The Issue This case concerns a challenge to the validity of Rules 13A-1.001(12), 13A- 1.002(1)(b) and 13A-1.002(3) , Florida Administrative Code, pursuant to Section 120.56, Florida Statutes.
Findings Of Fact In the fall of 1988, the State of Florida, Department of Transportation (DOT) put out a Request for Proposals (RFP) as RFP-DOT-88-0l. Through this RFP the agency sought to acquire a new barrier and ticket toll collection system which would automate the toll collection operations and retrieval of audit data, having in mind increased reliability and performance. The project is principally one which envisions the purchase of commodities. It has an associated service component. Section 287.062(1)(e), Florida Statutes together with Section 287.073(3), Florida Statutes, established the basic authority for the award of RFP-DOT-88-01. The agency received responses in March, 1989, from three companies. The offerors were Petitioner and Intervenor and one other concern. The other company was AGS Informations, Inc. (AGS). Following evaluation DOT determined on May 18, 1989 to reject the Intervenor's proposal as nonresponsive. This rejection was followed by the Intervenor's notice of protest on Nay 25, 1989. A formal written protest was made on June 6, 1989. On July 31, 1989, Intervenor filed a notice of voluntarily dismissal of the formal written protest. This was addressed by the DOT final order of August 2, 1989 which dismissed the formal written protest. On November 21, 1989, DOT posted its intent to award a contract to Petitioner. This statement of intent to award was met by a notice of protest filed by Intervenor on November 27, 1989, followed by a formal written protest on December 6, 1989. The case was sent to the Division of Administrative Hearings for consideration and through response to a motion to dismiss the Hearing Officer in that case, DOAH Case NO. 89-6926B1D, entered a recommended order of dismissal. On January 22, 1990 DOT entered a final order dismissing Intervenor's petition and stating its intent to award the contract to Petitioner. An amendment to the January 22, 1990 order was made on February 21, 1990 reminding all concerned that the contract award was subject to review and approval by the Governor and Cabinet sitting as the State of Florida, Department of General Services to decide the propriety of the subject purchase which was an information technology resources purchase under Section 287.073, Florida Statutes. On February 21, 1990, DOT sent notice to the three offerors that it was rejecting all proposals submitted. As described in the notice of agency decision, DOT was operating on the basis that a further review of the proposals revealed that the proposals by AGS and Intervenor were nonresponsive. It went on to say that to have competitive offerors there must be two or more offers submitted by responsive and qualified offerors. In this instance DOT felt that it did not have two acceptable proposals and did not have a competitive offer. Because the commodities sought were available from more than one source, it had decided to withdraw its notice of intent to award which was contingent upon the approval of the Governor and Cabinet. On February 27, 1990, Petitioner gave a notice of protest of the DOT decision to reject all bids. This was followed by a formal written protest on March 9, 1990. Although the decision to reject all proposals was not opposed by Intervenor, the motion by the Intervenor to intervene in DOAH Case No. 90- 1583BID was granted allowing limited participation in support of the DOT decision to reject all proposals. That outcome tended to create the opportunity for Intervenor to participate in any re-advertisement for proposals. As revealed in the final hearing in DOAH Case No. 90-1583BID, DOT utilizes Chapter 13A, Florida Administrative Code, in the procurement process. Intervenor participated in the final hearing in DOAH Case NO. 90- 1583BID. The DOT decision to reject all proposals in which reliance upon the rules under challenge are perceived to support that decision has an adverse impact on Petitioner. By that arrangement Petitioner loses the opportunity for the contract. Additionally, it is placed in a disadvantaged position in that the particulars of its method of responding to the RFP have been revealed and are now known to the competitors who might be expected to utilize that information in a setting where a re-advertisement takes place. Under the circumstances, Petitioner filed its challenge to the existing rule on March 28, 1990. Intervenor sought the opportunity to intervene in this case on April 4, 1990, and that opportunity was granted on April 6, 1990. Intervenor intends to participate in any re-advertisements of the RFP. In his testimony at hearing William Monroe, Director of the Division of Purchasing for Respondent, established that in governmental purchasing the terms "offers" and "proposals" are synonymous. This opinion is accepted. Mr. Monroe also established that Respondent believed that it was implementing Section 287.012(15), Florida Statutes, when promulgating Rule 13A- 1.001(12), Florida Administrative Code. Through the promulgation of Rules 13A- 1.002(1)(b), and 13A-1.002(3), Florida Administrative Code, Respondent believed that it was implementing Section 287.062, Florida Statutes. Respondent interprets Section 287.062, Florida Statutes, to require an agency making a commodity purchase to use competitive sealed proposals in instances where invitations to bid are not used. Mr. Monroe in speaking for Respondent indicated that this interpretation gained support from the language set out in Section 287.001, Florida Statutes. According to Mr. Monroe the circumstance in which less than two responsive and qualified offerors respond to an RFP is one in which the procuring agency must reject all proposals or seek the approval from Respondent to negotiate with the one responsive offeror or where no responsive offerors were received to negotiate with someone whom the agency has chosen. Likewise, a sole source purchase negotiation must be approved by Respondent. Mr. Monroe's testimony, in speaking for Respondent, indicates that Respondent interprets the terminology within Section 287.062(2), Florida Statutes, "no competitive" to modify the words "bids" and "proposals." Thus, it is incumbent upon an agency to receive authority to negotiate in those instances where it receives less than two proposals submitted by responsive and qualified offerors who are responding to a RFP in acquiring commodities.
