The Issue Whether Respondent's Notice Of Intent To Award RFP-DOT-91/92-1005 to OHM Remediation Services Corporation is fraudulent, arbitrary, illegal, or dishonest.
Findings Of Fact By RFP-DOT-91/92-1005, the Florida Department of Transportation (DOT), Respondent, sought bid responses to provide equipment and services on an as needed basis to assess and/or clean up contaminants in rights-of-way to be acquired for road construction projects. Principal contaminants envisioned were those resulting from abandoned and leaking petroleum tanks or other business whose waste disposal threatened ground water in the area with contamination. The Requests For Proposals (RFP) provided for technical proposals and price proposals to be submitted for evaluation. The technical evaluation is the process of reviewing the proposer's Executive Summary Management Plan and Technical Plans for understanding the project. The price evaluation is the process of examining a prospective price without evaluation of the separate cost elements and proposed profit of the potential provider (Exhibit 3). The only issue here is the price proposal. In evaluating the Price Proposals, the RFP (Exhibit 3, Section 1.16.2) provided: The Department will determine a "typical project" prior to receipt of proposals. The District Procurement Office will compute costs for the "typical project" based on fees submitted by each proposer. All responsive bid proposals will be scored in relation to the lowest computed cost for the "typical project" using the following formula: (Lowest "Typical Project" cost - by subject "Typical Project" cost) x 40 = Awarded points for price proposal. The "typical project" was prepared by Raymond Nottingham, District I Contamination Coordinator, prior to the proposals being received and opened. Although the exact content of the typical project was not included in the RFP, bidders were informed of the typical type of project they could expect to encounter under the contract during the prebid meeting and in the RFP. The price evaluation was done by matching up the prices offered by the bidders in their price proposals to the items and tasks listed in the DOT's typical project to come up with the bidders typical project cost. This is the first RFP for remediation services offered by DOT District I. In preparing this RFP, the administrative section of the statewide RFP earlier consummated by the department was utilized; however, for more specific pricing bids the price part of the RFP was largely adopted from a similar RFP prepared by DOT District VI in Miami, Florida. As a result of mixing the two RFPs, a slight possibility existed that some proposers would follow the more general descriptions allowed in the earlier statewide RFP rather than the more specific provisions of the District VI RFP. However, a careful reading of the instant RFP would have eliminated any such confusion. Section 1.17.3 of the RFP provided in pertinent part: The Price Proposal information is to be submitted in a separate sealed package marked "Price Proposal Number RFP-DOT- 91/92-1005.(sic) The Price Proposal information shall be submitted on the forms provided in the Request for Proposal or on Proposers' own forms provided the Department format is followed. The Department reserves the right to reject any proposal that is not submitted in this format. The format included in the RFP was broken down into the following classifications: Labor Classification, Heavy Equipment, Mobile Equipment, Water Equipment, Personal Protective Clothing and Equipment, Drilling, Field Analytical Equipment, Treatment Equipment, and Other. The format further indicated one fee for each item listed under the classification at an hourly rate and overtime hourly rate. The proposal submitted by Petitioner included prices for equipment offered under the following classifications: Trucks and Trailers, Personal Protective Equipment, On-Site Recovery and Treatment, Sampling and Testing Equipment, Construction and Excavation Equipment, Miscellaneous Equipment, Rental Equipment, and Expendables. The proposal submitted by Petitioner contained no price for an air stripper or crane. It lists three prices for three sizes of carbon cells, three prices for three sizes of submersible pumps, three prices for three sizes of pools, two prices for drums, three prices for pool liners, separate prices for hood and suit of protective clothing, and three prices for boots. Petitioner was the only proposer of the 17 submitting proposals that failed to submit a price for an air stripper and crane. Several proposers omitted prices for items on which the other proposers submitted a price. In attempting to keep all bidders in the process by not declaring their bid nonresponsive while being fair to all other proposers, the Department adopted different procedures for different items. Generally, when a proposers omitted a price for a particular piece of equipment, the Department inserted the highest price received from other proposers for that piece of equipment in the proposal in calculating the total bid. On other occasions where the proposer submitted more than one price and did not select the price himself, the Department averaged the prices submitted and used that figure to calculate the price for that item. Where there was obviously a lot of confusion and a wide disparity in the proposals as in establishing well point systems and quality control blanks, the Department omitted those items in calculating the prices. In totaling the bids received, only the daily rate offered was used because the RFP specified only a daily rate, and all proposers did not submit weekly and monthly rates. Part of the confusion stemmed from other parts of the RFP which did indicate that weekly and monthly rates were desired. However, since the other section did not require the submission of weekly and hourly rates, the Department in evaluating the bids did not use those rates in determining the bid price. Petitioner contends that the air stripper and crane to be used on a project can vary widely, and it is not practicable to submit a proposal for a fixed price for such an item. However, it is significant that Petitioner was the only proposer that failed to submit a price for these items. Intervenor utilized the bid forms provided with the RFP and, although Intervenor in its supplementary material listed varying prices for different sizes of the same item or different materials, it entered one price, usually the lowest, on the bid form for calculating its bid. Petitioner contends that had Respondent brought forth the lowest price for items Petitioner submitted several prices on, and disallowed the prices on air strippers and cranes, then Petitioner's bid would have been lower than the Intervenor's bid. However, in the final ranking of proposers, Petitioner stood fifth. No evidence was presented that had Petitioner's contentions been granted and applied to all proposers that Petitioner's proposal would have been lower than the other bidders whose proposals were initially deemed superior to Petitioner's proposal. By failing to follow the format contained in the RFP Petitioner's proposal was not responsive.
Recommendation It is recommended that a Final Order be entered dismissing Westinghouse Remediation Services, Inc. protest to the award of RFP-DOT-91/92-1005 and OHM Remediation Services Corporation. DONE and ORDERED this 12th day of May, 1992, in Tallahassee, Florida. K. N. AYERS 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 12th day of May, 1992. APPENDIX Proposed findings submitted by Respondent and Intervenor are accepted. Those not included in Hearing Officer's findings were deemed to be unnecessary to the conclusions reached. Proposed findings submitted by Petitioner are accepted except as noted below. Those not noted below or included in Hearing Officer's findings were deemed to be unnecessary to the conclusions reached. 8. Rejected that Petitioner's price proposal followed FDOT format. 22. Rejected. 28. Rejected. Additional reasons for rejection was the wide fluctuation in prices indicating the bidders did not understand the scope of the item. 37. Rejected. Although an inappropriate substitution was selected, the price for the item was below the maximum price offered for a crane. Accordingly, Petitioner benefited from the decision to substitute an item rather than use the highest price offered. 39. While it is true that OHM and Petitioner were the only bidder submitting weekly and monthly rates the reason for FDOT using only daily rates. See HO #13. 43. Rejected. 45. Rejected. See HO #13. 47. Rejected. Table 1. Rejected. This evidence was not submitted at the hearing. COPIES FURNISHED: Neal Smith, District Manager Westinghouse Remediation Services, Inc. 675 Park North Boulevard Building F, Suite 100 Clarkston, GA 30021 Susan P. Stephens, Esquire Department of Transportation 605 Suwannee Street Tallahassee, FL 32399-0450 Vasilis C. Katsafanas, Esquire Post Office Box 1873 Orlando, FL 32802 Ben G. Watts Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, FL 32399-0458 Thornton J. Williams General Counsel Department of Transportation Haydon Burns Building 562 Suwannee Street Tallahassee, FL 32399-0458
The Issue The issues to be resolved in this proceeding are delineated with particularity in the Joint Pre-hearing Stipulation executed by all parties; however, the issues generally are as follows: Whether Experior has standing to challenge the RFP Process. Whether Promissor was a qualified or responsive proposer. Whether Experior's cost proposal was entitled to the maximum points if Promissor's proposal is determined to be unqualified or non-responsive. Whether the scoring of the proposals by Evaluator three was affected by his bias or was so aberrant as to be unsupportable or illogical or in violation of the RFP. Whether DBPR's award of MBE/WBE preference points to Experior and PSI was inappropriate and should be eliminated. Whether Experior suffered an unfair competitive disadvantage.
Findings Of Fact The Department first decided to seek proposals for computer-based testing (CBT) services on March 29, 2002, when it issued RFP 01-02-001. General Condition Number Seventeen of that RFP stated that any material submitted in response to the Request for Proposal will become a public document pursuant to Section 119.07, including any material which a responding proposer might consider confidential or a trade secret. Any claim of confidentiality was waived upon submission. Experior never protested that General Condition Number Seventeen in that first RFP. The cost proposals submitted by all proposers in response to that first RFP became public record after the Department posted the notice of intent to award the contract to Experior on September 17, 2002. Promissor and PSI filed notices of intent to protest and formal written protests. In response to those protests, however, the Department decided to reject all proposals. Experior then challenged the rejection of all proposals by filing a notice of intent to protest on October 24, 2002, but ultimately withdrew that protest on October 31, 2002. Thereafter on January 13, 2003, the Department issued requests for proposal RFP 02-03-005 (the RFP), seeking proposals for the provision of computer-based testing services for several professions regulated by the Department. That is the RFP with which this case is concerned. Questions arose by potential vendors at a Pre-Proposal Conference, which was held on January 21, 2003. Representatives of the Department, Experior, Promissor, and PSI attended. Amendment One to the RFP grew out of that conference and was issued on February 3, 2003. This amendment contained the written questions and the Department's answers and the minutes of the Pre-Proposal Conference. The Department appointed certain employees to serve on the evaluation committee. The employees who were appointed were Karen Campbell-Everett; Steven Allen; Mollie Shepard; Alan Lewis; Milan Chepko (alternate) and Joe Muffoletto (alternate). Additionally, Department employee Valerie Highsmith was appointed to evaluate proposer references. Ultimately, alternate evaluator Joe Muffoletto replaced evaluator Steven Allen due to the death of Mr. Allen's father. Amendment One to the RFP then identified the evaluators and informed all proposers that the educational and professional background of each evaluator could be obtained by making a public records request. The protest filed by Experior alleges that evaluator Joe Muffoletto was not appropriately qualified. Experior did not file a challenge to the evaluators within 72 hours after they were identified in RFP Amendment One. Realistically this would have been difficult to do unless they already knew what the objections to qualifications might be, since Amendment One, in identifying the evaluators, informed the proposers that they would need to make a public records request to obtain the educational and professional background of each evaluator. In any event, preponderant evidence shows that Mr. Muffoletto's experience is sufficient to constitute "experience and knowledge in program areas and service requirements" for the CBT contract within the meaning of Section 287.057(17)(a) (which only requires that evaluators "collectively" have such experience). Mr. Muffoletto has a bachelor's degree, with a major in English and a minor in psychology. He holds a master of science degree in education and master of arts degree in multi- disciplinary studies and has completed the graduate level course called "assessment of learning outcomes" at Florida State University. Before working for DBPR, in 1996, he was a junior high and high school English teacher for 30 years. He has worked as a computer trainer for students taking the New York State Regents Competency Exam. In 1996-1997 he was an OPS test editor with DBPR and from 1997 to 1999 worked for the Florida Department of Education as a coordinator of test development, where he trained consultants on how to write test items, review test items, and amend test content outlines and blue prints. While in that position, he also wrote an RFP and developed a set of exams. Since 1999 he has been a psychometrician with DBPR and currently develops computed-based examinations for landscape architects and auctioneers and regular examinations for electrical contractors. Promissor, Experior and PSI each submitted responses to the second RFP. The technical proposals were distributed to members of the evaluation committee for review sometime after a standardization session for evaluators was conducted on February 11, 2003. The members of the evaluation committee separately conducted an analysis of each proposal and awarded points based on their review. Each evaluator submitted his or her completed technical evaluation guides or score sheets to Lyra Erath, who then forwarded the score sheets to the lead evaluator, Molly Shepard. The evaluation of the proposer references was completed by Valerie Highsmith and her score sheets for such evaluations were submitted to Bobby Paulk. On February 27, 2003, the Department opened the cost proposals, which reflected the following prices proposed per hour: Promissor: $9.00; Experior: $10.50; PSI: $11.35; and NCS Pearson: $14.75. The score for each cost proposal was calculated in accordance with a mathematical formula set out in the RFP. Promissor proposed the lowest cost and thus received the maximum cost score of 175 points. Experior received 150 points, PSI 138.77 points, and NCS Pearson 106.79 points. Upon concluding the evaluation process established by the RFP, Promissor's proposal was ranked first with 490.08 points out of a maximum available 555 points. PSI was second place, being awarded 461.40; Experior was awarded 440.03 points and NCS Pearson, 305.16 points. The bid/proposal tabulation was posted by the Department on March 12, 2003. Therein it indicated its intent to award the contract for CBT Services to Promissor. On March 17, 2003, Experior and PSI filed notices of intent to protest the intended award to Promissor. Experior thereafter timely filed a formal written protest, although PSI did not. ISSUES TO BE RESOLVED The Time Period for Contract Implementation Experior's protest alleges that the time period for contract implementation was allegedly "too aggressive" (short). The RFP however, repeatedly notified all proposers that they would waive any protest of the terms and specifications of the RFP unless they filed such protest within 72 hours of receiving notice of the specifications, as provided in Section 120.57(3). Similarly, RFP Amendment One informed the proposers that the RFP was amended to include "changes and additions" and that failure to file a protest within the time specified in Section 120.57(3) would constitute a wavier of Chapter 120 proceedings. RFP Section V, states "A. DBPR estimates that the contract for the RFP will be effective on or about March 17, 2003, and the testing services begin May 19, 2003." The 