The Issue The issue in this proceeding is whether the proposed action of the Department with regard to procurement of the State of Florida Statewide Law Enforcement Radio Communications System, DMS Number 21-725-001-W, is contrary to the Department's governing statutes, rules, policies, or any applicable bid or proposal specification.
Findings Of Fact General Background Pursuant to Section 282.1095, Florida Statutes, the State of Florida established the State Agency Law Enforcement Radio Trust Fund (Trust Fund) in the Department to fund the construction, maintenance, or support of a statewide law enforcement radio system. On or about January 31, 2000, the Department issued RFP No. 21-725-001-W entitled "Statewide Law Enforcement Radio Communications System." The RFP sought proposals for providing the statewide law enforcement radio communication system. The purpose of the proposed radio system is to allow various state law enforcement officers to communicate from one end of the state to the other. Motorola was the vendor responsible for the construction and operation of Phases I and II of the radio system. In this procurement, the Department sought proposals for continued maintenance and operation of Phases I and II and completion of Phases III, IV, and V of the radio system. The Department sought "innovative proposals from the private sector that will result in a more economical and timely completion of a statewide radio communications system." The Department stated that it would "consider all approaches, methods, alternative technologies . . . provided that the proposal is reasonable, clearly achievable, and can be accomplished with minimal or no cost to the State of Florida to the extent permitted by law." On March 7, 2000, Com-Net and Motorola submitted proposals in response to the RFP. Com-Net and Motorola were the only two vendors that submitted proposals. On April 4, 2000, the Department posted a notice terminating the RFP and declared both proposals non-compliant. On April 5, 2000, the Department sent a letter to Com- Net and a letter to Motorola, advising each vendor of the major areas of the proposals deemed non-responsive. The letters also informed the vendors that the Department had determined to follow a negotiation process pursuant to Section 287.057(4), Florida Statutes. On April 10, 2000, the Department sent a letter to Com- Net and a letter to Motorola, advising each vendor of the procedures for the negotiation process. The letters included a list of questions and vendor evaluation guidelines and advised the vendors to bring their proposals into compliance with the specifications and requirements of the terminated RFP document. The April 10, 2000 letters also advised Com-Net and Motorola that the Department reserved the right to negotiate concurrently or sequentially with the vendors. On April 19, 2000, Com-Net and Motorola each submitted responses to the questions in the Department's April 10, 2000 letters, revisions to technical and financial proposals, and other information. After Motorola and Com-Net submitted their respective modified proposals on April 19, 2000, the Department conducted an initial meeting on May 12, 2000, with both vendors to provide further direction on how the negotiation process would work and to answer questions. At the May 12, 2000 meeting, the Department introduced a five-member evaluation team. The Chairman of the evaluation team, Roy Cales, explained to the proposers that there would be an evaluation process followed by a negotiation process. During that process, focus would initially be on the technical proposals, while later consideration would focus on cost proposals. Each member of the evaluation team brought different relative strengths and perspectives to the decision process. Kourosh Bastani's primary expertise was technical. As the coordinator of Phase I and II, field manager of the radio system, and twenty years' experience in the Florida Highway Patrol, Captain Keith Gaston brought the skills and perspective of a system user and manager. Lisa Saliba has an extensive background in state budgeting, planning, and coordination of projects with agencies. Rick Blankenship is an investment banker and brought considerable financial expertise to the process. As Chairman of the evaluation committee and Chief Information Officer for the State of Florida, Roy Cales possesses technical expertise and experience with state procurement of technology products. The evaluation team was assisted by a technical advisory team composed of technical experts employed by the state, Bruce Meyers and J.P. Saliba, and external technical consultants, Jeff Ellis and Mike Thayer of the Gartner Group. From May 12, 2000 to June 22, 2000, representatives of the evaluation team and technical advisory team met on several occasions with the proposers, both individually and together. During these meetings, the parties engaged in discussions regarding changes to both technical/financial aspects of the proposals and potential contract. After the series of meetings with one or both vendors present, the evaluation team met in private on June 22, 2000, to review the proposals one last time and to make certain all team members understood the financial aspects of both proposals. On June 23, 2000, the evaluation team met in public and voted to rank Com-Net's proposal first and Motorola's proposal second, and to negotiate sequentially beginning with Com-Net. On that same day, the Department posted notice of its proposed agency action which stated that if the negotiations with Com-Net were successful, a contract would be awarded to Com-Net. If the negotiations with Com-Net were not successful, the Department would proceed to negotiate with Motorola and, if successful, a contract would be awarded to Motorola. On July 10, 2000, Motorola filed its Petition to Formally Protest Decision to Negotiate Sequentially, and Initially, with Com-Net Ericsson Critical Radio Systems, Inc. The sole relief sought by Motorola in its Petition is a final order "declaring that the Department is required to conduct concurrent negotiations with both Com-Net and Motorola . . . and that Motorola be ranked No. 1." On or about July 19, 2000, the Department referred Motorola's protest to the Division of Administrative Hearings and requested that an Administrative law Judge be assigned to conduct a hearing. On August 9, 2000, the Administrative Law Judge entered an Order granting the Petition of Com-Net to intervene in this proceeding. The Evaluation Process Motorola's Allegations The Department terminated the RFP with its April 4, 2000 posting, and any specific scoring or weighting stated in the RFP. The Department's April 10, 2000 letter, explicitly advised that the state would use the attached evaluation criteria only as a "negotiation guideline" and that "these guidelines may not be all-inclusive of the criteria to be considered. Further not all of these criteria will necessarily be considered with the same weighting." Motorola, in its Petition acknowledges that it "was directed [by the Department's April 10, 2000 letter] to forget the RFP, think out of the box, and be creative." By Motorola's own admission, the Department's clear direction to "forget the RFP" and "think out of the box" put Motorola squarely on notice that the RFP was at most a guideline in the Section 287.057(4), Florida Statutes, negotiation process. In internal e-mails, Motorola personnel stated that the Department had "given us the opportunity to change the assumption of our models, get outside the bounds of the RFP and find ways to reduce costs . . . ." Motorola understood that in addition to its response to the April 10, 2000 letter, it had the opportunity to submit technical and financial alternatives "outside the boundaries of the RFP and current technical question submittals." Motorola cited no provision which would prohibit the Department from disregarding the RFP and negotiating in the best interests of the state. Motorola alleged that the Department impermissibly permitted Com-Net to materially alter its proposal after the April 19, 2000 deadline for re-submission of modified proposals during "improper negotiations not in accordance with the procedures set forth in the April 10, 2000 letter." Motorola, however, presented no evidence at hearing as to what "improper negotiations" occurred. The evidence presented does establish that Motorola availed itself of an opportunity to significantly change its April 19, 2000 cost proposal. A simple comparison of Motorola's April 19, 2000 and June 22, 2000, cost proposals reveals substantial differences. Motorola did not establish at any time in this proceeding an absence of Department authority to allow proposers to change their proposals after April 19, 2000. Both proposers were clearly on notice that the Department was seeking changes to the proposals. Both proposers were informed of the process and had an equal opportunity to respond. There was no advantage to one proposer over another when the Department sought modifications to proposals during the negotiation process under Section 287.057(4), Florida Statutes. Evaluation Team Determination Four out of five members of the evaluation committee voted for sequential negotiations and ranked Com-Net first and Motorola second. The only member of the evaluation committee who did not rank Com-Net first and vote for sequential negotiations was Kourosh Bastani. Mr. Bastani ranked Motorola first and voted for concurrent negotiations, although he acknowledged that the rankings were meaningless in concurrent negotiations. He had concerns about both proposals, describing Motorola's technical proposal as "acceptable" and Com-Net's technical proposal as "viable," yet believed that both vendors "provided good proposals, and they were worthy of further consideration." Despite being the only team member who did not rank Com-Net first and vote for sequential negotiations, Mr. Bastani unequivocally expressed his belief in the fairness of the evaluation process and respect for the votes of the other members by stating: I believe that the process provided me an opportunity to objectively review both proposals and provide an opportunity for both vendors to provide clarifications and answer questions. And I was able to, in a fair and objective manner, arrive at my decision. So I believe in the integrity of the process, whether I agree with their vote or not, I think they reached it in an informed manner. Mr. Bastani could think of no basis or prejudice in the process that would undermine the validity of the decision. Captain Gaston voted to negotiate sequentially with Com-Net first because he felt the cost difference between Motorola and Com-Net was so great it was unlikely Motorola was going to get within the "ballpark." His interest is in securing a contract as quickly as possible and he believed concurrent negotiations would delay the final outcome. Ms. Saliba voted to negotiate sequentially with Com-Net first because she wanted the opportunity to concentrate on negotiations with a single vendor without the distraction of lobbying and external communications from representatives of competing vendors. In addition to the cost factor, she favored Com-Net because Com-Net is attempting to gain a "foot-hold" in the industry through this contract to establish itself as a credible provider and therefore is committed to reaching an agreement that will satisfy the state's needs. She did not have that confidence in Motorola. Mr. Cales voted to negotiate sequentially with Com-Net first based on a determination of the overall best value for the state. He informed the vendors from the beginning of the evaluation process that if one stood out above the other, the negotiations would be sequential. In that circumstance, concurrent negotiations would have penalized the vendor that stood out and Mr. Cales determined that Com-Net stood out. Additionally, in Mr. Cales' view, concurrent negotiations (e.g., double sessions with a single DMS negotiation team) would take twice as long and time is a critical factor. Com-Net's proposal stood out because it guaranteed a system that would do the job, guaranteed a cost within the trust fund revenue stream and guaranteed the state would have the level of service it would contract for without additional cost to the state. Motorola's proposal did not provide those guarantees. In fact, the only way the Motorola proposal would not cost the state millions of dollars more than Com-Net would be if projected tower lease revenue was realized, and those projections were unreasonable and unsubstantiated in Mr. Cales' assessment. Mr. Blankenship voted to negotiate sequentially with Com-Net first based on a determination that doing so would be in the best interests of the state because Motorola required the state to assume risk while Com-Net did not; Motorola required the state to borrow money which was not authorized; Motorola's proposal entailed operating at a deficit for years three through seventeen; Motorola's tower revenue projections were unreasonable and unreliable; and Com-Net's proposal included technology refreshers that Motorola did not. Technical Proposals After several meetings with both vendors to review their technical proposals and after considering the input of the technical committee, the evaluation team determined that the two technical proposals were either equivalent or that, if not equivalent, both vendors could do the job. The responsiveness of both vendors' technical proposals is not at issue in this proceeding. Both vendors met any "threshold" requirements in the Department's April 10, 2000 letter, and were eligible to be considered for negotiation. Cost Proposals Motorola alleges that the Department "failed to properly calculate the cost to the State of Motorola and Com- Net's proposals," and the Department "improperly assigned a zero revenue figure to the revenue sharing financial component of Motorola's June 22, 2000 financial proposal." Both Com-Net and Motorola submitted cost proposals on April 19, 2000, and submitted revised cost proposals on June 22, 2000. Both Com-Net and Motorola outlined modifications to their respective cost proposals during meetings with the Department evaluation team on June 22, 2000. The major components of both vendors' cost proposals are similar, including up-front cash payments from the vendor to the state, an initial first-year payment from the state to the vendor of a portion of the current balance in the Trust Fund, continuing payments from annual Trust Fund revenues to the vendors, and sharing with the state of revenues that the vendors expect to derive by renting excess tower space to third party users of "tower tenants." While the major components in the two proposals are similar, the dollar figures and guarantees differ substantially. The proposals can be fairly summarized based on the major components which most greatly affect the cost to the state. On April 19, 2000, Com-Net's proposal was for revenue sharing to the state of 33 percent, an initial capital contribution from Com-Net to the state for tower upgrade and enhancement, an initial payment to Com-Net of $39 million from the current Trust Fund balance, and annual payments to Com-Net of all Trust Fund revenues, plus $2 million per year. On June 22, 2000, Com-Net reduced the revenue sharing component to 15 percent, eliminated the $2 