Findings Of Fact On March 1, 1984, Respondent gave notice to qualified contractors that it would receive sealed bids for State Project No. 72000-3541, referred to as Federal-Aid Project No. M 9041(10). This project involves the installation of a computerized traffic control system for the City of Jacksonville. In response to the opportunity to bid, the Department of Transportation received four bids. Petitioner, Winko-Matic Signal Company, was among the bidders. The other bidders were Georgia Electric Company, Traffic Control Devices, Inc., and Sperry Systems Management. The bids of Traffic Control Devices and Sperry Systems were rejected based upon an error in bid tabulations on the part of Traffic Control, a mistake on the quantities page, with the Sperry rejection being based upon a bid bond problem. Traffic Control had been the apparent low bidder with a bid of $1,964,115. Winko-Matic was the second apparent low bidder with a bid of $2,279,604.70. The Department of Transportation had estimated that the total cost of the Jacksonville project would be $ 2,024,680.61. Having discarded the bid of Traffic Control Devices, the Department of Transportation telegrammed Winko-Matic on April 4, 1984, advising Winko-Matic that it was the apparent low bidder for the Jacksonville project. Subsequently, the awards committee of the Department of Transportation met on April 18, 1984, and determined to reject all bids and re-advertise the job. In the course of this meeting the awards committee was told that there were erratic bids received on contract items, pointing to some perceived confusion among the contractors as to requirements of the contract. Discussion was also held on the possibility of establishing a pre-bid conference if the project was re advertised. The awards committee then voted to reject the bids on the basis that the apparent low bidder, Winko-Matic, had submitted a bid which-was 12.6 percent over the Department's estimate, instead of being within 7 percent of the Department of Transportation's pre-bid estimate, a point above which the Department of Transportation in its non-rule policy would call to question to the acceptability of the apparent low bid. In addition to deciding to reject all bids and re-advertise, it was determined that a pre-bid conference should be scheduled at least 30 days prior to the bid-letting date. Winko-Matic was advised that the Department of Transportation's decision to reject all bids by correspondence of May 4, 1984, in which it was indicated that all bids had been rejected based upon the fact that they were too high. In response to this notice of rejection, Winko-Matic, effective May 17, 1984, filed a written notice of protest. The case was subsequently referred to the Division of Administrative Hearings on June 20, 1984, and a final hearing date was established by Notice of Hearing of July 5, 1984. The hearing date in this cause was September 12, 1984. The Jacksonville project in question requires the utilization of what has been referred to "UTCS Enhanced" software. This software package is unique and has only been used in a limited number of locations within the country. Those locations are Los Angeles, California; San Diego, California; Broward County, Florida; and Birmingham, Alabama. Another unique feature within the project design is the use of an associated coaxial computer sys gem. Given the unique nature of this project and the fact that the Department of Transportation had never advertised for bids related to UTCS software, Department of Transportation obtained assistance from a consulting firm, Harland, Bartholomew & Associates. In fulfilling its function Harland gave estimates to include an estimate related to the projected cost of the software, Item 681-102. The Harland estimate for the overall project was $2,143,130 including a $100,000 estimate for the software system. That estimate relating to the software was subsequently adjusted by the Department of Transportation to depict a cost of $13,780. The Department of Transportation estimate was based upon information within its computer related to a system unlike the enhanced software contemplated by the plans and specifications. In other words, the stored information in the Department of Transportation computer was not the same as contemplated by the plans and specifications in the Jacksonville project. Moreover, the initial estimate of Harland was based upon the idea of an extended software system, as opposed to an enhanced software system. Winko-Matic had bid $389,500 for the software in Item 681-102. That estimate was premised upon figures obtained from JHK and Associates, the group which Winko-Matic intended to use as its subcontractor for the enhanced software portion of the project. JHK developed the software and was responsible for systems integration of the Los Angeles, California, project, one of the locations in which UTCS enhanced software has been utilized. JHK premised its estimate for the software hare upon experience in Los Angeles and an evaluation of the tasks to be performed related to the enhanced software. This included general software development activities, hardware innovation, installation costs during the period of acceptance and testing, and the preparation of data base. The JHK bid price was $339,500. Another $50,000 was added to that price related to what the Petitioner describes as its management costs for that item. By June 20, 1984, when a further meeting was held by the awards committee on the subject of the Jacksonville project, it was concluded that the estimate made by the Department of Transportation of $13,780 was not correct, on the topic of the enhanced software. A more reasonable estimate, according to the information imparted in this session, would be $200,000 for enhanced software as called for in this project, with a $100,000 amount being a reasonable estimate had they chosen to use extended software. Adjusting the initial price related to the UTCS enhanced software to reflect a corrected estimate of the Department of Transportation in its original advertised bid, that estimate becomes $2,210,900.61 and its consultant Harland's estimate becomes $2,243,130. With this adjustment, the differential in the estimate made by the Department of Transportation and the Petitioner approaches 3 percent and not the 12.6 percent originally found. The 3 percent is below the threshold of 7 percent used as the policy for determining whether a bid might be rejected as being far beyond the acceptable limits set forth in the Department of Transportation's estimate. In the aforementioned June 20, 1984, awards committee meeting, the Department of Transportation continued to hold the opinion that all bids in the Jacksonville project should be rejected and the matter re-advertised. Although the problem pertaining to the estimate of the cost of the enhanced software package had been addressed, the committee continued to feel that the prices received in the bid letting were erratic Reference was also made to revisions or modifications to the project plan which would be offered if the matter were re- advertised. It was also pointed out that the Federal Highway Administration would concur in the Department's decision to reject all bids and would accept modifications. The awards committee again voted to reject the bids. The matter was again considered by the awards committee on August 31, 1984. On that occasion, it was pointed out that the revisions contemplated by the Department of Transportation, should the matter be re-advertised, would not affect in a substantial way the cost estimate for the project with the exception of Item 680-101, the system control equipment (CPU), which would promote a lower price for the project. The committee determined in the August, 1984, meeting to reject all bids and re-advertise. While the initial notice of rejection of May 4, 1984, had suggested the basis for rejection as being the fact that Petitioner's bid far exceeded the 7 percent allowance for price above the Department of Transportation's estimate of costs, the meetings of the awards committee and the suggestion of the Respondent in the course of the final hearing in this case indicated that there were other reasons for the decision to reject. Those Were: (a) an apparent lack of clarity among bidders regarding specifications for the Jacksonville job, (b) the desire of the Respondent to revise specifications on the Jacksonville project; and (c) a lack of sufficient competition in the bids. In connection with the first of the additional reasons Respondent suggests that variations within the bid responses related to particular line items within the specifications point out a lack of clarity in the project's specifications or confusion by bidders related to those specifications. Respondent did not bring forth any of the bidders who might speak to the matter of possible confusion or misunderstanding concerning some of the bid items. By contrast, the Petitioner's president; the president of JHK & Associates and James Robinson, Harland's project manager for the Jacksonville job, did not find the specifications in the original documents to be confusing. In addition, the testimony of those individuals established the fact that bid variations related to particular line items are not extraordinary and do not establish any apparent confusion by the bidders as to the requirements of those line items. In effect, what the differentials demonstrate are variations related to the manufacture or in-house capabilities of the bidders and an effort to allocate discretionary costs in various places as to line items. Moreover, they might indicate last- minute adjustments in the bid quote prior to the opening and a possible effort by a contractor to enter into a new job market. Finally, they demonstrate offsetting which is the allocation of item prices by a contractor to maximize profits. To do this, a contractor submits high bids on items representing quantities which the contractor feels will increase after the contract is awarded and submits low bids on items representing quantities which are not likely to change. In summary, while the Department of Transportation in its presentation expressed some concern about the variations in the pricing in the bid quotations offered by the respective bidders in this project, its suspicions on the question of the possible clarity of its specifications were not confirmed and are not convincing. On the topic of revisions which the Department of Transportation would offer if the matter were re-advertised, with one exception those matters appear to be items that could be attended through change orders or supplemental agreements. They are not matters which necessarily must be addressed through a rejection of all bids and a re-advertising of the project. The lone exception to this is the possibility that the Department of Transportation may not be able to protect its proprietary rights in the enhanced software which is being developed for the project, under the terms of the present bid documents. Given that uncertainty, the Respondent would wish to re-advertise the project and make certain that its proprietary interests are protected. Finally, Respondent has alluded to the fact that the Jacksonville project should be re-advertised in view of the lack of competition in the initial letting. Only four bidders expressed an interest in this project at the time of the first letting. Of those, two bidders were found to be responsive. While this is a low number of bidders, there does not appear to be any agency practice on the part of' the Department of Transportation to the effect that this number of bidders would not be accepted. Moreover, no indication has been given that should the matter be re-advertised a greater number of bidders would express an interest than was the case in the first letting. Consequently, this reason for bid rejection is not acceptable. If Respondent did not reject the bids and re-advertise the project, Winko-Matic would be the successful bidder in the Jacksonville project.
