas & Associates. The proposal asserted that Thomas & Associates is not certified as a minority business enterprise and had only applied for such certification. The Solicitation Package, therefore, required that Thomas & Associates document Mary's minority ownership. The only documentation submitted was a copy of an application for certification without any proof that the application had even been filed. The application was dated May 4, 1995, and represented that Mary Thomas had acquired her 60 percent ownership in Thomas & Associates, a business which earned $220,000 in 1994, on April 30, 1995. The application also reflected that Jeffrey Thomas, the 40 percent owner of the firm, is the president of Thomas & Associates, while Mary Thomas, the 60 percent owner of the firm, is only the vice president. Thomas & Associates submitted no documentation of Mary Thomas' minority ownership. Had Thomas & Associates submitted even the documents required to be submitted as part of the application for certification as a minority business, the Evaluation Committee would have seen that Mary Thomas bought her 15 shares of stock by writing a check in the amount of $15 from the joint checking account of her and her husband Jeffrey. The stock certificate issued to her was dated May 30, 1995, subsequent to the Department awarding to Thomas & Associates the contract which is the subject of this proceeding. The stock certificate issued to Mary bears certificate number 1 while the stock certificate for ten shares issued to Jeffrey on September 21, 1989, bears certificate number 2. The stock transfer ledger also reflects that Mary was issued stock certificate number 1 and Jeffrey was issued stock certificate number 2 five and a half years earlier. The Thomas & Associates proposal did not document the alleged minority ownership, and Thomas & Associates was entitled to receive no points for that category. The Evaluation Committee was concerned about the alleged minority ownership being documented only by an application dated one week before the deadline for submitting proposals to the Department. The Committee contacted the Department's Tallahassee office for guidance as to how to score the alleged minority ownership. The Evaluation Committee was advised to score that category in any manner the individual members saw fit. No guidance was given to the Evaluation Committee members and no criteria were suggested for grading that category which allowed a range of points from zero to five. The scores given by the Evaluation Committee to the Thomas & Associates proposal for minority ownership covered the range from zero to five. It is illogical to give partial credit for a category such as minority ownership. Thomas & Associates either is a minority business, thereby being entitled to full credit, or it is not, thereby being entitled to no credit. Since Thomas & Associates failed to comply with the Solicitation Package requirements by documenting the alleged minority ownership, it was entitled to no points in that category. The Solicitation Package advised prospective proposers that the "evaluation of all proposals will be made by an Evaluation Committee of qualified persons who are familiar with child support services". In making the representation that the membership of the Evaluation Committee would consist of "qualified" persons, the Department intended those persons to be familiar with the requirements to carry out the terms of the CSE legal services contract, including the various means for doing that work. The Department made no effort to insure that members of the Evaluation Committee were familiar with the necessities of a high-volume CSE law practice, that members were familiar with the operations of law firms necessary to carry out that kind of practice, or that members understood the experience and needs in their region. The members of the Department's CSE staff on the Evaluation Committee do not have knowledge of how to operate a CSE law office under state contract. In the past, when proposals for CSE legal services have been solicited, attorneys have been included on the evaluation committees. The Department gave no guidance to the Evaluation Committee on how to evaluate the proposals for "attorney experience" or for their "Plan." The Evaluation Committee members gave Thomas & Associates high scores for its Plan even though some of the representations in it are not feasible in a high-volume CSE practice of law. The lack of guidance resulted in the Evaluation Committee giving high scores for Thomas & Associates' Plan, notwithstanding Thomas & Associates' obvious lack of understanding of CSE legal practice under state contract. For example, Thomas & Associates' Plan indicated that depositions would be taken in every paternity and support action. Because a very limited amount of money is available under the contract for expenses, it would not be possible to take depositions in all of those cases. Thomas & Associates' Plan also inaccurately describes the use of temporary relief hearings when no such hearings are utilized by the judicial hearing officers in Martin and Okeechobee Counties. That Plan also inaccurately suggested that a temporary relief hearing would be used when a respondent acknowledges paternity, since no temporary relief hearing is necessary in such a circumstance. Instead, the case would be scheduled on the next available docket for final hearing. The Plan also inaccurately indicates there is a need for a temporary relief hearing when the issue of support has already been resolved through a stipulation for support. Thomas & Associates' Plan also inaccurately suggests all support cases can be brought to hearing within 45 days of referral from the Department. Given the time necessary for a case to be processed by the court clerk's office and for the sheriff to serve the summons, together with the 20 days the respondent is given to respond after service, it would not be possible to meet this schedule in every case. Moreover, the sheriff is unable to obtain service on the non-custodial parent in approximately 35 percent of support cases. Such cases are not set for hearing because the court has no jurisdiction over the non-custodial parent. Instead, these cases are sent back to the Department so a correct address for the non-custodial parent can be found, if possible. Anyone familiar with a high-volume CSE practice of law under state contract would know that the above-described components of Thomas & Associates' Plan are impossible, impractical, or simply make no sense. Similarly, an experienced attorney would know that the time frames suggested for service of process and obtaining discovery were unrealistic and that it is inappropriate to seek a temporary relief hearing when a case is ready to be set for final hearing. All family law does not constitute child support enforcement law. The Evaluation Committee members' lack of qualifications is evidenced by their inability to distinguish among family law, child support, enforcement and collection, and trial and appellate areas of practice even though the Evaluation Sheet required a separate score for each of these practice areas for evaluating attorney experience. The Evaluation Committee members did not have specialized computer knowledge. Their lack of experience in computers is evidenced by the high scores awarded the Thomas & Associates proposal based on the computerized handling of the contract, notwithstanding the proposal's failure to mention any hard drive, failure to describe the random access memory (RAM) its computers contain, and failure to indicate whether its software can handle the number of files necessary to perform under the Department's contract. Without knowing the computers' hard drive capacity and the RAM of the computer, the Evaluation Committee could not judge the capability of the computers to handle the volume of files under the contract. The Evaluation Sheet utilized by the Evaluation Committee is not the same as the Evaluation Sheet which was included in the Solicitation Package. In the evaluation scheme specified in the Solicitation Package, the area that provided the largest single award of points was "attorney experience." In this area, the Solicitation Package indicated that points would be awarded for attorney experience on a "per attorney" basis. The Solicitation Package does not contain any indication that for multi-attorney firms the attorneys' years of experience will be totalled and then averaged before points are assigned. Unlike the Solicitation Package which was provided to potential proposers, the Instructions given the Evaluation Committee contained contradictory provisions, some providing for attorney experience points to be awarded on a per attorney basis and others providing for points to be awarded based on the average years of experience of all attorneys designated to work on the contract. For multiple-practitioner law firms such as Thomas & Associates, the attorney experience points differ significantly if they are computed on a "per attorney" basis and then averaged, rather than on the basis of "average years" of experience of all attorneys designated to work on the contract. When attorney experience scores are calculated on a per attorney basis, each attorney assigned to the contract must have a minimum of five years experience in an area of law for the firm to receive the maximum points for that area. When attorney experience scores are calculated on the basis of "average years" of experience of all attorneys designated to work on the contract, a multiple-practitioner firm such as Thomas & Associates can receive the maximum number of points even if some of the attorneys have no experience. Thomas & Associates received the maximum number of attorney experience points even though one of the attorneys assigned to work on the contract, Charles Willoughby, graduated from law school in 1994 and became licensed to practice law some time thereafter. The proposal admits that Willoughby has "little experience in family law matters." Conversely, the proposal does not assert that he has any experience in family law matters, any experience in child support, any experience in enforcement and collections, or any experience in trial and/or appellate work. Further, his resume does not indicate that he has any experience in the practice of law. Interestingly, not all members of the Evaluation Committee evaluated the same attorneys when computing the points to be awarded to Thomas & Associates for attorney experience. One Evaluation Committee member's Evaluation Sheet reflects that Mary Thomas was evaluated along with Jeffrey Thomas and Charles Willoughby in some areas of practice but that Mary Thomas along with Jeffrey Thomas and Denise Coffman were evaluated as to other areas of practice. In calculating Thomas & Associates' attorney experience score, the Evaluation Committee members did not consider the two additional attorneys who are unidentified but would be hired if Thomas & Associates receives more than one contract. The only way to take into account those additional attorneys would be to award each of them zero points for experience. Basing attorney experience points on the "average years" of experience of all attorneys designated to work on the contract, or on the years of experience of a single attorney in a multiple-practitioner firm, as was done by some members of the Evaluation Committee, is inconsistent with the Department's stated goal of obtaining the highest possible level of legal representation through this solicitation process. Similarly, utilizing a formula which gives the same credit for experience to an attorney practicing in the general area of family law as to an attorney practicing high-volume CSE legal services, a concept the Evaluation Committee members found to be unfair, is also inconsistent with the Department's stated goal of obtaining the highest possible level of legal representation. The maximum score Thomas & Associates could have received for attorney experience based on the per attorney scoring procedure specified in the Solicitation Package is substantially less than the number of points awarded by the Evaluation Committee. Further, if the Evaluation Committee had properly scored Thomas & Associates' attorney experience, that proposal would have received an overall average score lower than the Reymore proposal received. The Evaluation Committee awarded an average of 4.9 of the available 5 points for references to Thomas & Associates based solely on the one reference for Jeffrey Thomas it was able to contact. However, the Evaluation Committee interviewed two of the Reymore references. The Department's Tallahassee office specifically instructed the Evaluation Committee not to interview the third person listed in the Reymore proposal as a reference since she was also a member of the Evaluation Committee, something Reymore could not have known when he prepared his proposal since the names of the persons on the Evaluation Committee were not disclosed in the Department's Solicitation Package. To insure that the evaluation of the proposals was fair and equal, the Evaluation Committee had been instructed to interview an equal number of references for each proposer. By basing Thomas & Associates' score on a single interview, the Evaluation Committee members did not follow the appropriate procedure in awarding points for references. One member of the Evaluation Committee did not participate in the interviews of references. Instead, that member used another member's notes from the references' interviews to award points for references. By awarding points for references based solely on the notes of another Evaluation Committee member, that Committee member did not follow the appropriate procedure in awarding points. Despite the absence of any effort by the Department to assure that its members were qualified to evaluate a high-volume CSE practice, the Evaluation Committee was given wide discretion to evaluate the proposals using whatever criteria its individual members chose. The evaluation scheme developed for this solicitation differed from those used previously in order to give the Department's regions more flexibility. The only substantive instructions given the members of the Evaluation Committee on how to evaluate the proposals for CSE legal services were those in the Solicitation Package and the Instructions. Members of the Evaluation Committee found the Instructions inadequate, and the ranges of points with no criteria confusing. In prior solicitations for CSE legal services, evaluation committees were given a scoring matrix which set guidelines on how to score each section of a proposal. The Department's departure from the past practice of providing a scoring matrix to assist the evaluation committee in evaluating the proposals in order to give the regions more flexibility is illogical since there is no basis for the premise that the practice of law varies from region to region in the state or that different regions require different legal services. The difference in the average scores given Thomas & Associates' proposal over the Reymore proposal was 11.8 points. Had the Thomas & Associates' proposal been properly scored, the Reymore proposal would have been the highest-scoring proposal. Moreover, Reymore would have submitted the highest-scoring responsive proposal if the Thomas & Associates' proposal had been disqualified due to the failure of Thomas & Associates to include all of the Mandatory Requirements in its proposal. Thomas & Associates has not challenged the responsiveness of Reymore's proposal or the accuracy of the Evaluation Committee's scoring of the Reymore proposal.