30- day periods the protest claims were "too aggressive" (i.e. too short) were specifically disclosed in RFP Section X concerning "scope of services." The time period of which Experior now complains was apparent on the face of the RFP. Indeed, when Experior's personnel first read the RFP, they had a concern that the time period might give Promissor a competitive advantage. At the Pre-Proposal Conference on January 21, 2003, Mark Caulfield of Experior even expressed concern that the 60 days allowed for implementation was a very aggressive schedule and asked the Department to reconsider that time period. The concern over the implementation schedule was documented in written questions which DBPR answered in Amendment One, telling all proposers that the implementation schedule was fair, in its view, and would not be changed. Experior did not protest the RFP's implementation time period within 72 hours of first reading the RFP and never filed a protest to any term, condition or specification of RFP Amendment One, including the Department's notice that it felt that the implementation schedule was fair and that it would not be amended. Thus, any challenge to the implementation schedule was waived. Even had Experior not waived its challenge to the implementation schedule, there is no persuasive evidence that the schedule would give Promissor an unfair competitive advantage over Experior and PSI. The DBPR tests are already finalized and would simply have been transferred to a new vendor if a new vendor had been awarded the CBT Services Contract. Experior failed to adduce persuasive evidence to show that any proposer was advantaged or disadvantaged by the implementation schedule which applied to all proposers. Evaluation of the MWBE Submittals RFP Section XIV.Q. encouraged minority and women-owned businesses (MWBE) to provide work goods, or services associated with services contemplated by the RFP. Proposers were to be awarded additional points for committing to use MWBEs, based on the percentage of the business under the contract the MWBE would perform. Experior, Promissor and PSI each proposed to use MWBEs to supply goods or services needed to perform the CBT contract. Promissor indicated that it would use one MWBE for 30 percent of the contract value. Resultingly, the Department awarded Promissor 16.5 MWBE preference points (30 percent x 55 maximum points). Experior presented no persuasive evidence showing how the Department interpreted and applied the MWBE provisions of the RFP or showing that the Department acted in excess of its authority in determining the award of MWBE points, as described in Amendment One. Experior offered no evidence concerning whether the Department considered or applied the "two subcontractor" limitation in RFP Section VI.5 ("no more than two subcontractors may be used") when it evaluated the Experior and PSI MWBE proposals, nor how it applied that limitation. Experior and PSI both indicated they would use three MWBE vendors. Experior proposed to use JR Printers (Printing Services); Colamco, Inc. (computer equipment for testing centers); and Workplace Solutions, Inc. (furniture for testing centers). (Furniture is a commodity, not a service.) PSI proposed to use Victoria and Associates (staffing services); Franklin's Printing (printing/mailing services); and National Relocation Services, Inc. (furniture, computers, delivery and installation [commodities, not services]). Based on the proposals, the Department awarded Experior 7.15 points and awarded PSI 17.48 points. Although Experior claims that it and PSI each exceeded the two subcontractor limitation by proposing to use three MWBEs, RFP Section XIV.Q. did not specifically require that proposed MWBEs be subcontractors, but rather only required that MWBEs be utilized by the primary vendor (contractor) to provide work, goods or services. Thus a vendor of goods or a supplier of services could qualify as an MWBE (and, implicitly, not necessarily be a subcontractor). Experior did not prove that any of the MWBEs proposed by PSI or Experior were actually subcontractors on an ongoing basis. The parties stipulated that the companies that each proposed to use were vendors. Moreover, when questioned about the provisions of Section VI regarding sub- contracting of services under the RFP, Jerome Andrews, chief of purchasing and human resources, differentiated the purchase of services from the purchase of commodities as being defined by statute. (See Sections 287.012(4) and 287.012(7).) Experior did not explain or offer persuasive evidence relating to its allegation that PSI's proposal for MWBE services was misleading. Experior did not show that PSI's MWBE proposal did not conform to the RFP requirements or, if there were a defect, how many points, if any, should be subtracted from PSI's total. Moreover, to the extent that Experior claims that the proposal was defective because PSI's proposed suppliers would not provide services over the course of the entire contract, Experior's proposal suffers the same defect, as Experior's proposal admits that "[c]omputer equipment and furniture services will be performed during the implementation phase of the contract." Thus, if PSI's MWBE point award had to be reduced, so would Experior's. Experior fail to carry its burden to show any error in the scoring of the PSI MWBE proposal. It did not establish that these vendors were subcontractors and thus did not establish that the relevant vendors were of a number to exceed the subcontractor limitation in the RFP. It did not persuasively establish that such would have been a material defect, if it had been exceeded. Completion of Evaluation Sheets Some of the RFP's evaluation criteria identified the number of points available and state that such points would be "awarded as a whole and not broken down by sub-sections." In contrast, the remainder of the evaluation criteria simply stated that a specific number of points was available for each specified criterion. In each instance where the evaluation criteria stated that points are "awarded as a whole and not broken down by subsections," the corresponding section of the RFP was broken down into two or more subsections. In each instance where the evaluation criteria simply listed the number of points available, the corresponding section of the RFP was not broken down into subsections. Experior alleged that the evaluators did not properly score Experior's proposal in instances where the evaluation sheet indicated "points are to be awarded as a whole and not broken down by subsections." Experior offered no proof regarding how the Department interpreted that provision or the manner in which the scoring was actually conducted, however. The score sheets reflect that the evaluators actually did award points "as a whole," not broken down by subsections, for those evaluation criteria where that was required. The record does not support any finding that the Department or its evaluators violated the requirements of the RFP, Department policy or controlling law and rules in this regard. Issue of Bias on the Part of Evaluator Three Experior contends that Evaluator Three, Mr. Muffoletto, was biased against Experior. The persuasive evidence does not support that allegation. During his employment with the Department, Mr. Muffoletto interacted with Experior on one occasion regarding reciprocity of an out-of-state examination. This experience left him with the impression that Experior was "proprietary" because it was protective of the content of its examinations. The evidence did not show he had any other impressions, positive or negative, concerning Experior or misgivings about Experior being selected in the first RFP. The mere fact that his total score for Experior was lower than those awarded by other evaluators does not establish bias or irrationality in scoring. The evidence shows that Mr. Muffoletto scored the proposals in a rational manner. He appeared to evaluate criteria comparatively and gave a proposer more points if that proposer was more convincing than another on a particular criteria or point of evaluation. He gave lower scores when the proposer simply copied the text of the RFP and then stated that the proposer would meet or exceed the criteria; in accordance with instructions that evaluators could give lower scores in such cases, so long as the scoring was consistent between proposals. Mr. Muffoletto gave higher scores when the proposers gave more individualized responses, provided more thorough statistics and ways to interpret those statistics, gave numerous specific examples and had a more attractive presentation. Even if Mr. Muffoletto had been biased, it has not been persuasively shown that such would have a material impact on the outcome of the evaluation. If the scores of Evaluator Three were completely eliminated for both PSI and Experior, which is not justified, PSI's point total would be 459.12 and Experior's point total would be 453.54. If Evaluator Three were deemed to give Experior scores equivalent to the highest scores awarded to Experior by any other evaluator, PSI's total would be 461.42 and Experior's point total would be 458.87. Even if Evaluator Three had given Experior the maximum points for each criterion, PSI's point total would have been 461.42 and Experior's point total would have 461.12. Issue of Prior Knowledge of Experior's Prior Cost Proposal Experior contends that Promissor's knowledge of Experior's cost proposal submitted in response to the first RFP in 2002 gave Promissor an unfair competitive advantage. Experior waived that challenge, however, when it withdrew its protest to the rejection of all bids submitted in response to the first RFP. Experior knew when it filed and withdrew its protest to the first RFP decision that all cost proposals had become public record and so it was incumbent on Experior to have challenged the issuance of a second RFP, if it had a legal and factual basis to do so. At the latest, Experior should have challenged the second RFP specifications when issued (within 72 hours) as Experior had already obtained the other proposers' cost proposals and so it knew then that the prior cost proposals were available to all for review. Even if Experior had not waived that challenge, the evidence does not support a finding that Promissor gained any competitive advantage. Although Experior attempted to show, through the testimony of Mark Caulfield, that Promissor could not perform the CBT Services Contract at a profit at the $9.00 per hour price it proposed, Mr. Caulfield actually testified that it would be possible for a company to perform the services for $9.00 per hour, and he did not know what Promissor's actual costs were. Moreover, there is no persuasive evidence that Experior's prior cost proposal played any role in Promissor's determination of its bid for the second RFP or, if it did, that such consideration would have violated any provision of the RFP, governing statutes or rules or Department policies, under the prevailing circumstances, if it had occurred. Alleged Improper Scoring of Experior's Proposal with Respect to Criterion VII.A. Experior alleged that Evaluator One should have awarded 15 points instead 11 points for Experior's proposal format, criterion VII.A., but Experior did not offer the testimony of Evaluator One or any other evidence supporting that allegation. Experior failed to carry its burden of showing that the award of 11 points to Experior for criterion VII.A., was irrational or violated the requirements of the RFP or controlling policies, law or rules of the Department. Even if Evaluator One had awarded 15 points for that criterion, Experior admitted it would have no material impact on the outcome of the procurement, given the more than 21 point advantage PSI enjoyed over Experior. Responsiveness and Qualification The preponderant evidence does not establish that Experior was entitled to but did not receive the additional 21.38 points that it would have to earn to score higher than PSI and move into second place. Experior did not establish error in the evaluation or scoring of its proposal or PSI's proposal that alone, or collectively, would be sufficient for Experior to overtake PSI. As a result, Experior could only prove its standing ahead of PSI by having the Promissor proposal disqualified, which would move it to the first-ranked position because of accession of the full 175 points for having what, in that event, would be the lowest cost proposal. Experior's objection to the Promissor proposal is not meritorious. Its protest alleges that "because Promissor will [allegedly] subcontract for services representing more than 33 percent of contract value, Promissor is disqualified from submitting its proposal and its proposal must be stricken from consideration." Experior did not allege any error in the scoring of Promissor's proposal and so Promissor's highest score cannot be changed. Indeed, even if Experior were awarded the maximum technical score of 325 points, Experior's score would be 482.15 points, still less than Promissor's score of 490.08 points. Experior, as a practical matter, cannot earn enough points because of the disparity in final cost proposal scores to overtake Promissor, unless it can prove Promissor should be disqualified. Experior's proof did not amount to preponderant, persuasive evidence that the Department erred in determining that Promissor's proposal was responsive and that Promissor was a qualified proposer. The Department did an initial review of the proposals to determine if they were responsive to all mandatory requirements, and any proposer determined non-responsive would have been excluded at that point. Promissor's proposal contained all required information in the required format and was deemed responsive. The preponderant evidence shows that the Department's determination that Promissor was responsive and qualified comported with the requirements of the RFP and controlling policy, rules and law. Promissor expressly stated that it would comply with the RFP's subcontracting guidelines upon performing the contract wherein it stated "Promissor agrees and commits to meet the requirement of the RFP." Promissor's proposal stated its intent to subcontract less than 33 percent of the contract value, and that was all that was required for the proposal to be responsive. There is nothing in the Promissor proposal that indicated that Promissor would not comply with the subcontracting guidelines. Experior's entire challenge to the Promissor proposal is based on the contention that Promissor intended to use a subcontractor to provide call center services under the Florida contract but did not say so in its proposal. The Promissor proposal actually stated that Promissor would use its "proprietary scheduling system" or "proprietary reservation system" to service the Department's contract as it was currently doing, not that it would use any particular call center. These representations appear to be true, as Promissor's "scheduling system" or "reservation system" (the proprietary software Promissor uses to take reservations) that it said it would use for the new Florida contract is the same system used under the prior contact with the Department. Ordinarily, whether or not Promissor would actually comply with the subcontractor guidelines could not be determined until Promissor actually performs the contract. It is an issue of contract compliance and not responsiveness or qualification. Here the evidence shows that Promissor was in compliance with the 33 percent maximum subcontracting requirement before the originally scheduled contract implementation date. Since Promissor wished to obtain the maximum points for minority participation, Promissor decided to subcontract to the maximum possible extent with an MWBE. In doing so, Promissor wanted to assure that the use of Thompson Direct, Inc., for call center services did not make it exceed the 33 percent subcontractor standard. Thus, Promissor decided, before it submitted its proposal, to perform the call center services from one of its three regional centers and this decision was communicated internally before Promissor prepared its proposal. Promissor initially intended to perform the call center services from its regional offices in Atlanta, Georgia. In order to implement that decision, senior executives of Promissor, including its president, toured that office in early March, before the Department posted its notice of intent to award to Promissor. After the notice of award was posted on March 12, 2003, Promissor promptly posted an employment advertisement on its website seeking persons to act as call center representatives to service the Florida contract from the Atlanta office. That advertisement was posted on March 14, 2003, a day before Experior filed its notice of intent to protest. In early to mid-April, the manager of the Georgia regional office prepared a project plan that revealed that the Georgia regional office might not be ready to