Findings Of Fact Findings stipulated to by the parties On March 27, 1990, the school district issued an Invitation For Bids, Bid NO. 91-037V for Security Guard Services - Term Contract. Special Condition 5 of the bid specifications states as follows: Bidders shall submit evidence with this bid of the following: The bidder is presently engaged in security services; and The bidder has an established record of satisfactory performance over the past three (3) years and shall furnish names of five (5) organizations for whom the bidder has provided security services during this period. Failure to provide this information with the bid shall result in disqualification of bid submitted. (emphasis furnished) The school district received timely bids upon Bid NO. 91-037V from eight bidders, including the Petitioner, Security Services, Inc. Bids were open on April 19, 1990, at 2:00 p.m. Six of the eight bidders upon Bid NO. 91-037V submitted with their bids the five (5) references required by Special Condition 5 of the Invitation To Bid. The Petitioner, Security Services, Inc., failed to submit the required five (5) references along with its bid. Security Services, Inc.'s, bid of $6.25 per hour constituted the lowest hourly rate contained in any of the bid submittals. Universal Security Consultants' bid submittal contained a proposal to render guard services at the rate of $6.88 per hour and constituted the second lowest hourly rate contained in any of the bid submittals. In addition, Universal's bid submittal met all other requirements of the bid specifications and included the five (5) references required by Special Condition 5. Prior to issuing a recommendation upon the bid item, the staff of the school district contacted the five references submitted by Universal Security Consultants with its bid, and each reference indicated that Universal had satisfactorily provided security guard services. After reviewing and evaluating the bid submittals, the staff of the School Board recommended the rejection of Security Services, Inc.'s bid for its failure to meet the requirements of Special Condition 5 of the Invitation To Bid. It was further recommended that a contract be awarded to Universal Security Consultants under Bid NO. 91-037V. The recommendations and bid tabulations were posted on April 26, 1990, at 3:00 p.m. On April 27, 1990, the Petitioner, Security Services, Inc., submitted a document entitled "Letter Of Protest -- Bid NO. 91-037V" to the school district. Within the document, Security Services, Inc., notified the school district of its protest of recommendations that were posted on April 26, 1990. The document states that "[w]hile preparing this year's bid package, I [the owner of Petitioner] overlooked the section pertaining to requirement of having to list references." The document requests the school district to reconsider the bid of Security Services, Inc., and lists the following organizations as references: The School Board of Broward County, Florida; WSCV - Ch. 51; The Lauderhill Mall; Telemundo Productions, Inc.; and Midway Club Apartments. The Petitioner, Security Services, Inc., had previously been awarded contracts by the school district to provide security guard services. The first contract was dated February 4, 1988. A second contract was awarded to Petitioner on March 1, 1989, and the Petitioner was providing security guard services to the school district under the second contract at the time of the bid proceedings pertaining to Bid NO. 91-037V. The first contract awarded to the Petitioner by the school district arose from Security Services, Inc.'s, bid submission to a certain bid numbered 88-518D. The bid specifications for Bid NO. 88-518B did not require bidders to submit references, and none were provided at that time by Security Services, Inc. The second contract awarded to the Petitioner by the school district arose from Security Services, Inc.'s, bid submission to a certain bid numbered 89-368V. The bid specifications for Bid NO. 89-368V contained a requirement to submit references identical to the requirement contained in the bid specifications for Bid NO. 91-037V. Security Services, Inc., did submit five references along with its bid proposal to Bid NO. 89-368V. The five references listed in the Petitioner's bid submittal to Bid NO. 89-368V were as follows: Broward County School Board; WSCV-Ch. 51; Lauderhill Mall; Lauderdale Yacht Basin; and Woodhue Condominium Association. On May 1, 1990, the school district received a formal written Notice Of Protest [dated April 30, 1990] from Security Services, Inc. Within the formal written protest, the Petitioner requested that it be awarded the contract for security guard services on the basis of the Petitioner's work being satisfactory and the lowest bid. The protest asserted that Security Services, Inc., had de facto complied with the requirements of Special Condition 5 as Petitioner had provided this information to the school district in previous years and that such information was on file at the school board. The Petitioner further asserted that the failure to submit the five (5) references was an irregularity that could be waived by the school district or that was correctable after opening of the bids. The formal written notice of protest filed by Security Services, Inc., states as follows: There was an unintended omission from the Security Services, Inc., Invitation to Bid in that through inadvertence, Security Services, Inc., failed to provide a list of five (5) organizations for whom the bidder has provided security services as required by Paragraph 5B of the Special Conditions. On May 15, 1990, the School Board considered the protest filed by Security Services, Inc., and rejected the same. The Petitioner subsequently requested further proceedings in accordance with Chapter 120, Florida Statutes, and these proceedings commenced. b. Additional facts established at hearing: The School Board requires the inclusion within its bids of the names of five (5) organizations for whom the bidder has provided security services over the past three (3) years in order to be able to evaluate the present ability of the bidder to perform under a contract awarded under the bid item. The information as to references is evaluated and investigated by the school district as to the apparent low bidder prior to the posting of recommendations for the award of the bid item. Security Services, Inc., has satisfactorily performed the two security guard contracts it has previously been awarded by the School Board, and there have been no complaints about the performance of Security Services, Inc., under those two contracts. At the time the bids in this case were opened, the School Board already knew that Security Services, Inc., could perform satisfactorily because it had been doing so for the School Board for two years. Over the term of the contract, the difference in cost between the low bid submitted by Security Services, Inc., and the second low bid submitted by Universal Security Consultants, will amount to approximately $50,000.00.
Recommendation For the foregoing reasons, it is RECOMMENDED that the School Board of Broward County enter a Final Order in this case concluding that the irregularities in the bid submitted by Security Services, Inc., are minor irregularities, that those irregularities are waived, and that Bid NO. 91-037V should be awarded to Security Services, Inc. DONE and ENTERED this 24th of July, 1990, in Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day 24th day of July, 1990.
The Issue Whether Respondent has reason to reject the bids submitted by Petitioner to provide landscape maintenance services at two schools (item number 3 and item number 43 of the Invitation To Bid numbered SB 96C-56Z) based on Petitioner's performance of similar contracts in prior years.
Findings Of Fact On June 15, 1995, Respondent issued its Invitation To Bid number SB 96C-56Z (ITB) for landscape maintenance services to be rendered at various schools in the Palm Beach County district school system. Item 3 of the ITB was for landscape maintenance services at Bears Lake Middle School and item number 43 was for landscape maintenance services at Santaluces High School. The contracts for the various schools are awarded for a term of one year through the bid process, with the contract for the subject ITB to be for a term beginning July 21, 1995, and ending July 20, 1996. Similar ITBs for similar services have been issued by Respondent for each prior year that is pertinent to this proceeding. After the bids were opened, it appeared that Petitioner was the low bidder for items 3 and 43. Respondent rejected the bids of Petitioner for these two items and asserted, based on Petitioner's prior performance of similar contracts, that it would not be in the best interest of the School District to award items 3 and 43 to Petitioner. Petitioner thereafter timely protested the bid process for items 3 and 43, the matter was referred to the Division of Administrative Hearings, and this proceeding followed. The award of contracts by the Respondent for items 3 and 43 has been halted pending resolution of this proceeding. Petitioner has been in the landscape business for approximately ten years. For a number of years, Petitioner has been awarded contracts following an invitation to bid similar to the one at issue in this proceeding. The number of schools awarded to Petitioner has varied from "a few" to 22 in one year. Petitioner was awarded contracts for several schools for the 1994 contract term that the instant bid process is to replace. Petitioner was unable to perform the work at all the schools that it was awarded and surrendered its rights to some of those schools. Petitioner retained its contract for several other schools. The work Petitioner performed on the schools it retained was not acceptable to the Respondent. The record is replete with notices to the Petitioner stating its work was not acceptable and describing the noted deficiencies. Several of these letters threaten to terminate contracts that had been awarded to the Petitioner. Petitioner asserts that its problems with the Respondent are the product of unreasonable inspections of its work by Joe Lawson and Tom Williams, who were hired after Petitioner started working on schools. Petitioner has filed complaints against with the Respondent against Mr. Lawson and Mr. Williams on two separate occasions which purport to document the Petitioner's mistreatment by these two employees. Petitioner's assertions pertaining to these two inspectors are not based on persuasive, competent evidence and are, consequently, rejected. Petitioner also argues that it has received no more notices of complaints than other providers when the number of schools are considered. This is contrary to the more believable testimony, which established that Petitioner received more complaints. Lee Ziomek is a buyer employed by Respondent who has extensive experience in public procurement. Steve Zwirz is a landscape site technician whose duties include technical writing, supervising contracts, and supervising personnel. Joe Lawson is Mr. Zwirz's supervisor. Following the opening of bids, Mr. Ziomek, Mr. Zwirz, and Mr. Lawson met to review Petitioner's past performance. As a result of this meeting, it was decided to recommend that Petitioner had not performed its past contracts in an acceptable manner and that it was not in the best interest of the School District to award these two contracts to the Petitioner. The numerous notices of deficiencies that had been documented by Respondent provided a reasonable basis to conclude that awarding these bids to the Petitioner was not in the best interests of the School District. The first page of the ITB form used by Respondent contains the following: AWARDS: In the best interest of the School Board, the Board reserves the right to reject any and all bids . . .