million per year payment, and proposed to charge the state the annual net revenues from the Trust Fund. Com-Net represented to the evaluation team that this proposal would give the state its "entire wish list within the confines of the trust fund." Com-Net proposed to build, operate, and maintain the radio system for no more than the amount of the current balance and annual revenues in the Trust Fund. Steve Savor, Chief Executive Officer of Com-Net, told the evaluation team on June 22, 2000: We want you to be in a position where you do not have to go back to the Legislature. We are guaranteeing a position where we do not come back to you. Regardless of whether the state ever receives a single dollar of revenue sharing, it can obtain the radio system from Com-Net without exceeding the confines of the Trust Fund. The total cost to the state of Com-Net's June 22, 2000 proposal as calculated by the evaluation team was approximately $331 million. Com-Net's June 22, 2000 proposal included an initial contribution from Com-Net to the state of $20 million, a first-year payment to Com-Net from the Trust Fund of $39 million, and annual payments from the state to Com-Net of all future Trust Fund revenues over twenty years totaling $348 million. Com-Net also proposed to include two features not included in Motorola's June 22, 2000, proposal - a mobile data system valued between $25 million to $40 million and "technology refreshes" valued between $10 million and $50 million. Motorola's April 19, 2000 cost proposal included two alternates. The cost of the primary proposal was approximately $80 million more than the cost of the alternate. Motorola acknowledges that its cost proposal as of April 19, 2000 was "considered outrageous" by the Department. At the June 22, 2000 evaluation team meeting, Motorola presented a revised cost proposal which it explained to the team. Motorola proposed a total cost of $418 million. This figure exceeded the projected Trust Fund revenues of $348 million by $70 million. Because the proposed annual payments to Motorola would exceed available monies to the state in the early years, Motorola proposed to loan the state the funds to cover these shortfalls, and charge the state an estimated total of $55 million in interest. In that the interest cost is only an estimate and funds available to the state could differ from that projected by Motorola, the actual interest cost to the state could increase. Motorola's witness, David Kliefoth, testified that despite the cost of $418 million offered to the Department in Motorola's June 22, 2000 proposal for the project, Motorola's real or "net" price is actually $364 million. Even after making adjustments to the costs of both proposals, Mr. Kliefoth admitted that Motorola's "net price" was $34 million more than Com-Net's price. In order to pay for the radio system, Motorola proposed three sources of funds: i) Trust Fund current balance and projected annual revenues of $348 million, ii) revenue sharing from third party tower rentals of $68 million, and iii) an initial cash contribution from Motorola of $32 million, for a total of $448 million. Although the annual Trust Fund revenues are not sufficient to cover the annual payments to Motorola, the company contends that its proposal provides the state with ample revenue sharing that will allow the state to have a $30 million positive balance in the Trust Fund at the end of twenty years. Yet, despite repeated requests by the evaluation team, Motorola failed to guarantee the projected amount of revenue sharing required to "make the deal work" within the confines of the "Trust Fund. As Motorola representatives told the evaluation committee on June 22, 2000, if Motorola's projected third party tower rental revenues or the projected Trust Fund revenues did not materialize, the state would be expected to make up the difference. The most Motorola was willing to do was to say they "could talk about it." As a basis for its third party tower rental revenue projections, Motorola told the evaluation team on June 7, 2000, that its tower company partner, Pinnacle Tower, had an average of 4.9 tenants per tower nationally and an average of 3.9 tenants per tower in Florida. On June 22, 2000, just two weeks later, Motorola doubled the estimate, claiming that Pinnacle Tower would average 10 tenants per tower in Florida. Motorola raised its estimate without any explanation and despite the fact that tower industry financial research analysts, such as Lehman Brothers, limit their estimates to a more conservative five tenants per tower. In contract to Motorola, Com-Net used a more conservative figure of 1.1 to 2.4 tenants per tower when estimating future third party tower rental revenues. As Com-Net stated to the evaluation team at its June 22, 2000 meeting, third party revenues are "speculative at best." Because they considered both vendors' projections of potential future revenues to be speculative and because neither vendor could guarantee the projections, the evaluation team decided to disregard both vendors' revenue sharing projections and evaluate both proposals based on cost alone. On that basis, the evaluation team determined that the Motorola proposal would be significantly more expensive to the state. Depending on how the proposals were viewed and the assumptions made, most of the evaluation team members determined that the Com-Net proposal would cost the state approximately $91 million less than the Motorola proposal. Each of the evaluation team members decided that the two technical proposals were either equivalent or that, while not equivalent, both vendors could do the job. Having determined that both proposers could do the job, the paramount consideration for most team members became cost. Motorola's internal e-mails demonstrate that it fully understood the importance of cost to the state. Motorola's June 9, 2000 internal e-mail states that the evaluation committee "continues to place higher percentage priority on cash flow of the trust fund and revenue sharing funds versus technology, system performance and long-term maintenance" and that "the State is trying to back into the completion of [the radio system] by using funds available and doing the best they can [to] reduce the scope of work and technology if that's what it takes to finish the State buildout." Motorola alleges that the Department impermissibly altered Motorola's financial proposal such that Motorola's true financial proposal was not fairly considered. Specifically, Motorola argues that the evaluation team disregarded Motorola's revenue-sharing projections by assigning a zero revenue figure. Yet Motorola points to no statute, rule, or policy which would prohibit the Department from such flexibility in evaluating the proposals. Motorola refused to guarantee the revenue-sharing projections and the Department was free to accept or reject such projections. Motorola also complains that the evaluation committee did not inform Motorola of its decision to disregard revenue-sharing projections; yet again Motorola points to no authority imposing an obligation on the committee to do so. The evaluation team treated Motorola and Com-Net equally in this regard by ignoring both vendors' revenue projection and focusing instead on cost. The team recognized the risks and speculation involved in predicting market conditions and revenue streams twenty years into the future. Motorola also alleges that it was told to provide a stronger revenue-sharing model, and thus having been explicitly solicited, its revenue-sharing projections should not be disregarded. However, Mr. Cales established in his testimony that what he asked for was not a higher percentage of revenue sharing or for the state to bear more risk, but rather by "stronger model" he meant he wanted to see the numbers and assumptions behind the projections. Mr. Cales was especially concerned that Motorola kept changing its projected tower revenue figures and that except for changes in the sharing percentage, the total revenue projections should not change. At 6:51 p.m., on June 22, 2000, Motorola transmitted by e-mail to a Department technical consultant additional information from Pinnacle Tower relating to tower tenants. At the time of the e-mail the evaluation team was in session and the team did not know of the information that night. Some of the team members saw it at some point, but the information would not have affected their votes. Pinnacle Tower had a full opportunity to state its case for tower revenues at the June 7, 2000, meeting and at that time projected only five tenants per tower. Moreover, Pinnacle Tower was present at the meeting site on June 22, 2000, but Motorola elected not to have them present in the meeting room even though Motorola understood the team had serious concerns about the revenue projections. As Mr. Cales made clear in his testimony, the last-minute information from Pinnacle Tower concerning tenant projection did not resolve concerns over the substantial increases in projections or their speculative nature. Further as to Motorola's tower revenue projections of June 22, 2000, Mr. Bastani believed the projection of 10 tenants per tower was unrealistic. The other team members likewise did not accept Motorola's assumption that it would achieve 10 tenants per tower. Ultimate Findings of Fact Motorola's June 22, 2000 proposal did not guarantee that the cost of the contract would be within the revenue from the Trust Fund. Motorola's projections of revenue from tower leases was not reliable and was not guaranteed by Motorola. Com-Net's cost proposal of June 22, 2000, was substantially less costly than Motorola's proposal and provided a guarantee that the cost of the contract would not exceed the revenue from the Trust Fund. The decision to negotiate sequentially beginning with Com-Net was logical and reasonable.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Management Services enter a final order denying Motorola's protest. DONE AND ENTERED this 3rd day of October, 2000, in Tallahassee, Leon County, Florida. DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of October, 2000. COPIES FURNISHED: C. Everett Boyd, Jr., Esquire Melissa Fletcher Allaman, Esquire Ervin, Varn, Jacobs & Ervin Post Office Drawer 1170 Tallahassee, Florida 32302 W. Robert Vezina, III, Esquire Mary M. Piccard, Esquire Vezina, Lawrence & Piscitelli, P.A. 318 North Calhoun Street Tallahassee, Florida 32301 William E. Williams, Esquire J. Andrew Bertron, Jr., Esquire Huey, Guilday & Tucker, P.A. 106 East College Avenue, Suite 900 Tallahassee, Florida 32301 Alan C. Sundberg, Esquire Mark K. Logan, Esquire Smith, Ballard & Logan, P.A. 403 East Park Avenue Tallahassee, Florida 32301 Shari M. Goodstein, Esquire Shipman & Goodwin, LLP One Landmark Square Stamford, Connecticut 06901 Pennington G. Kamm, Esquire Terry A. Stepp, Esquire Office of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Bruce Hoffmann, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Cynthia Henderson, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue On January 8, 2016, the Escambia County School District (District) issued Request for Proposal Number 161301 (RFP) for custodial services. The RFP was issued to solicit proposals to clean the District’s Zone Three schools. After evaluating the proposals, the District awarded the contract to American Facility Services, Inc. (AFS), who was the highest-scoring proposer. Enmon Enterprises, LLC, d/b/a Jani-King of Pensacola (Jani-King), received the second highest score and is protesting the scoring and proposed award of the contract to AFS. At issue is whether the District’s decision to award the cleaning contract to AFS was contrary to a governing statute, the District’s rules or policies, or project specification; and, if so, whether such action was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact The Escambia County School District is an independent taxing and reporting public entity managed, controlled, operated, administered, and supervised by the District’s school officials. Jani-King of Pensacola is a master franchise territory of Jani-King International. Enmon Enterprises, LLC, has bought the rights to sell franchises in a geographic territory referred to as “Jani-King of Pensacola.” Jani-King of Pensacola is one of 13 territories that Enmon Enterprises, LLC, has bought from Jani-King International. On January 6, 2016, the District issued the RFP for custodial services. When the RFP was issued, the District still had approximately five years left on its contract with the incumbent provider of cleaning services. Once an RFP is posted, the District gives those interested in responding an opportunity to ask questions. Those questions, along with the District’s answers, are compiled and posted on the District’s website for all to see, creating an equal playing field. No inquiry was submitted regarding the requirement that “Responder must provide the last two (2) years’ audited financial statements for the Responder.” The RFP was created by John Dombroskie, Escambia County School District’s director of purchasing, and Jim Beagle, a custodial manager. The RFP required vendors to show “financial ability,” by demonstrating the wherewithal and knowledge to cover the expenses associated with fulfilling the terms of the contract. As noted, part of this requirement included the submission of two years of audited financial statements. The entire “financial ability” section of the RFP was worth ten total points in the overall evaluation of the bidding companies. According to Brad Mostert, senior auditor with the District, the District requested audited financial statements primarily in order to assess whether a bidding company could handle the start-up cost of the job, since it would be 45 to 60 days before the winning company would be paid. Mr. Mostert testified that the District wanted to ensure that “for the initial period of their services, 45 to 60 days, that they would be able to maintain their operations, i.e., pay their payroll for the folks they would have to hire and invest in the equipment that they would have to invest in to perform the duties under the bid.” The RFP stated that any proposal which did not provide all of the requested items would be deemed non-responsive. However, the District expressly reserved the right to waive any conditions or criteria set forth in the RFP. The District also reserved the right to waive any irregularities and technicalities. The Evaluation Committee Instructions, which were provided to each committee member, stated, “[e]ach committee member will review and assign points to the areas giving the best proposal the highest assigned points for each area evaluated. Points will be awarded based on the responses that each proposal received. Lack of a response for any item will receive zero points in that item.” Within the Financial Ability section of the Evaluation Committee Instructions it was stated that “Responder must provide the last two (2) years’ audited financial statements for the Responder.” The proposals were opened on March 1, 2016. At the time bids were opened, John Dombroskie, with purchasing, was present, along with Jim Beagle, with custodial services, and Michelle Kiker, a senior auditor from internal auditing. These three individuals served as witnesses to which bids were timely received by the District, and they also made the