02-001494BID Catalfumo Construction And Development, Inc.; Catalfumo Construction L.L.C.; Catalfumo Construction, Ltd.; And Catalfumo Construction, Inc. vs. Martin County School Board Status: Closed Recommended Order on Friday, June 28, 2002.

Summary: Petitioner proved that award of constructive-manager-at-risk contract was contrary to School Board`s rules due to changing procedures and provision of inaccurate information to School Board by District employee.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CATALFUMO CONSTRUCTION AND )

DEVELOPMENT, INC.; CATALFUMO )

CONSTRUCTION L.L.C.; CATALFUMO )

CONSTRUCTION, LTD.; AND )

CATALFUMO CONSTRUCTION, INC., )

)

Pe titioner, )

)

vs. ) Case No. 02 - 1494BID

)

MARTIN COUNTY SCHOOL BOARD, )

)

Respondent, )

)

and )

)

MORGANTI GROUP, INC., )

)

Intervenor. )

_______________________________)

RECOMMENDED ORDER

Robert E. Mea le, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Stuart, Florida, on May 8 - 9, 2002.

APPEARANCES

For Petitioner: Gary M. Dunkel, Esquire

Susan Fleischner Kornspan, Esquire

Greenberg, Traurig, P.A.

777 South Flagler Drive, Suite 300 East

West Palm Beach, Florida 33401

For Respondent: Douglas G. Griffin, Esquire

School Board of Martin County

500 East Ocean Boulevard

Stuart, Florida 34994

For Intervenor: Joseph Ianno, Jr., Esquire

Michael Winston, Esquire

Carlton Fields, P.A.

Post Office Box 150

West Palm Beach, Florida 33402 - 0150

STATEMENT OF THE ISSUE

The issue is whether Respondent's tentative decision to

attempt to negotiate with Intervenor a contract for services as

a construction manager at risk is con trary to statutes, rules,

policies, or the request for qualifications, in violation of

Section 120.57(3)(f), Florida Statutes.

PRELIMINARY STATEMENT

By Formal Written Protest and Petition for Administrative

Hearing filed April 16, 2002, Petitioner protest ed Respondent's

selection of Intervenor with which to negotiate a contract for

Intervenor to serve as Respondent's construction manager at risk

for the construction of the Port Salerno Elementary School and

Jensen Beach High School.

Petitioner alleged tha t it and 13 other applicants

submitted to Respondent a package in response to a request for

qualifications issued by Respondent. Using criteria published

in the Guidelines for Selection of Construction Management At

Risk for Martin County Schools, Respond ent's Short List

Committee selected five applicants, including Petitioner and

Intervenor, for interviews by the Professional Services

Selection Committee.

Petitioner alleged that, following interviews, the

Professional Services Selection Committee ranked the five

applicants, naming Petitioner as the top - ranked applicant and

Intervenor as the second - ranked applicant.

Petitioner alleged that applicable law, including the

documents constituting the request for qualifications, required

Respondent to commence negotiations with Petitioner. Instead,

Petitioner alleged that the Martin County School Board required

Petitioner, Intervenor, and the third - ranked applicant to make

presentations, so that the School Board could select the

applicant with whom Respondent w ould commence negotiations.

Petitioner alleged that the School Board voted upon the

applicants immediately after the third presentation and, using

unknown criteria and point values, declared that, under a system

in which each School Board member ranked ea ch of the applicants,

the vote was a tie because Petitioner had two first - place votes

and three second - place votes and Intervenor had three

first - place votes, one second - place vote, and one third - place

vote. School Board chair David Anderson then allegedl y

announced that he would break the tie by selecting Intervenor

because it had three first - place votes.

Petitioner alleged that Respondent's selection of

Intervenor was arbitrary, capricious, fraudulent,

anti - competitive, and unreasonable; violated Sectio n 287.055,

Florida Statutes, administrative rules and Respondent's

guidelines; and constituted unfair dealing.

At the hearing, Petitioner called four witnesses and

offered into evidence 30 exhibits: Petitioner Exhibits 1 - 30.

Respondent called no witness es and offered into evidence no

exhibits. Intervenor called one witness and offered into

evidence four exhibits: Intervenor Exhibits 1 - 4. All exhibits

were admitted.

The court reporter filed the Transcript on May 22, 2002.

The parties filed their P rop osed R ecommended O rders on June 5,

2002.

FINDINGS OF FACT

1. In 2001, Respondent began to investigate various

options for the construction of Jensen Beach High School and

reconstruction of Port Salerno Elementary School. The recent,

sudden departure of R espondent's Director of Facilities and

several of his employees left Respondent with few employees

sufficiently experienced to deal with a general contractor

constructing substantial projects, such as the construction of

these two schools.