perform call center services by the May 20th contract implementation date. Promissor then decided to use its Maryland regional office to perform the call center services. Regardless of the location of the call center, the scheduling system used by Promissor would be the same as under the prior contract and the same as Promissor promised in its proposal. The Scranton call center and the three regional offices use the same proprietary scheduling system provided by Promissor and run from servers located at Promissor's headquarters in Bala Cynwyd, Pennsylvania. Even at the Scranton call center that was previously used, Promissor trained all of the employees, who handle calls only for Promissor, wrote the scripts for their use and provided the proprietary scheduling software. The Maryland call center was actually accepting all calls for the Florida programs to be serviced pursuant to the RFP by May 19th, before the May 20th contract implementation date. Since the call center services were actually being provided by Promissor's Maryland regional office before the contract implementation date, Experior's claim that Promissor would provide those services through a subcontractor is not supported by preponderant evidence. Allegations that Promissor Made Misrepresentations Regarding Subcontractors In light of Promissor's actual provision of call center services from its regional office before the contract implementation date, Experior's contention that alleged misrepresentations occurred in the Promissor proposal are without merit. Even if Promissor had not actually performed, however, Experior failed to prove that Promissor made any misrepresentations or was unqualified. In support of its claim that Promissor was unqualified, Experior introduced into evidence three proposals that Promissor or ASI (a corporate predecessor to Promissor) had submitted to agencies in other states in the past three years. Experior argues that Promissor/ASI made misrepresentations in the other proposals and, therefore, Promissor made misrepresentations in the proposal at issue in this proceeding. Its basis for alleging that Promissor made misrepresentations in the Florida proposal at issue is its contention that Promissor/ASI made misrepresentations in other proposals to other states. No evidence was offered that Promissor had made a misrepresentation to the Department as to this RFP, however. In light of Promissor's actual performance in accordance with its proposal and the RFP requirements, the proposals from the other states have little relevance. Experior did not prove that Promissor made misrepresentations in the other proposals, particularly when considering the timing of those proposals and Promissor's corporate history. Promissor's corporate history must be considered in evaluating the claim of misrepresentation to the other state agencies in other states. In 1995, Assessment Systems, Inc., or "ASI," was acquired by Harcourt Brace Publishers. In June of 2001, ASI was sold with a number of other Harcourt companies, including a company called Harcourt Learning Direct, to the Thompson corporation. Harcourt Learning Direct was re-named Thompson Education Direct. Soon after, the federal government required, for anti-trust reasons, that Thompson divest itself of ASI. Accordingly, ASI was acquired by Houghton Mifflin Publishers in December 2001, and its name was later changed to Promissor. Up until December 2001, the entity now known as Promissor and the entity now known as Thompson Education Direct were corporate affiliates under the same corporate umbrella. The Kansas Proposal Experior's Exhibit five was ASI's Proposal for Agent Licensing Examination Services for the Kansas Insurance Department dated May 8, 2000. A letter that accompanied the proposal stated that ASI would not engage a subcontractor for examination development or administration services. Mark Caulfield testified that he did not know whether or not what was said in this letter was true on the date it was written. He testified that he did not know if ASI was using any subcontractors or any outside contractors for any purpose in May of 2000. In fact, as of May 2000, ASI did not subcontract for any call center services; at the time that the letter was written, all of the representations in the letter were true. ASI was awarded the Kansas contract and Experior did not protest. Experior did not offer any evidence related to the requirements in the Kansas RFP and is not aware of any issues between Kansas and Promissor regarding the contract. There is no evidence that the Kansas request for proposals had any subcontracting limitations in it. The proposal that ASI submitted to Kansas in May 2000 listed a phone number for ASI's call center. In preparation for the hearing, witness Mark Caulfield called that phone number and claimed that a person answered the phone "Promissor," and said she was located in Scranton, Pennsylvania. Experior did not show that the person that answered the phone was an employee of Promissor. Whether or not the person who answered the phone in that example was or was not an employee of Promissor and could or could not bind Promissor with any statement as a party admission, is beside the point that it has not been shown who would have answered the phone in May 2000, or where they would have been located, as to whether or not that person was the employee of Promissor or its immediate corporate predecessor in interest or whether that person was employed by some subcontractor. That is immaterial, however, in the face of the fact that it has not been proven that the Kansas request for proposals had any subcontracting limitations in the first place and, therefore, no misrepresentation in the Kansas situation has been proven on the part of Promissor. The Maine Proposal Experior's Exhibit seven is ASI's proposal to provide real estate examination administration and related services for the Maine Department of Professional Regulation and is dated August 1, 2001. As of August 1, 2001, ASI did not subcontract for call center services. On pages 2-10 of the Maine proposal, there is a reference to ASI having an extensive network of program-specific, toll-free telephone lines and program-dedicated customer care representatives. This statement was shown to be accurate and was an accurate statement when made on August 1, 2001. The statement refers to the monitoring of the reservation process done by ASI management. Experior admitted that it had no reason to believe that in August of 2001, ASI did not have an extensive network or program-specific toll-free telephone lines and program-dedicated customer care representatives, and Experior did not prove that to be currently untrue. Experior's Exhibit eight is Promissor's Real Estate Candidate handbook regarding the Maine procurement dated April 2003. As of April 2003, the statements made in the handbook were accurate and correct. The handbook listed on page 11 a customer care phone number of 877-543-5220. Experior provided no evidence as to the location where that phone number rang in April of 2003. Experior did not show persuasive evidence regarding the requirements in the Maine RFP and there is no evidence that the Maine RFP had any subcontracting limitations as are in question in the instant case. The Oklahoma Proposal Experior's Exhibit nine was Promissor's response to Bid No. N031354 for License Testing Services for the Oklahoma Insurance Department. It is dated December 18, 2002. Promissor did not state in the proposal that it would not use subcontractors. There is no need to reference subcontractors in the Oklahoma proposal as the Oklahoma RFP did not contain subcontracting limitations. Oklahoma has approved the manner in which Promissor is performing under that contract and Experior did not establish that the statements in Promissor's proposal were false when made or now. The Texas Proposal Experior's Exhibit twelve is Promissor's press release titled "Texas Selects Promissor as Exclusive Provider for Insurance License Testing," dated October 1, 2002, in which Promissor referred to "the Promissor Call Center." Experior did not establish that Texas was not served by a Promissor call center or that Promissor was not performing in the manner its Texas proposal promised. In fact, Texas has approved Promissor's performance under the Texas contract. Even if the proposals Promissor offered had stated that Promissor would provide call center services through a specified entity (which they did not do), and then Promissor later performed such services through another entity, such evidence would be insufficient to prove that Promissor would not comply with the Florida RFP's subcontracting guidelines, especially given Promissor's actual performance in accordance with its proposal. Experior did not establish with preponderant evidence a "routine business practice" of Promissor to make misleading or false promises in proposals to evade subcontracting guidelines. There is no evidence in any of the four states concerning which Experior provided evidence, that they had any subcontracting limitation in their RFPs. The evidence showed that the statements in each of these proposals were undoubtedly accurate at the time they were made; to the extent that the provision of call center services differs from what was promised (although the evidence does not establish that), such difference is explained by the changes in corporate structures that have occurred since the proposals were submitted. Additionally, the evidence established that Promissor has submitted between 70 and 120 proposals since the beginning of 2000 across the nation. The documents relating only to other proposals to other states that were not even proved to have requirements similar to Florida's are insufficient to establish that Promissor had a "routine" practice of making misleading promises about its call center services. Accordingly, the Petitioner has not offered preponderant, persuasive evidence that Promissor is unqualified as a proposer.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Business and Professional Regulation denying the Petition and approving the intended award of the contract to Promissor, Inc. DONE AND ENTERED this 22nd day of August, 2003, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 Clerk of the Division of Administrative Hearings this 22nd day of August, 2003. COPIES FURNISHED: Wendy Russell Weiner, Esquire Mang Law Firm, P.A. 660 East Jefferson Street Tallahassee, Florida 32301 Joseph M. Helton, Jr., Esquire Michael J. Wheeler, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2022 Paul R. Ezatoff, Esquire Katz, Kutter, Alderman & Bryant, P.A. 106 East College Avenue, Suite 1200 Tallahassee, Florida 32301 Michael P. Donaldson, Esquire Carlton Fields Law Firm 215 South Monroe Street, Suite 500 Tallahassee, Florida 32301 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue The issue in these cases is whether the Agency for Health Care Administration's (AHCA) proposed award of a contract to Caremark, Inc., based on evaluations of proposals submitted in response to a Request for Proposals (RFP), is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact AHCA is the single state agency in Florida authorized to make payments for medical assistance and related services under Title XIX of the Social Security Act (the "Medicaid" program). In order to participate in the federal Medicaid program, AHCA is required to maintain a state plan for Medicaid in compliance with Title XIX of the Social Security Act. AHCA is required to operate the Florida Medicaid program in compliance with the state plan. AHCA is apparently concerned by costs associated with the Florida Medicaid program's hemophilia population. Florida's Medicaid hemophilia beneficiaries constitute a relatively small, but costly population to serve. Hemophilia is a bleeding disorder caused by a deficiency in one of numerous "clotting factors," which normally causes a persons' blood to coagulate. Hemophilia is treated by administration of the deficient clotting factor to the person with the disorder. AHCA seeks to control the cost of providing hemophilia-related services to this population through a combination of case management and medication discounts known as the Medicaid Comprehensive Hemophilia Management (MCHM) program. AHCA believes that a single vendor responsible for operation of the MCHM program can provide managed care to the population while achieving significant drug-cost savings. Through a federal requirement referred to as "freedom of choice," Florida's Medicaid program state plan must provide that any individual eligible for medical assistance (including drugs) may obtain such assistance from any institution, agency, community pharmacy, or person qualified to perform the service and who undertakes to provide such services. The freedom of choice requirement is subject to being waived in accordance with applicable federal law. Such waiver requires approval by the Centers for Medicare and Medicaid Services (CMS). AHCA began seeking approval from CMS for an amendment to an existing "Managed Care Waiver" to implement the MCHM program in October 2002. By letter dated May 22, 2003, CMS approved AHCA's request to amend the existing waiver to permit implementation of the MCHM program. Subsequent correspondence between the agencies has further established AHCA's authority to implement the MCHM program. AHCA issued the RFP ("RFP AHCA 0403") on October 1, 2003. The RFP seeks to implement the MCHM program. There were no timely challenges filed to the terms and specifications of the RFP. Section 287.057, Florida Statutes (2003), requires that an agency must make a written determination that an invitation to bid is not practicable for procurement of commodities or contractual services prior to issuance of an RFP. AHCA did not make such a written determination prior to issuance of the RFP. Under the terms of the RFP, AHCA will contract with a single provider for a period of two years, with an option to extend the contract for an additional two-year period. RFP Section 10.2 sets out an extensive list of vendor requirements designed to provide care to Medicaid hemophilia beneficiaries and better management of related costs. The RFP provides that the successful vendor will be paid only on the basis of the factor products dispensed to eligible Medicaid beneficiaries. All other services required by the RFP must be delivered within the revenue provided by AHCA's reimbursement for factor product costs. No additional payment beyond payment of factor product costs will be provided. The RFP stated that the successful vendor would be reimbursed for factor product cost based on the average wholesale price (AWP) of the factor product minus a minimum discount of 39 percent. The RFP provided that vendors may offer a greater discount than 39 percent. An Addendum to the RFP indicated that if a vendor proposed a discount greater than 39 percent, the increased discount must apply to all factor products and that vendors could not propose varying discounts for individual factor products. The RFP contains language in the background section referencing budget "proviso" language adopted by the Legislature and referring to the MCHM program as a "revenue enhancement program." HHS asserts that because this RFP does not create a revenue enhancement program, AHCA had no authority to proceed with the RFP. The evidence fails to establish that this program will enhance revenue. The evidence fails to establish that based on the "proviso" language, AHCA is without authority to issue the RFP. RFP Section 20.11 sets forth the "proposal submission requirements." The section included a number of requirements set in capital letters and highlighted in boldface. The terms of each requirement indicated that failure to comply with the requirement was "fatal" and would result in rejection of the proposal submitted. None of the proposals submitted by the parties to this proceeding were rejected pursuant to RFP Section 20.11. The evidence fails to establish that any of the proposals submitted by the parties to this proceeding should have been rejected pursuant to RFP Section 20.11. RFP Section 20.16 provides that AHCA may waive "minor irregularities," which are defined as variations "from the RFP terms and conditions, that [do] not affect the price of the proposal or give one applicant an advantage or benefit not enjoyed by others or adversely affect the state's interest." RFP Section 20.17 provides as follows: Rejection of proposals Proposals that do not conform to all mandatory requirements of this RFP shall be rejected by the Agency. Proposals may be rejected for reasons that include, but are not limited to, the following: The proposal was received after the submission deadline; The proposal was not signed by an authorized representative of the vendor; The proposal was not submitted in accordance with the requirements of Section 20.11 of this RFP; The vendor failed to submit a proposal