04-004609BID Maximus, Inc. vs. Agency For Persons With Disabilities Status: Closed Recommended Order on Tuesday, March 15, 2005.

Summary: Petitioner did not meet its burden of proving that Respondent`s intended action is clearly erroneous, contrary to competition, arbitrary, or capricious.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MAXIMUS INC., )

)

Petitioner, )

)

vs. ) Case No. 04 - 4609BID

)

AGENCY FOR PERSONS WITH )

DISABILITIES, )

)

Respondent, )

)

and )

)

INNOVATIVE RESOURCE GROUP, LLC )

d/b/a APS HEALTHCARE MIDWEST, )

)

Intervenor. )

___________________________________)

RECOMMENDED ORDER

A formal hearing was held pursuant to notice, on

February 2, 2005, in Tallahassee, Florida, before Barbara J.

Staros, assigned Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: David C. Ashburn, Esquire

Greenberg Traurig, P.A.

Post Office Drawer 1838

Tallahassee, Florida 32302

For Respondent: Mary Piccard Vance, Esquire

Vezina, Piccard & Piscitelli, P.A.

318 North Calhoun Street

Tallahassee, Florida 32301

For Intervenor: Karen D. Walker, Esquire

Holland & Knight, LLP

315 South Calhoun Street, Suite 600

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether Respondent's intended award of t he contract

arising out of Request for Proposal No. 09L04FP4 to Intervenor

is clearly erroneous, contrary to competition, arbitrary, or

capricious.

PRELIMINARY STATEMENT

On November 12, 2004, the Agency for Persons with

Disabilities (Agency) posted its N otice of Intended Award to

award a contract to conduct additional reviews of prior

service authorizations for individuals enrolled in the

Developmental Disabilities Home and Community - Based Services

waiver program pursuant to Request for Proposal No. 09L04 FP4

(the RFP). The Notice referenced the scores attributable to

the three proposals received. Intervenor, Innovative Resource

Group, LLC, d/b/a APS Healthcare Midwest (APS) 1/ was awarded

the highest score and Petitioner, Maximus, Inc. (Maximus),

received the second highest score. Petitioner timely filed a

Petition for Formal Administrative Proceedings challenging the

Agency's intended decision. The Petition for Formal

Administrative Proceedings was forwarded to the Division of

Administrative Hearings on or about December 27, 2004. By

agreement of the parties to extend the timeframe as set forth

in Section 120.57(3), Florida Statutes, a formal hearing was

scheduled for February 2 and 3, 2005.

On January 13, 2005, APS filed an unopposed Petition for

Lea ve to Intervene, which was granted.

The parties filed a Prehearing Stipulation. The parties

stipulated to the admission of Joint Exhibits numbered 1

through 9. At hearing, Petitioner presented the testimony of

Richard Zelznak, Lorena Fulcher, and Linda D avis.

Petitioner's E xhibits numbered 1 and 2 were admitted into

evidence. Intervenor presented the testimony of David

Hunsaker and the deposition testimony of Richard Zelznak.

Intervenor's Exhibit numbered 1, Mr. Zelznak's deposition, was

admitted into evidence. Respondent did not present witness

testimony or exhibits.

A Transcript, consisting of two volumes, was filed on

February 9, 2005. The parties timely filed Proposed

Recommended Orders which have been considered in the

preparation of this Recomme nded Order. All citations are to

Florida Statutes (2004) unless otherwise indicated.

FINDINGS OF FACT

Stipulated Facts

1. In accordance with a 2001 legislative mandate, the

Developmental Disabilities Program, formerly part of the

Department of Children a nd Family Services and now within the

Agency, established a requirement for prior service

authorization (PSA) reviews for individuals enrolled in the

Developmental Disabilities Home and Community Based Services

waiver (waiver).

2. Following a competitive procurement process, Maximus,

Petitioner herein, was awarded a contract to provide PSA

reviews for persons satisfying certain selection criteria, and

related services.

3. These PSA reviews ensure that services for which

reimbursement is provided under the waiver are based on

medical necessity.

4. Currently only those cost plans that meet certain

selection criteria are reviewed.

5. A 2004 legislative mandate required the Developmental

Disabilities program to expand the PSA program to review all

support an d cost plans for the waiver, including those that do

not meet the selection criteria that trigger a PSA review

under the Agency's existing contract with Maximus.

6. On or about October 13, 2004, the Agency issued

Request for Proposal No. 09L04FP4 - Agency for Persons With

Disabilities Prior Service Authorization Reviews (the APSAR

contract).

7. The RFP sought a vendor to serve as the contracted

provider to conduct the additional reviews required by the

2004 legislative mandate (the ASPAR Contractor). The RFP

proposals were to include responses to inquiries concerning

the qualifications and capabilities of each proposer, as well

as the proposed's vendor's proposal for providing the

requested services (the technical proposal) and a separate

proposal setting forth the proposed vendor's costs for

providing such services (the cost proposal).