2. Respondent thus considered the use of a construction

manager and construction manager at risk (CMAR) contract. Under

these types of contracts, Respondent would hire a construction

manager to serve as its representative in entering into

contracts with subcontractors and suppliers. Although not

relevant to this case, the CMAR contract imposes upon the

construction manager greater risks for increased construction

costs.

3. Initially, Superintendent Wilcox and School Board

Attorney Griffin investigated the CMAR form o f contract. After

they had decided to recommend the use of a CMAR, on January 14,

2002, Respondent hired Rodger Osborne as the new Director of

Facilities, and Mr. Osborne assumed from them the primary

responsibility for investigating and later implementin g the CMAR

procurement in this case.

4. Immediately prior to his employment with Respondent,

Mr. Osborne had been the Director of Maintenance and Operations

for the Charlotte County School District. In this capacity,

Mr. Osborne managed construction, mai ntenance, and operations

for the school district. Among his duties was the procurement

of construction contracts. The Charlotte County School District

has used the CMAR form of contract seven or eight times.

Managing the process, Mr. Osborne borrowed pr ovisions and

procedures from various sources, including state statutes and

provisions used by Sarasota County.

5. Four days after Mr. Osborne began employment with

Respondent, Mr. Griffin submitted a memorandum to the Martin

County School Board in which h e recommended that it approve the

use of a CMAR for the construction of Jensen Beach High School

and Port Salerno Elementary School. Eight days after

Mr. Osborne began employment with Respondent, the Martin County

School Board approved Mr. Griffin's recom mendation and

authorized Respondent to advertise for applicants to serve as

the CMAR for these projects.

6. Mr. Osborne's first task as Director of Facilities was

to prepare the legal advertisement. On January 28, 2002 -- two

weeks after Mr. Osborne had started working for Respondent -- a

local newspaper published the first of three legal

advertisements for submittals from interested parties. The

advertisement states:

MARTIN COUNTY PUBLIC SCHOOLS will select a

qualified Construction Manager at Risk under

t he Consultants' Competitive Negotiation Act

to provide preconstruction and construction

services for the Port Salerno Elementary

Replacement School and Jensen Beach High

School. The School District will award both

projects to a single Construction Manager at

Risk.

Firms interested in being considered are

requested to submit a letter of interest,

resumes of key personnel who would be used

on the project, proof of professional

liability insurability as required by Martin

County Public Schools and a copy of Florida

Registration Certification. Each applicant

must submit a completed Professional

Qualification Supplement (PQS). Copies of

the PQS Format and project information are

available through the Facilities Department

by calling [telephone number omitted] . All

data must be current as of date of

submission and received no later than 4 P.M.

February 15, 2002.

Submissions to be received by:

Director of Facilities

Martin County Public Schools

500 East Ocean

Stuart, Fl. 34994

Anticipated award date is, Marc h 19, 2002,

with work to begin immediately.

Estimated construction cost of $43,500,000.

In accordance with School Board Rule

6Gx43 - 8.01, the Professional Services

Selection Committee will rank the top three

(3) firms and submit the ranking of firms to

th e Superintendent and School Board.

MARTIN COUNTY PUBLIC SCHOOLS

Dr. Sara Wilcox, Superintendent

7. Fifteen potential applicants timely submitted responses

to the advertisement. Mr. Osborne supplied each of these

applicants a package consisting of anoth er copy of the

advertisement and "Guidelines for Selection of Construction

Manager at Risk for Martin County Schools" (Guidelines).

8. The Guidelines state:

Complete all items of the Professional

Qualifications Statement (PQS) for

Construction Manager a t Risk.

Submit not less than three copies of the PQS

along with any supporting information to

Director of Facilities, Martin County Public

Schools, 500 East Ocean, Stuart, Fl 34994.

SHORT LIST

Within approximately seven (7) days after

the submission date of 4 P.M. February 15,

2002, for the purpose of reducing the number

of applicants qualifying for interviews to

no more than six (6), a short list committee

will be formed. The Short List Committee

will include one School Board Member, one

Superintendent' s designee, one

representative from Operation Services, one

Program Staff Member, the Director of

Facilities and Supervisor of Construction.

The Director of Facilities will serve as

chairperson.

The following criteria and point values will

be used to det ermine a number rating for

each applicant:

1. Letter of Interest 0 points

2. [PQS] 0 points

3. Certified Minority Business 5 points

4. Location 1 - 5 points

5. Current Work Load 0 - 1 0 points

6. Capability 0 - 10 points

7. Professional Accomplishments 0 - 10 points

Up to six (6) firms with the highest

rankings will be interviewed by the

Professional Services Selection (Ranking)

Committee.