guarantee in an acceptable form in accordance with the terms identified in Section 20.12 of this RFP or the guarantee was not submitted with the original cost proposal; The proposal contained unauthorized amendments, deletions, or contingencies to the requirements of the RFP; The vendor submitted more than one proposal; and/or The proposal is not deemed to be in the best interest of the state. None of the proposals submitted by the parties to this proceeding were rejected pursuant to RFP Section 20.17. The evidence fails to establish that any of the proposals submitted by the parties to this proceeding should have been rejected pursuant to RFP Section 20.17. RFP Section 30.1 provides that the "total cost of the contract will not exceed $36,000,000 annually." RFP Section 30.2 provides in part that the "total cost for the contract under any renewal will not exceed $36,000,000 per year." The RFP's contract amount apparently was based on historical information and assumed that some level of cost control would occur through case management. The contract amount cannot operate as a "cap" because Medicaid hemophilia beneficiaries are an "entitled" group and services must be provided. If the amount of the contract is exceeded, AHCA is obliged to pay for necessary factor products provided to the beneficiaries; however, in an Addendum to the RFP, AHCA stated that if the contract fails to contain costs "there would be no justification to renew or extend the contract." The RFP required vendors to submit a performance bond based on 20 percent of the $36 million contract amount. The RFP stated that proposals could receive a maximum possible score of 2000 points. The proposal with the highest technical evaluation would receive 1340 weighted points. The proposal with the lowest cost proposal would receive 660 weighted points. The combined technical and cost proposal scores for each vendor determined the ranking for the proposals. The RFP set forth formulas to be used to determine the weighted final score based on raw scores received after evaluation. AHCA conducted a bidder's conference related to the RFP on October 8, 2003. All parties to this proceeding attended the conference. At the conference, AHCA distributed a copy of a spreadsheet chart that listed all factor products provided to Florida's Medicaid hemophilia beneficiaries during the second quarter of 2003. The chart identified the amount of each factor product used and the amount paid by AHCA to vendors for the factor product during the quarter. The chart also showed the amount that would have been paid by AHCA per factor product unit had the vendors been paid at the rate of AWP minus 39 percent. AHCA received six proposals in response to the RFP. The proposals were received from Caremark, HHS, Lynnfield, PDI Pharmacy Services, Inc., Advance PCS/Accordant, and Coram. RFP Section 60 contained the instructions to vendors for preparing their responses to the solicitation. As set forth in RFP Section 60.1, the technical response was identified as "the most important section of the proposal with respect to the organization's ability to perform under the contract." The section requires vendors to include "evidence of the vendor's capability through a detailed response describing its organizational background and experience," which would establish that the vendor was qualified to operate the MCHM program. Vendors were also directed to describe the proposed project staffing and the proposed "technical approach" to accomplish the work required by the RFP. Vendors were encouraged to propose "innovative approaches to the tasks described in the RFP" and to present a detailed implementation plan with a start date of January 10, 2003. The technical responses were opened on October 29, 2003. AHCA deemed all six proposals to be responsive to the technical requirements of the RFP and each technical proposal was evaluated. For purposes of evaluation, AHCA divided the technical requirements of the RFP into 50 separate criteria. AHCA assembled the technical evaluators at an orientation meeting at which time an instruction sheet was issued and verbal instructions for evaluating the technical proposals were delivered. The instruction sheet distributed to the evaluators provided that the evaluators "should" justify their scores in the "comments" section of the score sheets. The five AHCA employees who evaluated the technical proposal were Maresa Corder (Scorer "A"), Bob Brown-Barrios (Scorer "B"), Kay Newman (Scorer "C"), Jerry Wells (Scorer "D"), and Laura Rutledge (Scorer "E"). AHCA employees Dan Gabric and Lawanda Williams performed reference reviews separate from the technical evaluations. Reference review scores were combined with technical evaluation scores resulting in a total technical evaluation score. Reference review scores are not at issue in this proceeding. Kay Newman's review was limited to reviewing the financial audit information provided by the vendors. Technical evaluators reviewed each technical response to the RFP and completed evaluation sheets based on the 50 evaluation criteria. Other than Mr. Wells, evaluators included comments on the score sheets. Mr. Wells did not include comments on his score sheet. The technical proposal scoring scale set forth in the RFP provided as follows: Points Vendor has demonstrated 0 No capability to meet the criterion 1-3 Marginal or poor capability to meet the criterion 4-6 Average capability to meet the criterion 7-9 Above average capability to meet the criterion 10 Excellent capability to meet the criterion Each evaluator worked independently, and they did not confer with each other or with anyone else regarding their evaluations of the responses to the RFP. Janis Williamson was the AHCA employee responsible for distribution of the technical proposals to the evaluators. She received the completed score sheets and evaluation forms from each of the technical evaluators. The RFP set forth a process by which point values would be assigned to technical proposals as follows: The total final point scores for proposals will be compared to the maximum achievable score of 1340 points, and the technical proposal with the highest total technical points will be assigned the maximum achievable point score. All other proposals will be assigned a percentage of the maximum achievable points, based on the ratio derived when a proposal's total technical points are divided by the highest total technical points awarded. S = P X 1340 N Where: N = highest number of final points awarded to t technical proposal P = number of final points awarded to a proposal S = final technical score for a proposal According to the "Summary Report and Recommendation" memorandum dated December 4, 2003, after application of the formula, Caremark received the highest number of technical points (1340 points). Of the parties to this proceeding, HHS was ranked second on the technical proposal evaluation (1132.30 points), and Lynnfield was ranked third (1101.48 points). Lynnfield and HHS assert that the scoring of the technical proposals was arbitrary based on the range of scores between the highest scorer and the lowest scorer of the proposals. Review of the score sheets indicates that Scorer "A" graded "harder" than the other evaluators. The scores she assigned to vendor proposals were substantially lower on many of the criteria than the scores assigned by other evaluators. The range between her scores and the highest scores assigned by other evaluators was greater relative to the Lynnfield and the HHS proposals than they were to the Caremark proposal, indicating that she apparently believed the Caremark technical proposal to be substantially better than others she reviewed. There is no evidence that Scorer "A" was biased either for or against any particular vendor. The evidence fails to establish that her evaluation of the proposals was arbitrary or capricious. The evidence fails to establish that AHCA's evaluation of the technical proposals was inappropriate. After the technical evaluation was completed, cost proposals were opened on November 21, 2003. Section 60.3 addressed the cost proposal requirements for the RFP. RFP Section 60.3.1 provides as follows: The cost proposal shall cover all care management services, hemophilia specific pharmaceuticals dispensing and delivery, and pharmacy benefits management activities contemplated by the RFP. The price the vendor submits must include a detailed budget that fully justifies and explains the proposed costs assigned. This includes salaries, expenses, systems costs, report costs, and any other item the vendor uses in arriving at the final price for which it will agree to perform the work described in the RFP. The maximum reimbursement for the delivery of services and factor products used in factor replacement therapy (inclusive of all plasma-derived and recombinant factor concentrates currently in use and any others approved for use during the term of the contract resulting from this RFP) will be at Average Wholesale Price (AWP) minus 39%. Proposals may bid at a lower reimbursement but not higher. All other drugs not otherwise specified in factor replacement therapy will be paid at the normal Medicaid reimbursement. RFP Section 60.3.2 provides as follows: A vendor's cost proposal shall be defined in terms of Average Wholesale Price (AWP) and conform to the following requirements: The first tab of a vendor's original cost proposal shall be labeled "Proposal Guarantee" and shall include the vendor's proposal guarantee, which shall conform to the requirements specified in this RFP, Section 20.12. Copies of the cost proposal are not required to include the proposal guarantee. The second tab of the cost proposal shall be labeled "Project Budget" and shall include the information called for in the RFP, including the total price proposed, a line item budget for each year of the proposal, a budget narrative, and other information required to justify the costs listed. The RFP does not define the "detailed" budget mentioned in RFP Section 60.3.1 and does not define the "line item" budget mentioned in RFP Section 60.3.2. No examples of such budgets were provided. RFP Section 80.1 provides as follows: Evaluation of the Mandatory Requirements of the Cost Proposal Upon completion of the evaluation of all technical proposals, cost proposals will be opened on the date specified in the RFP Timetable. The Agency will determine if a cost proposal is sufficiently responsive to the requirements of the RFP to permit a complete evaluation. In making this determination, the evaluation team will review each cost proposal against the following criteria: Was the cost proposal received by the Agency no later than time specified in the RFP Timetable? Did the vendor submit an original and ten copies of its cost proposal in a separate sealed package? Was the vendor's cost proposal accompanied by a proposal guarantee meeting the requirements of the RFP? Did the cost proposal contain the detailed budget required by the RFP? Does the proposal contain all other mandatory requirements for the cost proposal? The AHCA employee who opened the cost proposals apparently determined that each proposal met the requirements of RFP Section 80.1, including providing a "detailed" budget. The RFP set forth a process by which point values would be assigned to cost proposals as follows: On the basis of 660 total points, the proposal with the lowest total price will receive 660 points. The other proposals will receive a percentage of the maximum achievable points, based on the ratio derived when the total cost points are divided by the highest total cost points awarded. Where: S = L X 660 N N = price in the proposal (for two years) L = lowest price proposed (for two years) S = cost points awarded The cost proposal scoring process clearly required comparison of each vendor's total price for the initial two-year portion of the contract. Caremark's proposal included estimated total costs of $44,797,207 for FY 2002-2003, $43,245,607 for FY 2003-2004, and $44,542,975 for FY 2004-2005. According to RFP Section 30.1, the maximum annual contract was not to exceed $36,000,000. All of Caremark's estimated annual costs exceeded the contract amount set forth in the RFP. Caremark's proposal also provided as follows: The above budget includes all salary expenses for Caremark employees involved in providing services for the program including the Contract Manager, Clinical Pharmacist, Care manager, additional pharmacist(s), Client Service Specialists in Florida for the expanded hemophilia program. Also included are the support staff such as pharmacy technicians, materials management, field service representatives, warehouse, reimbursement, marketing, sales and administrative staff. Also included are all delivery, data and report development, educational and marketing communication expenses. Product costs including medically necessary ancillary supplies, medical waste disposal and removal, protective gear and therapeutic devices. Caremark's proposal did not include information sufficient to assign specific costs to any of the items that Caremark indicated were included in its annual cost estimate. The HHS proposal projected estimated costs identified by month and year. The HHS proposal estimated total first-year costs of $14,261,954 and second-year costs of $27,333,389. HHS did not propose to assume responsibility for serving all Medicaid hemophilia beneficiaries at the start of the contract, but projected costs as if beneficiaries would "migrate to our service at a rate of 20 per month" during the first year and that full service provision would begin by the beginning of year two. RFP Section 10.2 provides as follows: The purpose of this RFP is to receive offers from qualified vendors wishing to provide the services required by the Florida Medicaid Comprehensive Hemophilia Management Program. The contract resulting from this RFP shall be with a single provider for up to two years commencing on the date signed, with an option to renew for two additional years. Otherwise stated, all Medicaid hemophilia beneficiaries would be served though the program's sole provider from the start of the contract period. The RFP provides no option for a vendor to gradually increase service levels through the first half of the two-year contract. The HHS proposal also included a breakdown of costs by factor product unit, identifying the AWP for each listed factor product and applying a discount of between 39 percent and 45 percent to indicate the product cost-per-unit that would be charged to AHCA. In Addendum 2 to the RFP, AHCA stated that it has received a written inquiry as follows: Knowing that the minimum accepted discount is AWP less 39%, can different products have different discounts. AHCA's response to the inquiry was as follows: No. The proposed discount will apply to all factor products. As to the costs included in the proposal annual total, the HHS proposal provided as follows: The product price above will include the following costs incurred in servicing the patients: The cost of the product dispensed to the patient. The cost of freight and other delivery expense of transporting the product to the patient. Pharmacy, warehouse and patient supplies. Cost incurred for patient protective gear and education materials Salary costs for the following: o Project/Contract Manager Clinical Pharmacist Staff Pharmacist Case Management Coordinator Pharmacy Care Coordinators Shipping Clerk Warehouse Coordinator Community Advocates Insurance Reimbursement Specialist The cost of Information Technology support for systems and reporting The cost of rent, office supplies, equipment, postage, printing. The HHS proposal did not include information sufficient to assign specific costs to any of the items that HHS indicated were included in its annual cost estimate. Lynnfield's proposal estimated total costs of $34,000,000 for calendar year 2004 and $36,000,000 for calendar year 2005. Lynnfield's budget proposal included information identifying the specific expense lines which form the basis for the cost estimation, including salary costs by position, travel costs, employee insurance, postage, equipment costs, and various office expenses. Lynnfield's budget proposal included a significantly greater level of detail than did either the Caremark or the HHS proposals. Jerry Wells was assigned the responsibility to evaluate the cost proposals. Mr. Wells failed to review the RFP or the related Addenda prior to evaluating the cost proposals submitted by the vendors. Mr. Wells asserted that it was not possible, based on the information submitted by the vendors, to perform an "apples- to-apples comparison." Each vendor set forth information in its proposal sufficient to calculate a total price for the initial two-year portion of the contract. Mr. Wells testified at the hearing that his cost review was intended to determine what AHCA would be paying for each of the individual factor products