8. Pursuant to the provisions of the RFP, the ASPAR

Contractor will be responsible for reviewing these additional

support plans and cost plans in order to ensure that

ind ividuals receiving waiver services receive medically

necessary services to meet their identified needs.

9. Pursuant to the provisions of the RFP, the ASPAR

Contractor will be responsible for determining whether the

Developmental Disabilities program is th e appropriate funding

source for the service(s) identified and shall recommend

alternative funding mechanisms.

10. The RFP set forth evaluation criteria and a scoring

process in which a proposal could receive a maximum of 100

points, 25 of which are attri butable to the cost proposal.

The RFP states that "[t]he agency will attempt to contract

with the prospective vendor attaining the highest total

price."

11. The deadline for submission of proposals in response

to the RFP was November 2, 2004.

12. The Ag ency received proposals from three prospective

vendors: APS, Maximus, and First Health Services.

13. On November 12, 2004, the Agency posted its Notice

of Intended Award of the APSAR contract to APS.

14. The Notice of Intended Award reflected the

pros pective vendors' scores as follows: APS, 86.45; Maximus,

82.06; and First Health, 71.52.

15. Of its total score of 86.75, APS received 25 points

for its cost proposal as the prospective vendor with the

lowest total price.

16. On November 16, 2004, Maxim us timely filed a notice

of intent to protest the Agency's intent to award the ASPAR

contract to APS.

17. Maximus timely filed its formal written protest, a

Petition for Administrative Proceedings, with an accompanying

bond which satisfied the applicable statutory and RFP

requirements.

Findings of Fact Based on the Evidence of the Record

18. APS has standing to intervene in this proceeding.

19. The APSAR contract being procured through the RFP is

a fixed price contract.

20. Lorena Fulcher is the Agency' s procurement manager

for the RFP. When the proposals were received, the Agency

screened each of them for compliance with a list of fatal

criteria set forth in Section 6.3.1 of the RFP. According to

Ms. Fulcher, the purpose of the initial screening was t o

determine whether the proposals should go to a formal

evaluation process. No scoring or points were associated with

whether a vendor met the fatal criteria. The Agency

determined that all three vendors met the fatal criteria.

Therefore, the three prop osals were sent to an evaluation

committee which was responsible for evaluating the technical

aspects of the proposals.

Fatal Criteria

21. Petitioner asserts that Intervenor did not satisfy

one of the mandatory requirements of the RFP and, therefore,

its proposal should not have been forwarded for further review

and scoring by the evaluation committee.

22. Section 5.4 of the RFP states that the mandatory

requirements are described as "Fatal Criteria" on the RFP

rating sheet and that failure to comply wi th all mandatory

requirements will render a proposal non - responsive and

ineligible for further evaluation.

23. Section 6.3.1 of the RFP is entitled, "Fatal

Criteria." One criterion reads as follows: "Did the proposal

document and describe at least one ye ar of experience in the

developmental disabilities field and with Home and Community

Based Services waivers?"

24. According to Ms. Fulcher, the Agency looked at each

proposal in its entirety to determine that there was prior

experience with the sort of re view that the Agency was trying

to procure with the RFP.

25. Ms. Fulcher referenced several pages of Intervenor's

proposal relating to this criterion that the Agency reviewed

in making its determination to send Intervenor's proposal to

the evaluation comm ittee.

26. One such reference is contained on page 9 of

Intervenor's proposal. That page references Intervenor's

experience with Georgia Medicaid since 1999. On page 84 of

Intervenor's proposal, that experience is further described as

"Prior authorizati on and Concurrent Review for all Medicaid

services under the Rehabilitation Option to individuals with

mental health disorders and/or developmental disabilities.

Specialized projects include technical assistance to HCBS

Waiver providers."

27. Intervenor was formed in the early 1990's and was

acquired by APS Healthcare in 2002. Intervenor's proposal

explains: "APS Midwest is a wholly owned subsidiary of APS

Healthcare Bethesda, Inc. APS Midwest, formerly known as

Innovative Resource Group, was acquired by APS in 2002."

28. Petitioner argues that the Georgia experience should

not have been counted because it was experience acquired prior

to the 2002 acquisition of Intervenor. Specifically,

Petitioner argues that since the Georgia project has been

ongo ing since 1999 and since Intervenor was not acquired by

the APS parent company until 2002, that Intervenor could not

have been the provider.

30. APS Healthcare, and its subsidiaries, including

Intervenor, are managed as a single entity and many of their

s ervices and resources are integrated. The evidence

established that the resources of the APS family of companies

are available in the performance of the contract.

31. Moreover, the undersigned is not persuaded that

Intervenor was prohibited in any way by the language of the

RFP or otherwise, from referencing experience obtained by a

parent or related corporate entity prior to the 2002

acquisition.