9. The package supplied to p otential applicants contained

blank scoring sheets with specific points assigned to different

factual scenarios. The package also contained a fact sheet

describing each of the schools to be constructed and a set of

forms seeking specific information; the forms were part of the

Professional Qualification Statement for Construction Manager At

Risk (PQS).

10. PQS Paragraph E states:

RELATED EXPERIENCE

List the three (3) projects in the last five

(5) years for which your firm has

provided/is providing const ruction

management and/or general contracting

services which are most similar in scope to

this project. In determining which projects

are more related, consider: related size

and complexity; how many members of the

proposed team worked on the listed proj ect;

and how recently the project was completed.

List the projects in priority order, with

the most related project listed first.

11. The PQS form provides one box that asks for specific

information about the three listed projects, such as the size,

typ e of construction, and construction cost. The PQS form

supplies another box for a "detailed description of projects."

PQS Paragraph F requires the disclosure, for each of the three

projects, the owner budget, final budget, schedule status, and

impact of firm on the final results.

12. PQS Paragraph G states:

PROPOSED TEAM

Describe your proposed organization

structure for this program indicating key

personnel and their relationship to this

project and other team members. Give brief

resumes of key persons to be assigned to the

program.

13. The PQS form provides one box for office staff and one

box for onsite staff. Each box asks for specific information

about the listed key personnel, such as the percentage of time

they will be assigned fulltime to the subject projects; their

experience in terms of "types of projects, size of projects,

[and] project responsibilities"; and "other experience and

qualifications relevant to this project."

14. Mentioned in the legal advertisement, although not

included in t he package, Respondent's Rule 6Gx43 - 8.01 provides:

FACILITIES AND OPERATIONS

6Gx43 - 8.01 Professional Services

1. Professional Service Contracts between

the Board and architects, engineers and

surveyors shall follow the following

procedures if the basic construction cost

for the project is estimated to be greater

than $120,000 or if the fee for professional

service for planning or study is estimated

to exceed $8,500 (except valid emergencies

so certified by the Superintendent of

Schools):

a. Publicl y announce each project

indicating:

i. general project description

ii. how interested parties can apply

b. Certify firms or individuals wishing

to provide professional services while

considering:

i. General Services Administra tion

Forms 254 and 255.

ii. Past performance

iii. Willingness to meet requirements

of:

(1) time

(2) budget

(3) availability -- planning --

construction

(4) ability to furnish required

service

iv. F irm's workload in relation to

job under construction.

v. Volume of work previously

awarded to the firm.

c. A committee, comprised of the

Superintendent of Schools and/or his/her

designee, appropriate staff members, and an

annually appointed Sc hool Board Members

[sic] shall recommend to the School Board a

minimum of three (3) "certified" firms or

individuals which shall be recommended in

order of preference 1, 2, and 3, with the

object of effecting an equitable

distribution of contracts, providi ng the

selection of the most highly qualified firm

is not violated.

d. The School Board, or its designee,

shall negotiate a contract with the most

qualified firm for professional services at

compensation which the School Board, or its

designee, determi nes if fair, competitive,

and reasonable. In making such

determination, a detailed analysis of the

cost of professional services shall be

conducted in addition to considering the

scope and complexity of the services

required for the project.

Should the S chool Board, or its designee, be

unable to negotiate a satisfactory contract

with the firm considered to be the most

qualified at a price the School Board, or

its designee, determines to be fair,

competitive and reasonable, negotiation with

that firm shall be formally terminated.

Negotiations shall then be undertaken with

the second most qualified firm. Failing

accord with the second most qualified firm,

negotiations shall be undertaken with the

third most qualified firm.

If unable to negotiate with any of the

selected firms, three more firms shall be

selected in the order of preference and

negotiations will be continued until an

agreement is reached.

1. For professional services when the basic

construction cost for the project is

estimated to be less t han $120,000 or

planning or study fees estimated to be less

than $8,500, the procedure shall be as

follows:

Follow steps B, C, and D outlined under

preceding 1 for purpose of selecting the

agency best to accomplish the project.

2. The use of a continuin g contract may be

approved provided the following provisions

are met. A continuing contract is for

professional services for projects in which

construction costs do not exceed $500,000;

or for study activity, the fee for which

professional service does no t exceed

$25,000; or for work of a specified nature

as outlined in the contract required by the

School Board, or its designee. The contract

requires no time limitation but shall

provide a termination clause.

Footnote: All professional firms are

encourag e [sic] to submit their statements

of qualifications and performance data using

Govt. Service Adm. Forms 254 and 255. The

submission will be valid for one year

beginning July 1. A reminder for this

purpose will be made in the form of an

annual public ann ouncement.