initial determination as to which bids should be rejected as non- responsive. Three submitted proposals were immediately rejected and were not considered as they were deemed non-responsive. One proposal submitted by Owens Realty Services was dismissed because it was not signed, and two other proposals submitted by ABM Janitorial Services and GCA Services Group were dismissed for failure to submit a bid bond. Mr. Dombroskie put together a diverse committee to evaluate the remaining submitted proposals. The committee members were: Terry St. Cyr, assistant superintendent, Finance and Business, Escambia County School Board; Brad Mostert, internal auditor for Escambia School Board; Jim Beagle, manager III, custodial services; Keith Rich, custodial employee; Chuck Peterson, maintenance director; Shawn Dennis, assistant superintendent; and Margret Warr, assistant principal. John Dombroskie acted as a non-voting supervisor of the committee. The committee met on March 14, 2016. Mr. Dombroskie gave the proposals to the committee members about a week prior to their meeting, along with the Evaluation Committee Instructions, in the hopes that they would read and evaluate the proposals on their own. Each committee member was given evaluation sheets, which contain the criteria area, plus the points that could be earned by a perfect score in that area. Jani-King and AFS both submitted proposals in response to the RFP. AFS submitted reviewed, rather than audited, financial statements. Jani-King submitted audited financial statements. AFS’s proposal was the lowest in proposed cost and received the highest total score from the evaluation committee. Jani-King’s proposal was the second highest scored proposal and it had the second highest proposed cost. The Jani-King proposal also included 30 percent more staffing than the AFS proposal. In its proposal, Jani-King submitted three or four franchise owners’ resumes who could potentially do the work if Jani-King was the winning bidder. At the time it submitted its proposal, Jani-King had not yet selected the franchise owner who would actually service the account. Jani-King did not supply audited financial statements or any other financial information for any of the franchise owners to the District. Jani-King instead submitted audited financial statements only for Enmon Enterprises, LLC. AFS’ proposal deviated from the RFP requirements because AFS submitted reviewed financial statements, rather than audited financial statements. At least two other bidders also submitted reviewed financial statements, rather than audited financial statements. It is unknown how many prospective bidders did not submit bids because of the requirement that proposals include (the more costly) audited financial statements. Also unknown is how many additional bids would have been submitted had the requirement been for reviewed, rather than audited, financial statements. The fact that some companies had submitted reviewed, rather than audited, statements arose at the beginning of the evaluation committee meeting. The issue was raised by committee member, Bradley Mostert, an auditor for the District, who understands the difference between an audited and a reviewed statement. Mr. Mostert explained these differences to the evaluation committee in relation to the bidder, American Maintenance Services, who also submitted reviewed, rather than audited, financial statements. As the recording of the meeting reveals, Mr. Mostert explained the differences between reviewed and audited financial statements, but there was no substantive discussion among the committee members as to whether non-audited financial statements would provide the necessary assurance that the winning bidder would have the financial wherewithal to perform under the terms of the contract. In addressing the committee members about the issue, Mr. Mostert stated: [F]or an audit, I’m testing the material portion of all of those transactions that are relevant to those financial statements. For a review, I’m compiling the numbers. I’m getting them together. I’m doing some analysis, maybe ratios, maybe stuff like that, but in an audit, I’m in the nitty gritty. I’m looking at documents that support those numbers in the material portion. (Oh) present fairly, (um) that means there’s nothing materially out of compliance with the appropriate rules that they need. But what I’m saying is, the weight behind that opinion is different than an audit, and it may not matter, but it is different. There was less work performed on those financials. (Audio recording of March 14, 2016, meeting at 12:05-12:56). Mr. Mostert did not explain to the committee members the difference in the opportunity for fraud or material misstatement with reviewed financial statements as compared to audited financial statements. According to Mr. Mostert, he simply wanted to point out to the committee members that there “is a little bit of a difference” between reviewed and audited financial statements. At hearing, Jani-King introduced in evidence the “Guide to Financial Statement Services: Compilation, Review and Audit” published by the American Institute of Certified Public Accountants. The publication highlights the significant differences between reviewed and audited financial statements. The review is the base level of CPA assurance services. * * * A review is substantially narrower in scope than an audit. A review does not contemplate obtaining an understanding of your business’s internal control; assessing fraud risk; testing accounting records through inspection, observation, outside confirmation or the examination of source documents or other procedures ordinarily performed in an audit. In a review engagement, the CPA will issue a formal report that includes a conclusion as to whether, based on the review, he is aware of any material modifications that should be made to the financial statements in order for them to be in accordance with the applicable financial reporting framework. In contrast to reviewed financial statements, audited financial statements provide a much higher level of assurance as to the validity of the financial information presented: CPA issues a formal report that expresses an opinion on whether the financial statements are presented fairly, in all material aspects, in accordance with the applicable financial reporting framework. * * * The CPA performs procedures in order to obtain “reasonable assurance” (defined as a high but not absolute level of assurance) about whether the financial statements are free from material misstatement. In an audit, your CPA is required to obtain an understanding of your business’s internal control and assess fraud risk. Your CPA is also required to corroborate the amounts and disclosures included in your financial statements by obtaining audit evidence through inquiry, physical inspection, observation, third-party confirmations, examination, analytical procedures and other procedures. As between financial statement review and audit, only audited statements include a licensed professional’s assessment of fraud risk, and a reasonable assurance that the financial statements are free from material misstatement. As noted by Jani-King’s expert in accounting and auditing, Marvin Beasley, only an audited report confirms that “the financial statements present fairly in all respects the financial condition of the company.” This is because the financial data presented in reviewed statements is simply provided by the client, rather than being independently verified as required in an audited statement. Mr. Beasley further noted that the difference in a review versus an audit is the level of assurance one should associate with those two types of reports because of the amount of work done by the audit or accounting firm. The work it takes to issue a reviewed report is substantially less in volume and scope than the work an auditor or certified public accountant (CPA) would be required to do to issue an audited report. Consequently, the cost of obtaining audited financial statements is considerably higher than the cost of obtaining reviewed financial statements. The CPA on the committee, and the District’s chief financial officer, Terry St. Cyr, did not consider the submission of reviewed versus audited statements to be a material deviation from the RFP. Brad Mostert also did not think the submission of reviewed, instead of audited, financial statements should disqualify the bidders “because of the nature of the bid.” The evaluation committee deemed the submission of reviewed, rather than audited, statements as “acceptable for [their] purposes.” At hearing, Mr. St. Cyr explained the District’s rationale in deciding not to reject proposals that included reviewed, but not audited financial statements: Q Did the submission of those reviewed financial statements instead of audited financial statements send up any red flags or give you cause for concern about those bids or proposals? A It did not concern the District. Even though it stated audited financials, we were satisfied, based on the level of testing or evaluation that we were doing, and the services to be performed, that we were not worried about whether or not they were audited, as long as they were reviewed with the reviewed statement by the auditor that the financial statements do not have a material misstatement, we were good with relying on them. The reviewed financial statements contained in the AFS proposal do not include an auditor’s or CPA’s statement that the financial statements do not contain a material misstatement. To the contrary, on the cover page of the reviewed financial statements, the accounting firm noted that: A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. * * * Based upon our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. Committee members were told not to consider price as part of their scoring, and there was no discussion about pricing during the committee meeting. At the end of the meeting, John Dombroskie gave the committee a sheet with the number of points that was to be given each bidder based on their pricing. This number was reached by calculating total value based on total cost and then price per square footage. To calculate the points that should be assessed to each bidder based on cost, Mr. Dombroskie took the lowest proposed cost, assigned the maximum points (in this case 30), and then divided the other costs into that lowest cost. He then multiplied that factor by the 30 allotted points to reach a scoring amount based on cost. The recommended supplier, pursuant to the tabulation results, was AFS with a score of 94 points. Jani-King was the second highest scored supplier with a score of 83.65 points. No one on the Evaluation Committee scored AFS a zero in financial ability for failure to submit audited financial statements. The Bid Award Notice, provided prior to Jani-King’s protest being filed, stated that if an agreement was not reached with AFS, the District would negotiate with the second highest scored bidder. The District does not have blanket discretion to decide what requirements of the RFP it may waive; and accordingly, the District must adhere to the material requirements of its RFP. AFS’s submission of reviewed, rather than audited financial statements, was a material deviation from the requirements of the RFP, and was not a minor irregularity. The RFP provided that non-responsive proposals would be discarded. Nonetheless, the AFS proposal was improperly reviewed and scored. The District never informed Jani-King or any other potential bidders that the requirement for each bidder to provide audited financial statements would be waived. The District’s decision to allow bids with reviewed financial statements, but without audited financial statements, was contrary to the requirements of the RFP. The District’s decision to allow bids with reviewed financial statements, but without audited financial statements, was clearly erroneous based upon the requirements of the RFP. The District’s decision to allow bids with reviewed financial statements, but without audited financial statements, provided a competitive advantage to AFS over other responders who complied with the requirements of the RFP; and thus, the District’s decision was contrary to competition. The District’s decision to allow bids with reviewed financial statements, but without audited financial statements, is unsupported by facts or logic when the RFP and Evaluation Committee Instructions expressly mandate that each responder must provide audited financial statements. If the AFS bid was properly deemed to be non- responsive, then Jani-King would have been the highest scored responsive bidder.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Escambia County School Board, enter a final order that adopts the Findings of Fact and Conclusions of Law set forth herein. It is further RECOMMENDED that the contract issued in response to Request for Proposal, Solicitation Number 161301, entitled "Custodial Services" be awarded to Enmon Enterprises, LLC, d/b/a Jani-King of Pensacola, as the highest scoring responsive vendor. DONE AND ENTERED this 26th day of August, 2016, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of August, 2016. COPIES FURNISHED: David C. Willis, Esquire Rumberger, Kirk & Caldwell, P.A. Suite 1400 300 South Orange Avenue Orlando, Florida 32801 (eServed) Brian W. Hoffman, Esquire Carver Darden Koretzky Tessier Finn Blossman & Areaux, LLC Suite A 801 West Romana Street Pensacola, Florida 32502 (eServed) Sandra Destin Sims, Esquire Jani-King Gulf Coast Region 122 West Pine Street Ponchatoula, Louisiana 70454 Malcolm Thomas, Superintendent Escambia County School District 75 North Pace Boulevard Pensacola, Florida 32505 Matthew Mears, General Counsel Department of Education Turlington Building, Suite 1244 325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed)
Findings Of Fact Petitioner is seeking licensure as a certified public accountant in Florida. Petitioner is licensed as a certified public accountant in the State of Pennsylvania. He is seeking licensure in Florida by endorsement based upon his Pennsylvania licensure without the necessity for taking an examination. Petitioner was initially licensed in Pennsylvania in 1961. The Board of Accountancy reviewed Petitioner's application and determined that he met all Florida requirements for education and experience, and that he was administered the same examination in Pennsylvania in 1961 that was administered in Florida in 1961. In a non-final order, however, the Board determined that Petitioner did not receive grades on the examination administered in Pennsylvania that would have constituted passing grades in Florida, and denied his application. The non-final order is the subject of a formal administrative proceeding before the Division of Administrative Hearings in Case No. 80-2332. The Board's rules require that an applicant for licensure as a certified public accountant receive a grade of 75 or above on all parts of an examination administered by the American Institute of Certified Public Accountants. Rule 21A-28.05(2), (3), Florida Administrative Code. Rules in effect in 1961 also required that a grade of 75 or above would be required in all four subjects of the examination. Rules of the State Board of Accountancy Relative to Examinations and the Issuance and Revocation of Certificates, Rule 1(f).