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order that sustains the rejection of Petitioner's bids as to items 3 and 43 of ITB SB 96C-56Z and dismisses Petitioner's bid protest. Respondent's evaluation committee should resume the award process for items 3 and 43 of ITB SB 96C-56Z. DONE AND ENTERED this 23rd day of October, 1995, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 23rd day of October, 1995. COPIES FURNISHED: J. Steven Reynolds, Esquire 2628 Forest Hill Boulevard West Palm Beach, Florida 33406 Robert A. Rosillo, Esquire Palm Beach County School Board 3318 Forest Hill Boulevard West Palm Beach, Florida 33406-5813 Dr. C. Monica Uhlhorn, Superintendent Palm Beach County School District 3318 Forest Hill Boulevard West Palm Beach, Florida 33406-5813 Cynthia S. Prettyman, General Counsel Palm Beach County School District 3318 Forest Hill Boulevard West Palm Beach, Florida 33406-5813
The Issue The issue for consideration herein is whether the Respondent's proposed award on BID No. HSMV - 90022010 to Dunn Construction Company, Inc., should be upheld.
Findings Of Fact At all times pertinent to the issues herein, the Department was the state agency responsible for the solicitation of bids for and award of contracts for the construction of state buildings in Florida. Both Greenhut and Dunn are qualified contractors who are certified to bid on state construction contracts in general and this procurement in particular. In December, 1991, the Department issued an advertisement for bids for the project in issue herein, the construction of the Kirkman Complex Addition Data Center in Tallahassee, Florida. According to the Advertisement for Bids, all bids "must be submitted in full accordance with the requirements of the Drawings, Specifications, Bidding Conditions and Contractual Conditions, which may be examined and obtained ..." from the Department's designated architect/engineer, Clemons, Rutherford and Associates, Inc. in Tallahassee. Section B-21 of the request for proposals (invitation to bid) reads, in pertinent part: The recommendation for contract award will be for the bidder qualified in accordance with Section B-2 and submitting the lowest bid provided his bid is responsible and it is in the best interest of the Owner to accept it. The Owner reserves the right to waive any informality in bids received when such waiver is in the interest of the owner. Bids received on this project were originally scheduled to be opened and read aloud on January 15, 1992 with the tabulation and Bid Award Recommendation to be posted the following days at the location where the bids were opened. The proposal as originally issued called for the submittal of a Base Bid with four Alternates, 1a, 1b, 2, and 3. Alternate 1a was a deduct for merely extending the existing Johnson Controls System to incorporate the new work instead of providing a totally new and independent control system. Alternate 1b called for adding furniture and landscaping for certain of the rooms shown on the drawings; Alternate 2 called for adding a "shelled" fourth floor as described in the proposal; and Alternate 3, as originally issued, called for: Add a complete fourth floor as indicated in drawings including the finished interior partitions with full HVAC, Plumbing and Electrical Service. Include furniture and landscaping for rooms 414 and 419. (Includes items in Alternate No. 2) As a result of questions received from prospective bidders at the pre-bid conference which indicated some confusion as to the meaning and intent of the Department regarding Alternate No. 3, by letter to all prospective bidders, dated January 8, 1992 the Department's architect indicated: Alternate #3 shall be the fourth floor complete, as shown on drawings, which includes items in Alternate #2. Addendum #1 to the request for bids, dated January 10, 1992, clarified Item 1-3.6), PROPOSAL FORM, of the PROJECT MANUAL to ADD to "Alternate #3", "(Include items in Alternate #2)". Item #2-1 of Addendum #2, dated January 16, 1992, deleted the sentence changed by Item #1- 3.6, and revised the sentence to read as follows: This includes any items required in addition to Alternate #2 to complete the remainder of the work for the Fourth Floor. Information contained at the beginning of each Addendum calls the bidders' attention to the change and indicates that failure to incorporate it may result in disqualification. The due date for bids was extended at the instance of the Department. Both Petitioner and Intervenor submitted bids for this project as did several other concerns on January 23, 1992. Greenhut's base bid was $4,139,000 with a deduct of $63,600 for Alternate 1a, and additions for Alternates 1b, 2, and 3 of $69,500, $239,000, and $209,000 respectively. Greenhut's total bid, therefore, through Alternate 3, was $4,592,900. Dunn's base bid was $4,079,000 with a zero deduct for Alternate 1a, and additions for Alternates 1b through 3 of $67,000, and $428,000. Dunn's total bid, therefore, was $4,574,000 for a difference of $18,900. Greenhut's bid was submitted on a form which provided for the base bid, the deduct for 1a, and the additions for 1b. 2 and 3 with the figure for 3 being those costs in addition to those identified in Dunn's bid was submitted on a prior form which provided for a base bid, a 1a deduction if any, (there was none), and additions for 1b, 2, and 3 with the figure for 3 including the figure listed for 2. An initial review of Dunn's bid form, then, showed a base bid of $4,079,000, no 1a deduction, a 1b addition of $67,000, a 2 addition of $311,000, and a 3 addition of $428,000. This letter figure included the $311,000 figure for Alternate 2, which should have been deducted from the bid during tabulation. When the bids were opened on January 23, 1992 by Mr. Everline, each figure on each bid was read off and listed on the bid tabulation form in the appropriate area. No attention was given at that time to the appropriateness or correctness of the figures listed on each bid form, nor was any attention paid to any other technical requirement of the procurement. This was merely a transfer of figures from the bid form to the tabulation form, and when this was done, Mr. Everline announced to all in attendance, including many contractor representatives, that the "apparent low bidder" was Greenhut. In arriving at that conclusion, Mr. Everline added all of Dunn's figures together without deducting the $311,000 listed for Alternate 2, a figure which was included in the $428,000 figure listed for Alternate 3. This resulted in an incorrectly large total bid for Dunn. Sometime later that day, a representative of Dunn contacted Mr. Everline to indicate that Dunn had inadvertently bid on the wrong form which precipitated its misleading presentation. Mr. Everline properly declined to discuss the matter and referred the Dunn representative to the Department's legal counsel. Sometime thereafter, when the bids had been tabulated and reviewed for responsiveness and legal qualification of bidders, Mr. Everline suggested to representatives of DHSMV that in order to forestall a protest, only so much of the project as extended through Alternate 2 be awarded. DHSMV officials, however, had sufficient funds available for the entire project, including some additional funds, if necessary, for cabling, and insisted they wanted the entire project awarded. The Department's legal counsel, upon review of the situation, concluded that the Dunn's actual bid intent was clear to include the amount listed for Alternate 2 within that listed for Alternate 3, and not to consider the two as additives to each other. It further concluded that Dunn's use of the improper form on which to submit its bid was immaterial and afforded it no improper competitive edge over other bidders. Therefore, it was concluded that Dunn was the low responsive bidder and, on February 4, 1992, the Department issued a Notice of Award to Dunn. Thereafter, Greenhut filed its Petition For Hearing taken as a protest to the award. Both the Department and Dunn agreed that Greenhut had standing to protest the award and that the protest was timely filed. It is so found.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Department of General Services enter a Final Order in this case dismissing the protest of Greenhut Construction Company, Inc., in regard to the proposed award of contact in bid number HSMV - 90022010 to Dunn Construction Company, Inc. RECOMMENDED in Tallahassee, Florida this 21st day of April, 1992. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of April, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-1297 BID The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of fact submitted by the parties to this case. FOR THE PETITIONER: 1. - 6. Accepted and incorporated herein. 7. - 9. Accepted. Accepted. & 12. Accepted and incorporated herein. Accepted. Accepted. & 16. Accepted and incorporated herein. Accepted and incorporated herein. & 19. Accepted and incorporated herein. Accepted. & 22. Accepted and incorporated herein. Argument and not Finding of Fact except for 1st sentence which is accepted. & 25. Accepted and incorporated herein. FOR THE RESPONDENT: 1. - 3. Accepted. 4. - 6. Accepted and incorporated herein. 7. & 8. Accepted. 9. - 12. Accepted and incorporated herein. Accepted. Accepted and incorporated herein. Accepted and incorporated herein. & 17. Accepted and incorporated herein. Irrelevant but accepted as true. Accepted. Accepted and incorporated herein. Accepted. Accepted. Irrelevant but accepted as true. Accepted. Accepted and incorporated herein. Irrelevant. Accepted and incorporated herein. Accepted. FOR THE INTERVENOR: Accepted. - 5. Accepted and incorporated herein. Accepted and incorporated herein. & 8. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. - 15. Accepted. 16. - 19. Accepted. 20. & 21. Accepted. Accepted and incorporated herein. & 24. Accepted. COPIES FURNISHED: Robert A. Emmanuel, Esquire 30 South Spring Street Post Office Drawer 1271 Pensacola, Florida 32596 Sylvan Strickland, Esquire Suite 309, Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 Harry R. Detwiler, Jr., Esquire 315 S. Calhoun Street, Suite 600 Tallahassee, Florida 32301 Ronald W. Thomas Executive Director Department of General Services Suite 307, Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 Susan Kirkland General Counsel Department of General Services Suite 309, knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue Whether Respondent acted fraudulently, arbitrarily, illegally, or dishonestly in determining that Intervenor's bid was responsive.
Findings Of Fact On March 16, 1994, the Respondent issued an invitation to bid (ITB) for security guard services. The desired services were described in detail by the bid documents. Bids from eleven bidders, including a bid from Petitioner and a bid from Intervenor, were opened on April 13, 1994. After the bids were evaluated, the Respondent determined that Intervenor's and Petitioner's bids were responsive. Intervenor was determined to be the lowest bidder and Petitioner was determined to be the second lowest bidder. Respondent thereafter notified all bidders that it intended to award the bid to Intervenor. Pertinent to this proceeding, the bid document contained the following general condition: AWARDS; In the best interest of the School Board, the Board reserves the right to reject any and all bids and to waive any irregularity in bids received . . . [Emphasis has been added.] Pertinent to this proceeding, the bid document contained the following special conditions: G. OCCUPATIONAL LICENSE: Each bidder, by submitting a bid, certifies that they possess a Class B license issued by the State of Florida as well as town and county occupational license. ALL BIDDERS MUST SUBMIT PROOF OF THE ABOVE REFERENCED LICENSE WITH THEIR BID (PHOTOCOPY) IF IT IS TO BE CONSIDERED FOR AWARD. * * * J. QUALIFICATIONS: The bidder will have maintained continual work experience in security guard services for a period of three years prior to the bid date. Bidder must submit written documentation with bid or within three days upon request, substantiating experience requirement. The bidder will have a place for contact by the owner during normal working days. [Emphasis in the original.] Petitioner timely protested the intended award of the bid to Intervenor on the ground that the Intervenor did not have an occupational license issued by Palm Beach County at the time of its response as required by Special Condition G. Intervenor submitted with its bid a copy of its Class B license issued by the State of Florida, Division of Licensing, and a copy of its occupational licenses issued by Broward County. Because Intervenor did not have any business in Palm Beach County at the time it submitted its bid, it did not have an occupational license issued by Palm Beach County. Respondent determined that Special Condition G. was met when Intervenor submitted a copy of its Class B license. Respondent has the discretion to waive as a minor irregularity the fact that Intervenor did not have a Palm Beach County occupational license at the time it submitted its bid. There was evidence that Respondent waived similar irregularities in the occupational licenses of other bidders, including an irregularity pertaining to the Petitioner. There was no evidence that the Respondent acted fraudulently, arbitrarily, illegally, or dishonestly in determining that Special Condition G. had been met. Intervenor was not afforded an unfair advantage in the bid process by this determination. Petitioner also timely protested the intended award of the bid to Intervenor on the ground that the Intervenor had not been incorporated for three years at the time of the bid and that it did not meet the experience condition contained in Special Condition J. The Intervenor was incorporated August 27, 1992. At the time of the bid, the Intervenor had been a viable business for more than two years but less than three years. Mr. Inyang, the president of the corporation, submitted documentation that established that his qualifications and experience exceeded the requirements of Special Condition J. Respondent acted within its discretion in determining that the experience of the president of the corporation satisfied the requirement that the bidder "... have maintained continual work experience in security guard services for a period of three years prior to the bid date" as required by Special Condition J. There was no evidence that the Respondent acted fraudulently, arbitrarily, illegally, or dishonestly in making this determination as to Intervenor's experience. Intervenor was not afforded an unfair advantage in the bid process by this determination.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent dismiss Petitioner's bid protest. DONE AND ENTERED this 18th day of July, 1994, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 18th day of July, 1994. COPIES FURNISHED: Donald H. Neff, President Southern Star Event Services, Inc. 316 Flamingo Road West Palm Beach, Florida 33401 Robert A. Rosillo, Esquire Palm Beach County School Board 3318 Forest Hill Boulevard West Palm Beach, Florida 33406-5813 Robert E. Inyang, President Michael Graziano, Investigator Supreme Intelligence Agency, Inc. 4700 North State Road 7, Suite 120 Lauderdale Lakes, Florida 33319 Dr. C. Monica Ulhorn, Superintendent Palm Beach County School Board 3340 Forest Hill Boulevard West Palm Beach, Florida 33406-5869
The Issue Whether the Department of General Services should award state contracts for "walk-up convenience copiers" to Xerox Corporation in categories where Xerox was the only responsive bidder, or should reject Xerox's bid and solicit new bids on grounds that competitive bids were not received and there is no basis or excepting the award from competitive bid requirements; Whether the Department should disqualify Xerox's bid in one category for alleged material deviation from bid specifications where Xerox failed to initial a change in its bid price.
Recommendation Based on the foregoing, it is RECOMMENDED: That DGS reject Xerox's single responsive bids and readvertise; and That Xerox's bid for category Group-I, Type 3, Class 12, monthly rental acquisition plan, be rejected as nonconforming. DONE and ENTERED this 11th day of July, 1984, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 11th day of July, 1984.
The Issue The dispute in this case arises from various policy decisions of Respondent that underlie and inform a request for proposals that Respondent has issued for the purchase, through competitive bidding, of durable medical equipment and related services. The ultimate issue is whether Respondent’s decisions in connection with the competitive bidding process at the heart of this controversy have complied with state and federal law governing the Medicaid program.