15. Superintendent Wilcox selected a Short List Committee,

whose task was to score the submittals and, based on these

scores, select the five applicants that would make presentations

to the Professional Services Selection Committee. The Short

List Committee comprised Mr. Osborne, chair; Bob Sanborn,

Supervisor of Operations; Darrel Miller, Director of Educational

Technology; Dr. David Anderson, School Board chair; Tracey

Miller, principal of Port Salerno Elementary School; and John

Dilworth, Supervisor of Construction.

16. The Short List Committee met on February 21, 2002.

After examining the submittals of the applicants in response to

the Guidelines, the Short List Committee scored the submittal of

each applicant. The highest - ranking app licant received 185

points. Intervenor was ranked third with 160 points, and

Petitioner was ranked fourth with 158 points. The Short List

Committee selected five applicants to make presentations to the

Professional Services Selection Committee.

17. By l etter dated February 22, 2002, Mr. Osborne

supplied each of the five short - listed applicants with a

document entitled, "Interview and Selection for Construction

Manager At Risk" (Selection Criteria). The Selection Criteria

states that the Professional Ser vices Selection Committee will

use the following criteria to "reduc[e] the number of qualified

applicants to three . . .":

1. Letter of Interest 0 points

2. Professional Qualification

Supplement forms 0 points

3. Ce rtified minority business 5 points

4. Location 0 - 5 points

5. Current work load 0 - 10 points

6. Capability 0 - 10 points

7. Professional accomplishments 0 - 10 points

8. Schedule & budget 0 - 10 points

9. Approach and methods 0 - 10 points

10. Understanding of project 0 - 10 points

11. Previous work for MCSD 0 - 10 points

12. Progressive use of technology 0 - 10 points

13. Warranty period 0 - 10 points

14 . Construction administration 0 - 10 points

18. The Selection Criteria states: "The Professional

Services Selection Committee will present to the Superintendent

for approval and presentation to the Board a ranked list of the

top three qualifying firms. " Separate pages of the Selection

Criteria detail the scoring guidelines for each of the scored

criteria. For example, the Selection Criteria states under

Professional Services Evaluation: "Current and past records of

those projects successfully complet ed which are similar in scope

to project(s) under consideration. References listed and check

[sic]. Review PQS form." Ratings of 9 and 10 are for

"extremely qualified for project"; ratings of 7 and 8 are for

"very qualified for project"; ratings of 5 an d 6 are for

"qualified -- experienced with project type"; ratings of 2, 3, and

4 are for "not very qualified -- questionable abilities for

project"; and ratings of 0 and 1 are for "unqualified -- no

experience with project type."

19. After sending the February 22 letter, Mr. Osborne

called each of the applicants to confirm that each had received

the letter. During these conversations, Mr. Osborne informed

each applicant that only the applicant ranked first by the

Professional Services Selection Committee would make a

presentation to the School Board. As Mr. Osborne understood the

selection process, the Board would have the final decision

whether to accept the top - ranked applicant. If it did so, the

School Board would then try to negotiate a CMAR contract with

the top - ranked applicant. If the parties could not reach an

agreement, the School Board could then try to negotiate a

contract with the applicant ranked second by the Professional

Services Selection Committee.

20. Superintendent Wilcox, with Mr. Osborne' s assistance,

selected the Professional Services Selection Committee. The

Professional Services Selection Committee comprised Leighton

O'Connor, Executive Director of Operations Services and

immediate supervisor of Mr. Osborne; Hank Salzler, Assistant

Sup erintendent and designee of Superintendent Wilcox;

Ms. Miller; Mr. Dilworth; Dr. Anderson; and Mr. Osborne.

21. On March 5, 2002, Mr. Osborne informed the members of

the Professional Services Selection Committee that they would

rank the applicants and t he top - ranked applicant would make a

presentation to the School Board. No member of the committee

voiced an objection to the process.

22. After Mr. Osborne had addressed the Professional

Services Selection Committee, the representatives of the five

sho rt - listed applicants made their presentations. Based on

these presentations and the earlier submittals, the Professional

Services Selection Committee, on March 5, 2002, ranked

Petitioner first with 513 points and Intervenor second with 487

points.

23. Im mediately after the meeting of the Professional

Services Selection Committee, Assistant Superintendent Salzler

visited Superintendent Wilcox and told her that Mr. Osborne had

told the committee members that only the top - ranked applicant

would make a presen tation to the School Board. For professional

services contracts, the top three - ranked applicants customarily

made presentations to the Board, which would then select the

applicant that the Board felt was most qualified.

Superintendent Wilcox had thought that the same process would

apply to the selection of the applicant with which to negotiate

the CMAR contract.