that AHCA provides hemophiliacs through Medicaid because the cost of the products was all AHCA would be paying to the vendors. The RFP did not require vendors to include a detailed list of, or unit prices for, factor products. The RFP specified only that factor products be provided at a minimum of AWP minus 39 percent. AHCA employees, under the direction of Mr. Wells, created a cost comparison chart which purported to identify the price proposed by each vendor for certain factor products and which projects an estimated quarterly factor product cost for each vendor. HHS's cost proposal included a listing of specific prices to be charged for factor products. The list was based on products being used by existing HHS patients. Caremark offered to provide all products at the AWP minus 39 percent cost required by the RFP. Caremark also suggested various "innovative cost savings," which specified use of factor products and indicated discounts greater than the 39 percent required by the RFP. Lynnfield did not include a product-specific listing of factor costs in its proposal, but offered to provide all products at the AWP minus 39 percent cost required by the RFP. The AHCA employees used the HHS cost proposal, including the HHS range of discounts, as the basis for preparation of the cost comparison chart that included the other vendors. The factor products listed on the AHCA cost comparison mirror those listed in the HHS cost proposal. AHCA employees apparently applied the factor product usage information from the second quarter of 2003 that was included on the spreadsheet distributed at the bidder's conference to the HHS factor product list. The AHCA spreadsheet distributed at the bidder conference lists 29 factor products by name and dosage. Of the 29 products, 15 are listed in the HHS cost proposal. The AHCA cost comparison created at Mr. Wells' direction includes only the 15 factor products listed on the HHS cost proposal. AHCA's cost comparison assumed no costs would be incurred, where the AHCA spreadsheet information indicated no usage of the factor product that had been included on the HHS cost proposal. AHCA's cost comparison did not include factor products which have been supplied by AHCA to Medicaid beneficiaries, but which do not appear on the HHS list. Mr. Wells relied on this cost comparison to determine that the cost proposal submitted by HHS offered the lowest cost to the agency and was entitled to the 660 points. Lynnfield and Caremark were both ranked according to cost proposals of AWP minus 39 percent, and according to the Summary Report and Recommendation memorandum, were awarded 652.74 points. Calculation of the points awarded to Lynnfield and Caremark in the Summary Report and Recommendation memorandum does not appear to comply with the formula set forth in the RFP. The AHCA cost comparison spreadsheet identifies the HHS proposed cost as $10,706,425.66 and identifies the AWP minus 39 percent cost as $10,795,477.48 (assigned as the Lynnfield and Caremark cost proposal). The Summary Report and Recommendation memorandum states the lowest cost proposal to be $10,706,405.66 (perhaps a typographical error). The methodology applied by AHCA assumed that all vendors would utilize identical quantities of identical factor products (based on historical usage in Quarter 2 of 2003 of those listed in the HHS cost proposal) and that there would be no cost savings related to disease management. The application of methodology to compare vendor cost proposals outside the process established by the RFP is clearly erroneous, arbitrary, and capricious. The vendors who are party to this proceeding assert that each other vendor's budgetary submission is insufficient, flawed, or unreliable for varying reasons. It is unnecessary to determine whether the budgetary information submitted by the vendors meets the requirements of the RFP because, despite having requested the information, AHCA has no interest in the data. There is no evidence that in making an award of points based on the cost proposals, AHCA relied on any of the budgetary information required by the RFP or submitted by the vendors.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order rejecting all proposals submitted in response to the RFP AHCA 0403. DONE AND ENTERED this 29th day of April, 2004, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of April, 2004. COPIES FURNISHED: Anthony L. Conticello, Esquire Thomas Barnhart, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Geoffrey D. Smith, Esquire Thomas R. McSwain, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Linda Loomis Shelley, Esquire Karen A. Brodeen, Esquire Fowler, White, Boggs, Banker, P.A. 101 North Monroe Street, Suite 1090 Post Office Box 11240 Tallahassee, Florida 32301 J. Riley Davis, Esquire Martin R. Dix, Esquire Akerman & Senterfitt Law Firm 106 East College Avenue, Suite 1200 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
The Issue Did Respondent Department of Labor and Employment Security (Department) properly reject the response submitted to the Department's Request For Proposal No. RFP 96-033-VA, For Computer Hardware and Related Equipment Maintenance Including Operating Software (RFP) by Petitioner Knaus Systems, Inc. (Knaus)? Did the Department provide Knaus with a clear point of entry to challenge the Department's decision, and, if so, did Knaus timely file its notice of protest or formal written protest?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: On January 29, 1996, the Department issued an RFP which requested a Vendor Technical Proposal (technical proposal) and a Vendor Cost Proposal (cost proposal). Knaus was on the Department's bidder's list and received a copy of the RFP around the end of January, 1996. Knaus is engaged in the business of selling and servicing computer hardware, and currently has nine contracts with the State of Florida in response to requests for proposals. As required by Rule 60A-1.002(9)(a), Florida Administrative Code, the original RFP contained the Department of Management Services' Form PUR 7033, revised 1/9/95, (cover sheet), which in pertinent part provides: PROPOSALS WILL BE OPENED 3:00 P.M., MARCH 19. 1996 and may not be withdrawn within 30 days after such date and time. POSTING OF PROPOSAL TABULATIONS Proposal tabulations with recommended awards will be posted for review by interested parties at the location where proposals were opened and will remain posted for a period of 72 hours. Failure to file a protest with- in the time prescribed in Section 120.53(5), Florida Statutes shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. Posting will be on or about MARCH 21, 1996 In pertinent part, Sections 2 and 5 of the RFP provide: 2.1 RFP Submission Date Vendors shall submit their proposals on or before the date and time indicated in Section 5.9 and to the location indicated in Section 5.12 of this Request For Proposal. * * * 2.5 Addenda All addenda to this Request For Proposal will be in writing, with content and number of pages described, and sent to all Vendors known to be in receipt of this Request For Proposal. The Vendor must acknowledge receipt of all addenda in in writing and submit with the Proposal. * * * 5.1 Bid Evaluation and Award Proposals which do not meet the requirements specified in this Request for Proposal will not be considered for award. Please return your sealed bid response in the enclosed self-addressed envelope labeled: BID: RFP 96-033-VA TIME: 3:00 p.m. DATE: March 19, 1996 The Proposal number must be clearly marked on the outside of the vendors submittal. Failure to identify a Proposal in the above prescribed manner shall result in automatic disqualification of the Proposal. * * * 5.9 Calendar of Events Listed below are the important date and times by which actions noted must be taken or completed. If the Department finds it necessary to change any of these dates or times, the change will be accomplished by addendum. Date/Time Event February 13, 1996 Written Vendors Inquiries Due February 22, 1996 Pre-proposal Conference (Vendor attendance is mandatory) February 28, 1996 Addenda issued by Department March 19, 1996 Opening of Vendor 3:00 p.m Technical Proposals April 2, 1996 Opening of Vendor 10:30 a.m. Cost Proposals April 4, 1996 Posting of RFP Award * * * Responsiveness and Rejection of Proposals All proposals must be in writing. A responsive proposal is an offer to perform the scope of services called for in the Request For Proposal. A Proposal may be rejected if it fails to meet the general requirements and mandatory specifications as stated in this Request for Proposal. . . . Submission of Proposals Sealed proposals must be received by the Department of Labor and Employment Security at the address noted below, on or before the date and time shown in Section 5.9 "Calendar of Events". . . . * * * The vendor must submit both a technical proposal for evaluation and a cost proposal. Both proposals must be in a separate sealed envelope and clearly marked on the outside stating technical proposal or cost proposal Both proposals must be delivered as stated above. * * * Proposals, including amendments, may be mailed or hand-delivered, but in either case must be received no later than 3:00 P. M. on March 19, 1996. . . . NUMBER OF COPIES: 1 original and 5 copies for each category bid SUBMIT TO: Vonnie Allen -- DLES Computer Maintenance, Department of Labor and Employment Security, 2012 Capitol Circle S.E. 104 Hartman Building, Tallahassee, Florida 32399-2169 DEADLINE: March 19, 1996 at 3:00 p.m * * * 5.16 Posting of Recommended Award Proposal tabulation with recommended award will be posted for review by interested parties at the Department's Office of Purchasing on or about the date noted on the cover sheet of this RFP, and will remain posted for a period of seventy-two (72) hours, not including weekends or holidays. [Emphasis supplied] In accordance with the initial RFP, the technical and cost proposals were to be submitted in separate sealed envelopes within a single envelope to the Department on or before 3:00 p.m. on March 19, 1996, which was also the date for opening the technical proposals. All vendors, including Knaus, understood that for their response to the RFP to be timely both the technical proposal and the cost proposal had be received by the Department on or before 3:00 p.m. on March 19, 1996, the time and date scheduled for opening the technical proposals set out in Section 5.9. The date (March 21, 1996) shown on the cover sheet of the RFP for posting proposal tabulations with recommended awards is different from the date (April 4, 1996) shown in Section 5.9 of the RFP for posting RFP award. It is unclear whether these are two separate events requiring separate dates or a conflict as to the posting date. In accordance with the terms of the RFP, the Department conducted a mandatory Pre-proposal Conference on February 22, 1996. Knaus was represented at this conference. Questions raised by Knaus and other vendors at this conference necessitated an amendment to the RFP. On March 13, 1996, the Department issued Addendum [No.] 1 to the RFP, a copy of which was received by Knaus. In pertinent part, Addendum [No.] 1 provides: March 13, 1996 Addendum: [No.] 1 Bid: [No.] 96-033-VA Opening Date/time: March 19, 1996, changed (Technical) to April 2, 1996 April 2, 1996 changed to April 16, 1996 (Cost) Dear Sir or Madam: The subject Request for Proposal is hereby amended as follows: * * * 5.1, 5.9, 5.12 RFP Technical Opening is to be changed from 3:00 p.m. on March 19, 1996 to 3:00 p.m. on April 2, 1996. The Cost Opening is to be changed from 10:30 a.m. April 2, 1996 to 10:30 a.m. April l6, 1996. Addendum [No.] 1 did not amend or delete the requirement of the RFP that the technical and cost proposals be sealed in separate envelopes and both envelopes to be placed in the self-addressed envelope furnished with the RFP and submitted to the Department. All vendors, other than Knaus, relying only on the RFP and Addendum [No.] 1 concluded that both the technical and cost proposal were to be submitted on or before the opening of the technical proposal and therefore, submitted their technical and cost proposals on or before 3:00 p.m. on April 2, 1996. None of the vendors, including Knaus, submitted their response to the RFP on or before March 19, 1996, the original submittal date for responses and the original opening date for technical proposals. The Department received Knaus' technical proposal on April 1, 1996, and Knaus' cost proposal on April 5, 1996. On April 11, 1996, Vonnie Allen, the Department's Purchasing Specialist, telephoned Anthony J. Knaus, President and Chief Executive Officer for Knaus, to advise him that the Knaus proposal was non-responsive because the Department had not received both the technical and cost proposal before the opening of the technical proposals at 3:00 p.m. on April 2, 1996. During this telephone conversation, Anthony Knaus expressed his understanding of Addendum [No.] 1 as not requiring receipt of the cost proposal by the Department before the opening of the technical proposal at 3:00 p.m. on April 2, 1996. After his conversation with Vonnie Allen on April 11, 1996, Anthony Knaus wrote Allen a letter advising her that based on Addendum [No.] 1 that Knaus intended to file a protest in regards to the RFP. On April 15, 1996, Anthony Knaus again wrote Allen a letter in regards to the April 11, 1996, telephone conversation advising Allen that he had not received written notification from the Department of Knaus' noncompliance with the RFP but that Knaus would proceed with the protest. The letter further advised Allen that Knaus intended to file a formal protest. On April 19, 1996, Barbara Chance, Purchasing Director for the Department, wrote Knaus a letter advising Knaus that its response to the RFP was non-responsive due to the cost proposal not being submitted as stated in the RFP, and returning Knaus' certified check that had been submitted with its proposal. No further explanation of the basis for this determination was included in the letter. Likewise, there was no notice of Knaus' right to challenge the Department's determination as required by Section 120.53(5)(b), Florida Statutes, and Rule 60A-1.001(7) and (8), Florida Administrative Code. On April 23, 1996, the Department issued what is titled "NOTIFICATION [No.] 2" concerning Cost Opening Date which advised Responsive Vendors that the cost opening had been moved to 9:00 a.m. on April 24, 1996, and such opening was to be held at the Hartman Building, 2012 Capital Circle, Southeast. The letter further advised the Responsive Vendors that posting of the intended award would be "approximately Thursday, April 25, 1996 at 9:00 a.m.". Since the Department did not consider Knaus a responsive vendor, Knaus did not receive a copy of "NOTIFICATION [No.] 2". Knaus was never advised by the Department of the change in dates for the posting of intended award prior to or during the time of posting. On April 25, 1996, Dennis H. McVeen, General Manager for Knaus, wrote the Department's General Counsel concerning Barbara Chance's letter of April 19, 1996, and requested that Knaus be advised of the exact deadline for filing its protest. The Department never responded to this letter. The Department did not respond to any of Knaus' letters, and has yet to advise Knaus of its right to contest the Department's determination that because Knaus' cost proposal was not received by the Department on or before the opening of the technical proposal at 3:00 p.m. on April 2, 1996, Knaus' response to the RFP was non-responsive . On April 25, 1996, the Department posted the bid tabulations for the RFP, which, in pertinent part, states: "FAILURE TO FILE A PROTEST WITHIN THE TIME PRESCRIBED IN SECTION 120.53(5). FLORIDA STATUTES, SHALL CONSTITUTE A WAIVER OF PROCEEDINGS UNDER CHAPTER 120, FLORIDA STATUTES." The Bid Tabulation indicated a Posting Time/Date from 8:00, 4/25 until 8:00, 4/30. The Bid Tabulation does not indicate whether 8:00 was a.m. or p.m. However, Allen testified that it was intended to be a.m. Knaus was listed on the Bid Tabulation as to "Technical only" and was shown as NR or non-responsive. The Department has not fully evaluated Knaus' response to the RFP. Knaus obtained a copy of the Bid Tabulation sometime after 8:00 a.m. on April 30, 1996, which was after the time for posting. Obtaining a copy of the Bid Tabulation was the result of Knaus' own efforts and cannot be attributed to any efforts on the part of the Department. Knaus filed its Petition For Administrative Proceedings, Notice of Protest and Formal Written Protest on May 13, 1996, with the Department. Knaus did not file a Notice of Intent to Protest or Formal Protest addressed to the specifications contained in the RFP or Addendum [No.] 1. There was no evidence that Knaus gained any advantage by submitting the cost proposal after the technical proposals were opened. There is sufficient evidence to establish facts to show that Knaus knew or should have known that the RFP as amended by Addendum [No.] 1 required that both the technical and cost proposal be submitted together on or before April 2, 1996.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is recommended that the Department of Labor and Employment Security enter a final order that Knaus' failure to timely submit its cost proposal was a minor irregularity and is waived, and directing staff to reevaluate all responses, including Knaus', under the RFP, as amended. RECOMMENDED this 24th day of July, 1996, at Tallahassee, Florida. WILLIAM R. CAVE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of July, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 96-2365BID 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 in this case. Knaus' Proposed Findings of Fact. Proposed findings of fact 1 through 37, 44, 45 and 47 are adopted in substance as modified in Findings of Fact 1 through 25. Proposed findings of fact 38 through 43 go to the weight of the testimony of witness and are not considered as proposed findings of fact. Proposed finding of fact 46 is neither material nor relevant. Proposed finding of fact 48 is covered in the Preliminary Statement. Department's Proposed Findings of Fact. 1 Proposed findings of fact 1 through 14 and 16 through 21 are adopted in substance as modified in Findings of Fact 1 through 25. 2. Proposed finding of fact 15 is neither material nor relevant. COPIES FURNISHED: Douglas L. Jamerson, Secretary Department of Labor and Employment Security Suite 303, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security Suite 307, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Daniel H. Thompson, Esquire Berger and Davis, P.A. 215 South Monroe Street, Suite 804 Tallahassee, Florida 32301