Findings Of Fact After the motion for continuance was again denied, petitioners declined to offer any evidence and petitioners announced that they would be pursuing certain supposed federal remedies.
The Issue Whether the specifications set forth in Respondent's Invitation To Bid for Lease No. 590:2029 are in accordance with law.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The Department of Health and Rehabilitative Services (Department) determines space need annually pursuant to a letter of agency staffing, primarily generated as a result of legislatively allocated new positions. Based on the letter of agency staffing showing the need for additional office space in the Inverness, Florida service area of the Department's District Three, the Department caused an ITB to be advertised regarding Lease No. 590:2029 seeking some 19,373 square feet of office space, plus of minus 3%. The Petitioners presently lease office space to the Department in the Inverness, Florida, District Three service area. This office space is located within the preferred zone set forth in Attachment B to the ITB. In addition to the presently leased space, the Petitioner intends to offer additional space within the preferred area. The Department's Leasing Manual HRS M 70-1 (Manual) sets out the procedure to be followed when the Department is seeking to lease office space of 2,000 square feet or more in privately owned buildings. Within this manual are the forms to be utilized for this purpose and, among other forms, is an ITB packet that contains a Bid Submittal Form (BSF) and, within the BSF is a page entitled Evaluation Criteria. The Department followed the procedure set forth in the manual in advertising for competitive bids on Lease No. 590:2029 for office space in Inverness, Florida service area of District Three and, in doing so, used the ITB packet that contains the BSF with the Evaluation Criteria page. The BSF, including the Evaluation Criteria page, is a slightly modified version of the Department of General Services' (DGS) Request For Proposal Submittal Form - BPM 4136, incorporated by reference in Rule 13M-1.015(3)(e), Florida Administrative Code, as a suggested format. The Evaluation Criteria page of the Department's BSF contains nine of the eleven evaluation criteria set forth on the evaluation criteria page of the BPM 4136, but does not place any limit on the weight of award factors as does BPM 4136 on two of the same criteria used by the Department. The Evaluation Criteria set out in paragraph C. 2. and 4. of BPM 4136 which corresponds to paragraph 1(a) and 2(c) of the Department's Evaluation page, provide that award factors for these two criteria should not exceed ten, whereas the Department does not place a limit on the award factors for any of the criteria. The two Evaluation Criteria on BPM 4136 that do not appear on the Department's Evaluation Criteria page address the availability of dining facilities and proximity of offered space to other Department activities and public services. Both the BSF and BPM 4136 are used in bidding for space in existing facilities and, therefore, require a scaled floor plan showing present configuration, with measurements that equate to the net rentable square footage using the Standard Method of Space Measurement. The BSF does not attach a "floor plan for suggested configuration of offices and rooms" as does the BPM 4136 but does provide the number, types and sizes of rooms to be placed in the existing facility. Both forms leave the final configuration of the floor plan to the successful bidder and the lessee. The Department's reasoning for not including a "suggested floor plan" is that this may reduce the number of prospective bidders due to the varied configuration of existing facilities in the bid area. The majority of the clients to be served by the Department in Citrus County, Florida reside within the preferred zone shown as Attachment B. However, there may be other areas where a lesser concentration of clients may be served by "outposting". That is, servicing those clients on a regular scheduled basis at other smaller facilities within an area outside of the preferred zone. The Department no longer requires the facility to be under one roof but how co-location is accomplished is important to the efficient utilization of services and supervision of staff. Elderly and handicapped clients experience difficulty in utilizing needed services (when more than one service is needed) because of distance between buildings. Department clients frequently utilize the services of more than one program and such multi-service utilization is projected to increase in the future. Public transportation in Citrus County, Florida is partially funded by the Department to assist its clients and is uniformly available to the clients in the Inverness services area. The Department did not prepare any studies of functional space needs, staff space needs, client needs, client demographics or client transportation needs before or after the ITB was advertised. The Evaluation Criteria did not include a factor for future expansion even though the Department's caseload is projected to increase. In accordance with the procedure set forth in the Manual an Evaluation Committee (Committee) was appointed to determine, among other things, the award factor or weight to be placed on the nine Evaluation Criteria set forth on the Evaluation Criteria page of the BSF. The committee determined the significance of the nine criteria on the Evaluation page to the Department's needs in regard to Lease No. 590-2029 and awarded a weight factor in accordance with the significance of the criteria. Those criteria most significant to the Department's needs received the highest weight. These award factors were added to the Evaluation page of the BSF at the time the ITB was advertised. No additional Evaluation Criteria were used by the Committee. There was insufficient evidence to show that Committee's action in determining the weight to be given the nine criteria was arbitrary or capricious or unlawful even though different weights had been placed on some of the same criteria in the 1988 ITB. Likewise, there was insufficient evidence to show that any of the specifications set forth in the ITB did not promote fair competition or otherwise reflect normal policy or, that the criteria were designed to favor a specific location or prospective bidder within the preferred zone. The procedure and the forms set forth in the Manual and used by the Department, including the procedure followed by the Evaluation Committee in putting together the ITB for Lease No. 590:2029, comports substantially with all substantive provisions of Chapter 13M-1, Florida Administrative Code, and more specifically with Rule 13M-1.015, Florida Administrative Code. The differences, such as they are, are not substantial, nor is there any extrinsic or intrinsic divergence from the substance of the rule such as to mislead any potential bidder who sought to address the ITB.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, accordingly, RECOMMENDED that a Final Order be entered by the Department dismissing Petitioners' Formal Notice of Written Protest. DONE and ENTERED this 2nd day of October, 1990, in Tallahassee, Florida. WILLIAM R. CAVE 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 2nd day of October, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-6017BID The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the Proposed Findings Of Fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in Finding of Fact 1. - 3. Covered in the Preliminary Statement 4. 6. Adopted generally in Findings of Fact 4 - 11, otherwise not material or a restatement of testimony and stated as a finding of fact. 7. - 8. Not material or relevant. 9. - 22. Adopted generally in Findings of Fact 4 - 11, 15, 17 and 18, otherwise not material or a restatement of testimony and not state as a finding of fact. 23. - 24. Not material or relevant. 23. - 24.*Covered in the Conclusions of Law, otherwise not material or a restatement of testimony and stated as a finding of fact. 25. - 27. Adopted in Findings of Fact 2 and 16. 28. - 31. Not material. Adopted in Finding of Fact 16, otherwise a restatement of testimony and not stated as a finding of fact. - 37. Not material or a restatement of testimony and stated as a finding of fact. Specific Rulings on Proposed Findings of Fact Submitted by the Respondent 1. Adopted in Finding of Fact 1. 2. - 3. Not material. 4. 6. Adopted in Findings of Fact 14, 15 and 13, respectively. 7. - 9. Not material. 10. - 12. Adopted in Findings of Fact 11, 12 and 13. 13. - 15. Rejected as not being supported by substantial competent evidence in the record. 16. Adopted in Finding of Fact 13. 17. Not material. 18. Adopted in Finding of Fact 11. 19. - 22. Not Material COPIES FURNISHED: Thomas V. Infantino, Esquire Post Office Drawer 30 Winter Park, FL 32609 Arthur R. Shell, Esquire 1000 Northeast 16th Avenue Gainesville, FL 32601 Sam Powers, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 Linda Harris, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 Case No. - 89-6017BID
The Issue Whether or not the Petitioner is liable for tax, penalties and interest under the authority of Chapter 212, Florida Statutes, on certain purchases, rentals/leases and repairs to capital equipment made by the Petitioner on paging equipment, for the audit period October 1, 1974 through September 30, 1977. The audit also considers the purchase of office supplies in the aforementioned period, but for the purposes of this hearing the Petitioner is not contesting the imposition of tax, penalty and interest on those items. Furthermore, the Petitioner does not contest the mathematical calculations in arriving at the tax as set forth in the Notice of Proposed Assessment; instead, it is an attack on the right of the Respondent to affect such a tax against the Petitioner on the items in dispute.