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered determining the Thomas & Associates proposal to be nonresponsive and awarding to Petitioner Reymore the contract to provide child support enforcement legal services for Martin and Okeechobee Counties. DONE and ENTERED this 11th day of September, 1995, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of September, 1995. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 1-20, 22-45, 48-82, 85- 95, 99-101, 106, 107, 114, 116-147, 149, 150, and 152-173 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 21 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Petitioner's proposed findings of fact numbered 46, 47, and 96 have been rejected as being irrelevant to the issues under consideration in this cause. Petitioner's proposed findings of fact numbered 98, 102-105, 108-113, and 115 have been rejected as being unnecessary to the issues involved herein. Petitioner's proposed findings of fact numbered 83, 84, 148 and 151 have been rejected as being subordinate to the issues herein. Intervenor's proposed findings of fact numbered 1-12, 15, 16, 18, 37, 76, 77, 83, 84, 87, 101, 109-111, 115, 118, 120, 123, 165, and 178 have been adopted either verbatim or in substance in this Recommended Order. Intervenor's proposed findings of fact numbered 13, 14, 21-23, 25, 26, 31-34, 38, 40, 46, 57, 61-65, 71, 90, 91, 96, 99, 117, 130-132, 158, 160, 162, 163, and 168-173 have been rejected as being irrelevant to the issues under consideration in this cause. Intervenor's proposed findings of fact numbered 17, 19, 20, 24, 42, 45, 48, 51, 58-60, 66, 72-75, 79, 85, 86, 88, 89, 92, 97, 98, 112, 113, 116, 121, 127, 133, 166, 167, 176, 177, 179, 181, and 182 have rejected as not being supported by the weight of the credible evidence in this cause. Intervenor's proposed findings of fact numbered 27, 30, 35, 39, 41, 43, 44, 47, 50, 52-56, 67-70, 80-82, 100, 102-107, 114, 124-126, 128, 129, 137, 142- 146, 148-153, 174, and 180 have rejected as being subordinate to the issues herein. Intervenor's proposed findings of fact numbered 28, 29, 36, 49, 78, 108, 119, 122, 138-141, 147, 154, 155, 157, 159, 161, 164, 175, and 183 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Intervenor's proposed findings of fact numbered 93-95, 134-136, and 156 have been rejected as being unintelligible. Respondent's proposed findings of fact numbered 1-3, 5, and 11 have adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 4, 7, 10, and 20 have been rejected as not being supported by the weight of the credible evidence in this cause. Respondent's proposed findings of fact numbered 6, 8, 9, 14, 16, and 18 have been rejected as being subordinate to the issues herein. Respondent's proposed finding of fact numbered 13 has been rejected as being irrelevant to the issues under consideration in this cause. Respondent's proposed findings of fact numbered 15, 17, 19, and 21 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. COPIES FURNISHED: Douglas Reymore, Esquire Suite 420 10 Central Parkway Stuart, Florida 34994 Gary P. Sams, Esquire Carolyn S. Raepple, Esquire Hopping Green Sams & Smith P.A. 123 South Calhoun Street Tallahassee, Florida 32314 Thomas Barnhart, Esquire Patrick Loebig, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Jeffrey F. Thomas, Esquire Thomas & Associates Treasure Coast Bank Building Suite 209 789 South Federal Highway Stuart, Florida 34991 Noel A. Bobko, Esquire McCarthy, Summers, Bobko, et al. Suite 2-A 2081 East Ocean Boulevard Stuart, Florida 34996 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background On August 16, 1991, respondent, Department of Professional Regulation (DPR), issued Request for Proposal No. 92-002 (RFP) to various firms inviting them to submit proposals for assisting DPR and the Florida Real Estate Commission (Commission) in the production and scoring of the Florida Real Estate and Appraisal Examination for the period beginning January 1, 1992, through June 30, 1993, with a renewal option for one to two years. More specifically, the contract called for the successful firm to develop examinations from a bank of questions provided by the Commission, administer periodic examinations, score and analyze tests, and perform other related support services. Such proposals were to filed no later than 2:00 p.m. on September 20, 1991. Thereafter, and in accordance with the RFP, a six-person committee composed of representatives of the DPR, Commission and Division of Real Estate (Division) would evaluate the proposals and make a recommendation to the Secretary of DPR, who retained final authority to award the contract. Proposals were timely filed by three firms, including petitioner, Professional Testing Service, Inc. (PTS), Applied Measurement Professionals, Inc. (AMP), and National Assessment Institute (NAI). After these proposals were evaluated by the committee, AMP was recommended for award of the contract. By a 4-3 vote, the Commission concurred with this recommendation. On October 24, 1991, the Secretary of DPR selected AMP as the recipient of the contract, and notice to that effect was posted. Citing various alleged irregularities in the review process, PTS filed its formal protest to the award of the contract on November 4, 1991. After efforts to informally resolve this dispute were unsuccessful, this proceeding ensued. The Vendors Who Submitted Proposals Petitioner is a Florida corporation with offices located at 223 Pasadena Place, Orlando, Florida. It has provided various licensure examination services to DPR for the past eighteen years. Except for a two year break in 1984 and 1985, for the last eleven years PTS has held the contract with DPR to provide licensure examination services on the real estate examination, and pending resolution of this dispute, it continues to provide such services. AMP did not intervene as a party in this cause. However, according to its proposal, AMP is a Kansas corporation with offices at 8310 Nieman Road, Lenexa, Kansas, and has been in the business of developing and administering examinations since 1984. Among other things, it now provides assistance to the State of Michigan for the real estate licensure examination. AMP maintains no offices or personnel in the State of Florida. Although NAI submitted a response to the RFP, it is not a party to this action. Located in Clearwater, Florida, with branch offices in other cities in Florida and throughout the country, NAI has provided assessment services to various state governments since 1976. It has administered the DPR contractor examination for the last fourteen years. Events Leading to the Issuance of RFP 92-002 In May 1991, DPR issued RFP 91-009 requesting proposals for assistance in the development and administering of real estate examinations. That RFP requested proposals on three components of the real estate examination services, including (a) application processing, (b) test development, grading and review, and (c) administration of the examination. Items (a) and (c) and a portion of item (b) had previously been handled by the Division, the administrative arm of the Commission. In response to RFP 91-009, proposals were filed by PTS, AMP, NAI, and two other vendors. PTS was recommended for award of the contract as to two components while AMP was recommended for the award of the contract as to one component even though its proposal had been deemed to be nonresponsive. However, DPR eventually decided to reject all proposals and issue a new RFP. The new RFP (91-002) did not call for proposals on items (a) and (c) and the test development portion of item (b) since the Division determined that it would continue to perform those functions. Even so, while RFP 91-002 was more narrow in scope of services than was 91-009, it nonetheless contained some of the same terms, conditions and requirements as did the earlier RFP. It is also noted that, with one minor exception relating to on-site grading, the scope of services under the existing contract held by PTS and those enumerated in RFP 91- 002 are the same. Prior to the time for submitting responses to RFP 91-009, the Division, whose director was designated as contract manager, and Commission conducted a pre-bid conference with interested vendors to answer questions concerning the RFP. Both RFP 91-009 and 91-002 contained an identical requirement that the successful firm "(m)aintain an office/center in the greater Orlando area." In response to a question by a vendor as to whether DPR would "accept proposals that identify Tallahassee as the office/center site for the provider's office in lieu of Orlando", the response given was "no, Orlando is the designated site." Other questions and answers concerning the same topic were as follows: Q. Would the Department consider allowing the contractor (for application processing function only) to maintain offices in Tallahassee instead of Orlando, provided that 1)regular meetings are held in Orlando, and 2) reports can be delivered to the Department's offices in Orlando? A. No. Because the application processing function relating to deficient applications must be closely coordinated with the records section, the investigative section, the legal section, administrative section of the Division of Real Estate and the Florida Real Estate Commission. Florida Statutes require that the office of the Division of Real Estate and the Florida Real Estate Commission be located in Orlando. Therefore, Divisional functions must be performed in the Orlando area. Q. Is Orlando the only site the Department will agree to, or is the Department flexible to the location if all requirements can be met from another site in the State of Florida? Orlando is the only site. The above questions and answers, together with others asked and answered at the conference, were transcribed by DPR and then furnished to all interested vendors. Since AMP filed a proposal in response to RFP 91-009, it may be reasonably inferred that AMP was privy to the above clarifying information. It is noted that there was no pre-bid conference prior to the filing of proposals in response to RFP 91-002. The RFP A copy of RFP 91-002 is found on pages 90 through 108 of petitioner's composite exhibit 1. The RFP includes sections relating to statement of need, purpose, scope of work, DPR responsibilities, provider responsibilities, general information, documents required in submitting a proposal, the proposal format, proposal rating criteria, and an appendix delineating the manner in which points would be awarded in the evaluation process. Prior to the submission of the proposals, no vendor formally challenged any provision in the RFP as being unreasonable, ambiguous, or otherwise unlawful in any respect. A number of provisions within RFP 91-002 are relevant to this controversy and are cited below. First, there is a general requirement found in Article VIII which requires all responses to be prepared in a manner consistent with the requirements of the RFP. More specifically, this article provided that Respondents must follow the proposal format as set forth under Section III in this request for proposal. The provider shall refer to the request for proposal to ensure all required information is submitted. By following the designed format of proposals, respondents will have a uniform method of presenting information helping assure complete fairness by the review team in evaluating proposals. Next, Article VII set forth those documents that were required to be submitted with the proposal. Among them was a requirement in paragraph 1 that the vendor submit "evidence that the organization is a legal entity." The purpose of this requirement was to ensure that DPR could enforce the agreement in the event the successful firm later attempted to back out of its commitment. The RFP also prescribed twenty-three major services that were within the scope of work to be provided by the successful firm. Indeed, the RFP stated in unequivocal language that "(t)he provider shall perform the following services as outlined below." (Emphasis added) Specifically, paragraphs 22 and 23 of Article III specified that the successful firm would Furnish to each candidate an unofficial grade report at the examination site at no additional cost to the candidate according to specifications approved by the Department. Maintain an office/center in the greater Orlando area. These two requirements, both unambiguous, were reasonably construed by participating vendors to mean that (a) the successful firm would furnish, at no cost to the candidate, on-site grade reports to those candidates who desired an unofficial grade after the examination was completed, and (b) the successful firm would maintain an office in the Orlando area to provide technical and other assistance to Commission and Division personnel regarding the examination. The interpretation as to paragraph 23 was especially reasonable since it conformed to clarifying information given to vendors at the pre-bid conference prior to the submission of proposals for RFP 91-009. Finally, despite DPR's contention to the contrary at hearing, the requirements in paragraphs 22 and 23 were considered material by the Division and Commission. From DPR's perspective, an important consideration was the costs to be charged both the candidate who sat for the examination and the candidate who made application but did not take the examination. This was because DPR's experience indicated that each year a large number of candidates apply for the examination but then fail to appear and sit for the examination. Indeed, during the most recent fiscal year of record, DPR had received 38,886 applications to take the various real estate and appraiser examinations but almost 3,000 did not appear. These figures were contained in RFP 91-009 and thus were available to all vendors, including AMP. Accordingly, DPR inserted a provision in the RFP directing each vendor to develop a cost schedule reflecting the cost for both the candidates scheduled for examination and the candidates who were actually examined. This material requirement was embodied in paragraph 1 of Article VI, which provided the following instructions to the vendors: The costs schedule for this proposal shall be priced on a per candidate examined for the first year and each of the option years provided. *Differences between the number of candidates scheduled for exam and the number of candidates examined shall be compensated for at a specific rate per candidate to be set forth by the provider.