Findings Of Fact In April of 1977, Respondent contracted to purchase approximately four and one-half acres of land in Pinellas County, Florida on which it sought to develop a 120-bed nursing home. In May, 1977, Respondent filed an application for a Certificate of Need pursuant to the provisions of Section 381.494, Florida Statutes. The certificate was issued on August 8, 1977 by Petitioner to Respondent for the proposed 120-bed nursing home. The certificate provided on its face that it would terminate on August 8, 1978, " . . . with renewal possible only if applicant clearly demonstrates positive construction efforts." In addition, a cover letter forwarded to Respondent by Petitioner with the certificate indicated that the termination date " . . . is extendable provided you can demonstrate as of that date, positive action toward project accomplishment." Prior to receiving the certificate, Respondent retained an architect to prepare plans and specifications for the nursing home, and had made preliminary efforts to obtain financing for the construction of the facility. After issuance of the certificate, Respondent and his architect met with Petitioner's architect to submit schematic drawings for review. Respondent's schematic drawings were approved by Petitioner on August 31, 1977. When Respondent's initial efforts to obtain financing failed, further financing was sought unsuccessfully in Indiana and in Pinellas County, Florida. Respondent's efforts to obtain financing on its own continued to be unsuccessful. As a result, Respondent retained a mortgage broker to attempt to locate an institution to advance the money to construct the project. Public financing through the sale of municipal bonds was attempted, but failed when the City Commission of Safety Harbor, Florida voted against the bond proposal. Subsequently, in June of 1978, after some nine months of continuous attempts to locate an institution to finance construction of the facility, Respondent secured a loan commitment for the project at a cost to Respondent of $13,000. After obtaining the loan commitment, Respondent contacted its architect and requested that he proceed with preparation of plans and specifications for the preliminary and final stages of the project. The architect had ceased his efforts in this direction on Respondent's instructions after approval of the schematic drawings in August of 1977, because it was felt that further efforts in this regard would be imprudent in the absence of a commitment for financing construction of the project. When Respondent's architect attempted to contact the architect for Petitioner to set up a meeting on June 24, 1978, he discovered that Petitioner's architect would not be available for consultation until the following month. When a meeting was finally arranged for July 24, 1978, Petitioner's architect insisted on certain time-consuming changes in the schematic drawings. However, Respondent's architect indicated that had Petitioner's architect advised him on July 24, 1978 that the final plans were required to be filed by August 8, 1978, he could have accomplished the preparation of those plans and specifications by that date. In any event, the changes in the plans and specifications required by Petitioner's architect as a result of the July, 1978 meeting were completed and submitted to Petitioner on the day prior to hearing in this cause, well after the certificate expired on August 8, 1978. These plans contain much of the data customarily found in final construction plans, but Petitioner obviously had not had sufficient time to conduct an in-depth review of those plans prior to the hearing. In any event, Respondent's architect indicated that final construction plans could be completed in no more than two weeks, and that actual construction could begin within two to three days from Petitioner's approval of final construction plans. By letter dated August 4, 1978, Petitioner advised Respondent that its certificate would expire on August 8, 1978 and that a six-month extension might be granted if requested, and if the following four criteria had been met: "1. If applicable, has a site been firmly secured? Has firm financing been secured? Have final construction plans and speci- fications for the project been submitted for review by the Bureau of Health Facilities? Can it reasonably be expected that the project can be under construction within the requested additional time?" Respondent, through its President, testified that it had never been advised by Petitioner that all four of these criteria would have to be met in order to obtain a six-month extension of the certificate. In fact, Respondent apparently relied on the wording in the certificate itself that an extension would be possible " . . . only if applicant clearly demonstrates positive construction efforts . . .", and the language of the covering letter from the Administrator of the Office of Community Medical Facilities which indicated that the expiration date of the certificate would be extendable upon a showing of " . . . positive action toward project accomplishment." By letter dated August 4, 1978, to the Director of the Office of Community Medical Facilities, Respondent requested an extension of its certificate. As grounds for this extension, Respondent advised Petitioner that its earlier unsuccessful attempts to obtain financing had caused inordinate delay in preparing to begin construction of the facility. In fact, in Petitioner's six-month review of the status of Respondent's certificate, Respondent informed Petitioner on March 20, 1978, that it had been unable to procure permanent financing. Subsequently, on June 6, 1978, Respondent informed Petitioner that it had obtained the necessary financing, and furnished a copy of the commitment letter from the Community Bank of Seminole, Florida, to Petitioner. As further justification for an extension of its certificate, Respondent advised Petitioner that as a result of a change in criteria by the City of Clearwater, Florida, an impact study which it was required to submit to the city had to be revised, thereby causing a delay in rezoning the property which it had acquired for construction of the facility a Respondent further advised Petitioner in its August 4, 1978 letter that its working drawings for the facility were fifty percent complete, and that it expected to begin construction by November 1, 1978. Petitioner contends that Respondent's certificate should be revoked, and that the requested extension should not be granted because Respondent has not firmly secured a site for the facility; has not secured firm financing; has not submitted final construction plans and specifications for review; and that, as a result, it cannot reasonably be expected that the project can be under construction within the requested additional time. Respondent's contract to purchase the land on which the facility is to be constructed contains a provision that the purchase of the property must be concluded on or before October 15, 1977. This provision of the contract was not performed by October 15, 1977. However, testimony established that Respondent and the sellers of the property have continued through the present time a joint effort to obtain rezoning of the land to allow construction of the facility. Consequently, the parties have apparently, as between themselves, agreed not to consider the October 15, 1977, closing date binding. The land purchase contract also contains a contingency which would relieve Respondent from its obligation to purchase the property should it be unable to obtain a rezoning of the parcel to an RM-28 zoning classification. Although evidence introduced at the hearing indicates that the local government might not be agreeable to rezoning the property to RM-28, there is nothing in the record to indicate that the facility might not be constructed on the property should it be rezoned to a different classification. Further, the contingency in the contract for rezoning to RM-28 was obviously intended for the benefit of Respondent, and Respondent would, therefore, be free to waive that requirement should the facility be allowed to be constructed on the property in a different zoning classification. Although final construction plans have admittedly not been filed with Petitioner for review, the evidence is uncontradicted that this failure was due to a combination of the Respondent's inability to obtain financing, and Petitioner's architect's unavailability to consult with Respondent's architect following issuance of the loan commitment. In addition, evidence of record is also uncontradicted to the effect that final construction plans could be submitted within two weeks after granting of an extension of the certificate, and that construction on the project could commence within two to three days after approval of the final plans and specifications. Respondent's mortgage loan commitment contains requirements that necessary rezoning of the property be obtained by September 1, 1978, and that the commitment in its entirety expires on September 15, 1978. However, Respondent's Predisent testified that he had obtained a 60-day extension of this commitment. In any event it appears that the loan commitment was in existence and effective as of the date of the expiration of the certificate and the date on which Petitioner issued its Administrative Complaint.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a Final Order be entered by the State of Florida, Department of Health and Rehabilitative Services, denying the relief sought in the Administrative Complaint against Respondent, Shive Nursing Centers of Florida, Inc., and that Respondent's certificate be extended by the Department for a period of 6 months from the date of final agency action in this cause. RECOMMENDED this 14th day of December, 1978, in Tallahassee, Florida. WILLIAM E. WILLIAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building MAILING ADDRESS: Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Steven W. Huss, Esquire Building 1, Room 310 1323 Winewood Boulevard Tallahassee, Florida 32301 John T. Blakeley, Esquire 911 Chestnut Street Post Office Box 1368 Clearwater, Florida 33517
The Issue The issue in this case is whether Petitioner, a disappointed bidder, waived its right to pursue administrative remedies by failing timely to file a notice of intent to protest.
Findings Of Fact On November 26, 2002, Respondent Department of Transportation ("Department") issued a request for proposals on a contract for the development of a transportation facility, which was to be located adjacent to the Miami International Airport. On March 3, 2002, Petitioner MIC Development, LLC ("MIC") submitted the only proposal that the Department received in response to this solicitation. The next activity of relevance to this case occurred three years later, on May 20, 2005, when a selection committee decided to reject all proposals (as mentioned, there was just one) and discontinue the procurement. By two letters dated May 31, 2005, each of which was addressed to a principal of MIC and marked "certified mail," "return receipt requested," the Department notified MIC of its decision. It is undisputed that the Department did not post its decision on the internet. There is, however, a genuine and spirited dispute concerning the date on which MIC received the Department's decision-letters; as a result, the evidence is in conflict regarding whether MIC received the Department's notice of rejection on June 3, 2005, as the Department contends, or on June 10, 2005, as MIC maintains. It is not necessary to resolve this particular dispute because——for reasons that will soon become apparent——the contested fact is immaterial. On June 14, 2005, MIC filed a notice of intent to protest the Department's decision to reject its proposal. Nine days later, on June 23, MIC filed its formal written protest. The Department insists that MIC's initial protest- notice, having been filed more than 72 hours after MIC's receipt of the notice of rejection, was untimely, thereby constituting a waiver of the right to a hearing. The Department urges that this case be dismissed on that basis. MIC asserts that its notice was filed within 72 hours after receiving the Department's letters——which it claims were defective in any event and hence legally insufficient to trigger the 72-hour filing period——and that, even its protest-notice were untimely, equitable principles should be invoked to allow this case to go forward notwithstanding the filing delay.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department refer this matter to DOAH for a final hearing on the merits of MIC's protest of the rejection of its proposal. DONE AND ENTERED this 20th day of April, 2006, in Tallahassee, Leon County, Florida. S 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 20th day of April, 2006.
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-333 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 corrgct copies have been furnished to the persons listed below in the manner described, on this 20 day of September, 2009. 4 Z gency Clerk Florida Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100 U.S. Mail: The Honorable Bram D. E. Canter Brenna M. Durden, Esq. Administrative Law Judge Lewis, Longman & Walker, P.A. Division of Administrative Hearings 245 Riverside Avenue, Suite 150 The DeSoto Building Jacksonville, Florida 32202 1230 Apalachee Parkway Tallahassee, FL 32399-3060 Kenneth B. Hutchins 22645 Fishcreek Highway Conrad C. Bishop, Jr., Esq. Perry, Florida 32384 The Bishop Law Firm, P.A. P.O. Box 167 Perry, Florida 32348 Hand Delivery: Matthew Davis, Esquire Assistant General Counsel Department of Community Affairs 2555 Shumard Oak Blvd. Tallahassee, Florida 32399
The Issue This is a bid protest proceeding pursuant to Section 120.57(3), Florida Statutes, in which the primary issue raised by the Petitioner (who is the second-ranked proposer) is that the subject contract should be awarded to the Petitioner because the first-ranked proposer submitted a non-responsive proposal. The Petitioner's alternative arguments challenge the manner in which the proposals were evaluated and assert, alternatively, that, if properly evaluated, the Petitioner would be the first-ranked proposer, or that the evaluation was so flawed as to require that all bids be rejected and that the agency embark upon a new request for proposals. The first-ranked proposer intervened to protect its substantial interests. The primary issues raised by the first- ranked proposer are that its own proposal is responsive, that any flaws in the evaluation process are insufficient in nature and number to warrant embarking on a new request for proposals, and that the second-ranked proposer lacks standing to challenge the proposed agency action because the proposal of the second-ranked proposer is asserted to be non-responsive. The third-ranked proposer intervened primarily in a defensive posture to protect its interests from any adverse consequences that might flow from the issues raised by the other two proposers, as well as to benefit from any windfall that might result from the challenges to the sufficiency of the other two proposals.