Findings Of Fact This cause came on for consideration based upon the Petition filed by Gabriel Communications Corporation protesting a proposed deficiency of sales tax liability asserted by the Respondent, the Florida Department of Revenue, by its 1st Revised Notice of Proposed Assessment of Tax, Penalties and Interest Under Chapter 212, Florida Statutes. The contents of that 1st Revised Notice of Proposed Assessment, to include the worksheets of the Respondent's Tax Examiner, may be found as the Respondent's Composite Exhibit No. 1 admitted into evidence. The proposed assessment contains claims for tax, penalties and interest on the Petitioner's purchase, rentals/lease and repair to capital equipment; to wit, pagers made by the Petitioner. The purchases and rentals/leases were involved in transactions between the Petitioner and certain suppliers to the Petitioner and the repairs pertain to materials necessary to keep the pagers in working order. There are additional items in the audit which concern certain office supplies purchased by the Petitioner for which sales tax was not paid; however, for the purposes of this proceeding those items are not contested by the Petitioner. Moreover, Gabriel Communications Corporation does not contest the amount of the assessment, assuming that the Respondent is entitled in law to make the assessment on the matters in dispute. Gabriel Communications Corporation is a Florida corporation and a holder of a Certificate of Public Convenience and Necessity issued by the Florida Public Service Commission, which certificate authorizes Gabriel to provide radio, telephone and paging services to the public in certain areas in Florida. The Petitioner's corporate office is in Fort Lauderdale, Florida. Gabriel Communications Corporation is one of forty-three organizations licensed by the Public Service Commission of the State of Florida as a radio common carrier. (The conclusion is borne out in the late-filed exhibit of the Petitioner, which is Exhibit No. 5, admitted into evidence, being a statement from the Commission Clerk for the Florida Public Service Commission.) The tax that the Respondent is attempting to impose in this matter is a tax on the pagers which the Petitioner has purchased or rented/leased from suppliers to be provided to the Petitioner's customers to assist in establishing the paging services which the Petitioner offers to those customers. The proposed tax also involves a tax asserted against the Petitioner on those items of inventory which the Petitioner purchases from its suppliers for purposes of making repairs to the equipment its customers are utilizing. The focus of the Petitioner's argument in support of this Petition is centered on the provision of Rule 12A-1.46(8) (i), Florida Administrative Code, which in discussing taxation involving telephone, telegraph and other communication services by radio common carrier states as follows: "(8) Radio Common Carriers. * * * The charge by the radio common carrier for one-way pocket pager service is exempt." In the view of the Petitioner this means that the entire transaction between the Petitioner and its customers involving paging services, to include the initial purchase or rental/lease of pagers from its suppliers and repairs thereto, would be exempt from any tax under Chapter 212, Florida Statutes. The Petitioner supports its argument in this vein by citing Attorney General's Opinion 68-62, dated 1968, dealing with an interpretation of Section 212.05(5), Florida Statutes, and the subsequent Florida Revenue Commission ruling No. 068-56 of June 27, 1978. That section, 212.05(5), Florida Statutes, states: (5) At the rate of 4 percent on charges for all telegraph messages and long distance telephone calls beginning and terminating in this state; on recurring charges to regular subscribers for local telephone service and for wired television service; on all charges for the installation of telephonic, wired television, and telegraphic equipment; and, at the same rate, on all charges for electrical power or energy. Telephone and telegraph services originating within this state and completed outside this state or originating outside this state and completed within this state are not taxable. The provisions of s. 212.17(3), regarding credit for tax paid on charges subsequently found to be worthless, shall be equally applicable to any tax paid under the provisions of this section on charges for telephone and telegraph services and electric power subsequently found to be uncollectible. The word 'charges' in this subsection shall not include any excise or similar tax levied by the federal government, any political subdivision of the state, or any municipality upon the purchase or sale of telephone, wired television or telegraph service, or electric power, which tax is collected by the seller from the purchaser." The Petitioner makes a further argument that the provision which the Respondent relies on in proposing its assessment does not have application. That provision is Rule 12A-1.46(8)(e), Florida Administrative Code, and it reads: "(8) Radio Common Carriers. * * * (e) Sales, rentals or repairs of machines, equipment, parts or accessories to a radio common carrier for its use in providing communication services are taxable. This includes parts and materials used by radio common carriers in the repair and installation of their own communication equipment. When purchasing equipment for resale or for exclusive rental, a radio common carrier should furnish its supplier a resale certificate in lieu of paying the tax." The Petitioner doesn't feel that this provision has application to it because of the perception that the sale-rental or repair of equipment is not for purposes of the radio common carrier's use in providing communication service, but is for the benefit of the ultimate consumer/customer of the Petitioner. Finally, the Petitioner argues that if a tax should be allowed, it should be on the arrangement between the Petitioner and the customer, on the theory that the arrangement involves the rental of a pager by the customer and the Respondent should not make that tax have retroactive application to the transactions in question. From the point of view of the Respondent, Section 212.21(2), Florida Statutes, establishes the general proposition that tax shall be levied for sales and rentals considered under Chapter 212, Florida Statutes, except to the extent that those transactions were specifically exempted. To the Respondent, the only exemption in application is that exemption found in Rule 12A-1.46(8)(i), Florida Administrative Code, and that only pertains to the one-way pocket pager service, not as Rule 12A-1.46(8)(e), Florida Administrative Code, sets out, the, "sales, rentals or repairs of machines, equipment, parts or accessories to a radio common carrier for its use in providing communication services." In the position of the Respondent, the purchase or rental of equipment and the repair to that equipment made by the Petitioner are for its own use in providing the separate exempt service to the Petitioner's customers. After analyzing the arguments in behalf of the parties, the Respondent's position is found to be persuasive. Although the service charges made by the Petitioner to its consumer are exempt from taxation, under authority of Rule 12A-1.46(8)(i), Florida Administrative Code, the purchase or rental/lease and repair to the capital equipment of the Petitioner which it uses in providing that service to its consumers are taxable pursuant to Rule 12A- 1.46(8)(e), Florida Administrative Code. There flows from that tax liability certain interest charges not to exceed a total penalty of 25 percent in the aggregate (see Section 212.12(2), Florida statutes). However, the Respondent may for good cause shown compromise those penalties after investigation reveals that the penalty would be too severe or unjust (see Section 212.12(5), Florida statutes). In view of the testimony offered by a number of radio common carriers in the State of Florida licensed by the Florida Public Service Commission to the effect that they misunderstood the tax liability under Rule 12A-1.46(8)(e), Florida Administrative Code, and the acknowledgement of the undersigned of that difficulty, it would be recommended that no penalty be imposed in this instance. (A review has been made of the proposed findings of fact and conclusions of law submitted, and they have been utilized in this Recommended Order in those instances in which the proposals were deemed to be appropriate.)
Recommendation Upon a full consideration of the facts in this cause, it is recommended that the Petitioner be required to pay the tax and applicable interest due and owed under the 1st Revised Notice of Proposed Assessment of Tax, Penalties and Interest, which is the subject of this case. It is further recommended that the penalties be waived. DONE and ENTERED this 29th day of August, 1978, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 1978 COPIES FURNISHED: John D. Moriarty, Esquire Department of Revenue Room 104, Carlton Building Tallahassee, Florida 32304 John W. Costigan, Esquire Post Office Box 669 Tallahassee, Florida Maxie Broome, Jr., Esquire Department of Legal Affairs The Capitol Tallahassee, Florida 32304
The Issue Whether Petitioners violated provisions of Chapter 106, Florida Statutes, as alleged in the Order of Probable Cause filed August 23, 2002.
Findings Of Fact Chapters 97 through 106, Florida Statutes, comprise the Florida Election Code (Code). Pursuant to the Code, the Commission is empowered specifically to enforce the provisions of Chapters 104 and 106, Florida Statutes. Mary McCarty was elected to the City Commission of Delray Beach, Florida in 1987. She was elected to the Palm Beach County Commission in 1990. She has been returned to that office in each subsequent election and she is currently a member of the Palm Beach County Commission. In November of 2002, she was elected to her fourth term as Chairman of the Palm Beach County Republican Executive Committee. The Committee to Take Back Our Judiciary was an unincorporated entity. It was a de facto committee, which, for reasons addressed herein, did not ever become a "political committee" as defined in Section 106.011(1), Florida Statutes. Ms. McCarty has run for public office six times and was successful on each occasion. Prior to each election she received from the Florida Secretary of State a handbook addressing campaign financing. She is familiar with the statutes and rules with regard to financing an individual campaign. Sometime before the Thanksgiving Holiday in 2000, Ms. McCarty received a telephone call from Roger Stone of Washington, D.C. Ms. McCarty knew Mr. Stone, who at various times had been a campaign operative for Senator Arlen Specter, had been involved in opposing the sugar tax amendment in Florida, and had been a consultant to Donald Trump, during his short-lived presidential campaign. Ms. McCarty was aware that Mr. Stone and Craig Snyder were principals of IKON Public Affairs, a business entity with offices in Washington, D.C., and Miami Beach, Florida. Roger Stone informed Ms. McCarty that he was forming a committee to raise funds for the purpose of taking action against the Florida Supreme Court. Mr. Stone stated that he had formed The Committee and that he wished for her to be the chairperson. She did not initially commit to undertake this responsibility. A few days after the conversation with Mr. Stone, Ms. McCarty received a facsimile draft of a fundraising letter that The Committee proposed to post. The facsimile was sent by Roger Stone from Washington. She made some suggested changes and returned it to the address in Washington from whence it came. Subsequently, she had a telephone conversation with Lora Lynn Jones of Unique Graphics and Design in Alexandria, Virginia. Ms. Jones was in the business of making mass mailings. Ms. McCarty told Ms. Jones that her name could be used on the fundraising letter although Ms. McCarty did not sign the fundraising letter. Nevertheless, the document was mailed to a large number of people and it bore the printed name, "Mary McCarty, Palm Beach County Commissioner." The first time Ms. McCarty saw The Committee's finished product it was in the form of a "Telepost, high priority communication." She first saw the "Telepost" when it arrived in her mailbox in early December 2000. The wording of the letter was different from the draft Ms. McCarty had seen earlier. Unlike the draft, it targeted specific justices on the Florida Supreme Court. It cannot be determined from the evidence the date the December "Telepost" was posted, but it was posted before Ms. McCarty determined that she had become Chairperson of The Committee. The "Telepost," dated December 2000, solicited funds so that The Committee could, ". . . send a clear message to the Florida Supreme Court that we will not tolerate their efforts to highjack the Presidential election for Al Gore." Later in December 2000, Mr. Stone called Ms. McCarthy and told her that she should be the chairman of The Committee. She agreed. Ms. McCarty signed a "Statement of Organization of Political Committee," which was dated December 19, 2000. This is a form provided by the Division of Elections, which, if properly completed and filed, officially establishes a political committee. She also signed a form entitled "Appointment of Campaign Treasurer and Designation of Campaign Depository for Political Committee." Mr. Stone, or his operatives, provided these forms to Ms. McCarty. She signed them and mailed them to Mr. Stone's address in Washington, D.C., which was the headquarters of the IKON Public Affairs Group. The "Statement of Organization of Political Committee," dated December 19, 2000, was received by the Division of Elections on December 26, 2000. It listed Amber McWhorter as Treasurer. Inez Williams, who works in the document section of the Division of Elections, processed the form. When Ms. Williams received it, she recognized that the form was incomplete because on the face of it the reader could not determine if the committee was an "issue" committee, or a "candidate" committee. Ms. Williams noted that the mailing address on the form dated December 19, 2000, was "c/o VisionMedia," 1680 Michigan Avenue, Suite 900, Miami Beach, Florida. Ms. Williams found a telephone number for that business and dialed it, on December 27, 2000. No one answered so she left a message on VisionMedia's answering machine. In addition to the telephone call, Ms. Williams prepared a letter with the address of, "Mary McCarty, Chairperson, The Committee to Take Back Our Judiciary, 1348 Washington Avenue, Suite 177, Miami Beach, Florida." This letter was dated December 27, 2000, and was signed by Connie A. Evans, Chief, Bureau of Election Records. This is the address found on the "Appointment of Campaign Treasurer and Designation of Campaign Depository for Political Committee," which had also been received by the Division of Elections on December 26, 2000. The letter signed by Ms. Evans on December 27, 2001, informed Ms. McCarty that items 3 and 7 needed to be "rephrased." It further informed Ms. McCarty, that upon receipt of the requested information the committee would be included on the "active" list. The message recorded on The Committee answering