* (Emphasis added between *) The above provision was consistent with the manner in which the existing contract holder (PTS) had calculated its candidate costs for DPR during the preceding five years. Very simply, this meant that the proposal had to include one cost figure for candidates examined and another cost figure for scheduled candidates who did not appear. In calculating the costs for scheduled candidates, Appendix I, Section IV, page 3 of 3, required that all vendors develop a cost for services, including a "cost per candidate scheduled" to be made up of eight cost components: scan sheet costs, examination booklet production costs, scanning and microfilming costs, on-site grading costs, scoring costs, grade reporting/grade summary costs, security costs, and item bank maintenance costs. Therefore, each vendor was required to segregrate its costs per candidate into the eight prescribed categories, with the sum of those eight components representing the total costs per candidate scheduled. The Responses A copy of AMP's proposal filed on September 20, 1991, is found at pages 257 through 392 of petitioner's exhibit 1. In response to the requirement that the vendor give "evidence that the organization is a legal entity", AMP responded that it was a private stock corporation incorporated in 1982 in the State of Kansas. Although AMP represented that "a Certificate of Good Standing with the State of Kansas is available upon request," no such certificate was enclosed with its proposal. Documentation offered by PTS confirmed that AMP is not a Florida corporation, and there is no evidence to show that AMP, as an out- of-state corporation, has registered with the Department of State to transact business in the State of Florida. In its proposal, AMP provided an overall price "per candidate" but failed to differentiate between the costs incurred for candidates examined and candidates who were scheduled to take the examination but did not appear. This was contrary to the requirement in Article VI that such costs be identified for both categories and caused the proposal to be nonresponsive in a material respect. Although the RFP specifically required the vendor to set out eight cost components in developing the cost per candidate scheduled, AMP submitted nine specific costs as follows: 1. Test Development $3.72 2. Scan Sheet 0.10 3. Examination Booklet Production 2.47 4. Scanning 1.01 5. Scoring 1.05 6. Grade Tape Preparation 0.43 7. Security 0.32 8. Item Bank Maintenance 0.50 9. On-Site Grading 0.20 TOTAL $9.80 It should be noted that the first item, "Test Development" costs, which included 38 percent of AMP's total price, was not a category contained in or authorized by the RFP. Thus, the proposal was nonresponsive in this material respect. According to its proposal, AMP did not intend to maintain an office/center in the greater Orlando area. Rather, it proposed that: as an alternative to staffing an office in Orlando, AMP proposes to conduct regular monthly meetings in Orlando with the Division and key AMP project staff, typically the doctorate level Program Director and a Test Development Specialist. AMP will bring its portable computer equipment, and paper and computer files of the draft test and the item banks to these meetings. Any changes to examinations, as required by the Division, can then be immediately made in the draft tests and reviewed by the Division. It is AMP's opinion that this procedure will provide the Division with the direct responsiveness desired, and ensure efficient communication between the Division and the key project staff, without information being filtered through a lesser qualified individual in a satellite office. Additional urgent concerns can be discussed using the telephone or FAX equipment with the Program Director. (page 272, petitioner's exhibit 1) By filing this response, AMP contravened the material requirement in paragraph 23 of Article III that it maintain an office/center in the greater Orlando area. In response to the material requirement that it "furnish to each candidate an unofficial grade report at the examination site at no additional cost to the candidate according to specifications approved by the Department", AMP responded that it would: train the Department's test administration personnel to use this equipment to this end . . . . AMP's cost proposal is based on using the Department's personnel. If this is not possible, an additional per candidate fee will be determined based on using AMP personnel. Thus, AMP's response unilaterally modified the RFP requirement that AMP personnel rather than DPR personnel perform the task of providing unofficial grade reports at the examination site. Moreover, AMP's proposal did not state what its price per candidate would be if DPR enforced the RFP requirement. Under AMP's proposal, it calculated a cost of 20 cents per candidate for providing this service assuming DPR personnel were used. This was $2.27 less per candidate than the charge given by PTS ($2.47). Thus, AMP gained an economic advantage by its failure to provide on-site grading with its own personnel. Accordingly, this portion of the proposal was nonresponsive. The proposal of PTS was responsive to the RFP in all respects. This finding was not contradicted by DPR. It is noteworthy that two potential vendors, H. H. Block & Associates, Inc., a Gainesville, Florida firm, and Psychological Services, Inc., a firm located in Glendale, California, both advised DPR in writing that because of the requirement in the RFP that the successful vendor locate a center/office in the greater Orlando area, they would not be filing a proposal. The latter two vendors were obviously prejudiced by DPR's failure to advise them that it did not intend to enforce the requirement in paragraph 23 of Article III. This failure by DPR to enforce the provision also gave AMP an economic advantage over other vendors since AMP did not have to incur the costs of operating an Orlando office. The Evaluation Process The committee selected to evaluate the proposals was made up of six individuals appointed by the Secretary of DPR. It met in Tallahassee on September 30, 1991, to evaluate the proposals. The committee was chaired by Ella D. Hall, a DPR psychometrician. In accordance with the instructions in the RFP, the committee reviewed only the technical aspects of the proposals and did not review the cost data. Article IX of the RFP outlined the responsibilities of the evaluation committee and the procedure for evaluating proposals. Among other things, the committee was assigned the responsibility to: first determine if all required documents are included, that the proposal format is followed, and that all responses to the request's responsibilities of the provider are properly addressed. The cost data will not be reviewed as part of the technical evaluation. The committee utilized both a scoring guide and an evaluation guide in arriving at its recommendation. A total of 300 possible points were to be given to a vendor, of which 226 were related to technical matters. As noted above, the committee did not consider cost in its evaluation. Contrary to Article IX of the RFP, the committee did not initially determine whether the proposals were responsive. More specifically, the committee did not "first determine if all required documents (were) included, that the proposal format (was) followed, and that all responses to the request's responsibilities of the provider (were) properly addressed." According to the committee's chairperson, the committee was never told to determine if the proposals were responsive before evaluating them on their merits. Indeed, the chairperson assumed, albeit incorrectly, that someone else had previously evaluated the proposals in terms of responsiveness. As it turned out, none of the proposals were evaluated for responsiveness prior to or during the committee evaluation process. Through its chairperson, the committee issued a written report on October 9, 1991, recommending that AMP be awarded the contract. Although the committee considered the responses by AMP and PTS to be almost equal in terms of technical ratings, it gave a slight edge to AMP's proposal in the cost rating and recommended that AMP be awarded the contract. NAI was a very distant third in the evaluation process. Because of the committee's report, and AMP's announcement on October 16, 1991, as discussed below, that its price per candidate scheduled but not examined would be zero, the Commission voted 4-3 to endorse the committee's recommendation. The Secretary received the proposals in that posture. Events Occurring After the Committee Evaluation On October 4, 1991, or before the contract was awarded but after the committee evaluation was completed, AMP's president, Steven K. Bryant, sent a letter to the Secretary of DPR. The letter was received by DPR on October 9, 1991, and a copy of same has been received in evidence as petitioner's exhibit It provides in relevant part as follows: Dear Secretary Stuart: At the request of Lou Ritter, I am writing to you due to our concerns about the opportunity for our company to fairly compete for testing services business in your state. The recent rebidding of the Florida Cosmetology and Real Estate Programs have generated some serious questions in my mind as to whether or not it is in our interest to continue to respond to Florida RFPs. I hope you will investigate the following concerns and use the power of your office to correct these circumstances: The second RFP regarding real estate was clearly written to ensure that the current vendor retains the contract. The requirement that the vendor have an office in Orlando staffed by an individual whose only job would be to serve as a liaison with the Real Estate Commission makes it basically impossible for any organization based outside of the state of Florida to compete with the current vendor. An organization such as ours cannot afford to put a doctorate level individual in an office in Florida to be at the beck and call of the Real Estate Commission to answer examination development questions and economically survive. At best, we could put a clerical person in an office in Orlando who would be unable to answer any of the Commission's test development concerns. In our response to the RFP, we indicated that we would not establish an Orlando office, but would provide a doctoral level measurement expert and a test development specialist to meet once a month with the Real Estate Commission to revise the real estate examinations to their specifications using very highly qualified individuals. The second real estate RFP also requires that the examination booklets be printed and shipped to Florida examination centers within a seven day time frame, after the examinations are reviewed by the Real Estate Commission. This item was clearly written for the current vendor, which is basically photocopying examination materials as soon as the Commission provides approval on examination copy. There is no real reason why the examinations could not be reviewed and approved by the state to allow a longer time frame for printing, so that higher quality offset printed examination booklets could be prepared and shipped to Florida by a vendor residing out of state. In fact, we could provide several months of examinations in advance for the Commission's approval and avoid the crisis mode of printing which a seven day turnaround would cause. Although, we could provide the seven day turnaround through the use of overnight air carriers and the like, clearly the Real Estate Commission had in mind the current vendor when making this unreasonable requirement. * * * The letter also carries a handwritten note by the Secretary in the upper right hand corner which reads "Discussed with Lou Ritter/Steve Bryant - file 10/21". According to the Secretary, Ritter (a former Secretary of DPR) is now a consultant for AMP. The Secretary acknowledged that he spoke with Ritter and Bryant concerning the letter and advised them the agency was proceeding with the RFP. The Secretary's assertion that he followed up on the letter only to the extent that he wanted to ascertain if AMP had been unfairly penalized in the evaluation process was not contradicted. On October 16, 1991, Bryant sent a second letter on behalf of AMP to the Secretary of DPR. It read as follows: Dear Secretary Stuart: This is to confirm our telephone discussion regarding our price proposal for RFP #92-002 (sic) for Real Estate Examination Services. Since the RFP calls for AMP to provide examination booklets to the test centers the department administers, it was our intention to charge the state $9.80 per candidate tested, based on the number of answer sheets actually scored by AMP. Thus, there would not be a charge for candidates who do not appear for testing. Thank you for the opportunity to provide this information. Please let me know if there are any other questions. The above letter was solicted by the Secretary after he and Bryant spoke by telephone on or about October 15, 1991. The purpose of the letter was to allow AMP to clarify and amend its proposal which failed to include a cost for candidates who were scheduled to take the examination but did not appear. In contrast, neither PTS nor NAI were offered the opportunity to clarify or change their proposals after being filed. Thus, AMP was allowed to correct a material deviation from the terms of the RFP thereby giving it an advantage over its competitors. The contract was thereafter awarded to AMP on or about October 24, 1991. Summary of Errors in the RFP Process By failing to file evidence that it was a "legal entity", failing to file a cost per candidate scheduled but not examined, and submitting a price per candidate based on nine cost components rather than the prescribed eight, AMP failed to follow the proposal format required of all vendors by Article VIII. AMP's proposal was materially nonresponsive in four respects. First, it failed to differentiate between costs incurred for candidates examined and candidates who were scheduled but did not appear. Second, it utilized nine cost components in developing the cost per candidate scheduled instead of the eight components specified by the RFP. Third, in declining to establish an office in the greater Orlando area, AMP deviated from a material requirement. Fourth, contrary to the RFP, AMP proposed that DPR personnel rather than its own personnel provide unofficial grade reports to candidates at the examination sites. If this was unsatisfactory to DPR, AMP proposed to assess DPR an unspecified charge for providing this service. By waiving the enforcement of a material requirement (paragraph 23, Article III) after the proposals had been filed and evaluated, DPR gave a competitive advantage to AMP not enjoyed by other vendors. Further, by allowing AMP to correct a material variance from the RFP on October 16, 1991, as to the price charged for candidates scheduled but who did not take the examination, DPR gave a competitive advantage to AMP not enjoyed by other vendors. Collectively, these considerations support a finding that (a) the proposal submitted by AMP was materially nonresponsive and should be rejected, and (b) DPR created unfair competition and favoritism by waiving material requirements and allowing AMP to amend its proposal after being filed and evaluated.