Findings Of Fact Setting the Stage Medicaid is a cooperative federal-state program in which Florida has voluntarily elected to participate in partnership with the national government. Medicaid provides medically necessary health care——including, relevantly, durable medical equipment (“DME”)——to lower income persons. In addition to shouldering administrative and regulatory responsibilities, Florida partially funds the Medicaid program, contributing about 42 percent of the money budgeted for the program’s operation in this state. Federal funds make up the balance. In Special Appropriation 252 of the General Appropriations Act of 2001, the Florida Legislature appropriated an amount for Medicaid compensable home health services, such as DME, that reflected a budget cut of approximately $1.3 million. By way of explanation, the legislature wrote: Funds in Specific Appropriation 252 reflect [an overall] reduction of [about $1.3 million] as a result of implementing a policy to pay for specific durable medical equipment products on a competitively bid basis, effective October 1, 2001. Ch. 2001-253, Section 3, Laws of Florida. As a cost containment measure, competitive bidding for publicly funded healthcare is a subject that academics and policy makers have been studying and debating for some years. Proponents view competitive bidding as a means of bringing market forces to bear on possibly inflated, predetermined fees, exposing providers’ true costs and producing lower prices as competition trims the fat. Critics fear that competitive bidding will result in a diminution of the quality of available healthcare because the relatively few providers who win contracts will thereafter have little or no incentive to innovate or otherwise exceed minimum contractual requirements—— and, indeed, will be rewarded for cutting costs to the bone. To decide the instant case does not, however, require a finding or conclusion that competitive bidding is either a good policy choice or a bad one under the circumstances. Without reaching that issue, it is determined that, once made, the broad policy decision to use competitive bidding as a means of purchasing healthcare for Medicaid recipients entails the considerable challenge of devising a detailed competitive bidding model that balances the interest of cost containment, on one side, against competing interests such as the continued availability of quality care, on the other. At bottom, because the course of performance under the resulting contracts can be expected to exert a regulatory effect on providers and recipients alike, competitive procurement in this particular environment demands that significant policy choices be made. One substantial impact that competitive bidding can have on recipients——which impact happens to be pertinent here—— is the abridgement of their freedom to choose a provider. Federal law requires, as a general principle, that Medicaid recipients be granted the freedom to obtain medical assistance from any authorized provider. This general rule yields under certain circumstances, as will be discussed in detail in the Conclusions of Law below, but the fact is that federal Medicaid policy expresses a preference for allowing recipients the freedom of choice. Consonant with that preference, this state’s policy prior to the present dispute was to allow each Medicaid recipient to obtain DME from any willing, Medicaid-enrolled provider. (To serve the Medicaid population, a DME provider must “enroll” in the program by agreeing to comply with the prescribed terms and conditions of coverage and to accept payment from Medicaid at predetermined rates set forth in fee schedules.) The Players The Agency is the state agency charged with administering the Medicaid program in Florida. At the federal level, the Centers for Medicare and Medicaid Services (“CMS”) of the U.S. Department of Health and Human Services is the agency authorized to administer Medicaid. The Agency administers Medicaid in Florida pursuant to a State Medicaid Plan (the “State Plan”). In whole or in part, the State Plan is incorporated by reference, and thereby adopted as rules, in the Florida Administrative Code. FAMES is a trade association whose members are providers of DME and related services. FAMES represents its members’ interests before state and federal administrative and legislative bodies. Policy Decisions The Agency construed the explanatory language of Specific Appropriation 252 as a binding legislative directive to initiate a competitive bidding process for the procurement of DME and related services. In response to this perceived mandate, the Agency prepared a Request for Proposals——identified as RFP – AHCA 0203 (the “RFP”)——which, according to its terms, “establishes the requirements for the durable medical equipment and medical supplies program.” In choosing which particular items to put out for bids1——a function that necessarily required important underlying policy decisions to be made——the Agency considered fungibility to be a weighty criterion; however, the Agency was strongly motivated, as well, to select things that were thought to offer the greatest potential for cost savings.2 Consequently, while the RFP states that the “procurement [hereunder] is limited to hospital beds, and respiratory equipment and supplies,” the procurement is not quite as limited as this description might suggest. For in addition to goods the Agency is also seeking to purchase services, as the RFP itself discloses: “The purpose of this document is to request proposals from qualified organizations to provide quality, selected Medicaid services to Medicaid recipients.” (Emphasis added). The most significant of these services are those provided by respiratory therapists. As licensed health care practitioners, respiratory therapists are an integral part of the delivery of respiratory equipment, particularly the ventilators which are covered by the RFP. When a ventilator is placed in a patient’s home, a respiratory therapist must periodically visit the patient to monitor the patient’s oxygen levels and adjust the equipment as needed. In this, the respiratory therapist makes clinical assessments and exercises independent judgment. There is no doubt that, through the provision of such services, a professional relationship is established between the therapist and the patient. Obviously, respiratory therapists are not fungible in the way that, for example, hospital beds might be. Another set of important decisions that shaped the design of this competitive procurement concerned the number of contracts to be let and their nature and scope. In this regard, the Agency decided to award a single prime contract for each of the areas served by the Agency’s 11 regional offices. It determined that the same contractor may be selected for more than one regional area. And it announced that, once selected, the prime contractor——and only the prime contractor——will be responsible for serving all of the Medicaid eligible recipients in the specified region; all other providers will be precluded from delivering the same DME goods and services in that area. The upshot of these decisions is that 11 DME providers, at most, will hold prime contracts. Even after accounting for subcontracting, which is allowed, it is clear that the number of eligible providers of the subject DME——which is around 1,500 under the prevailing “any willing and authorized provider” policy——will be dramatically reduced. Like the decisions that led to the selection of the specific items covered by the RFP, the decisions that will, if fully implemented, overhaul the existing delivery system for the specified DME are matters of policy committed to the Agency’s discretion. While FAMES has raised legitimate concerns about the wisdom and efficacy of these decisions, establishing that reasonable people could disagree with the Agency’s solutions, the evidence does not show that the Agency abused its discretion or acted arbitrarily or capriciously in formulating the RFP. That said, it cannot seriously be disputed——and is hereby found——that if the Agency completes the competitive process contemplated by the RFP, the outcome will substantially affect, and indeed will regulate, both providers and Medicaid patients.3 It is clear, in other words, that there are substantive Medicaid policies embedded in, and articulated through, the RFP. The Agency has not yet amended the State Plan or any Medicaid handbook to account for the changes in Florida Medicaid policy being effected through the competitive bidding process established in the RFP. An Important Negative Decision As mentioned, federal law requires as a general rule that Medicaid recipients be guaranteed the right to choose their own providers. Without getting into the legal details at this point, federal law further provides that, under certain circumstances, a state may be granted a waiver of, or fall within an exception to, this freedom of choice requirement. At the time it was devising the competitive bidding model reflected in the RFP, the Agency believed that it could proceed with the subject procurement in the absence of any formal approval from the federal government, notwithstanding the fact that the project will, if implemented, curtail recipients’ freedom of choice. This