machine on December 27, 2001, generated a response from a person who identified himself as Mr. Snyder, on January 2, 2002. Mr. Snyder engaged in a telephone conversation with Ms. Williams. Ms. Williams explained to Mr. Snyder that items 3, 5, 7, and 8, would have to be completed properly as a condition of The Committee's being recognized. A letter dated January 4, 2001, bearing the letterhead of "The Committee to Take Back Our Judiciary," and signed by Amber Allman McWhorter, was faxed to the Division of Elections on January 4, 2001, and received that date. This letter referenced the telephone call between Ms. Williams and Craig Snyder, who was further identified as The Committee's attorney. The letter stated that a corrected Statement of Organization of Political Committee, and a designation of treasurer, would be forwarded to the Division of Elections within the next 72 hours. On January 8, 2001, a filing was received by the Division of Elections that was deemed by the Division to be complete. Subsequently, in a letter dated January 10, 2001, and signed by Connie Evans, informed Ms. McCarty and The Committee that the Statement of Organization and the Appointment of Campaign Treasurer and Designation of Campaign Depository for The Committee complied with the Division of Elections' requirements. The Committee was provided with Identification No. 34261. Posted with the letter was a copy of the "2000 Handbook for Committees," which is published by the Division of Elections. The letter and the handbook were sent to The Committee operation in Miami, not Ms. McCarty, and no one in the Miami Beach operation ever forwarded it to her. Connie Evans, Bureau Chief of Election Records, the entity that supervises the filing of the forms mentioned above, believes that due to a court ruling in Florida Right to Life v. Mortham, Case No. 98-770-Civ-Orl-19A, the language in Section 106.011, Florida Statutes, which defines a "political committee," has been found to be unconstitutional. She believes that a political committee is not required to register with the Division of Elections but that if a committee does register, it must abide by the statutes regulating political committees. Ms. Evans has informed numerous entities of this interpretation of the law in letters. The efficacy of that case, and Ms. Evans' interpretation of it, will be discussed further in the Conclusions of Law, below. Ms. McCarty signed a "Campaign Treasurer's Report Summary"(CTR-Q1) which was filed with the Division of Elections on April 10, 2001. This addressed the period January 1, 2001 until March 31, 2001. Under the certification section of the CTR-Q1 are the words, "It is a first degree misdemeanor for any person to falsify a public record (ss. 839.13, F.S.)." Immediately above her signature are the words, "I certify that I have examined this report and it is true, correct, and complete." The box found immediately above and to the right of her signature, was checked to signify that Ms. McCarty was the chairperson of The Committee. According to Ms. Evans, The Division of Elections regulates several kinds of committees. There are "issues" committees, "candidate" committees," "party executive" committees, and "committees of continuing existence." Depending on the nature of the committee, different rules apply. The Committee was a "candidate" committee so the contribution regulations of a political candidate applied to the committee. That meant that the maximum contribution per person was $500. The CTR-Q1 indicated in the "Itemized Contributions Section" that seven people contributed $1,000 and one person contributed $2,000. Walter Hunter, Neda Korich, Arthur Allen, William Shutze, Caroline Ireland, Henry Allen, and Honore Wansler, contributed $1,000, each. Robert Morgan contributed $2,000. The amounts in excess of $500 were eventually returned to the $1,000 contributors, except that in the case of Henry Allen, the refund was made to Allen Investment corporation. The sum of $1,500 was returned to Robert Morgan, the $2,000 contributor, but the CTR-Q1 listed only a $500 repayment. Therefore, the CTR-Q1 in its expenditures section was incorrect with regard to Mr. Morgan. The CTR-Q1 also listed in the "Itemized Contributions Section" the receipt, on January 2, 2001, of $150,000 for "LOA/INK extension of credit for direct mail services." These words may be interpreted to mean that a loan in the form of an "in kind" service had been provided. This was reported under the name of Creative Marketing, 2760 Eisenhower Avenue, Suite 250, Alexandria, Virginia. The Committee had a bank account at CityBank of Miami, Florida. The sole authorized signatory on the account was Diane Thorne. The Account No. was 3200015694. There was no entry in the bank account of the receipt of $150,000. This indicates that the item was not processed through the bank and it would not have been processed through the bank if it were really an "in kind" contribution. Because the beginning balance was zero on February 8, 2001, it is concluded that the inception date of Account No. 3200015694 was February 8, 2001. Lora Lynn Jones, is the principal of Unique Graphics and Design, which is located in Suite 253, at an address in Alexandria, Virginia, which is not further identified in the evidence of record. Ms. Jones prepared and posted the fundraising letter of December 2000, at the direction of Mr. Stone. Ms. Jones talked on the telephone with Ms. McCarty prior to mailing the fundraising letter and determined that the language in the letter was agreeable to Ms. McCarty. At the direction of Mr. Stone, Ms. Jones requested payment and received payment for her work, but from whom she cannot remember, except that she is sure that Creative Marketing did not pay it. The money for this production was paid in advance by wire transfer. There is no evidence in the record that this was paid from the account of The Committee. In fact, because the payment was made sometime in early December 2000, it could not have been paid from the account because it had not been opened. Ms. Jones is aware of an entity by the name of Creative Marketing Company and she believes it may be located in Northern Virginia, but she is not involved with it. It is found by clear and convincing evidence that the fundraising letter was not paid for by Creative Marketing, 2760 Eisenhower Avenue, Suite 250, Alexandria, Virginia. The bank records of The Committee reflect a $50,000 expenditure made to Unique Graphics and Design, paid with a check dated May 9, 2001. This represents a payment for something other than the fundraising letter dated December 2000. The $50,000 item was reported as an expenditure on the CTR-Q1 that was reported to have been made on March 12, 2001. It was reported as having been made to Creative Marketing as payee. The only check in the amount of $50,000, reflected in The Committee checking account for the period February 8, 2001, to June 30, 2001, was payable to Unique Graphics and Design and was dated May 9, 2001. Therefore, it is found that the CTR-Q1 is incorrect when it was reported as having been made on March 12, 2001, to Creative Marketing. Ms. Jones believes there is a company by the name of Creative Marketing Company, which she believes may be located in Northern Virginia, but she is not involved with it. Contributions remitted in response to the fundraising letter were forwarded to one of Mr. Stone's two addresses. Because the address of 1348 Washington Avenue, Suite 177, in Miami Beach, Florida, is the address listed on the fundraising letter, it is likely that contributions in response to the fundraising letter went to Mr. Stone's Miami Beach operation. In any event, it is found as a fact that Ms. McCarty did not personally receive or have any contact with any of the contributions remitted to The Committee. The people handling the receipt of funds and the deposits were Roger Stone and people paid by his organization, including Diane Thorne, the secretary; Amber McWhorter, the treasurer; and Craig Snyder. Just as Ms. McCarty was not involved in the receipt of income to The Committee, she was also not involved in the disbursement of funds. The CTR-Q1 was completed by The Committee's staff in either Miami Beach or Washington, D.C., but Ms. McCarty had no input into its preparation. When Ms. McCarty signed the CTR-Q1 she was without knowledge as to whether the report was truthful, correct, or complete. It is further found that she made no effort to ascertain whether the report was truthful, correct, or complete. She believed it to be true and correct because she trusted Mr. Stone's operatives to accurately prepare the report. Ms. McCarty, excepting the current litigation, has never been the subject of a Commission action. Ms. McCarty has an income of approximately $80,000. She owns a residence jointly with her husband which is valued at approximately $300,000 and which is subject to a mortgage of approximately $200,000. She owns a vacation home in Maine jointly with her husband that is valued at approximately $25,000. She and her husband own three automobiles. She owns stocks, annuities, mutual funds or certificates of deposit of an indeterminate value.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered dismissing the Orders of Probable Cause entered in the case of both Mary McCarty and The Committee to Take Back Our Judiciary. DONE AND ENTERED this 21st day of April, 2003, in Tallahassee, Leon County, Florida. HARRY L. HOOPER 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 21st day of April, 2003. COPIES FURNISHED: Kendall Coffey, Esquire Coffey & Wright, LLP 2665 South Bayshore Drive Grand Bay Plaza, Penthouse 2B Miami, Florida 33133 J. Reeve Bright, Esquire Bright & Chimera 135 Southeast 5th Avenue, Suite 2 Delray Beach, Florida 33483-5256 Mark Herron, Esquire Messer, Caparello & Self, P.A. Post Office Box 1876 Tallahassee, Florida 32302-1876 Eric M. Lipman, Esquire Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Barbara M. Linthicum, Executive Director Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Patsy Ruching, Clerk Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050
Findings Of Fact On August 4, 1995, the Department issued request for proposal Number 95-CO-6740 titled "Appreciating Racial, Cultural, and Gender Diversity" (the "RFP") for the delivery of instruction addressing racial, cultural, and gender diversity issues in the correctional work place, as well as workplace diversity issues relating to the American with Disabilities Act (ADA). The proposal called for the training of 1,500 of its employees, thirty persons per session, at sites throughout the state. Four of the sessions were to be "train-the trainer" sessions, which would prepare Department employees to carry on the training after the expiration of the Contract. No protest challenging the terms and conditions of the RFP was filed. The RFP contained a description of the scope of the work to be performed, and of the required contents of the proposals to be submitted, as well as expectations for the prevailing offeror. Proposals were submitted to the Department on September 6, 1995 and were reviewed and evaluated by five (5) employees of Respondent who comprised the Evaluation Committee. Proposals were scored on a 100-point scale consisting of 50 evaluation points and 50 cost points. The 50 evaluation points were comprised of 10 points for "qualifications of offeror," 10 points for "previous related experience," and 30 points for "work plan and course outline." The proposal with the lowest cost per student was awarded 50 cost points. The cost points of all other proposals was determined by the formula 50(1-A/B). A being the difference between the cost-per student of the proposal being scored and B being the lowest cost per student. Petitioner New Day was a responsible bidder to the RFP. Out of a possible 50 points for the evaluation of its proposal, Petitioner New Day received an average of 43.8 points and Zanco received an average of 32.0 points. Out of a possible 50 points for its price per student, Petitioner received 31.4 points and Zanco received the full 50 points. Adding committee points and cost points, Zanco's proposal received the highest overall score with 82.0 points and New Day received the second highest score with 75.2 points. Respondent issued its intent to award the bid to Zanco. Petitioner seeks to compare its proposal with Intervenor's. This is contrary to the instructions given to the bidders and the evaluation committee. The evaluation committee guidelines stated, in part: 3.a. DO NOT evaluate by comparing one bid/proposal with another; each must be evaluated independently of the others. (Emphasis in original). Petitioner argues that Zanco's proposal was non-responsive because it did not comply with the mandatory requirements of the RFP. Petitioner argues that Zanco's proposal did not demonstrate a comprehensive knowledge of trends related to diversity and demographic changes. Relating to the mandatory requirements, sections 5.1 and 5.10 of the RFP provide as follows: 5.1 The State has established certain requirements with respect to responses to be submitted by bidders. The use of "shall", "must" or "will" (except to indicate simple futurity) in this Request for Proposal indicates a requirement or condition from which a material deviation may not be waived by the State. A deviation is material if the deficient response is not in substantial accord with this Request for Proposal require- ments, provides an advantage to one bidder over other bidders, has a [potentially signifi- cant] effect on the quantity or quality of items proposed, or on the cost to the State. [Material deviations cannot be waived]. (Emphasis in original). 