Recommendation Based on the foregoing findings of facts and conclusions of law, it is, RECOMMENDED that a final order be entered by respondent rejecting the proposal filed by Applied Measurement Professionals, Inc. in response to RFP 91- 002 and awarding the contract to one of the other vendors who filed a response. DONE and ENTERED this 3rd day of January, 1992, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of January, 1992. APPENDIX Petitioner: Partially adopted in finding of fact 1. Partially adopted in findings of fact 11, 12, 13 and 22. Partially adopted in findings of fact 6 and 7. Partially adopted in finding of fact 7. Partially adopted in findings of fact 2, 3 and 4. Partially adopted in finding of fact 24. Partially adopted in findings of fact 10 and 14. Partially adopted in findings of fact 7, 11, 17, 19 and 29. Partially adopted in findings of fact 11, 18 and 29. Partially adopted in findings of fact 12, 15, 28 and 29. Partially adopted in findings of fact 13, 16, 28 and 29. Respondent:* 1. Partially adopted in finding of fact 1. 2-3. Partially adopted in finding of fact 22. Partially adopted in findings of fact 1, 20 and 24. Partially adopted in finding of fact 24. Partially adopted in finding of fact 13. 6a. Partially adopted in findings of fact 3, 15 and 19. 6b. Rejected as being contrary to the evidence. 6c. Partially adopted in finding of fact 16. 7-8. Partially adopted in finding of fact 24. 9-10. Partially adopted in finding of fact 26. Partially adopted in findings of fact 10 and 14. Partially adopted in finding of fact 16. Partially adopted in finding of fact 17. The second sentence is specifically rejected as being contrary to the evidence. Partially adopted in finding of fact 16. Partially adopted in finding of fact 11. Partially adopted in finding of fact 18. Rejected as being unnecessary. * Respondent's proposed findings of fact included numbers 4, 5, 6, 4, 5, 6. Therefore, the second set of findings numbered 4, 5 and 6 have been renumbered 6a, 6b and 6c for purposes of this Appendix. Note - Where a proposed finding has been partially adopted, the remainder has been rejected as being irrelevant, unnecessary, subordinate, not supported by the evidence, redundant, or a conclusion of law. COPIES FURNISHED: Joseph W. Lawrence, II, Esquire Post Office Box 1116 Fort Lauderdale, FL 33302 Vytas J. Urba, Esquire 1940 North Monroe Street, Suite 60 Tallahassee, FL 32399-0792 George Stuart, Secretary Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0750 Jack L. McRay, Esquire 1940 North Monroe Street, Suite 60 Tallahassee, FL 32399-0792
Other Judicial Opinions REVIEW OF THIS FINAL ORDER PURSUANT TO SECTION 120.68, FLORIDA STATUTES, AND FLORIDA RULES OF APPELLATE PROCEDURE 9.030(b)(1)(C) AND 9.110. TO INITIATE AN APPEAL OF THIS ORDER, A NOTICE OF APPEAL MUST BE FILED WITH THE DEPARTMENT’S AGENCY CLERK, 2555 SHUMARD OAK BOULEVARD, TALLAHASSEE, FLORIDA 32399-2100, WITHIN 30 DAYS OF THE DAY THIS ORDER IS FILED WITH THE AGENCY CLERK. THE NOTICE OF APPEAL MUST BE SUBSTANTIALLY IN THE FORM PRESCRIBED BY FLORIDA RULE OF APPELLATE PROCEDURE 9.900(a). A COPY OF THE NOTICE OF APPEAL MUST BE FILED WITH THE APPROPRIATE DISTRICT COURT OF APPEAL AND MUST BE ACCOMPANIED BY THE FILING FEE SPECIFIED IN SECTION 35.22(3), FLORIDA STATUTES. YOU WAIVE YOUR RIGHT TO JUDICIAL REVIEW IF THE NOTICE OF APPEAL IS NOT TIMELY FILED WITH THE AGENCY CLERK AND THE APPROPRIATE DISTRICT COURT OF APPEAL. MEDIATION UNDER SECTION 120.573, FLA. STAT., IS NOT AVAILABLE WITH RESPECT TO THE ISSUES RESOLVED BY THIS ORDER. FINAL ORDER NO. DCA11-GM-051 CERTIFICATE OF FILING AND SERVICE I HEREBY CERTIFY that the original of the foregoing has been filed with the undersigned Agency Clerk of the Department of Community Affairs, and that true and correct copies have been furnished to the persons listed below manner described, on this V7 4 day of March, 2011. U.S. Mail: The Honorable Bram D.E. Canter Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-3060 Julia Cole City of Tampa Attorney’s Office 315 East Kennedy Boulevard, 5" Floor Tampa, FL 33602 Mark Bentley Attorney for Intervenors 201 N. Franklin St., Suite 1650 Tampa, FL 33602-5167 Hand Delivery: Matthew Davis Assistant General Counsel Department of Community Affairs 2555 Shumard Oak Bivd. Tallahassee, Florida 32399 hala nf Paula Ford Agency Clerk Florida Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100
The Issue The issues in this case are: (1) whether various statements regarding the Florida Public Service Commission's (PSC's) financial audit procedures and practices--including statements in the PSC Audit Manual, in various Standard Operating Procedures (SOP's), in the PSC's Audit Services Request (ASR) form, and the PSC's form letter notifying utilities of an impending audit--are invalid unpromulgated rules; and (2) whether Florida Administrative Code Rule 25-30.145 is an invalid rule.
Findings Of Fact The Petitioners Aloha Utilities, Inc. (Aloha) is a privately-owned utility company providing water and wastewater services to its customers. Aloha provides potable water, wastewater treatment and disposal services to approximately 12,000 customers in Pasco County, Florida. Aloha operates two separate water systems and two separate wastewater systems. Aloha's four systems are separated geographically, and are separately treated for various regulatory purposes by the Florida Public Service Commission (PSC). Aloha is a member of the Florida Waterworks Association, Inc. (FWA). The FWA is a voluntary trade association whose members are regulated water and wastewater utility companies. The FWA is the Florida Chapter of the National Association of Water Companies. The FWA's members are privately-owned water and wastewater utility companies, like Aloha, subject to environmental and economic regulation by the Florida Public Service Commission and other state and federal governmental agencies. The overall mission of the FWA is to act on behalf of its members in regulatory matters including policies, procedures, rules or proposed rules. The FWA has been actively involved in rulemaking and rule challenges on matters involving the PSC in the past. A substantial number of the FWA's members are subject to PSC audits, including Aloha. The FWA's Board directed by unanimous vote that the FWA join Aloha in filing the petition in this case. PSC Financial Audits The Florida Public Service Commission (PSC) has jurisdiction over the rates and revenues that PSC-regulated utilities can collect from their customers. Revenues and rates charged and collected must be fair, reasonable, compensatory and not unfairly discriminatory. One important role of the PSC is to set revenues needed to operate the utility, including a fair rate of return. The PSC sets revenues in one of two situations. One is a "file-and-suspend" rate case initiated by a utility to raise its rates. The other situation can arise when the PSC initiates an earnings investigation and decides that a utility's revenues are too high. In order to assist the PSC in determining whether a utility's rates are fair, the PSC's staff performs financial audits. (Other kinds of audits are performed for other purposes, as well.) Sometimes, the PSC requests that its staff conduct an audit; sometimes, the PSC's staff decides on its own that an audit is appropriate; sometimes, the staff's decision to audit is influenced by expressions of interest by the PSC or its members. Burden Imposed on Utility by a PSC Financial Audit PSC financial audits require that utilities present financial information using the Uniform System of Accounts developed by the National Association of Regulatory Utility Commissioners (NARUC). Original documentation supporting the accounts--including canceled checks, invoices, contracts, cash receipt journals, and tax returns--also would have to be made available to the PSC's auditors. In addition to making the required financial information available to the PSC's auditors, a PSC audit often requires that the utility create schedules, calculations and reconciliations not kept in the normal course of a utility's business in order to establish that the test year is representative. A utility can incur substantial costs in responding to a financial audit by PSC staff. While not required by the PSC, it is typical for utility accountants with regulatory experience to be present at the PSC audit of their utility clients. Lawyers and engineers sometimes are also paid for services related to a PSC audit. Burden of the Aloha Audit By letter dated March 5, 1997, the PSC informed Aloha that it would "compile and audit [Aloha's] rate base, capital structure and net operating for the test year ended December 31, 1996 in accordance with Commission audit procedures." As of March 5, 1997, Aloha's 1996 financial books had not been closed, and Aloha's 1996 Annual Report had not been prepared. It is unusual for the PSC to initiate an overearnings audit before reviewing the Annual Report for the test year to be reviewed. Aloha informally requested that the audit be delayed until after the closing of Aloha's financial books for 1996 and the filing of the Aloha's 1996 Annual Report. The PSC granted the request. Since Aloha had not been audited in 19 years, the audit letter would require that Aloha present 19 years of financial information using the NARUC Uniform System of Accounts and make the original supporting documentation available to the PSC's auditors. To comply with the audit letter, Aloha also would be required to spend a substantial amount of time preparing and providing support for a great many proforma adjustments which would be necessary to attempt to make the 1996 test year representative. Aloha was involved in a complex reuse case in 1996. This reuse case was one of the first such cases filed in the State of Florida. During 1996, Aloha had more than $500,000 in interim rates in escrow which it could not use. Because of the escrowed funds, Aloha's cash flow for 1996 was very tight, and normal operating and maintenance expenses were held to a minimum. In 1996, Aloha had high capital costs related to the reuse system, and it had more than $4 million of construction work in progress, relating primarily to the reuse facility construction and to the relocation of water and wastewater lines necessitated by order of the Department of Transportation. Each of Aloha's four systems has its own rate base. Several of these systems have their own authorized rates of return. The existence of four separate systems complicates the proposed Aloha audit, and increases the cost to be incurred by Aloha for this audit. The proposed audit of Aloha would involve a minimum of two or three PSC auditors being present on site at Aloha's offices for a period of six to eight weeks or longer. The total estimated direct cost to Aloha of the proposed audit is $132,580. These estimated costs are relatively high, owing in part to the characteristics of the Aloha audit. In particular, the engineering and legal fees appear to be unusually high. Recovery of Costs of a PSC Financial Audit Utilities generally can recover the costs of an audit. If the audit results in a determination that the utility is over- earning, these costs are taken into consideration, as appropriate, when the utilities new rates are established in a separate PSC proceeding for this purpose. (The Petitioners characterize the results of such a proceeding as "indirect costs" of an audit.) If the audit results in a determination that the utility's rates are reasonable, or that the utility is under-earning, the utility can initiate a limited proceeding to recover the costs of the audit. For various reasons, a utility may choose not to initiate such a proceeding. Likewise, if the audit results in a determination that the utility is under-earning, the utility may initiate a rate case to establish higher, reasonable rates, but the utility may or may not choose to do so. PSC Audit Manual and DAFA SOP's The PSC has an Audit Manual to guide its auditors in conducting financial audits