24. Superintendent Wilcox immediately visited Mr. Osborne

and informed him that the School Board would want the top three

applicants to make p resentations. Mr. Osborne replied that he

had told the applicants that only the top - ranked applicant would

make a presentation to the Board. Superintendent Wilcox told

him to telephone the top three applicants and tell them that all

of them would be maki ng presentations to the Board, so that the

Board could make the final ranking. Later the same day,

Mr. Osborne telephoned the top three applicants and informed

them of the new procedure.

25. Dr. Anderson had had to leave the meeting of the

Professional S ervices Selection Committee before it was

finished, so, later the same day, he telephoned Mr. O'Connor to

learn the results of the voting. Mr. O'Connor informed

Dr. Anderson of the three top - ranked applicants and expressed

his opinion that the key criteri on was not the general ranking

that resulted from the guidelines and criteria that Mr. Osborne

had developed, but the quality of the personnel who would manage

the actual construction. Acknowledging that the School Board

would not have adequate time to vi ew the applicants'

presentations and evaluate their submittals, Mr. O'Connor asked

Dr. Anderson if Mr. O'Connor should undertake an analysis for

use by the School Board. Dr. Anderson agreed that such an

analysis would be helpful and asked him to prepare o ne.

26. Mr. O'Connor prepared a 24 - page document entitled

"Construction Manger [sic] at Risk Finalist Comparisons"

(O'Connor Finalist Comparisons). Mr. O'Connor provided the

O'Connor Finalist Comparisons to each School Board member prior

to the March 19 meeting.

28. The O'Connor Finalist Comparisons introduces a new

element to the procurement criteria -- cost. The document advises

the School Board members that the "number of team members and

percentage of time devoted to the project may impact the cost o f

services." The document also relates, in an unspecified manner,

"pre - construction services" to "cost saving alternative."

29. The O'Connor Finalist Comparisons emphasizes some

published selection criteria at the expense of others -- without

regard to the ir relative point value. Admittedly reflecting

only Mr. O'Connor's opinion, the O'Connor Finalist Comparisons

states that the "key consideration [sic] for this project" are

"pre - construction services," "onsite construction service," and

"experiences of as signed project staff." The document adds:

"Our architect indicated that the Project Superintendent was the

most important team member."

30. The O'Connor Finalist Comparisons analyzes the

proposals of the three applicants in terms of two criteria --

"crede ntials" and experience of selected members of the onsite

project team in school construction.

31. The emphasis upon school -- construction experience also

reflects Mr. O'Connor's opinion -- this time clearly without the

smallest support in the Guidelines or Selection Criteria, which

ask for experience of similar scope, not merely

school - construction experience.

32. For Intervenor and Petitioner, the O'Connor Finalist

Comparisons compares two employees per job site. For the high

school, Intervenor's two emp loyees have handled six school -

construction projects, and their credentials consist of one

bachelor's of arts degree in business administration. For the

elementary school, Intervenor's two employees have handled 12

school - construction projects, and their credentials consist of

one of them holding a bachelor's of science degree and master's

degree in civil engineering. For the high school, Petitioner's

two employees have handled one school, and their credentials

consist of one bachelor's of science degree in business

administration. For the elementary school, Petitioner's two

employees have handled 11 school - construction projects, and

their credentials consist of no four - year degrees.

33. In this part of his analysis, Mr. O'Connor does not

disclose his rationale for excluding from his analysis other key

team members assigned 100 percent to the school projects, such

as the two assistant project superintendents for the Jensen

Beach High School project. These two persons have handled a

total of seven schoo l - construction projects. Interestingly,

Mr. O'Connor included a third member of the third applicant's

high - school team, and this person was an assistant

superintendent.

34. Mr. O'Connor fails to explain why he omitted analysis

of project engineers assi gned fulltime to the sites. From his

charts, Intervenor did not assign such a person to either site,

Petitioner assigned one to the elementary school and two to the

high school, and the third applicant assigned one to each site.

Petitioner's project engi neer for the elementary school has

handled two school - construction projects, and the sole person

identified by name as a project engineer for the high school has

handled one school - construction project.

35. Again without explanation, Mr. O'Connor identi fies

Petitioner's project manager for the high school as someone

other than the person whom Petitioner named in its proposal.

The person identified by Mr. O'Connor has handled only one

school - construction project. Although it is possible that

Petitioner had had to change assigned personnel in the month

since it first named its anticipated key personnel, nothing in

the record indicates that such a change in personnel actually

took place.

36. Sometime after March 5, Superintendent Wilcox,

Dr. Anderson, a nd Mr. Osborne informed each of the top three

applicants that each of them would make a 20 - minute presentation

to the School Board and that the Board would use the Selection

Criteria for ranking the applicants.