Findings Of Fact Preparation and issuance of the subject RFP The state agency involved in this dispute is AHCA. AHCA's powers and duties include the administration of Florida's Medicaid program. The Medicaid program provides medical services to eligible Medicaid recipients under Chapter 409, Florida Statutes, the United States Code Title 19, which involves Medicaid, and to children from birth until five years of age under United States Code Title 21, State Children's Health Insurance Program of the Social Security Act, through enrolled providers. On or about March 3, 2005, AHCA issued the subject RFP, which solicited proposals to develop the MMIS/DSS and to provide fiscal agent operations. The RFP required proposers to separately submit a technical proposal and a cost proposal. The RFP also required implementation of the new MMIS/DSS technical systems by July 1, 2007. However, the RFP permitted the implementation of some non-critical business functions after July 1, 2007. The RFP incorporated several separate addenda, numbered one through seven. Addendum Six, also had a separately issued Clarification Notice. Each addendum also included a list of questions asked by potential proposers concerning the RFP, and AHCA's answers to those questions. The questions and answers were part of the addenda in which they appeared and, therefore, became part of the RFP. Each proposer was required to include with its proposal a signed acknowledgement certifying its receipt of each addendum. Section 20.2 of the RFP includes the following: The State has established certain requirements with respect to responses submitted to competitive solicitations. The use of "shall", "must", or "will" (except to indicate futurity) in this solicitation, indicates a requirement or condition from which a material deviation may not be waived by the State. A deviation is material if, in the State's sole discretion, the deficient response is not in substantial accord with the solicitation requirements, provides an advantage to one respondent over another, or has a potentially significant effect on the quality of the response or on the cost to the State. Material deviations cannot be waived. The words "should" or "may" in this solicitation indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such desirable feature will not in itself cause rejection of a response. Sections 20.17 and 20.18 of the RFP read as follows: Correction of Proposal Errors If the Agency determines that a proposal contains a minor irregularity or an error, such as a transposition, extension or footing error in figures that are presented, the Agency may provide the Vendor an opportunity to correct the error. Information that is required to be included in the proposal and is inadvertently omitted shall not be accepted under this error correction provision. All information required to be included in a proposal must be received by the date and time that proposals are due to the Agency. The Agency reserves the right to seek clarification from a Vendor of any information contained in the proposal. Minor irregularities in proposals may be waived by the evaluators. A minor irregularity is a variation from the RFP terms and conditions that does not affect the price of the proposal or give one applicant an advantage or benefit not enjoyed by others or adversely affects the State's interest. Rejection of Proposals Proposals that do not conform to the mandatory requirements of this RFP shall be rejected by the Agency. Proposals may be rejected for reasons that are provided in Appendix M, Checklist of Mandatory Items; for failure to comply with any requirement of this RFP; when the proposal is conditional; or when in the Agency discretion, it is in the best interests of the Agency. The Agency reserves the right to reject any and all proposals. The three proposers ACS Parent, EDS Subsidiary, and Unisys each submitted a proposal in response to the subject RFP. EDS Parent did not submit a proposal in response to the RFP. A partnership or joint venture comprised of EDS Subsidiary and EDS Parent did not submit a proposal in response to the RFP. EDS Parent is not a party to this proceeding. A partnership or joint venture comprised of EDS Subsidiary and EDS Parent is not a party to this proceeding. In the MMIS area, EDS Parent and EDS Subsidiary frequently both sign the proposals and the contracts. EDS Parent and EDS Subsidiary as a matter of practice usually perform the EDS MMIS work together. As a general practice, EDS Parent stands behind the obligations of EDS Subsidiary as a guarantor of any unfulfilled liabilities of EDS Subsidiary, even when EDS Subsidiary is the only signer on a contract. And it may well be that EDS Parent and EDS Subsidiary intended to be co-proposers or joint adventurers on the subject RFP, but no such intention was set forth in the EDS Subsidiary proposal.2 EDS Parent and EDS Subsidiary are two separate legal entities. EDS Parent is a publicly traded Delaware corporation that was formed in the 1960s. EDS Subsidiary is a Delaware limited liability company that was formed in 1997. EDS Subsidiary is a wholly-owned subsidiary of EDS Parent. EDS Subsidiary was specifically established and has been operated as a separate business entity for the express purposes of obtaining the advantages of certain operational flexibilities, as well as certain tax advantages that may result from the operations of a separate business entity. During at least one period in its existence EDS Subsidiary owned assets valued at more than one billion dollars.3 Delivery of the proposals The RFP originally called for proposals to be submitted to AHCA's "Issuing Officer" at 2727 Mahan Drive, Tallahassee, FL 32308. Angela Smith was designated as the "Issuing Officer" of the RFP. Addendum Two to the RFP, which was issued on April 1, 2005, changed the delivery address for all proposals to: 2308 Killearn Center Boulevard, Tallahassee, Florida 32309. Proposals were required to be submitted at this new address by no later than 5:00 p.m. on June 2, 2005. EDS Subsidiary acknowledged receipt of Addendum Two. Section 20.08 of the RFP made it clear that it was each Proposer's responsibility "to obtain any issued addenda and to consider these materials in their response to the RFP." The RFP further expressly provided, "PROPOSALS RECEIVED AFTER THE SPECIFIED TIME AND DATE WILL NOT BE CONSIDERED AND RETURNED UNOPENED." In accordance with the requirements of the RFP, as amended by Addendum Two, ACS Parent and Unisys properly delivered their proposals to 2308 Killearn Center Boulevard, Tallahassee, Florida 32309. EDS Subsidiary's proposal consisted of 15 cartons. The proposal's cover letter and each carton were correctly addressed to 2308 Killearn Center Boulevard, Tallahassee, Florida 32309, but the proposal was never delivered to that address. Rather, EDS Subsidiary's proposal was delivered to AHCA's offices at 2727 Mahan Drive, Tallahassee, Florida 32308. Pat King, Marc Vandenbark, and Milt Ashford, employees of EDS Parent, delivered EDS Subsidiary's proposal to AHCA's 2727 Mahan Drive address at approximately 12:35 p.m. on June 2, 2005. Jason Kinchon, an AHCA employee, met Messers. King, Vandenbark, and Ashford outside of the AHCA office building and directed them to a second floor room in Building No. 2 where the EDS Subsidiary proposal was delivered. Mr. Kinchon brought a hand cart with him. Messrs. King, VanDenbark, Ashford, and Kinchon jointly loaded the proposal on a hand truck on multiple occasions near the rear entrance of the AHCA Contract Administration Office. It took three trips with the hand cart to move the proposal into AHCA Building Number 2 at 2727 Mahan Drive, Tallahassee, Florida. Messrs. Kinchon and King took the loaded hand cart into the AHCA Building Number 2 on the three trips into the building. Messrs. Kinchon and King placed the proposal in a room on the second floor of AHCA Building Number 2. Subsequent to delivery, AHCA secured the proposal to ensure that no unauthorized persons had access to the proposal. Messrs. King, VanDenbark, and Ashford attended the public proposal opening where they saw AHCA open the original proposal. At Mr. King's request, Mr. Kinchon provided a receipt for the EDS Subsidiary proposal bearing a date-time stamp and Mr. Kinchon's signature. After 5:00 p.m. on June 2, 2005, Angela Smith, AHCA's Issuing Officer for the RFP, called Mr. King to inquire about the status of EDS Subsidiary's proposal. Mr. King explained that he had delivered EDS Subsidiary's proposal to the incorrect Mahan Drive address and then faxed Ms. Smith a copy of Mr. Kinchon's receipt. After first conferring with legal counsel, Ms. Smith later informed Mr. King that AHCA would nevertheless accept the EDS Subsidiary proposal. The next day, at Ms. Smith's direction, other AHCA employees retrieved the EDS Subsidiary proposal from 2727 Mahan Drive, Tallahassee, Florida 32308, and delivered it to the AHCA office located at 1669 Mahan Center Boulevard, which was the address where AHCA planned to open, and in fact did open, all three of the proposals. On that same day, AHCA employees retrieved the ACS Parent proposal and the Unisys proposal from 2308 Killearn Center Boulevard and delivered those two proposals to the AHCA office located at 1669 Mahan Center Boulevard, at which address all three proposals were eventually opened. The delivery of the EDS Subsidiary proposal to an incorrect address did not confer any advantage to EDS Subsidiary, nor did it result in any detriment to either of the other proposers. EDS Subsidiary had no more time to prepare its proposal than its competitors and had no opportunity to see the bids of its competitors before submitting its own. The delivery to an incorrect address also did not result in any detriment to AHCA. On the day of the opening of the proposals, AHCA had to move each of the three proposals from the place where each proposal was received to the place where all of the proposals would be opened. It was no significant burden for AHCA to retrieve two proposals from one location and to retrieve the third from another location. The bid bond submitted by EDS Subsidiary On June 3, 2005, AHCA opened the technical proposals that were submitted by ACS Parent, EDS Subsidiary, and Unisys. Two AHCA employees, Angela Smith and Sally Morton-Crayton, presided over the opening. At the opening, Ms. Smith and Ms. Crayton reviewed each proposal to ensure the presence of those items required by the mandatory checklist located in Appendix M to the RFP. Section 70.4 of the RFP reads as follows: Each proposal will be reviewed for responsiveness to the mandatory requirements set forth in this RFP. This will be a yes/no evaluation. The purpose of this phase is to determine if the Technical Proposal is sufficiently responsive to the RFP to permit a complete evaluation. Mandatory requirements for the Technical Proposal are presented in a checklist in Appendix M. Failure to comply with the instructions or to submit a complete proposal will deem a proposal non-responsive, and will cause the proposal to be rejected with no further evaluation. The state reserves the right to waive minor irregularities. No points will be awarded for passing the mandatory requirements. As part of their review, Ms. Smith and Ms. Crayton did not actually read or analyze the mandatory items to determine whether the proposals complied with the RFP's requirements, but only looked to see if the items were present. The RFP required each proposer to submit a Proposal Guarantee with its proposal. In this regard, Section 20.12 of the RFP states: 20.12 Proposal Guarantee One proposal guarantee must be included in the sealed package with the original Technical Proposal. The original Technical Proposal shall be accompanied by a proposal guarantee payable to the State of Florida in the amount of $500,000.00. The form of the proposal guarantee shall be a bond, cashier's check, treasurer's check, bank draft, or certified check. If the proposal guarantee is a bond, the bond shall be written by a surety company authorized to do business in the State of Florida and signed by a Florida Licensed Agent. If a non-resident Florida Licensed Agent signs the bond, the bond shall be considered to have been made and executed in the State of Florida. All proposal guarantees shall be returned upon execution of a legal contract with the successful Vendor. If the successful Vendor fails to execute a contract within ten (10) consecutive calendar days after a contract has been presented to the Vendor for signature, the proposal guarantee shall be forfeited to the State. The proposal guarantee from the successful Vendor shall be returned only after the Agency has received the performance bond required under Section 30.24 of this RFP. The Proposal Guarantee submitted with the EDS Subsidiary proposal did not refer to any proposal submitted by EDS Subsidiary and did not name EDS Subsidiary as principal on the Proposal Guarantee. Fidelity and Deposit Company of Maryland is the surety that issued the Proposal Guarantee. The Proposal Guarantee named EDS Parent as the principal and the State of Florida as the obligee. On its face, the Proposal Guarantee provided security for a proposal submitted by EDS Parent (which proposal never existed), but not for a proposal submitted by EDS Subsidiary. The Proposal Guarantee does not indicate that EDS Parent, as the principal on the bond, is involved in a partnership or joint venture with any other entity, including EDS Subsidiary. Specifically, on its face, the Proposal Guarantee does not reference any entity, partnership, or venture other than EDS Parent as the principal. The Proposal Guarantee included in EDS Subsidiary's proposal does not guarantee EDS Subsidiary's proposal, but rather specifically references a proposal by EDS Parent; a proposal which never existed.4 Financial statements submitted by EDS Subsidiary Section 60.2.4(2) of the RFP required proposers to submit the following financial information: Corporate Financial Statements Audited financial statements for the legal contracting entity (and parent company if applicable) and subcontractors, sufficient to demonstrate the capability to perform this contract, shall be provided for each of the last three fiscal years. These shall include: Balance sheets; Statement of income; Statements of changes in financial position; Auditor's reports; Notes to financial statements; and Summary of significant accounting policies. If all of these are not provided, please explain why. The requirement quoted immediately above was amended by Addendum One, which included the following question and answer which became part of the RFP: Question: Audited financial statements are required in this section. However, many subcontracting firms may not be publicly held with the required forms available. What will the Agency accept for these financial requirements for non-public firms? Answer: If audited financial statements exist they are to be submitted. If audited financial statements do not exist, unaudited statements or financial information of the type that is contained in financial statements may be submitted with an appropriate explanation. (Emphasis added.) EDS Subsidiary's proposal did not include any financial information, audited or otherwise, from which the financial condition of EDS Subsidiary could be determined. Rather, the proposal only included consolidated audited financial statements for EDS Parent. In its proposal, under Tab 4, EDS Subsidiary explained: "EDS Information Systems (sic), L.L.C., will be the contract signing authority for the Florida Medicaid project. As a wholly owned subsidiary of EDS, EDS Information Systems (sic), L.L.C., is not a separate corporation and, as such, does not have separate financial statements. Throughout this RFP response, we will use the term ‘EDS’ to refer to this organization." While EDS Subsidiary may not have had audited separate financial statements, it certainly had "financial information of the type that is contained in financial statements." Without receiving any "financial information of the type that is contained in financial statements," AHCA has no information at all about the financial circumstances of EDS Subsidiary.5 In its proposal, on the title page under Tab 2, EDS Subsidiary stated that the vendor's name was "EDS Information Services, L.L.C." And in the transmittal letter under Tab 2 of the proposal, EDS Subsidiary states: "EDS Information Services, L.L.C., a subsidiary of the of Electronic Data Systems, (hereafter EDS), is pleased to submit our response to the Request for Proposal (RFP) 0514 issued by the Agency for Healthcare Administration." The transmittal letter also states: "EDS' federal tax identification number is 75-2714824." Tax identification number 75-2714824 is the tax identification number of EDS Subsidiary. The transmittal letter also lists "EDS Information Services, L.L.C." as the "Prime Contractor" and states that its "Corporate Charter Number" is M97000000533. That number is the document number assigned by the Florida Department of State to EDS Subsidiary. (The document number assigned by the Florida Department of State to EDS Parent is F96000001705.) The transmittal letter under Tab 2 of the EDS Subsidiary proposal also states: The following table reflects the exact amount of work in percentages to be completed by the Prime Contractor and each subcontractor. Company Percent of Work EDS Information Services, L.L.C. 76.5% First Health Services Corporation 21.8% APS Healthcare, Inc. 1.3% ProviderLink, Inc. .4% Cost proposal submitted with EDS Subsidiary's proposal Section 60.3 of the RFP required proposers to include in their Cost Proposal "a firm fixed price for each of the requirements contained on the pricing schedules within this section." Additionally, the mandatory checklist contained in Appendix M of the RFP required proposers to submit a "firm, fixed price without any additional stipulations or limitations." ACS Parent's Cost Proposal was $38 million less than the next least expensive Cost Proposal. ACS Parent submitted