5.10. Any RFP response which fails to meet the mandatory requirements stated in this Request may be rejected. Section 2.1 of the RFP lists the mandatory requirements. Section 3.1 of the RFP, titled "RFP response format," describes the format in which an offeror is to assemble the requirements in its proposal. On the issue relating to the offeror's knowledge of trends, section 2.1.1 of the RFP provides as follows: The offeror must demonstrate a comprehensive knowledge of racial, cultural and gender diversity issues and trends with particular emphasis on methods of improving racial cult- ural and gender interaction in the work place. The offer must also demonstrate comprehensive knowledge of diversity as described as above and as it pertains to ADA. Contained in Zanco's executive summary is the following statement: By the year 2000, just five brief years from now, minorities and women will completely dominate the demographics of the United States - a fact which will revolutionize the way in which our society will have to operate. Gone will be the days of the traditional majority - replaced by large groups of women, older and handicapped persons, Hispanics, Afro-Americans, Asians, Native Americans and others. Petitioner argues this statement is incorrect because the traditional majority will continue to be white Americans. Zanco's statement does not imply that white Americans will not be the majority. Zanco's statement merely separates white women from white men and predicts that there will be many more white women, along with men and women of other backgrounds, than white men. The United States Department of Commerce, Bureau of the Census, predicts that by the year 2000, there will be approximately 96 million white men compared to approximately 178 million combined white women and Hispanic, Black, American Indian, Eskimo, and Aleut, and Asian and Pacific Islander men and women in the workplace. Zanco's statement is correct and supported by the evidence. Zanco's proposal demonstrated a comprehensive knowledge of racial, cultural and gender diversity issues and trends. Petitioner argues that Zanco's proposal did not contain training goals or behavioral objectives. On this issue, section 2.1.2 of the RFP provides as follows: The offeror must provide specific training goals and behavior objectives along with a course outline depicting areas to be addressed in the instructional program. Petitioner argues that a behavior objective focuses on what participants are expected to do. They are expressed in behavior terms with verbs, such that a participant will distinguish, identify, or list. Petitioner bases this opinion on chapter 9 of Foundations of Education. This book, although a useful source book, was neither included in nor referenced by the RFP. Thus, Foundations of Education is relevant for the limited purpose of supporting the opinion of Petitioner as to the definition of a behavioral objective. Foundations of Education can not be the basis by which to determine whether Zanco's proposal includes training goals and behavioral objectives. Zanco's proposal includes training goals and behavioral objectives. For example, the training goal of session two is to establish a common language. The training goal of session three is to relate diversity to every day life. The behavioral objective of session six is to raise awareness and reduce attitudinal barriers. The training goal of session seven is to lead to effective cross-cultural relationships. The behavioral objective of session nine is the management and controlling of prejudicial thinking. The behavioral objective of session 11 is to have participants view others and themselves as greater than the sum of their parts. The behavioral objective of session 13 is to understand how a community's reaction to differences adversely affects everyone's humanity. The behavioral objective of session 16 is to become aware of our natural inclination to generalize and apply assumptions. The behavioral objective of session 20 is responding effectively to changes. The behavioral objective of session 21 is understanding differences and valuing uniqueness. The behavioral objective and training goal of session 22 is creating an environment for diversity in order to establish effective working relationships in which employees can succeed. The behavioral objective of session 23 is encouraging listening and responding constructively to others' views. Zanco also includes behavioral objectives in tab one of its proposal, its executive summary, as follows: Zanco helps employers think differently about the way people learn and develop, about employees [sic] capacity to achieve maximum performance, about how attitudes, actions and policies affect the climate of the workplace and, ultimately, its mission capability. . . Zanco's programs inspire individual contri- butors to take responsibility for improving the effectiveness of their organization, under- standing that those individuals who can work effectively with coworkers and inmates from a variety of backgrounds will be best equipped to contribute to their organization's goals and to fulfill their own career aspirations. Zanco's proposal included training goals and behavioral objectives. Petitioner argues that Zanco's proposal did not show comprehensive knowledge of familiarity with federal and state laws. On this issue section 2.1.3 of the RFP provides as follows: The offeror must demonstrate comprehensive know- ledge of all state and federal laws, rules and guidelines governing affirmative action, equal opportunity employment issues, and ADA. Under previous task-related experience, Zanco's proposal included an outline of the Florida Education Equity Act which was prepared pursuant to training clients in the education field based in Florida. Zanco's proposal refers to the ADA in its previous task-related experience and in its course outline. Zanco's proposal demonstrated comprehensive knowledge of all state and federal laws governing affirmative action, equal opportunity employment issues, and the ADA. Petitioner argues that Zanco's proposal does not show that it knows of the composition of the Department's work force. On this issue section 2.1.4 of the RFP provides as follows: The offeror must demonstrate reasonable aware- ness of the composition of the corrections workforce and of the corrections workplace/ environment. Zanco's proposal substantially demonstrates a reasonable awareness of the composition of the Department's work force. Petitioner argues that Zanco's proposal did not include visual or printed materials to be used in the program delivery process. On this issue section 2.1.5 of the RFP provides as follows: Instructional methods employed in the program delivery process must include appropriate visual and printed materials, hands-on experi- ence and performance-based participant interaction. This is a requirement for the successful offeror that is awarded the contract. It is not a requirement for an offeror to put in its proposal. Thus, it is irrelevant whether Zanco's proposal included visual or printed materials. Petitioner argues that three of the five references listed by Zanco were for the same training exercises. On this issue sections 2.1.11 and 3.1.3.1 of the REP provide as follows: The offeror must provide a listing of at least four (4) previous clients who are able to provide evaluative [sic] information regarding the offeror's instructional performance. The vendor shall provide a list of four (4) different previous clients as references. References shall provide a description of services performed with enough detail to allow the evaluation committee to easily determine whether the work was similar to that being requested by the state in this Request for Proposal.... Zanco listed the following four clients: the School Board of Charlotte County, the School Board of Sarasota County, the School Board of Manatee County, and the Florida Department of Labor and Employment Security. The RFP did not request the vendor to list five references that received different types of training. Rather, the RFP requested a list of four previous clients that received training similar to that being sought by the Department. Zanco's proposal listed four clients and described the services performed with sufficient detail to determine that the work was similar to that being requested by the Department. Petitioner argues that Zanco's proposal fails to include relevant measurement instrument samples. On this issue section 2.1.9 of the RFP provides as follows: The offeror must provide samples of relevant and measurement instruments, including performance evaluations, objective tests and course/instructor evaluation surveys. Zanco's proposal included samples of relevant measurement instruments. Zanco's proposal fails to list the education of Inez Bracy in its resume. On this issue section 3.1.2 of the RFP provides in pertinent part as follows: The vendor shall include resumes of the specific individuals proposed to work on this contract, specifying education and work experience that relates directly to appreciating racial, cultural and gender diversity. If Bracy's education were not directly related to appreciating racial, cultural and gender diversity, by a plain reading of section 3.1.2 if would not need to be specified. However, the first sentence in Bracy's resume states "I have taught in the Palm Beach District School System for fifteen years." Moreover, Section 3.1.2 did not ask for only the education of the trainer but prior work experience. Bracy's work experience was listed and includes coordinating a conference titled "Building Global Bridges" and teaching "sensitivity in a multicultural classroom" to the Palm Beach County Classroom Teachers Association. Zanco's proposal substantially demonstrates the educational background and work experience of Inez Bracy. Zanco's proposal indicates that it is entering its fifth year of business, but Petitioner argues that Zanco's references begin in 1994 and that Zanco does not have relevant experience that predates 1994. On this issue, Section 3.1.3.2 of the RFP provides as follows: The Department prefers vendors who have been in business for at least three years. Vendors which have not been in the instructional delivery business for at least three years will receive a five (5) point deduction. Zanco's proposal includes a statement that Zanco "is entering its fifth year as a specialist in the Diversity and Equity instructional delivery business." The RFP did not request references corresponding to every year a vendor is in business. Further, if Zanco had been in business for only one or two years, Section 3.1.3.2 of the RFP would only effect the score assigned to Zanco and not the responsiveness of Zanco's proposal. The score, reduced by 5 points, would still exceed Petitioners score. Petitioner argues that Zanco's proposal does not contain a work plan. On this issue, Section 3.1.4 of the RFP provides as follows: [Tab 4, Workplan and Course Outline] - This section shall include a proposed workplan describing how the vendor will approach this training including training aids, trainee interaction, etc. plus a proposed course out- line for the 3-day session. There shall be a workplan and outline for both the staff training and the train-the-trainer training. (Emphasis in original). Petitioner argues that this requirement mandates that a course outline and workplan must be separate documents. The RFP, however, does not state that two separate documents must be provided. It states that both must be present. Zanco's work plan is mixed with its outline. Zanco's proposal contained a work plan. Petitioner argues that the score given to Zanco's proposal was arbitrary because the proposal did not include a work plan or an outline for the three-day session. The 50 evaluation points consisted of 10 points for "qualifications of offeror", 10 points for "previous related experience", and 30 points for "work plan and course outline". Petitioner does not challenge the 50 cost-points given to Zanco. Zanco received an average of 32.0 evaluation points. Petitioner received an average of 43.8 evaluation points. For qualifications of offeror, Zanco received 5, 7, 10, 9, and 5 points for an average of 7.2 points. For previous related experience, Zanco received 10, 5, 10, 9, and 5 points for an average of 7.8 points. For work plan and course outline, Zanco received 20, 15, 15, 15, and 20 points for an average of 17.0 points. Petitioner proffered that 5 points was logical for Zanco's qualifications, and that 5 points was logical for Zanco's previous related experience. In Petitioner's witness Thompson's opinion, however, any score given to Zanco's qualifications or previous related experience above 5 points was arbitrary. Petitioner argues that Zanco should have received no points for its work plan and course outline because Zanco did not include a separate work plan. Petitioner argues that it was arbitrary for Zanco to have received any points for its work plan and course outline. By Petitioner's interpretation of the RFP, the work plan had to be separated from the course outline, and that Zanco did not include a separate three-day course outline. Zanco's three-day course outline is contained in its proposal. Each of the 25 sessions listed by Zanco in its diversity training outline is approximately 45 minutes to an hour in duration. It would take roughly 24 hours to cover 25 45-minute to one-hour sessions, or three eight-hour days. There was no requirement in the RFP that the work plan and course outline had to be on separate pages or located under separate tabs. Zanco's work plan is mixed with its outline. The evaluation committee did not award points for Zanco's work plan and course outline in an arbitrary or capricious manner.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order denying the relief requested by Petitioner and recommending that a Final Order be entered awarding the contract for RFP Number 95-CO-6740 to Intervenor, Zanco. DONE AND ENTERED this 16th day of February, 1996, in Tallahassee, Florida. DANIEL M. KILBRIDE, 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 16th day of February, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 95-5803BID To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Accepted in substance: paragraph 1, 2 (partially addressed in Preliminary Statement), 3, 4 (Preliminary Statement), and 5. Rejected as against the greater weight of evidence: paragraphs 6(A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K), (L), (M), (N), and 7. Respondent's Proposed Findings of Fact. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 51, 52, 53, 54, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 71, 72, 73, 75, 76, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 119. Rejected as subsumed, or irrelevant and immaterial: paragraphs 21, 49, 50, 55, 69, 70, 74, 77, 113, 114, 115, 116, 117, 118, 120, 121, 122, and 123. Intervenor's Proposed Findings of Fact. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 10 (in part), 12, 13 (in part), 14, 15, 16 (in part), 17, 18 (in part), 19 (in part), 21 (in part), 22 (in part), 24 (in part), 25, 26, 27, 28, 29, 30, 31, 32, 33, and 34. Rejected as subsumed, or irrelevant and immaterial paragraphs 9, 10 (in part), 11 (in part), 13 (in part), 16 (in part), 18 (in part), 19 (in part), 20 (in part), 21 (in part), 22 (in part), 23, 24 (in part), 25 (in part). COPIES FURNISHED: Norberto S. Katz, Esquire Katz and Veliz, P.A. 2211 East Michigan Street Orlando, Florida 32806 Daniel Te Young, Esquire Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 M. Christopher Bryant, Esquire Oertel, Hoffman, Fernandez and Cole, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Harry K. Singletary, Jr., Secretary Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Louis A. Vargas, General Counsel Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Darlene Andert-Schmidt, President Management Concepts 2562 Southwest 27 Place Cape Coral, Florida 33914