of regulated companies. The Audit Manual has been in existence since at least 1983. The August 1996 version was introduced into evidence in this case. The Audit Manual contains the "Commission audit procedures" referred to in the audit letters sent out by the PSC to inform utilities that an audit will be conducted. The audit procedures in the Audit Manual set out a format for PSC financial audit reports. They also cover audit topics, including: compliance with the NARUC Uniform System of Accounts; rate base; utility plant; accumulated depreciation expense; contributions in aid of construction (CIAC); CIAC and amortization; working capital (formula method and balance sheet method); revenue and expense; capital structure and cost; related party transactions; review of tax returns; review of proforma adjustments; review of officers' compensation. Not all of these audit topics are applicable to each audit; their applicability depends on the requirements of the audit, which vary from audit to audit. By its own terms, the Audit Manual "supplements the [Division of Auditing and Financial Analysis] DAFA Standard Operating Procedures Manual (SOP)." Staff is expected to follow them or "be prepared to justify deviations." The Petitioners did not put the DAFA SOP Manual in evidence, but the PSC did. (Respondent's Exhibit 9) Neither the Audit Manual nor the DAFA SOP Manual has been adopted as a rule by the PSC, appears in the Florida Administrative Code, or has been incorporated by reference as a rule by the PSC in the Florida Administrative Code. The PSC has not officially notified utilities that the Audit Manual and DAFA SOP Manual exist and has not notified utilities when changes have been made. It is not clear from the evidence whether utilities commonly know of their existence. The documents are not confidential, and the PSC would willingly furnish copies to any utilities that ask for them. PSC auditors are expected to reference the Audit Manual and the DAFA SOP Manual and to use them in guiding their decisions in the field. These Manuals instruct the auditors in how to conduct an audit for the PSC and how to produce an audit report in the form desired by the PSC. As such, they do not implement, interpret, or prescribe law or policy or describe the procedure or practice requirements of the PSC. Rather, they are the equivalent of a compendium of "[i]nternal management memoranda which do not affect either the private interests of any person or any plan or procedure important to the public and which have no application outside the agency issuing the memorandum." The Decision to Audit The Audit Manual specifically incorporates Chapter 1630 of the PSC Generic Standard Operating Procedure ("SOP") regarding the process for requesting the initiation of an audit. This SOP is part of the Commission's 1600 Series Standard Operating Procedures, which have not been adopted as rules. Under Generic SOP 1630, the Division of Water and Wastewater completes and sends to the Division of Auditing and Financial Analysis a form known as an Audit Service Request ("ASR"). When an ASR is issued, an audit will occur in most cases. Although not presented by the Petitioners, the PSC put in evidence its Division of Water and Wastewater SOP's relating to auditing utilities. (Respondent's Exhibit 1) SOP No. 2101, on File-and-Suspend Rate Case Procedures, would suggest that some kind of audit is done in response to all utility filings for rate increases; nonetheless, the evidence indicates that it is sometimes decided, for various reasons, that no audit is necessary. SOP No. 2102, on Overearnings Procedures, suggests that audits follow overearnings investigations and states simply that a formal investigations are initiated when overearnings are "clearly evident," while informal investigations are initiated when overearnings are not "clearly evident," but only "suspected." Again, the evidence indicates that it is sometimes decided, for various reasons, that no audit is necessary for an overearnings investigation. A review of the evidence reveals that neither the Audit Manual, the SOP's, nor the ASR address the manner in which it should be decided whether to initiate an audit. Rather, they describe the internal procedures within the PSC for initiating an audit once the decision to audit has been made. As such, they do not implement, interpret, or prescribe law or policy or describe the procedure or practice requirements of the PSC. Rather, they are the equivalent of "[i]nternal management memoranda which do not affect either the private interests of any person or any plan or procedure important to the public and which have no application outside the agency issuing the memorandum." The decision whether to initiate an audit is made on a case-by-case basis which does not lend itself to statements of general applicability. The PSC usually performs an audit in "file-and-suspend" rate cases, but not always. Likewise, the PSC usually performs an audit in earnings investigations, but not always. The decision to initiate an audit depends on the facts of the particular case and the application of professional judgment to those facts. The PSC has made no statements of general applicability on the subject; nor should it or could it do so. Usually, the decision whether to initiate an overearnings audit is made after review of a utility's annual report, but not always. In the case of Aloha, the decision to audit the 1996 test year was made before Aloha filed its 1996 annual report. The decision to audit Aloha was made for several reasons: (1) a separate, unaudited PSC reuse docket involving Aloha was pending; (2) the PSC received sworn testimony in a quality of service investigation docket that was consolidated with the reuse docket asserting that Aloha was overearning (together with conflicting testimony that Aloha was not overearning), and the PSC expressed interest in the issue; (3) the PSC's staff was aware that Aloha was involved in approximately $280,000 of related-party transactions that created numerous possibilities for Aloha to subsidize operations of the related parties; and (4) Aloha (and, in particular, its rate base) had not been audited in 19 years. The decision to audit includes the decision what to audit. As with the decision to audit, the decision what to audit depends on the facts of the particular case and the application of professional judgment to those facts. As such, this decision also must be made on a case-by-case basis, which does not lend itself to statements of general applicability. The PSC has made no statements of general applicability on the subject; nor should it or could it do so. Notice of Audit When it decides to audit a utility, the PSC sends a letter notifying the utility of the impending audit. The letters are basic form letters which are adapted to show the name of the utility and the type of audit. The PSC expects utilities to comply with requests to initiate an audit. If a utility does not comply with an audit request, it can be subject to fine or face other administrative actions. Compliance with PSC audit requests is mandatory. The form of the letter notifying utilities of an impending audit does not implement, interpret, or prescribe law or policy or describe the procedure or practice requirements of the PSC. Rather, it merely gives a utility notice of the PSC's decision to conduct an audit. Materiality Standards A review of the evidence reveals that neither the Audit Manual, the SOP nor the ASR includes any statement of general applicability that implements, interprets, or prescribes law or policy on the subject of quantitative materiality standards. The Petitioners contend that there should be rules establishing quantitative materiality standards so that the costs of unnecessary audits can be avoided. But the evidence is that, while materiality is considered in PSC financial audits, quantitative standards of materiality are not applied. The evidence is that materiality is a question of judgment determined on a case-by-case basis in the context of the particular audit being conducted. A statement of general applicability that implements, interprets, or prescribes law or policy on the subject of quantitative materiality standards would not be appropriate. After first explaining the related concepts of materiality and relevance, the Financial Accounting Standards Board states: Magnitude by itself, without regard to the nature of the item and the circumstances in which the judgment has to be made, will not generally be a sufficient basis for a materiality judgment. The Board's present position is that no general standards of materiality can be formulated to take into account all of the considerations that enter into an experienced human judgment. Quantitative materiality standards for PSC audits, as suggested by the Petitioners, would not be appropriate. It also is not clear that quantitative materiality standards would avoid the costs of an audit. It would seem that an audit of some kind would have to be conducted in order to determine the magnitude of an audit finding before it could be determined whether the finding is material, even using a quantitative standard. Audit Exit Conference Procedures The PSC Audit Manual sets out procedures for audit exit conferences that afford utilities an opportunity for input into the audit process. (Policy 2200, Audit Planning, p. 2202) However, these procedures are not promulgated as rules. Until recently, as part of the audit exit conference, utilities were given an opportunity to review and discuss preliminary draft audit findings and exceptions. In the current version of the Audit Manual, this is not permitted, and no opportunity for input is afforded until after the audit report is prepared. (Id.) The current version of the PSC Audit Manual provides that, after the audit report is prepared, the audited utility will "have a 10-15 day time period to respond with comments." (Id.) The PSC decides whether to accept the audit report after considering the utility's response. Unlike the other alleged unpromulgated rules, the audit exit conference procedures allowing for utility input into the audit process implement, interpret, or prescribe law or policy or describe the procedure or practice requirements of the PSC. As such, they affect the private interests of the utilities and are procedures important to the public. It is both feasible and practicable to promulgate the audit exit conference procedures as a rule, including the statement that the audited utility will "have a 10-15 day time period to respond with comments." Use Made of Audits It is up to the PSC to decide what to do with an audit report and the utility's response. The PSC could accept the audit report or reject it, or it could accept the audit report with modifications. Next, the PSC decides what do with the report it has accepted. If the report was generated in the context of a "file- and-suspend" rate case, the case proceeds. If the report was generated in the context of an earnings investigation, it could lead to PSC action to reduce the utility's rates; if so, the utility's due process rights will be defined in the context of that proceeding. In either case, findings will be made based on the evidence adduced in the new proceeding, not on the basis of the audit report itself. The subsequent proceeding, which would be governed by Florida Administrative Code Rules Chapter 25-22, affords the utility a full opportunity to defend against the audit findings. The defense can include presentation of a case that the test year adjustments were incorrect, or that another test year is more appropriate. It can also include presentation of a case that certain audit findings are irrelevant or immaterial. Questionable Pre-Challenge Inquiry The PSC contends that sanctions should be imposed on the Petitioners because, as the evidence makes clear, the Petitioners challenged the PSC Audit Manual as being an unpromulgated rule without ever having taken any action to obtain a copy of it and read it.