the lowest Cost Proposal and was awarded 600 points, consistent with the language of the RFP. The Cost Proposals for EDS Subsidiary and Unisys were awarded scores of 508 and 523, respectively, based on the application of a specified formula in the RFP and the ratio their prices bore to ACS Parent's price. Ms. Smith and Ms. Crayton oversaw the review and scoring of the proposers' Cost Proposals. During their opening of the Cost Proposals, Ms. Smith and Ms. Crayton did not analyze the Cost Proposal submitted with EDS Subsidiary's proposal to determine if it was submitted by the same legal entity. Ms. Smith and Ms. Crayton did not analyze EDS Subsidiary's Cost Proposal to determine whether it proposed a firm fixed price without additional stipulations or limitations. The Cost Proposal submitted with the EDS Subsidiary proposal identified a different legal entity, Electronic Data Systems, LLC, as the proposer. The Cost Proposal submitted with EDS Subsidiary's proposal included a firm, fixed price. The language in that proposal that described the "Cost Assumptions" underlying the Cost Proposal did not change the character of the Cost Proposal; it remained firm and fixed. Proposed EDS Subsidiary local operations facility Section 50.3.2.1 of the RFP reads as follows: 50.3.2.1 Location of Operations Facilities The Contractor's local facility shall be located within a five (5) mile radius of the State offices located at 2727 Mahan Drive, Tallahassee, Florida. The Agency prefers a location convenient to the Agency and will consider the location in the evaluation process. Consideration of potential expansion of operations should be given in choosing a site for the facility. The language quoted immediately above is rather ambiguous as to what must be included in the proposal regarding the proposer's local facility. It does not clearly state that a specific location must be identified in the proposal. The specific instructions in the RFP about what must be included under each tab of the proposals do not clearly require the inclusion of a specific address for the proposer's local facility. Further, the instructions in the Evaluation Manual do not appear to require the inclusion of a specific address. ACS Parent's proposal included a specific facility and address for its proposed operations facility location in Tallahassee. Unisys' proposal included the addresses for two possible locations, but did not include a specific proposed facility in Tallahassee. EDS Subsidiary's proposal did not include a proposed facility or an address for its operations facility in Tallahassee. EDS Subsidiary simply agreed to meet AHCA's requirements for a local facility. At its oral presentation, which occurred approximately six weeks after submission of the proposals, EDS Subsidiary first provided AHCA with a possible address for its local operations facility, at 325 John Knox Road in Tallahassee. Staffing information submitted by EDS Subsidiary The RFP required proposers to identify within their proposals certain individuals to fill various Named Staff positions. The Named Staff positions carried certain educational qualification requirements based on the type of work expected from each position. The Named Staff positions were separately identified because they were important positions and AHCA considered them critical to the success of the project. Addendum One to the RFP contained the following question and answer which became part of the RFP: Question: Will the State allow equivalent work experience in lieu of a bachelor's degree? Answer: The State will allow equivalent work experience, non-degree training and alternate certification in lieu of a required bachelors degree, provided the Vendor clearly identifies and explains the equivalence. Qualifications of proposed staff are an important consideration in the scoring of proposals. Several of the individuals that EDS Subsidiary and Unisys proposed to fill the Named Staff positions did not facially meet the minimal educational requirements as stated in the RFP. However, from resumes and other information submitted with the EDS Subsidiary and the Unisys proposals, AHCA could determine that the proposed staff at issue possessed degrees in related fields and/or had sufficient qualifications through extensive experience in the areas in which they would be working. Technical solutions proposed by EDS Subsidiary At paragraph 24 of the ACS Parent's amended petition, it asserts that EDS Subsidiary "failed to meet many of the mandatory technical requirements concerning the new FMMIS/DSS. . . ." In seven following subparagraphs the petition asserts seven specific alleged technical deficiencies in the EDS Subsidiary proposal. In view of the disposition of certain other issues in this case, it seems neither useful nor necessary to make detailed findings of fact (or conclusions of law) regarding these alleged technical deficiencies in the EDS Subsidiary proposal. In this regard it is sufficient to find that the technical solutions proposed in the EDS Subsidiary proposal were in compliance with the technical requirements of the RFP in all material matters. There are perhaps a few minor irregularities in a few minor details, but there is nothing in the technical solution proposed by EDS Subsidiary that deviates materially from the requirements of the RFP.6 The evaluation of the proposals In paragraph 26 of ACS Parent's amended petition, it is asserted that there were numerous irregularities in the manner in which the proposals were evaluated. The following paragraphs contain findings of fact related to those assertions. Gartner Report and Presentation AHCA hired Gartner, Inc. ("Gartner"), a third party company with technology expertise, to analyze the risk found in each of the technical proposals, and then produce a written report. The evaluators received and read the Gartner report before completing their final scores. The RFP did not disclose, and the proposers were never informed until after the proposed award was announced, that Gartner would conduct an analysis of the Technical Proposals. Gartner's written report visually displayed its final analysis through color coded comments (green, yellow, and orange). Gartner created its own criteria and sub-criteria to evaluate the proposals. The evaluators attended a presentation where the Gartner report's results were presented by Mr. Flowerree. The evaluators discussed these results at the presentation. This presentation on the Gartner report was neither publicly noticed or recorded, nor were any minutes taken at the meeting. AHCA did not give the proposers an opportunity to address the concerns and comments contained in the Gartner report and/or discussed at the presentation with the evaluators. The evaluators had the benefit of Gartner's analysis and conclusions when completing their scoring of the proposals. The evidence in this case is insufficient to determine whether the information in the Gartner presentation and report had any significant effect on the scoring of any of the proposals.7 ACS Parent's Corporate References Donna Eldridge. an AHCA employee, provided a corporate reference for ACS Parent which contained some errors, primarily errors of omission about matters of which Ms. Eldridge had no personal knowledge. There was also a corporate reference form from a Georgia official which contained a number of responses that were remarkably similar to the responses provided by Ms. Eldridge. The evidence in this case does not explain why the two responses were so similar. The evidence in this case is also insufficient to show that the information in either of the corporate references mentioned above had any material adverse impact on the evaluation scores of ACS Parent.8 Evenhanded evaluations During the course of their evaluation, to the best of their ability the evaluators applied the evaluation criteria in the same manner to all proposers. There is no persuasive evidence that the evaluators applied different criteria or different standards to different proposers. With regard to a related issue, the RFP required a critical path diagram for each phase. The proposal submitted by EDS Subsidiary had a critical path diagram for each of the phases. Organizational Conflicts of Interest Unbeknownst to the proposers, AHCA engaged Gartner to conduct an analysis of the proposals submitted in response to the RFP. As part of an earlier proposal submitted to the State of Texas, EDS Subsidiary proposed to hire Gartner as an "optional" subcontractor for the purpose of [I]ndependent assessment of governance processes." In that proposal, EDS Subsidiary described Gartner as having "[t]otal independence and objectivity--no ties to any one vendor or technology solution." EDS Subsidiary was not awarded the Texas contract, so the proposed use of Gartner as a subcontractor never happened. Site Visit Debriefing During the evaluation period, the evaluators attended multiple presentations and debriefings that covered different topics. AHCA did not publicly notice any of these meetings, and only one type of presentation, the proposers' oral presentations, was recorded or had any minutes taken. During their oral presentations, each proposer discussed its proposed solution and then answered questions posed by the evaluators. Evaluators also attended a briefing where they were presented with information gathered during AHCA's site visits to the proposers' operations in other states. This information included a presentation and a written site visit report compiling all of the site visit information into one document. Mr. Jay Ter Louw, an AHCA consultant, prepared the final site visit report. However, none of the evaluators attended any of the site visits. The evaluators relied upon the information presented during the site visit presentation and information contained in the site visit report to complete their assigned evaluations. The manner in which the site visits were conducted and reported was consistent with the provisions of the RFP. AHCA's Score Debriefings Section 70.3 of the RFP reads as follows: Evaluators will conduct a strictly controlled evaluation of the Technical Proposals submitted in response to this RFP. The evaluators will use prescribed evaluation criteria to score each proposal on its own merit regarding the Vendor's response to the requirements and adherence to the instructions in this RFP. The evaluators will not discuss the contents of the proposals with each other or anyone else during the evaluation process. The evaluators will be closely proctored to ensure that they follow the established rules of the evaluation. The evaluators attended numerous debriefings concerning their preliminary scoring. The stated purpose behind these debriefings was to give the evaluators an opportunity to discuss the reasons for their scores and where relevant information was located in the various proposals. The debriefing sessions were neither publicly noticed, recorded, nor were any minutes taken of these numerous sessions. While the evaluators did not discuss their scores with each other, they did discuss their evaluations and the contents of the proposals. All evaluators had the opportunity to change their scores based upon these discussions. At least one evaluator changed her scores after a debriefing session because of information she learned from other evaluators. Scoring After AHCA opened the proposals, it assigned various individuals to evaluate specific portions of the proposals. Some of the evaluators read the RFP and each proposal in its entirety, while others did not. The evaluators also reviewed an Evaluation Manual, an instruction manual produced by AHCA to guide agency staff and the evaluators through the evaluation process. After reading a proposal, an evaluator would generally assign preliminary scores for each of his or her assigned sections. The evaluators' scores were numeric and ranged from zero (worst) to ten (best). AHCA never gave the evaluators any instruction authorizing them to reject a proposal if it did not comply with the RFP's requirements. Rather, they were instructed to "score every section." Concerning the scoring of the Technical Proposals, Section 70.5.14 of the RFP provided, "[a] maximum of one thousand four hundred (1,400) points will be assigned to the highest passing Technical Proposal." The quoted provision is followed by a formula to be used to determine the number of points to be assigned to the other proposers for their Technical Proposals. It is clear from the formula that the formula only works if the highest passing Technical Proposal is awarded the full 1,400 points. Financial statements submitted by ACS Parent EDS Subsidiary asserts that the financial statements submitted with the ACS Parent proposal are deficient. The transmittal letter in the ACS Parent proposal contains a table reflecting the amount of work to be performed by the prime contractor and each subcontractor, as follows: Company Percent of Work ACS 97% Deloitte Consulting, LLP 1% FourThought Group, Inc. 0.2% Sun Microsystems, Inc. 1% Florida Pharmacy Association 0.4% KePRO, Inc. 0.4% There is no dispute about the sufficiency of the financial information submitted regarding ACS Parent, Deloitte Consulting, LLP, and KePRO, Inc. At page 4.4-5 of the proposal submitted by ACS Parent, Sun Microsystems includes the following: Per RFP Reference 60.2.4.2, we include our FY2004 Annual Report. The FY2004 Annual Report contains audited financial statements for fiscal years 2002 through 2004. These financial statements include information on the financial strength and stability of Sun including: Balance sheets Statement of income Statements of Changes in Financial Position Auditor's Reports Notes to Financial Statements Summary of Significant Accounting Policies The proposal submitted by ACS Parent also included information about both company and government web sites where additional financial information about Sun Microsystems could be found. With regard to the financial statements of the Florida Pharmacy Association, the proposal submitted by ACS Parent included the following: The Florida Pharmacy Association has not provided the above items [financial documents requested in the RFP] for submission with this proposal. Being a not-for-profit corporation we file an annual report with the Secretary of State and have enclosed a copy of our 2005 report in this section. We would be pleased to discuss additional details regarding our status with the Agency. The annual report included with the proposal did not contain any financial information regarding the Florida Pharmacy Association. FourThought Group, Inc., is a privately held corporation organized as an "S-Corporation." With regard to the financial statements of FourThought Group, Inc., the proposal submitted by ACS Parent included the following: FourThought Group has not provided the above items [financial documents requested in the RFP] for submission with this proposal. Being a privately held corporation, we do not routinely disclose our financials. We would be pleased to provide an overview of FourThought Group's financials to the agency. The information regarding FourThought Group, Inc., did not include any financial information. The ACS Parent cost proposal forms With respect to the cost proposal forms, RFP Section 60.4.3 states that "[w]here a signature block is indicated, pricing schedules must be signed and dated by an authorized corporate official." The pricing forms included in the RFP further state in all capital letters: "AN AUTHORIZED CORPORATE OFFICIAL OF THE VENDOR MUST SIGN THIS FORM. THE OFFICIAL'S TITLE AND THE DATE THIS FORM WAS SIGNED MUST BE ENTERED." The ACS Parent pricing schedules were all signed by John Crysler, who indicated that he was signing under the title and in the capacity of "Managing Director." When John Crysler signed the pricing schedules he was, and still is, a Senior Vice President and Assistant Secretary of ACS Parent. As such, when he signed the pricing schedules, Mr. Crysler was "an authorized corporate official of the vendor." The Unisys proposal The proposal submitted by Unisys (which was ranked third by AHCA) was responsive to the RFP in all material ways. No specific challenge to the responsiveness of the Unisys proposal was raised as an issue in the pleadings filed by either of the other two proposers. Similarly, AHCA did not file any pleading challenging the responsiveness of the Unisys proposal.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Agency for Health Care Administration enter a Final Order in this case rejecting the proposal of EDS Information Services, L.L.C., as non-responsive, and awarding the contract at issue in this case to Affiliated Computer Services, Inc. DONE AND ENTERED this 17th day of January, 2006, in Tallahassee, Leon County, Florida. S MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings This 17th day of January, 2006.
Recommendation Based on the foregoing, it is recommended that the Department of Environmental Protection enter a final order dismissing, with prejudice, the Second Amended Petition to Intervene in Licensing and Administrative Proceeding and for Formal Administrative Hearing filed in each of these cases by LEAF and Suzi Ruhl. RECOMMENDED this 1st day of November, 1996, at Tallahassee, Florida. J. LAWRENCE JOHNSTON, Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 1996. COPIES FURNISHED: David A. Ludder, Esquire Legal Environmental Assistance Foundation, Inc. 1115 North Gadsden Street Tallahassee, Florida 32303 Cynthia K. Christen, Esquire Department of Environmental Protection 3900 Commonwealth Boulevard, Mail Station 35 Tallahassee, Florida 32399-3000 Anthony Cleveland, Esquire Segundo J. Fernandez, Esquire Oertel, Hoffman, Fernandez and Cole Post Office Box 6507 Tallahassee, Florida 32314-6507 Virginia B. Wetherall, Secretary Department of Environmental Protection Douglas Building 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Perry Odom General Counsel Department of Environmental Protection Douglas Building 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