belief was based on a single telephone conversation between Florida Medicaid Director Robert Sharpe and an unnamed employee of CMS, which had taken place prior to the 2001 legislative session. The federal official apparently had told Mr. Sharpe that a state does not need to obtain from CMS a waiver of the freedom of choice requirement in order to purchase DME on a competitive-bids basis because DME providers are vendors whose relationships with recipients are not “personal.” This opinion was never reduced to writing. Because the only evidence of the substance of the aforementioned telephone conversation is Mr. Sharpe’s testimony, it is impossible to make a finding of fact as to whether the preceding paragraph contains an accurate and complete statement of CMS’s policy; there is, simply, no admissible nonhearsay evidence in the record to support such a finding. Although the undersigned accepts Mr. Sharpe’s testimony and finds that such a discussion occurred, this fact has little or no probative value because the Agency must comply with federal law, not the informal advice of an employee of CMS. In any event, it is undisputed that the Agency decided not to ask CMS to approve either a waiver of, or an exception to, the freedom of choice requirement. Consequently, neither the Secretary of the U.S. Department of Health and Human Services nor CMS has made a finding that adequate services or devices will be available to Medicaid recipients under the competitive bidding process that the Agency has initiated through the RFP. Though negative in nature, the Agency’s decision not to seek and obtain federal approval, in the form of a waiver or exception, was as important as other, positive decisions regarding the purchase of DME through competitive bidding. As will be seen, federal law requires a waiver or an approved exception in these circumstances. The Agency does not have the discretion to circumvent the federal requirements. The Notices The Agency caused the first notice of the RFP to be published in the February 22, 2002, edition of the Florida Administrative Weekly. This notice described the contract, advised that the RFP would be issued on February 28, 2002, provided instructions for obtaining a copy of the RFP, and established March 7, 2002, as both the deadline for responses and the proposal opening date. A second notice, similar to the first one, was published in the March 8, 2002, Florida Administrative Weekly. It changed the response deadline/opening date from March 7 to March 11, 2002. A third notice, published in the March 22, 2002, Florida Administrative Weekly, changed the deadline for proposal submission yet again, from March 7 to April 5, 2002. (Although this third notice did not mention the proposal opening date, presumably it, too, was changed to April 5, 2002.) The Agency did not directly notify DME providers or FAMES about the RFP. Factual Determinations Regarding FAMES’s Standing Members of FAMES are providers of DME goods and services, including those that are the subject of the RFP. DME providers, such as FAMES’s members, are not necessarily Medicaid providers, however. If a DME provider wants to participate in Medicaid and supply goods to Medicaid recipients, it must become enrolled in the Medicaid program. It is not possible to make a finding, based on the evidence in this case, as to how many (or what percentage) of FAMES’s members are enrolled Medicaid providers of DME. The Agency’s decision to award contracts, through competition, for Medicaid reimbursable DME poses an immediate threat of harm only to existing Medicaid providers, not to all DME providers. DME providers who are not presently participating in the Medicaid program might be interested in the outcome of this proceeding, but the resulting final agency action will not immediately affect their substantial interests one way or the other.4 As a result, FAMES’s standing must be predicated on its representation of members who are enrolled Medicaid providers of DME. FAMES’s vice president, Robert Lichtenstein, testified that at least 25 to 50 of FAMES’s 300 or so members provide DME to Medicaid recipients. Mr. Lichtenstein’s understanding of this asserted fact was based not on personal knowledge, he explained, but on conversations with members who had contacted him to discuss the RFP. Because Mr. Lichtenstein had not spoken with all of FAMES’s members, he was unable to state, with any degree of certainty, the total number of Medicaid-enrolled DME providers that belong to FAMES. Mr. Lichtenstein’s testimony about the minimum number of enrolled providers in FAMES’s ranks rested on statements of declarants (the members) made outside the hearing room, which statements were apparently offered as proof of the matters asserted. Mr. Lichtenstein’s testimony that no fewer than 25 to 50 of FAMES’s members are enrolled Medicaid providers was based, in other words, on hearsay and cannot, for that reason, support a finding of fact on its own.5 On the other hand, Mr. Lichtenstein’s testimony that he personally had talked to some 25 to 50 members about what was happening with the RFP is not hearsay to the extent that fact is relevant without reference to the truth of the matters discussed. Thus, this testimony is admissible, and has been credited, for the relevant, nonhearsay purpose of establishing that at least 25 to 50 of FAMES’s members were sufficiently interested in the RFP to share their views about it with Mr. Lichtenstein.6 The testimony of Mr. Lichtenstein, which was not contradicted or impeached, establishes, at least inferentially, that FAMES represents a number of members who, as enrolled Medicaid providers of DME, have a substantial interest in being reimbursed under state and federal law pursuant to rule-based methodologies.7 The proposed switch to a methodology of reimbursement based on competitive bidding, which methodology allegedly fails to comply with these criteria, impinges upon this interest. While more and better evidence regarding the number of affected members should have been adduced, the fact that a noticeable percentage (roughly 8 to 16 percent) of FAMES’s members happened to speak with Mr. Lichtenstein about the Agency’s competitive bidding process shows a level of interest within the organization from which it reasonably can be inferred, and is hereby found, that the Agency’s decision to competitively award at most 11 exclusive contracts for certain DME goods and services would directly impact a considerable number of FAMES’s members. The Agency’s proposed procurement scheme promises to affect these members in two substantial ways. First, under the competitive bidding process, all of FAMES’s members who are Medicaid providers of DME must compete for the Agency’s favor, whereas before they competed for the business of individual recipients. Because, moreover, the Agency plans to select no more than 11 providers, most (if not all) of FAMES’s members who presently serve the relevant market stand to lose existing business and hence suffer economic loss. The injuries threatened here are not, however, solely economic. The other substantial effect on the Medicaid providers is the violation of their right to be reimbursed in accordance with state and federal law pursuant to methodologies prescribed in lawful rules. To the extent, as FAMES contends, that the Agency is not following either federal law or duly promulgated rules, such unlawful conduct affects FAMES’s members in a way that differs from the effect of such conduct on the public at large. In short, the substantial interests of a substantial number of FAMES’s members would be determined by the proposed agency action at issue. Further, there is no real dispute, and it is hereby found, that the substance of the Agency’s decision to award exclusive contracts for DME goods and services on a competitive- bids basis is within FAMES’s general scope of interest and activity. Finally, the relief requested is appropriate for FAMES to receive on behalf of its members because if the Agency’s decision is rescinded and the proposed competitive procurement abandoned or substantially modified, it is reasonable to suppose that the ultimate remedy will inure to the benefit of FAMES’s injured members.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a Final Order that stops the procurement under the RFP until after (1) the Agency has submitted the certification required under 42 C.F.R. § 431.51(d) and CMS has notified the Agency that all of the requirements for an exception under 42 C.F.R. § 431.54(d) have been met or, alternatively, (2) CMS has granted the Agency a waiver of the freedom of choice requirement in connection with this procurement. It is further RECOMMENDED that the Agency update its DME Handbook to reflect or accommodate any new competitive reimbursement methodologies that might be put into effect, and to adopt such amendments as a rule, as soon as feasible and practicable, to avoid violating Section 120.54(1)(a), Florida Statutes. DONE AND ENTERED this 18th day of October, 2002, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 18th day of October, 2002.
The Issue Whether the Department of Juvenile Justice's (Respondent) decision to reject all bids is illegal, arbitrary, dishonest or fraudulent and should be rejected.