The Issue The issues are whether Petitioner effectively elected to move her retirement account from the Florida Retirement System (“FRS”) Pension Plan to the FRS Investment Plan prior to her retirement from state employment or, if not, whether Respondent, State Board of Administration (“SBA”) is estopped from claiming that Petitioner did not successfully elect to move her retirement account into the FRS Investment Plan.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner, Adrian Wagner began her state employment on April 22, 1994, with the Department of Health and Rehabilitative Services, which was renamed the Department of Children and Family Services after a 1996 reorganization. Since 2012, the agency has been named the Department of Children and Families. Upon her hiring, Ms. Wagner was enrolled in the Pension Plan, which was the only retirement program available for eligible employees in 1994. In 2002, the Investment Plan was made available for employees participating in the FRS. Ms. Wagner was provided a three month window, from December 1, 2002, through February 28, 2003, to switch to the Investment Plan. The Plan Choice Administrator did not receive an election from Ms. Wagner during the three month period. Therefore, Ms. Wagner remained in the Pension Plan by statutory default. See § 121.4501(4)(a), Fla. Stat. Ms. Wagner changed employers but remained in the FRS system until her last day of employment on April 3, 2019. At the time of her retirement from FRS-eligible employment, Ms. Wagner was working for the Alachua County Sheriff’s Office. On March 4, 2019, Ms. Wagner logged onto the FRS website, MyFRS.com, from her home computer. Her intention was to use the second election opportunity afforded by section 121.4501(4)(f), Florida Statutes, to move from the Pension Plan to the Investment Plan. Ms. Wagner recalled clicking a green button to change her plan, which took her to a page that read, “ready to make a decision” to change from the Pension Plan to the Investment Plan. It set out the steps needed to make the change. Ms. Wagner testified that she clicked on a green arrow that said, “change your plan,” which took her to a page that set forth the amount of money she would have in the Investment Plan. She continued to a page showing the different plans available to participants in the Investment Plan. The website advised her to contact an Ernst and Young (“EY”) financial planner to discuss her plan options. Ms. Wagner testified that a few minutes later she used the phone number provided by the MyFRS.com website to contact the EY financial planners. She testified that the EY planner with whom she spoke was named “Josh.” The EY call summary log for Ms. Wagner was entered into evidence. The log is a record of every phone call between EY and Ms. Wagner. It includes the date and time of the call, the name of the EY employee who spoke to Ms. Wagner, and a brief summary of their discussion. The EY call summary log identified the EY planner who spoke with Ms. Wagner at 12:10 p.m., on March 4, 2019, as Joshua Kantrowitz. Ms. Wagner testified that Mr. Kantrowitz told her that he could not see in his computer that she had made the switch to the Investment Plan. While Mr. Kantrowitz waited, Ms. Wagner clicked several “back” buttons on the MyFRS.com website. She then went through the same page progression she had done previously to make her plan selection. Ms. Wagner recalled finalizing her decision by clicking a button that read “send,” or “submit,” or “continue.” Ms. Wagner testified that Mr. Kantrowitz told her that he could now see that she had elected to change her retirement from the Pension Plan to the Investment Plan. They discussed fund options, tax questions, and penalties for taking funds out of the Investment Plan. Mr. Kantrowitz verified Ms. Wagner’s email address so that he could send her an FRS Investment Beneficiary Form. Ms. Wagner understood Mr. Kantrowitz to say that she would not be able to see that she had changed to the Investment Plan on the website for about a month. The conversation was interrupted when the phone connection was lost. Ms. Wagner testified that it was her understanding that she had successfully changed her retirement from the Pension Plan to the Investment Plan, and that this change had been confirmed by Mr. Kantrowitz. A transcript of the conversation between Ms. Wagner and Mr. Kantrowitz was entered into evidence. The transcript does not confirm every aspect of Ms. Wagner’s recollection. The transcript records that Ms. Wagner told Mr. Kantrowitz that she “just switched over from the FRS Pension Plan to the Investment Plan.” Mr. Kantrowitz asked when she made the switch. Ms. Wagner responded, “I just hit it today. Did it today.” She added that she made the election “about ten minutes ago.” The transcript clarifies that Mr. Kantrowitz accepted, but did not confirm, Ms. Wagner’s statement that she made the switch to the Investment Plan. After Ms. Wagner told him that she made the switch only 10 minutes ago, Mr. Kantrowitz stated: Okay. And you did it by--basically, you know, if you do--you know, it’s still being processed at the moment. Basically, you know, in the next month, it’s going to make that conversion. In order to, you know, switch and make that choice, you know, the types of investments you’re putting into. Okay. So I do want to keep you aware of that if you did fill it out today, okay. Mr. Kantrowitz never confirmed that the second election had been completed nor did he state whether he could or could not see the change on his computer. Mr. Kantrowitz simply accepted Ms. Wagner’s word and went on to tell her what would happen next if she indeed made the change. Mr. Kantrowitz did state that the conversion would be made in the next month, confirming in part Ms. Wagner’s recollection that she was told that it would be a month before she could see the switch to the Investment Plan on the website. Again, however, this statement was contingent: if Ms. Wagner made the change, the conversion would take about a month. The EY call summary log entry for the March 4, 2019, conversation, presumably completed by Mr. Kantrowitz, records Ms. Wagner’s “Question or Problem” as “made a switch to the FRS IP. [D]oesn’t plan to work in the FRS anymore.” The log records the “Resolution” with a series of four bullet points: talked about IP. taxation, timelines, HIS. says she spoke with admin and they said she would hit NRA at April 1 for 25 YOS SR. she did the 2nd election online and was defaulted into the FRS RDF. needs to set up beneficiaries sending out beneficiary form It could be argued that the second bullet point confirms that Ms. Wagner successfully completed the second election into the Investment Plan. However, when read in tandem with the transcript, Mr. Kantrowitz’s notes clearly set forth his summary of the conversation as it occurred, not his independent conclusion that Ms. Wagner had completed the second election. After the call with Mr. Kantrowitz was dropped, Ms. Wagner called back to inquire as to her exact retirement date. She spoke briefly with another EY planner, Zach Brown, who told her that the Division of Retirement keeps the record of official years of service for employees. Mr. Brown transferred the call to the Division of Retirement. The transcript indicates that Ms. Wagner remained on hold for some time, then hung up before speaking with a Division of Retirement representative. Ms. Wagner testified that on March 18, 2019, she again contacted the EY financial planners. She spoke for roughly a half-hour with a woman whose name she did not recall. The woman verified Ms. Wagner’s personal account information. After being verified, Ms. Wagner asked tax and health care subsidy questions and stated that she planned eventually to move her Investment Plan account from EY to an outside investment firm. Ms. Wagner testified that the EY planner never stated that she was not enrolled in the Investment Plan. The EY call summary log does not show a phone call from Ms. Wagner on March 18, 2019. Ms. Wagner testified that on March 19, 2019, she met with Shawn Powers, the human resources manager for the Alachua County Sheriff’s Office, to discuss Ms. Wagner’s impending retirement. As Ms. Powers filled out a retiree insurance data sheet, Ms. Wagner told her that she had enrolled in the Investment Plan. Ms. Powers cautioned her about the risks involved in the Investment Plan. Ms. Wagner assured her that she understood the risks. Ms. Powers checked the “Investment Plan” box on the insurance form. Ms. Wagner signed the form, attesting to her understanding that she had made the election to move from the Pension Plan to the Investment Plan. Ms. Wagner testified that, after the March 4, 2019, conversation with Mr. Kantrowitz, she received several emails from EY financial planners. She understood these emails as indirect confirmation that she had successfully elected to move to the Investment Plan. During cross-examination, Ms. Wagner conceded that none of these communications affirmatively stated that she was now in the Investment Plan. The third-party Plan Choice Administrator for the Investment Plan is Alight Solutions. FRS members who wish to utilize their second election have multiple options: they may complete and mail in a hard copy form; they may submit a second election form on the MyFRS.com website; or they may log into their account on the MyFRS.com website and go through the process of submitting and confirming their second election online. Fla. Admin. Code R. 19-11.007(3). If an FRS member successfully utilizes the online MyFRS.com process for submitting a second election, an “election confirmation” page appears that informs the member that the election has been received by Alight Solutions. Ms. Wagner had no specific recollection of receiving an electronic confirmation that her election to move to the Investment Plan had been successfully submitted or that it had been received by Alight Solutions. If an FRS member successfully submits an election form to Alight Solutions, a hard copy letter is mailed to the member confirming receipt. Ms. Wagner had no specific recollection of receiving any type of correspondence confirming receipt of her Investment Plan election via conventional mail. Ms. Wagner retired from the Alachua County Sheriff’s Office on April 3, 2019. The parties stipulated that the SBA has no record of receiving a second election from Ms. Wagner during her term of employment with an FRS-participating employer. On April 8, 2019, Ms. Wagner logged onto the MyFRS.com website and saw that she was still enrolled in the Pension Plan. Ms. Wagner immediately phoned the number for the EY financial planners and was transferred to a “solutions person” named Nichole. Ms. Wagner explained to Nichole that on March 4, 2019, she had elected to move her retirement account from the Pension Plan to the Investment Plan via the MyFRS.com website. She provided Nichole with the chronology of events from March 2019 as she remembered them. Nichole told Ms. Wagner that she would research the matter and get back to her within two weeks. Ms. Wagner testified that on or about April 22, 2019, Nichole phoned her to say that she could find no record of anything Ms. Wagner claimed to have done on the MyFRS.com website. Nicole told Ms. Wagner that she would need more time, possibly another two weeks, to do further research on the matter. Ms. Wagner told Nichole how upset she was. Nichole assured Ms. Wagner that she would do her best to find out what happened. Nichole also stated that she would send Ms. Wagner a form to request that the SBA intervene. Ms. Wagner subsequently filed a Request for Intervention, which was received by the SBA on May 17, 2019. Ms. Wagner testified that after she filed her Request for Intervention, but before the SBA responded, she attempted to contact Nichole. Her call was answered by an unnamed EY planner who stated that he would remain on the line while putting her through to a solutions person. Ms. Wagner began speaking with the solutions person but was interrupted by the EY financial planner, who stated that he had found notes by Mr. Kantrowitz indicating that she had changed from the Pension Plan to the Investment Plan. It is highly likely that the unnamed EY financial planner was referencing the EY call summary log notes quoted at Finding of Fact 18. As found above, Mr. Kantrowitz’s contemporary notes reflected what he was told by Ms. Wagner. The notes do not constitute an independent confirmation that Ms. Wagner successfully completed her second election. The SBA submitted into evidence a spreadsheet titled “Participant Web Activity Detail.” SBA witness Allison Olson testified that this document was produced by Alight Solutions in response to her request for all records of Ms. Wagner’s March 4, 2019, activity on the MyFRS.com website. Ms. Olson is the Director of Policy, Risk Management, and Compliance in the Office of Defined Contribution Programs. She credibly testified that she is familiar with reading the Alight Solutions spreadsheets and that she saw nothing on Ms. Wagner’s page indicating that Alight Solutions received her Investment Plan election. Petitioner’s information technology expert, Philip Schwartz, testified that the document provided by Alight Solutions was a “program log,” a high level program that runs to handle a particular task such as an accounting function. Mr. Schwartz testified that he suggested to his client that she request the “server log” for the relevant date. The server log captures every keystroke and click made by a user such as Ms. Wagner, even in situations in which the server is too busy to complete the requested function. Mr. Schwartz believed the program log was insufficient because it showed only which page of the website Ms. Wagner was on at a given moment, not which buttons she clicked or whether she had hit the “send” button. Mr. Schwartz’s suggestion was that Ms. Wagner might have done everything necessary to complete the second election but that the MyFRS.com server may not have recorded her election. The server log would have provided a more accurate representation of Ms. Wagner’s intentions. Ms. Olson testified that, after an informal hearing attempting to resolve the case, she requested a server log from Alight Solutions. The company responded that it did not have the server log. Ms. Olson testified that the program log would indicate the second election had it been completed by Ms. Wagner. Ms. Olson stated that FRS members are always advised to follow through and make sure their election has been received. Mr. Schwartz testified that there is no industry standard as to the length of time a program log should be kept. He has known companies to hold them for as long as a year, but has also known companies to keep them for only 90 days. Mr. Schwartz testified that there is no legal requirement for a company such as Alight Solutions to maintain a program log at all. Mr. Schwartz testified that he did not have enough knowledge of Alight Solutions’ terminology to state whether the program log indicated that Ms. Wagner’s election had been received. Thus, there is no evidence to contradict Ms. Olson’s credible testimony that the Alight Solutions program log did not indicate receipt of Ms. Wagner’s Investment Plan election. The preponderance of the evidence establishes that Ms. Wagner intended to make her second election on March 4, 2019, and to move her retirement account from the Pension Plan to the Investment Plan. The preponderance of the evidence also establishes that Ms. Wagner failed to complete her second election and that Alight Solutions, the Plan Choice Administrator for the Investment Plan, did not receive her election.1/ The evidence was insufficient to show that the SBA or any entity or person acting on its behalf or as its agent made any representation to Ms. Wagner that her second election had been received by the Plan Choice Administrator.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the State Board of Administration enter a final order dismissing Petitioner’s Florida Retirement System Investment Plan Petition for Hearing. DONE AND ENTERED this 8th day of January, 2020, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 2020.