37. On March 19, 2002, at a regularly sche duled School

Board meeting, each of the top three applicants made its

20 - minute presentation, interrupted by few, if any, questions

from Board members. Petitioner's presentation covered the 14

criteria stated in the Selection Criteria.

38. Petitioner c omplains that its presentation occurred at

the end of the evening, long after the presentations of

Intervenor and the third applicant, but this occurrence did not

confer competitive advantage or disadvantage. Equally without

meaning is the contention of R espondent and Intervenor that

Petitioner never objected to any change in the procurement

criteria. Nothing in the record suggests that Petitioner was

ever aware, prior to the March 19 meeting, of the O'Connor

Finalist Comparisons. Nothing in the record s uggests that

Respondent gave Petitioner a point of entry to challenge the

changes that Respondent made during the course of this

procurement.

39. At no time during the March 19 meeting did anyone

present the School Board with the rankings of the Professio nal

Services Selection Committee. At no time during the March 19

meeting did anyone move that the School Board try to negotiate a

contract with Petitioner. At the end of the meeting, without

any public discussion, each School Board member voted his or he r

first, second, and third preference.

40. Intervenor received three first - place votes, one

second - place vote, and one third - place vote. Petitioner

received two first - place votes and three second - place votes.

Dr. Anderson, who ranked Intervenor first, announced that the

vote was a tie, but that Intervenor should be declared the

winner because it received more first - place votes. In response,

another Board member moved to rank Intervenor first, Petitioner

second, and the third applicant third and author ize Respondent

to commence negotiations with Intervenor. The School Board

unanimously passed the motion.

41. The procurement documents are unambiguous, although

they are less then comprehensive in their treatment of the

procurement procedure. Rule 6Gx43 - 8.01.c provides that a

committee shall recommend, in order of preference, three

applicants to the School Board, which shall negotiate a contract

with the most "qualified" applicant. The legal advertisement

states only that the Professional Services Selec tion Committee

shall rank the top three applicants and submit them to the

Superintendent and School Board. The Selection Criteria states

that the Professional Services Selection Committee will present

to the Superintendent for approval and presentation to the

School Board a ranked list of the top three "qualifying"

applicants.

42. Citing past practices -- although none involves the

procurement of a CMAR -- Intervenor and Respondent contend that

the School Board was authorized to re - rank the applicants and

begin negotiations with any of the three applicants submitted to

the Board. Citing the reference in the Selection Criteria that

the Professional Services Selection Committee ranks the top

three "qualifying" applicants and the language in the other

documen ts requiring the School Board to negotiate first with the

most "qualified" applicant, Petitioner contends that the Board

has no right to change the ranking of the Professional Services

Selection Committee, but must deal first with the top - ranked

applicant. Due to the interpretation of Mr. Osborne,

Respondent's interpretation of its rules and procurement

documents is clearly erroneous and arbitrary.

43. Until the telephone calls from Mr. Osborne to the

applicants on March 5 after Superintendent Wilcox told

Mr. Osborne that all three top - ranked applicants would make

presentations to the Board, the applicants perceived correctly

that Mr. Osborne was in charge of implementing the procedures

for this procurement. And, from the start through his meeting

with Su perintendent Wilcox on March 5, Mr. Osborne consistently

understood that the Professional Services Selection Committee

would rank the top three applicants, and a committee member or

the Superintendent would present to the School Board only the

top - ranked a pplicant, which would then make a presentation to

the Board. As Mr. Osborne envisioned the process, the Board

could reject the top - ranked applicant and proceed to the second -

ranked applicant, although this was unlikely, but the Board

could not re - rank the top three applicants, without ever

formally rejecting the applicant ranked first by the

Professional Services Selection Committee.

44. Mr. Osborne consistently communicated his

understanding of the procurement process to the applicants.

Mr. Osborne's un derstanding of the procurement process is the

correct interpretation of the procurement documents. Among

other things, Mr. Osborne's interpretation of the procurement

documents lends meaning to the task of the Professional Services

Selection Committee in ranking the top three applicants. Under

Respondent's interpretation, the Professional Services Selection

Committee performs a useless act when, in addition to naming the

top three applicants, it ranks them. Respondent's departure

from this procedure at t he moment of decision clearly violates

the standards governing this procurement.

45. Exacerbating the situation is the O'Connor Finalist

Comparisons. This document distorts the Selection Criteria by

omitting many criteria, reassigning weights among other

criteria, and adding two criteria -- cost and school - construction

experience. This document distorts Petitioner's qualifications

by its arbitrary selection of personnel for comparison purposes.