Findings Of Fact Petitioners Robert and Sara Cook own a building located at 205 Gus Hipp Boulevard, Rockledge, Florida. The address for Petitioners Robert and Sara Cook is 1950 Murrell Road, Rockledge, Florida. Petitioner Alan Taylor is an agent for Petitioners Robert and Sara Cook, and assisted the Cooks in the preparation and submittal of their Response to the Department's Request for Proposals for Lease Number: 800:0176-COCOA. Respondent, Florida Department of Juvenile Justice, is the state agency that issued the Request for Proposals for Lease Number: 800:0176-COCOA. Intervenor, 11 Riverside Corp., is the bidder to whom the Respondent issued an award letter for the Lease prior to the Respondent's decision to reject all bids. On or about January 12, 1998, the Respondent advertised Request for Proposals ("RFP") for Lease No. 800:0176-COCOA. This was the second RFP issued by the Respondent for the Cocoa Lease. The Respondent did not receive any bids in response to the first RFP. Draft versions of both RFPs were prepared by Respondent's staff. There were only very "minor changes" in the contents of the first and second RFPs, such as revisions to the issuing and advertising dates. The Respondent received proposals from three entities: Robert and Sara Cook, 11 Riverside Corp., and James E. and Jacie Stivers. All three proposals were timely submitted. Respondent's General Services Manager, Fran Lyles, reviewed the three proposals and completed a responsiveness checklist for each proposal. When Ms. Lyles provided the three responsiveness checklists to Ms. Sandy Veal, the checklists for the proposals submitted by the Cooks and 11 Riverside Corp. did not contain any notations that said proposals were non- responsive. Ms. Lyles also informed Ms. Veal that the proposals submitted by the Cooks and 11 Riverside Corp. were responsive. On or about February 19, 1998, Sandy Veal traveled to Cocoa to perform site visits for the two responsive properties. On February 23, 1998, the Respondent issued a written letter of intent to award the Cocoa Lease to 11 Riverside Corp. The letter was prepared by Ms. Veal and signed by Ms. Lyles. The Petitioners timely filed a written Notice of Protest with the Respondent on March 2, 1998, in which the Petitioners challenged the Respondent's February 23, 1988, decision to award the Cocoa Lease to 11 Riverside Corp. In subsequent correspondent and telephone calls to the Respondent, Petitioners' agent provided a detailed analysis regarding the basis for the Petitioners' Notice of Protest. The primary basis was that the other two proposals were not responsive, and that, as the remaining responsive bidder, the Respondent should award the Lease to the Petitioners. Prior to the deadline for the filing of the Petitioners' Formal Written Bid Protest of the Respondent's February 23, 1988, decision to award the Cocoa Lease to 11 Riverside Corp., the Respondent informed the Petitioners that the Respondent had decided to reject all three proposals that the Respondent had received for the Cocoa Lease. On March 12, 1998, the Respondent provided written notification to the Petitioners that the Respondent had rejected all proposals and would "re issue [sic] at a later date." This date coincided with the deadline for the Petitioners to file their Formal Petition in support of their Notice of Protest pursuant to Florida law. On March 17, 1998, the Petitioners timely filed a second written Notice of Protest with the Respondent, in which the Petitioners challenged the Respondent's March 12 decision. No entity other than the Petitioners timely filed a Notice of Intent to Protest. The Respondent's contention that General Services Manager, Fran Lyles, did not review the RFP prior to its issuance is not credible. Ms. Lyles' testimony that she informed Ms. Veal that all three proposals were not responsive prior to Ms. Veal's trip to Cocoa for a site visit is also not credible. Ms. Lyles signed the award letter to 11 Riverside Corp., even though she had allegedly informed Ms. Veal that all three proposals were non-responsive. Ms. Lyles' explanation that she was very busy and simply didn't ask how an award could be made to a bidder that she had determined was non-responsive is also not credible. Ms. Lyles altered the responsiveness determination checklists after the Petitioners filed their Notice of Protest of the Respondent's award to 11 Riverside Corp. Words were added and white-out was used to cover up Ms. Lyles' initial responsiveness determination which was made prior to the filing of the Petitioner's first Notice of Intent. It appears that such alterations were made by Ms. Lyles in an attempt to shift the responsibility for errors made in the bidding process. The sole basis for the Respondent's contention that the proposals submitted by the Petitioners is non-responsive is that the site plan allegedly failed to show parking spaces. The evidence established that the site plan adequately showed the parking spaces, and that the proposal submitted by the Petitioners was responsive. The Respondent erroneously determined that the proposal submitted by the Petitioners was non-responsive. The proposal submitted by 11 Riverside Corp. failed to include the public entity crime statement as required by the Respondent's RFP, and also failed to include proof of zoning. The floor plan included in the proposals submitted by 11 Riverside Corp. failed to include the calculations as required by the Respondent's RFP. The proposal submitted by 11 Riverside Corp. also failed to include the documentation necessary to establish bidder control of the property as required by the Respondent's RFP. Any one of the aforementioned flaws in the proposal submitted by 11 Riverside Corp. rendered the proposal non- responsive. The building included in the proposal submitted by James E. and Jacie Stivers failed to provide the square footage calculations and failed to provide a scaled floor plan with square footage calculations, as required by the Respondent's RFP. The proposal submitted by the Stivers consisted of two separate facilities. However, the proposal submitted by the Stivers only included the items required by the Respondent's RFP for one of the two separate facilities. The proposal submitted by the Stivers failed to include a letter of authority from the owners of both facilities as required by the Respondent's RFP. Any one of the aforementioned flaws in the proposal submitted by the Stivers rendered the proposal non-responsive. It is not arbitrary for Respondent to reject all bids if there is only one responsive bidder. The state has discretion to award, or not award, in the event of a single responsive bidder, so long as the basis for the rejection is not improper. Whether such rejection is in the best interests of the state may be based on several criteria to be taken into account by the Respondent. One of the criteria is the absence of competition for state business and the lack of offerings. Rejection of all bids can be premised on an omission from the RFP or change in the Respondent's needs that would affect the ability of the Respondent to perform the duties prescribed by the Respondent. The Respondent provided evidence of the importance of correct specifications in the RFP. The Respondent made a decision before January 1, 1998, to develop new specifications for use in lease RFPs. The new specifications were used in the "Bradenton" RFP (issued after the Cocoa lease). The new specifications in the Bradenton RFP include a three percent cap on increases in the lease rate. This specification was material because it is an important part of the Respondent's budget evaluation. It was the Respondent's intent to use this new specification in the Cocoa RFP. Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification requiring proposer to provide copies of licenses of contractors. The Respondent intended to use that specification in the Cocoa RFP. The absence of this specification in the part has caused delays in occupancy of the leased space by the Respondent. Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification requiring the proposer to provide a construction schedule. The Respondent intended to use that specification in the Cocoa RFP. The absence of this specification was deemed by the Respondent to impede the Respondent's ability to assess liquidated damages. The Respondent identified a lease in Sarasota that was negatively affected by the absence of this specification. Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification requiring proposer to pay all renovation costs and that there be no outstanding liens on the property. The Respondent intended to use that specification in the Cocoa RFP. The absence of this specification has resulted in liens imposed on office space the Respondent was procuring. Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification clarifying whether the proposed space had to be in a single building. The absence of this specification was a concern to the Respondent and has created problems for other state agencies. The Department did not reject all proposals with the intent of avoiding a protest. The terms of the RFP do not specify when or how the Respondent is to notify proposers of the basis for the rejection of all bids. The evidence is insufficient to show that the Respondent's rejecting all proposals was illegal, arbitrary, dishonest or fraudulent.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the formal bid protest filed by Petitioners be DISMISSED. DONE AND ENTERED this 24th day of June, 1998, at Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 24th day of June, 1998. COPIES FURNISHED: David A. Theriaque, Esquire 909 East Park Avenue Tallahassee, Florida 32301 Scott C. Wright, Esquire Department of Juvenile Justice 2737 Centerview Drive Tallahassee, Florida 32399-3100 Theodore E. Mack, Esquire Powell & Mack 803 North Calhoun Street Tallahassee, Florida 32303 Calvin Ross, Secretary Department of Juvenile Justice 2737 Centerview Drive Tallahassee, Florida 32399-3100 Janet Ferris, General Counsel Department of Juvenile Justice 2737 Centerview Drive Tallahassee, Florida 32399-3100