The Issue The issue in this case is whether the proposed award of contracts by the Agency for Health Care Administration (AHCA) to Caremark, Inc. (Caremark), and Lynnfield Drugs, Inc., d/b/a Hemophilia of the Sunshine State (Lynnfield), pursuant to AHCA's Request For Proposal (RFP) 0507, was contrary to AHCA's governing statutes, AHCA's rules or policies, or the solicitation specifications.
Findings Of Fact AHCA is the state agency authorized to make payments for medical assistance and related services under Title XIX of the Social Security Act (the "Medicaid" program). There are approximately 250 Medicaid-eligible individuals ("beneficiaries") in Florida who have hemophilia. Hemophilia is a bleeding disorder caused by a deficiency in one of numerous clotting proteins or "factors" that contribute to the ability of a person's blood to clot. The disease is treated by administration of the deficient clotting factor to a person. The costs for hemophilia medicines ("factor products") and treatment for this relatively small group of beneficiaries are extremely high, estimated to be $46 million in 2005. Half of these costs are paid by Florida, half by the federal government. Section 287.057, Florida Statutes (2004),2/ requires an agency to make a written determination that an Invitation to Bid is not practicable for procurement of commodities or services prior to issuance of an RFP. On August 24, 2004, AHCA made the written determination that an Invitation to Bid was not practicable for procurement of the services called for in the MCHM program. Pursuant to Subsection 120.57(3)(b), Florida Statutes, a challenge to the terms and specifications of an RFP must be filed within 72 hours of notice of the posting of the RFP. There were no challenges filed to the terms and specifications of RFP 0507. RFP 0507 contemplates a statewide hemophilia management program that combines pharmaceutical management and disease management. Section 5.0 of the RFP identifies the two fundamental requirements for vendors responding to the RFP: The vendor must demonstrate that it has the capability to design, implement, monitor and evaluate a comprehensive hemophilia management program. The vendor must demonstrate that it has the experience in designing and implementing projects similar to the one prescribed in this RFP. Under the terms of the RFP, AHCA was to contract with up to three experienced vendors for a period of two years, with an option to extend the contract for an additional two-year period. Beneficiaries of the hemophilia services will be notified and instructed to choose one of the winning vendors or, for beneficiaries who do not make a choice, AHCA will assign a winning vendor on an equal, rotational basis. The RFP provides that the successful vendors will be paid 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 of factor product costs. Originally, RFP 0507 called for the submission of a technical proposal and a separate cost proposal. The cost to the State for the services provided was not to exceed the total cost of the factor products dispensed, discounted to the Average Wholesale Price (AWP) of the factor product, minus 39 percent. Cost proposals would have been scored separately from technical proposals, and then the two scores were to be combined to determine the ranking of the competing vendors. On January 21, 2005, prior to the deadline for responses to RFP 0507, AHCA issued Addendum 5 to the RFP, which eliminated the requirement for a separate cost proposal. All vendors were required to provide the technical services for the revenue they would receive under a reimbursement methodology set forth in Addendum 5. The reimbursement methodology makes AWP, minus 39 percent one of several measures of cost, the lowest of which determines the maximum reimbursement that Florida will pay the vendor. The change to RFP 0507 brought about by Addendum 5 did not change the fundamental nature of the RFP. Both the original RFP and the revised RFP created a competition among vendors to provide the best hemophilia management services to the State for a maximum cost. Addendum 5 changed the maximum cost from AWP, minus 39 percent, for factor products to a cost determined by the reimbursement formula. Under both the original RFP 0507 and the RFP as modified by Addendum 5, vendors could propose to provide factor products at a cost to the State lower than AWP, minus 39 percent. However, greater weight or importance would have been given to a proposal to provide factor products at a lower cost under the original RFP, because it called for cost proposals to be separately presented, evaluated, and scored. Based on the maximum scores attainable for the technical and cost proposals (1000 and 500, respectively), the cost proposal would have accounted for a third of a vendor's total score under the original RFP. Under the revised RFP, cost-saving measures offered by a vendor were relevant to only a few of the technical items in the RFP, such as those related to the management and dispensing of factor products. Even in the aggregate, these evaluation criteria allowed for the award of relatively few points for cost-saving measures contained in a proposal. AHCA received eight proposals in response to RFP 0507. One proposal was rejected by AHCA because it was determined to be non-responsive. The seven remaining proposals were made a part of the case record. Although RFP 0507 stated that up to three contracts would be awarded, AHCA decided to award contracts only to Caremark and Lynnfield. In a memorandum dated May 16, 2005, AHCA explained that "the points awarded indicate the top proposals scored significantly higher than the others. A difference of 124 points between the number two and the number three ranked proposal indicates a measurable difference in quality." The Organization of HHS's Proposal Section 6.0 of the RFP sets forth "Proposal Instructions." These instructions include a requirement to submit the proposal in a three-ring binder and to number the pages of the proposal. Another requirement imposed on the form of the proposal, as opposed to its content, was that the proposal had to use four tabs with specified titles. Tab 4 was to contain each vendor's technical response to the RFP. The RFP stated, "This is the most important section of the response with respect to the organization's ability to perform under the contract." Section 6.1E of the RFP describes the various categories of information that are required to be part of the vendor's technical response. There are eight general categories: Summary; Organizational Background and Experience; Project Staffing; Technical Approach; Innovations; Implementation Plan; Systems, Security and Confidentiality; and Certification Relating to Contracts. Some of these general categories were broken down further into separately numbered items of required information. For example, under the heading "Organizational Background and Experience," there are 11 numbered paragraphs describing the information required to be included in the proposal. Some of the numbered paragraphs are further divided into information requests identified by letter, such as item 9, which is divided into 23 information requests, lettered a through w. A logical manner in which to organize a proposal would be to present the information in the same order as the information is requested in the RFP, using the same headings, numbers, and letters that are used in the RFP. All the vendors, except HHS, organized their proposals so that the technical information required by Section 6.1E of the RFP was located under a divider or page labeled "Tab 4" or "Technical Proposal," and presented in the same order as the information was requested in the RFP. HHS's proposal has a "Tab 4" with a first page that includes the title "Technical Proposal" and begins with the required "Summary." Following the summary, however, HHS skips items 1 through 8 that were set forth in the RFP under the general category "Organizational Background and Experience" and presents a response to item 9. Then, HHS skips other items set forth in the RFP and presents information about "Innovations." At the end of HHS's Tab 4 is the heading "Additional Requested Information," followed by a list of seven appendices. Some of the information required to be in HHS's technical proposal is contained in these seven appendices. HHS's proposal included a table of contents that listed 31 other appendices, with subject titles, that contained more of the information that the RFP required to be included in each vendor's technical proposal. HHS chose to organize its proposal as it did because it believed the information it placed in the appendices was responsive to several parts of the RFP, and it would "irritate" the evaluators to see the same information repeated in several places. However, HHS's proposal did not always include notations that directed the evaluators to the appendices where relevant information was located. HHS acknowledged that it could have done "a much better job" in organizing its proposal. In the case of some items of requested information, very little effort was required for the evaluators to find the information in HHS's technical proposal. For example, it was relatively easy for an evaluator looking for information related to project staffing to find it in HHS's Appendix AG, entitled "Project Staffing." In other cases, however, greater effort was needed to find the information HHS says was relevant to a particular information request in the RFP. For example, HHS did not include behind Tab 4 a direct response to item 5 under "Organizational Background and Experience," which requests a detailed description of the vendor's organizational structure and ownership, and HHS did not refer the evaluator to a particular appendix. HHS contends the requested information is provided in Appendix AL, entitled "2004 Accredo Annual Report," which contains the Form 10-K for Accredo Health, Inc., HHS's parent company. Another example is HHS's response to item 8 under "Organizational Background and Experience," which requests a plan for the use of woman- or minority-owned businesses. HHS did not respond directly to this request under Tab 4 of its proposal, and its proposal merely contains a letter in Appendix AJ, entitled "Ethnically Diverse Utilization," from a woman-owned business to Accredo Health, Inc., acknowledging an existing relationship with HHS's parent company.3/ One of AHCA's evaluators said she gave HHS a score of zero for 27 evaluation criteria because she could not find the relevant information in HHS's proposal. The record evidence does not show that any other evaluator was unable to find information presented in HHS's proposal or failed to review the proposal in its entirety and score the proposal on its substantive merits. Whether HHS's Proposal Was Non-Responsive AHCA and the Intervenors claim that HHS's proposal was non-responsive to RFP 0507 because it does not include information required by Sections 7.2I and 7.2L of the RFP. Section 7.2 is entitled "Evaluation of the Mandatory Requirements of the Technical Proposal" and states in relevant part: During this phase, the Agency will determine if the technical proposal is sufficiently responsive to the technical requirements of the RFP to permit a complete evaluation. In making this determination upon opening the technical proposal, the overseer(s) will check each technical proposal against the following list: * * * Does the proposal include a table of contents listing sections included in the proposal and the corresponding sections of the RFP to which they refer? * * * L. Does the technical proposal include a description of the vendor's corporate background and experience at the level outlined in Section 6.1E of the RFP? Section 7.3 states that only those technical proposals determined to meet the mandatory technical requirements set out in Section 7.2 will be further evaluated. Presumably, AHCA determined that HHS's technical proposal included all mandatory requirements, because the proposal was not rejected. The table of contents in HHS's proposal accurately describes the information that is presented in its proposal. However, it does not list all the headings and information items as they appear in the RFP. There are over 30 itemized information requests in Section 6.1E related to the vendor's background and experience. HHS's proposal included information about its corporate organization and experience. However, the organization of the proposal made some of the information difficult to find. Sandra Berger, the AHCA employee who has coordinated contracts and procurements for the Medicaid program, stated that AHCA's policy regarding the review of RFPs is that the evaluator is to review the entire proposal; and if information is not found where it should have been presented, the evaluator will look elsewhere in the proposal for the information. AHCA's expectation is that the evaluator will read every sentence in every paragraph of each proposal. AHCA's Consideration of HHS's Guarantees HHS contends that three cost-saving measures that it offered in its proposal were not considered at all or not fairly considered by the evaluators. HHS offered an "assay management guarantee," an emergency room visit guarantee, and an outdated product guarantee. Because clotting factors are proteins or "biologics," the manufacturers of factor products cannot create a precise potency; they can only target potency. In the same sense that ore is assayed to determine its content of gold or other mineral, factor products are assayed to determine their content of clotting factor (potency). A manufacturer of factor products will generally produce products with low range, mid-range, and high-range potencies. Even within a targeted range, there will be variances of potency between particular vials of product that are dispensed. The recommended potency for some hemophilia treatments, such as a prophylactic regimen, is less than for others, such as for break-through bleeding. Therefore, "assay management" for factor products is a fundamental component of the current treatment of hemophilia. AHCA has established 105 percent as a threshold for evaluation of assay management. That means AHCA has an expectation that the factor dispensed to a patient will generally deviate less than five percent above the factor assay or potency prescribed for the patient by the physician. The 105 percent figure is a monitoring and evaluation threshold, not an absolute maximum. The State is required to pay for factor products exceeding the 105 percent threshold if they were medically necessary. HHS offered an "assay management guarantee" to repay AHCA on a quarterly basis for the cost of factor product that exceeded 102 percent of the target dose. Based on an HHS study done with 56 patients, the guarantee would have created a cost savings of $154,000. If a similar savings rate were realized for the approximately 250 Medicaid-eligible hemophilia patients in Florida, the savings would be approximately three times greater. Caremark also offered an assay management guarantee, but structured differently. However, AHCA does not view this particular type of guarantee as necessarily beneficial. AHCA believes it could create an incentive for the provider to withhold care, not based on medical considerations, but on financial considerations. A provider might reduce factor products dispensed to the patient in order to