46. Presumably, Respondent and Intervenor resist the

infere nce that the O'Connor Finalist Comparisons influenced any

of the School Board members. The administrative law judge

infers that the document influenced one or more members; given

the close outcome of the vote, the administrative law judge

infers that the document was a material factor in the selection

of Intervenor. These inferences are supported by numerous

facts, including the following. The School Board chair,

Dr. Anderson, endorsed the preparation of the document.

Dr. Anderson preferred Intervenor o ver Petitioner. The O'Connor

Finalist Comparisons appears to be the only document presented

to School Board members that was not part of the formal

procurement process. The School Board members did not

extensively discuss at the meeting the merits of the three

applicants before voting. Petitioner tried to elicit testimony

from the School Board members, but at Respondent's request, the

administrative law judge entered a prehearing order denying

Petitioner the opportunity to compel testimony from any of th em

except Dr. Anderson, who had served on the Professional Services

Selection Committee. The inference of materiality is eased by

the magnitude of the distortions contained in the O'Connor

Finalist Comparisons as to the Selection Criteria and

Petitioner's qualifications and the closeness of the Board vote;

the extensive distortion contained in the O'Connor Finalist

Comparisons means that it was material if it had even the

slightest influence on one of the School Board members.

47. Under these facts, Petit ioner proved that Respondent's

selection of Intervenor was contrary to Respondent's rule,

Respondent's policies (as stated by Mr. Osborne), and the other

procurement documents. Under these facts, Petitioner proved

that the deviations from Respondent's rul e, Respondent's

policies, and the other procurement documents rendered the

selection of Intervenor clearly erroneous, contrary to

competition, and arbitrary.

48. As a remedy, Petitioner contends that Respondent

should commence negotiations with Petitioner . However, by the

time Respondent issues a final order, six months will have

passed since each applicant submitted a proposal. The ability

of applicants to meet various criteria, such as the availability

of key personnel, may have changed dramatically.

49. Also, contrary to Petitioner's contention, this

procurement is not fundamentally flawed due to bad faith or

favoritism. The change in procurement procedures was

indisputably due to an innocent, mutual mistake among

Respondent's employees. The newly hired Mr. Osborne intended to

handle the procurement his way, and Dr. Anderson, Superintendent

Wilcox, and District staff intended Mr. Osborne to handle the

procurement their way. Nothing in the record suggests that the

O'Connor Finalist Comparisons is a nything more than

Mr. O'Connor, as Mr. Osborne's supervisor, injecting himself

into a process that was not going as smoothly as Mr. O'Connor

would have liked. Relying on the advice of an architect,

Mr. O'Connor belatedly rewrote the procurement criteria t o

emphasize school - construction experience and cost; it is easy to

indulge the presumption that Mr. O'Connor was motivated by a

desire to help Respondent, not an applicant. Absent other

evidence in the record, Mr. O'Connor's distortion of

Petitioner's qua lifications, which was not of the same magnitude

as his distortion of the procurement criteria themselves, may

presumably be attributed to haste or carelessness, rather than

favoritism toward Intervenor.

CONCLUSIONS OF LAW

50. The Division of Administra tive Hearings has

jurisdiction over the subject matter. Section 120.57(1) and

(3), Florida Statutes. (All references to Sections are to

Florida Statutes.)

51. Section 120.57(3)(f) provides:

. . . the burden of proof shall rest with

the party protesting the proposed agency

action. In a competitive - procurement

protest, other than a rejection of all bids,

the administrative law judge shall conduct a

de novo proceeding to determine whether the

agency's proposed action is contrary to the

agency's governing s tatutes, the agency's

rules or policies, or the bid or proposal

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious. In any bid -

pr otest proceeding contesting an intended

agency action to reject all bids, the

standard of review by an administrative law

judge shall be whether the agency's intended

action is illegal, arbitrary, dishonest, or

fraudulent.

52. Section 120.57(3)(f) thus i dentifies the ultimate

issue in an award case as whether the proposed agency action is

contrary to statutes, rules, policies, or the specifications.

The same statutory provision identifies the standard of proof as

whether the proposed agency action is cle arly erroneous,

contrary to competition, arbitrary, or capricious (Clearly

Erroneous Standard).

53. Typically, a standard of proof governs the

determination of the basic facts that underlie the determination

of the ultimate facts, and the determination of the ultimate

facts underlies the determination of the legal issues. However,

Section 120.57(3)(f) applies the Clearly Erroneous Standard only

to the proposed agency action, such as whether the proposed

award is contrary to statutes, rules, policies, or the

specifications. The statutes are not silent as to the standard

of proof for other purposes. Section 120.57(3)(f) provides that

an award case is to be de novo . Section 120.57(1)(j) provides

that the preponderance standard governs the determination o f the

basic facts, such statements made by an agency's representative.

54. There are also ultimate questions of fact to which the

Clearly Erroneous Standard applies. Ultimate questions of

fact -- express and implied -- link the basic facts to the final

lega l conclusion, which is whether the proposed decision to

award is contrary to statutes, rules, policies, or the

specifications. In some cases, the question arises whether a

deviation in a bid or proposal is a material variance or a minor

irregularity or wh ether a bid or proposal is responsive. These

are ultimate questions of fact, and the Clearly Erroneous

Standard requires the administrative law judge to defer to these

policy - influenced determinations.

55. The Clearly Erroneous Standard also applies to

subordinate questions of law and mixed questions of fact and

law, such as interpretations of an agency rule or

specifications, and questions of fact requiring the application

of technical expertise, such as whether a specific product or

service qualitativ ely complies with the specifications.

56. This approach is consistent with State Contracting and

Engineering Corporation v. Department of Transportation , 709

So. 2d 607 (Fla. 1st DCA 1998). In State Contracting , the court

affirmed the agency's final orde r that rejected the

recommendation of the administrative law judge to reject a bid

on the ground that it was nonresponsive. The bid included the

required disadvantaged business enterprise form, but, after

hearing, the administrative law judge determined t hat the bidder

could not meet the required level of participation by

disadvantaged business enterprises. The agency believed that

responsiveness demanded only that the form be facially

sufficient and compliance would be a matter of enforcement.

Rejectin g the recommendation of the administrative law judge,

the agency reasoned that the administrative law judge had failed

to determine that the agency's interpretation of its rule was

clearly erroneous.

57. In affirming the agency's final order, the State

Co ntracting court quoted the provisions of Section 120.57(3)(f)

for evaluating the proposed agency action against the four

criteria of contrary to statutes, rules, policies, and the

specifications and against the Clearly Erroneous Standard.

Addressing the m eaning of a de novo hearing in an award case,

the court stated, at page 609:

In this context, the phrase "de novo

hearing" is used to describe a form of

intra - agency review. The [administrative

law judge] may receive evidence, as with any

formal hearing u nder section 120.57(1), but

the object of the proceeding is to evaluate

the action taken by the agency.

58. Significantly, the State Contracting court did not

apply the Clearly Erroneous Standard merely to the agency

decision to award. The court conclud ed that the agency's

interpretation of one of its rules and determination that the

bid was responsive were not "clearly erroneous."

59. In the subject case, then, the preponderance standard

applies to all basic facts and the Clearly Erroneous Standard

a pplies to the ultimate questions of fact, mixed questions of

fact and law, subordinate questions of law, and questions of

fact involving agency expertise. Based on the resulting

findings, the conclusions of law determine whether the proposed

agency decisi on to award the contract to Intervenor is

consistent with statutes, rules, policies, and the

specifications.

60. Petitioner has proved by the Clearly Erroneous

Standard that Respondent's decision to negotiate first with

Intervenor is inconsistent with a pplicable rules, policies, or

the specifications.

RECOMMENDATION

It is

RECOMMENDED that the Martin County School Board enter a

final order setting aside the proposed decision to enter into

negotiations with Intervenor to provide services as a

construct ion manager at risk in the construction of the Jensen

Beach High School and Port Salerno Elementary Replacement School

and restart the procurement process, if Respondent still seeks

to proceed with these projects under this construction method

through a co mpetitive procurement.

DONE AND ENTERED this 28th day of June, 2002, in

Tallahassee, Leon County, Florida.

___________________________________

ROBERT E. MEALE

Administrativ e 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 28th day of June, 2002.

COPIES FURNISHED:

Dr. Sara Wilcox, Superintendent

Martin County School Board

500 East Ocean Boulevard

Stuart, Florida 34994 - 2578

Honorable Charlie Crist

Commissioner of Education

Department of Ed ucation

The Capitol, Plaza Level 08

Tallahassee, Florida 32399 - 0400

Gary M. Dunkel, Esquire

Susan Fleischner Kornspan, Esquire

Greenburg Traurig, P.A.

777 South Flagler Drive, Suite 300 East

West Palm Beach, Florida 33401

Douglas G. Griffin, Esquire

Sc hool Board of Martin County

500 East Ocean Boulevard

Stuart, Florida 34994

Joseph Ianno, Jr., Esquire

Michael Winston, Esquire

Carlton Fields, P.A.

Post Office Box 150

West Palm Beach, Florida 33402 - 0150

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All part ies have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions

to this recommended order must be filed with the agency that

will issue the final order in this case.