avoid exceeding a guarantee and having to repay the State. HHS also offered an emergency room visit guarantee so that AHCA would not have to pay for unnecessary emergency room visits. HHS defined unnecessary emergency room visits as those caused by the patient not having the correct amount or type of factor or a sufficient amount or type of infusion "ancillaries." HHS offered to credit AHCA $500 for each unnecessary visit. Another cost-saving measure offered in HHS's proposal was to replace outdated product without cost to AHCA. AHCA did not dispute that these two cost-saving measures would be of benefit to the State. No evidence was presented regarding the estimated value of the benefit. Few of the evaluation criteria for RFP 0507 related directly to the cost-saving measures offered by HHS. HHS presented information about its assay management guarantee in items 9.j and l, under "Organizational Background and Experience." Information about HHS's outdated product guarantee was presented under item 9.k. Information about HHS's emergency room visit guarantee was presented under item 9.v. The maximum score that HHS could have received for these four items was 20 points, out of a total score of 1000 for all criteria.4/ The Scoring Criteria For purposes of evaluation and scoring of proposals, AHCA formed the technical requirements of the RFP into 50 separate criteria, each worth from zero to 10 points, for a maximum possible score of 1000 points. The scoring scale for the 50 criteria was 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 of the 50 criteria was set forth on a separate evaluation sheet used by the evaluators. Each evaluation sheet identified from where in the RFP the criterion came. The 50 criteria in the evaluation sheets, however, did not correspond to 50 evaluation criteria, identified as such, in the RFP. RFP 0507 rarely uses the term "criteria." Instead, the itemized information requests in the RFP are alternately referred to as "instructions" (Section 6.0), as "specifications" (Section 6.1E), and as "requirements" (Section 7.3). In seven instances, two or more itemized information requests in the RFP were combined to form one criterion on an evaluation sheet. An example is page 13 of the evaluation sheets that grouped together items 9.e, f, g, and h, under "Organization Background and Experience." Judith Saltpeter, the AHCA employee who was principally responsible for the creation of the evaluation sheets, grouped these items together because they all related to vendor assistance to "physicians, specialists and other providers." Another example is the combination of items 9.j, k, and l into one criterion for scoring on page 15 of the evaluation sheets. These three items were combined by Ms. Saltpeter because they were all related to the vendor's proposed handling of factor products. There were two instances in which a single information request in the RFP was divided into more than one criterion for scoring on the evaluation sheets. For example, the evaluation criteria on pages 25, 26, and 27 of the evaluation sheets are derived from a single paragraph of the RFP under "Project Staffing": 2. Identification of staff along with details of training and experience of those individuals who will serve as the Project/Contract Manager, Clinical Pharmacist Coordinator, and Care Management Coordinator. Resumes and relevant licensure of all identified/named staff shall be included in an appendix to the proposal. AHCA made each of the three positions named in this paragraph a separate criterion for evaluation and scoring because of the perceived importance of these positions to the quality of the vendor's performance. The 50 evaluation criteria used for RFP 0507 were almost identical to the 50 evaluation criteria used for RFP 0403, in which HHS participated. Section 7.3 of the RFP, entitled "Evaluation of Technical Proposals," states in relevant part: Only those technical proposals determined to meet the technical requirements of this RFP will be further evaluated. Evaluation of technical proposals will involve the point scoring of each proposal by component specified in the RFP. The Agency will evaluate the extent to which the services offered in the proposal and the procedures and methods for performing such services meet the requirements of the RFP. For this purpose, evaluators will judge a vendor's description and explanation of the services it will perform to meet the service requirements of each component. Included in Addendum 5 to RFP 0507 and made a part of the RFP are "Agency Responses to Bidders' Questions," which include questions asked by the vendors at the vendors conference held prior to submittal of proposals and AHCA's answers. Two questions and answers are relevant here: Question: How will scoring for the technical proposal be evaluated? Do some [technical] questions have higher weight: If so provide weighting. Answer: All technical items have equal weight. Question: What specific factors will be used for the technical proposal evaluation pursuant to Section 7.3 of the RFP? What will be the relative weight of each factor? Answer: Equal consideration will be given to all items found under Section 6, excluding 6.3 Cost Proposal Requirements and 6.4, Cost Proposal Instructions. The organization of the technical requirements of the RFP into itemized lists and AHCA's statements to the vendors that "All technical items have equal weight" and "Equal consideration will be given to all items found under Section 6," communicated to the vendors a scoring process that was not followed by AHCA. There is nothing in the RFP that informs prospective vendors of the scoring process that was actually used. The combining and dividing of the information requirements in the RFP for scoring purposes affected their relative importance, but no prospective vendor would know from reading RFP 0507 that some of the requirements of the technical proposal would be combined for scoring and other requirements would be divided for scoring. No prospective vendor would know which items in the RFP would be worth up to 10 points, which items were worth only 1/3 or 1/4 as much and which items were worth twice as much. There is no evidence that AHCA acted arbitrarily or capriciously in combining and dividing the technical requirements of the RFP to create the 50 evaluation criteria. There was a rationale behind the combinations and divisions. However, RFP 0507 did not indicate the relative importance of the criteria. Their relative importance was only determinable by reviewing the evaluation sheets, which were not made a part of the RFP. Nevertheless, HHS failed to demonstrate that this error by AHCA made any difference to the contract awards under RFP 0507. The combining and dividing of technical requirements affected all vendors equally. Adjusting the scores so that every itemized technical requirement from the RFP is given equal value would not change the rankings. For example, if an evaluator gave a score of "5" for a criterion that was created from four requirements set forth in the RFP, the score was adjusted to 20 (four times five), and this kind of adjustment was made to all scores for all affected criteria, HHS would still finish in sixth place. Even if the actual scores might have varied from the adjustment just described, there is no evidence to explain how the variance could be more than de minimus or could change HHS's ranking. A related issue concerns item 3 under "Project Staffing" and item 20 under "Technical Approach," also related to staffing, that did not become evaluation criteria for scoring purposes. HHS claims that AHCA's decision to not make these items evaluation criteria was prejudicial to HHS because its proposal regarding project staffing was superior to what was offered by the other vendors. However, if these two items had become two evaluation criteria, they would have been worth a maximum of only 20 points. Even assuming that HHS had been given the highest points by all four technical evaluators for these two items, HHS's ranking would not have changed. Scoring by the Evaluators The four AHCA employees who evaluated the technical proposals were Linda Barnes, a registered pharmacist (Scorer "A"); Maresa Thomas, a registered nurse (Scorer "B"); Bruce McCall, who holds a doctorate in pharmacy (Scorer "C"); and Nancy Knox, a registered nurse (Scorer "D"). Kay Newman, a certified public accountant, reviewed only the financial information provided by the vendors. The evaluators were each provided a copy of the seven proposals, the original RFP, Addendums 5 and 11 to the RFP, an evaluation packet, and a conflict of interest form. The technical evaluators were given an instruction sheet and verbal instructions for evaluating the technical proposals. The instruction sheet distributed to the evaluators provided that the evaluators "should" justify their scores in the "comments" section of the score sheets. Some of the evaluators made comments, others did not. Each evaluator worked independently. The evaluators did not confer with each other or with anyone else during their evaluation of the proposals. The evaluators conducted their evaluations over a period of three weeks. Because each evaluator worked independently, the scores on each proposal differed. It can be expected, and was true in this case, that some evaluators will generally assign lower scores than other evaluators; some evaluators will tend to assign higher scores. There was no evidence that any evaluator for RFP 0507 was inconsistent in the application of his or her scoring approach to all proposals. In addition to the points awarded by the technical evaluators for the 50 criteria, each proposal also received "Financial Audit" points (between one and ten) from Kay Newman. Ms. Newman scored the seven proposals as follows: Caremark 9 Lynnfield 9 AmeriHealth 0 OptionCare 8 Maxim 8 HHS 9 PDI Pharmacy 4 Points were also assigned to the vendors based on telephone "reference reviews" conducted by AHCA employees Hope Chukes and Patricia Morena. Two references were selected for each vendor from the references listed in the proposals. The reviewers used a form with questions related to whether the vendor had fulfilled its obligations under previous contracts. In most cases, three points were given to the vendor when the reference reported that the vendor had performed the particular obligation; otherwise, a score of zero was given. The maximum score that could be obtained for the reference review was 19 points. Some questions on the reference review form were not relevant to the previous contract between the vendor and the reference organization. In those instances, Ms. Chukes was directed to give vendors a score of "3" for the question, rather than penalize the vendors with a score of zero. Because the reference reviews indicated that all vendors had performed their obligations under previous contracts, AHCA gave all vendors the maximum total score of 19. Following the conclusion of the technical evaluations, Ms. Chukes tallied the scores from the four technical evaluators, the financial audit scores from Ms. Newman, and the reference review scores. The resulting total scores and ranking of proposals were as follows: 1 Caremark 1437.2 2 Lynnfield 1384.9 3 AmeriHealth 1207.83 4 OptionCare 1107 5 Maxim 964.3 6 HHS 889.3 7 PDI Pharmacy 774.55 There are some fractional scores, because Ms. Thomas (and only Ms. Thomas) scored multi-part criteria by initially assigning a score to each subpart, using the zero-to-ten scale, and then averaging the result. Although this scoring approach would have caused a variance, in some cases, from the score that Ms. Thomas would have assigned if she had simply scored the criterion as a whole, the variance would have been de minimus. It would not have changed HHS's ranking. For reasons not explained in the record, AHCA manipulated the raw scores by averaging them, assigning the highest ranked vendor a score of 1000, and dividing the average scores of the other vendors by 1000. These manipulations did not change the ranking that resulted from the total raw scores as indicated above. None of the evaluators ranked HHS higher than fourth. One evaluator ranked HHS fourth, one ranked HHS fifth, and two ranked HHS seventh (last). Scoring by Ms. Thomas Ms. Thomas assigned HHS's proposal a zero for 27 of the 50 evaluation criteria. In her notes on the evaluation sheets and in her testimony at the hearing, Ms. Thomas explained that she gave HHS zeroes because she could not find HHS' responses for these criteria, and she assumed they had been omitted. For example, because she did not see information under Tab 4 of HHS's proposal numbered 1 through 7 to correspond to paragraphs 1 through 7 of the RFP, she assumed that the information had been omitted from HHS's proposal. Ms. Thomas did not always look through HHS's entire proposal to determine whether the information she expected to see in Tab 4 was located in an appendix or elsewhere. When she did not find information where she expected it, she often made a notation "nothing presented" on the evaluation sheet and assigned a zero for the criterion. There was no evidence that any other evaluator did the same. The other three evaluators apparently looked through HHS's entire proposal, found the relevant information, and assigned points for each criterion based on their review of the information. As stated above, AHCA's policy regarding the review of a proposal is that the evaluator is to review the entire proposal and, if information is not found where it should have been presented, the evaluator will look elsewhere in the proposal for the information. AHCA's expectation is that the evaluator will read every sentence in every paragraph of each proposal. There is no evidence that Ms. Thomas was biased either for or against any particular vendor. However, it was the duty of the evaluators to read each proposal in its entirety. Nothing in the RFP instructions authorized the evaluators to ignore information in a proposal if it were in the "wrong" place. In most cases, the information Ms. Thomas claims she could not find required little effort to find and was found by the other three evaluators. Ms. Thomas' failure to consider all the information presented in HHS's proposal when assigning scores under the 50 evaluation criteria was contrary to agency policy. Her assignment of a zero to HHS in 27 categories was arbitrary. However, HHS failed to demonstrate that, but for the arbitrary scoring by Ms. Thomas, HHS would have been awarded a contract under RFP 0507. If all of Ms. Thomas's scores are deleted, HHS still ranks sixth. If all of the zeroes that Ms. Thomas gave HHS were converted to tens, HHS would only move up to fourth place and would still not win a contract under RFP 0507. HHS complained of other aspects of the evaluation process used for RFP 0507, such as the separate financial audit performed by Ms. Newman and the reference review. However, HHS failed to prove that if all these alleged errors by AHCA were eliminated, HHS would have been a winner under RFP 0507.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Heath Care Administration enter a final order awarding contracts under RFP 0507 to Caremark, Inc., and Lynnfield Drugs, Inc. DONE AND ENTERED this 2nd day of December, 2005, in Tallahassee, Leon County, Florida. S BRAM D. E. CANTER 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 2nd day of December, 2005.
The Issue Whether the Respondent committed the violations stated in the Amended Administrative Complaint filed September 30, 2009, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Florida Real Estate Appraisal Board ("Board") is the entity responsible for licensing, regulating, and imposing discipline upon real estate appraisers operating in Florida. See §§ 475.613(2) and .624, Fla. Stat. (2007). The Department is the state agency responsible for investigating complaints and, upon a finding of probable cause by the Board, issuing administrative complaints and prosecuting disciplinary actions involving real estate appraisers in Florida. See § 455.225(1)(a), (4), and (6), Fla. Stat. At all times pertinent to these proceedings, Mr. Facendo was a state-certified real estate appraiser, having been issued license number RD-2598, and his business office was located in Plantation, Florida. In August 2007, Mr. Facendo's office received a request from University Capital Funding, a mortgage broker, for an appraisal on property known as 901 Southwest Worchester Lane, Port St. Lucie, Florida 34953 ("Worchester Lane property"). After receiving the request, Mr. Facendo consulted the Multiple Listing Service with respect to the Worchester Lane property and the neighborhood. Mr. Facendo then went to the Worchester Lane property, measured the property, inspected the interior and exterior of the property, and looked at the homes that were comparable to the Worchester Lane property. Mr. Facendo returned to his office and analyzed the data he had collected during the site visit. He used print sources and online services available in his office to verify the flood zones, neighborhood composition, land sales, and other information necessary to complete the appraisal. Mr. Facendo prepared the Appraisal Report for the Worchester Lane property and provided it to University Capital Funding. Mr. Facendo also compiled a workfile containing documentation he used to develop the Appraisal Report. The Appraisal Report contained three errors:2 Mr. Facendo included the incorrect zoning classification for the Worchester Lane property, identifying it as RM-143, residential multi-family, rather than the correct RS-2, residential; he identified the wrong location for the Worchester Lane property on the map included with the Appraisal Report,3 and he failed to include the lot number in the legal description of the property. Mr. Facendo stated in the Appraisal Report that the property was not in a FEMA (Federal Emergency Management Association) special flood hazard area, and he referenced FEMA Map # 12111C0290F, dated August 19, 1991. He did not include a copy of the map in the workfile he compiled when preparing the Appraisal Report. Mr. Facendo included in the Appraisal Report information regarding neighborhood characteristics, one-unit housing trends, one-unit housing, and present land use percentage. He indicated that the neighborhood was over 75 percent built-up and stable; that one-unit housing trends showed that the supply and demand for housing in the neighborhood were in balance, with marketing conditions partially stable to declining, and time exposure typically between three-to-six months; that the one-unit housing prices ranged from a low of $188,000.00 for new housing to a high of $450,000.00 for housing six years old, with a median of $305,000.00 for housing three years old; and that the present land use consisted of 80 percent one-unit housing and 20 percent commercial. Mr. Facendo did not include in his workfile documentation to support this information. Mr. Facendo concluded that the value of the Worchester Lane property was $305,000.00 when calculated under the Sales Comparison Approach method. In the Appraisal Report, Mr. Facendo identified 88 comparable properties currently for sale in the neighborhood, ranging in price from $175,000.00 to $360,000.00, and 72 comparable sales in the neighborhood within the previous 12 months, ranging in price from $188,000.00 to $450,000.00. Mr. Facendo did not include in his workfile documentation to support the number of properties currently for sale or the number of properties sold within the past 12 months. Mr. Facendo concluded that the value of the Worchester Lane property was $296,990.00 when calculated under the Cost Approach to Value method. Mr. Facendo placed a value of $60,000.00 on the property's home site. He calculated the square footage replacement cost new using the cost estimator in his online copy of the Marshall & Swift Residential Cost Handbook and noted in the Appraisal Report that this was the source of his cost data. Mr. Facendo also noted as a comment on the cost approach that he used the Marshall & Swift Residential Cost Handbook "& local builders [estimates]" as the sources of the cost figures he used to estimate the value of the Worchester Lane property using the cost approach. Finally, Mr. Facendo also consulted the South Florida 2007 Blue Book Construction and the 2007 National Building Cost Manual for cost data, but he did not mention these sources in the Appraisal Report. Mr. Facendo did not include in the workfile he compiled for the Appraisal Report documentation to support his opinion of site value, copies of the Marshall & Swift online calculations of the replacement cost new, copies of the local and national builder's data he used in his calculations, or copies of the Marshall & Swift data to support the square footage prices he used to calculate the value of the Worchester Lane property. Mr. Facendo signed the Appraisal Report on August 22, 2007, and noted on the Appraisal Report that it was effective August 22, 2007. In October 2007, JP Morgan Chase Bank, N.A.,4 ordered a review of Mr. Facendo's August 22, 2007, Appraisal Report of the Worchester Lane property. The review appraiser, John Nickerson, prepared a One-Unit Residential Appraisal Field Review Report ("Review Appraisal"), which he signed and dated October 8, 2007. In the review report, Mr. Nickerson opined that there were a number of errors in Mr. Facendo's Appraisal Report, including the zoning classification, the legal description, and the location of the property. Mr. Nickerson also criticized the comparable properties used by Mr. Facendo in the Sales Comparison section of the Appraisal Report and the site value assigned by Mr. Facendo in the Cost Approach section of the Appraisal Report. At some point, Mr. Facendo was advised by Chase Home Lending of the results of Mr. Nickerson's Review Appraisal, and he was provided with a copy of the report.5 In a letter to Chase Home Lending dated August 25, 2008, Mr. Facendo responded to the concerns raised by Mr. Nickerson in the Review Appraisal about Mr. Facendo's Appraisal Report. Mr. Facendo explained the basis for his choice of comparable properties and for the value he placed on the building site, and he discussed his reasons for believing that the conclusions regarding comparable properties and site valuation reached by Mr. Nickerson were flawed. As directed by an employee of Chase Home Lending, Mr. Facendo modified his August 22, 2007, Appraisal Report to include the correct zoning classification of RS-2, residential. Mr. Facendo was expressly directed by the employee of Chase Home Lending not to change anything on the face of the original Appraisal Report except for the zoning classification. Mr. Facendo followed this direction, and he did not revisit the Worchester Lane property or change any other information in the original Appraisal Report. The corrected Appraisal Report was, therefore, not a new appraisal report based on new information gathered in August 2008 regarding the Worchester Lane property. The corrected Appraisal Report was not effective in August 2008, and did not supersede the original Appraisal Report of August 22, 2007, except for the zoning classification correction.6 Mr. Facendo submitted the corrected Appraisal Report on the Worchester Lane property to Chase Home Lending on or about August 25, 2008, but he did not alter the original signature date or effective date of August 22, 2007. Mr. Facendo did not, however, include a copy of the original Appraisal Report in the workfile that he transmitted to the Department during the course of its investigation; the workfile contained a copy of only the corrected Appraisal Report. In signing the Appraisal Report, Mr. Facendo certified and agreed that he had complied with the USPAP that were effective when the report was prepared in August 2007. The Ethics Rule of the USPAP (2006) provides in pertinent part as follows: Record Keeping An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must include: the name of the client and the identity, by name or type, or any other intended users; true copies of any written reports, documented on any type of media; summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser's signed and dated certification; and all other data, information, and documentation necessary to support the appraiser's opinions and conclusions and to show compliance with this Rule and all other applicable Standards, or references to the location(s) of such other documentation. USPAP (2006) Standards Rule 1-1(c) provides: In developing a real property appraisal, an appraiser must: * * * (c) not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. USPAP (2006) Standards Rule 1-4(a) and (b) provides: In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results. When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. When a cost approach is necessary for credible assignment results, an appraiser must: develop an opinion of site value by an appropriate appraisal method or technique; analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and analyze such comparable data as are available to estimate the difference between the cost new and the present worth of the improvements (accrued depreciation). USPAP (2006) Standards Rule 2-1(a) provides: Each written or oral real property appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading[.] USPAP (2006) Standards Rule 2-2(b)(viii) provides: Each written real property appraisal report must be prepared under one of the following three options and prominently state which option is used: Self-Contained Appraisal Report. Summary Appraisal Report, or Restricted Use Appraisal Report.[footnote omitted.] * * * The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: * * * (viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order dismissing all counts of the Amended Administrative Complaint dated September 30, 2009. DONE AND ENTERED this 4th day of March, 2010, in Tallahassee, Leon County, Florida. PATRICIA M. HART 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 4th day of March, 2010.