32. Intervenor's proposal contained references to other

experience which the Agency considered in determin ing that

Intervenor's proposal met the one - year experience fatal

criterion at issue. These included experience obtained in

Pennsylvania, Idaho, and other states in the developmental

disabilities field and with home and community based services

waivers.

33. The Agency's determination that Intervenor met the

"one - year" experience fatal criterion is supported by the

evidence of record. The Agency's decision to forward

Intervenor's proposal to the evaluation committee was

appropriate. Any evaluation or sc oring of the content of

Intervenor's representations was left to the evaluation

committee.

The Cost Proposals

34. Section 4.4 of the RFP reads in pertinent part as

follows:

The prospective vendor shall clearly

present in the cost proposal the total cos t

for each deliverable as described in

Section 3.6, Task List. A pricing schedule

must be presented that indicates a unit

cost for each task to be performed, with

all task amounts added for a grand total

cost for each deliverable.

The total cost of al l deliverables will be

presented as the proposed total contract

amount. The cost proposal must be bound

separately.

The vendor must submit as supporting

documentation, a detailed line - item budget

that delineates and constitutes all costs

contained in the proposed total contract

amount. The line - item budget shall

delineate the number and type of positions

that will be required to complete the work

identified for each major task, and

discrete associated expenses.

Further, Section 4.4 included a g rid described as an "Example

Format of the Pricing Schedule." The RFP does not state that

a proposer must use the grid format provided in this section.

The grid includes columns marked "Unit Cost," "Number of

Units," "Amount for Year 1," "Amount for Year 2" and "Amount

for Year 3." At the bottom of the grid, there is a line for a

"Total per year" and there is a line for the "Grand Total."

35. APS used the grid format as shown in Section 4.4 of

the RFP. Below the grid, APS included a notation that reads :

"Please note that costs are adjusted for years two and three

accordingly." Following this notation are four "bullets" one

of which reads: "Unit cost for PSA reviews slightly increase

to reflect a 1 - 2% growth rate in years two and three.

However, if th e number of reviews significantly increase more

than this amount, pricing would have to be adjusted

accordingly."

36. Petitioner argues that the language of the above

referenced "bullet" constitutes a contingent price, as opposed

to a fixed price as requi red by the RFP, and, therefore,

Intervenor should have received a score of zero for its cost

proposal.

37. Section 6.3.3. of the RFP provides in pertinent

part: "Evaluating Cost Proposals -- The prospective vendor with

the lowest total price shall be award ed 25 points or 25% of

the maximum total score." Section 6.3.3 further provides that

the other prospective vendors would be awarded points by

dividing the lowest price by the prospective vendor's price

and then dividing the resulting percentage by four.

3 8. The Agency scored the cost proposal by the grand

total stated in each proposal. That is, the points assigned

for the cost proposals were based solely on the total price

proposed. According to Ms. Fulcher, the Agency ignored the

bullets for purposes o f scoring the cost proposals because the

RFP was for a fixed price contract.

39. Petitioner Maximus submitted a total cost proposal

in the amount of $10,259,131. Intervenor APS submitted a

total cost proposal in the amount of $7,460,615.

40. Accordi ngly, the Agency awarded Intervenor 25 points

for submitting the proposal with the lowest grand total cost

of the three vendors, and awarded Petitioner 18 points for its

grand total cost.

41. There is nothing in the referenced "bullet" in APS'

proposal th at implies that the grand total might increase.

The "bullet" clearly references "unit costs" only. Moreover,

Section 4.3 of the RFP states that payment method and pricing

will be determined during negotiations. According to

Ms. Fulcher, the cost info rmation requested other than the

total cost was to be used only for purposes of negotiating and

drafting the contract.

42. Petitioner argues that Intervenor's cost proposal

contained mathematical errors that, if corrected, would

increase the total cost proposed. The difference between the

two proposals was $2,798,516. The evidence does not establish

that if the mathematical errors were corrected, Intervenor's

actual cost would have been higher than Petitioner's proposed

total cost. Further, Petitioner offered testimony speculating

how Intervenor's actual costs might be higher than those

reflected in Intervenor's proposal. Petitioner's speculation

in this regard is of no consequence. Moreover, the contract

is clearly a fixed fee contract. The propose rs, including

Intervenor, are bound by the fixed total cost reflected in the

respective proposals. 2/

The Technical Proposals

43. Petitioner asserts that the Agency erroneously

scored its technical proposal, thereby depriving Petitioner of

points that woul d have resulted in an award of the contract to

Petitioner.

44. The RFP required the vendors to submit sealed

technical proposals separate from the cost proposals. In

contrast to the cost proposals, the scoring formula for the

technical proposals was not based on a ratio comparison of the

best proposal to the other proposals. Rather, the formula for

scoring the technical proposals provided that the total score

of each technical proposal would be divided by 48 to arrive at

a total percentage of 100 that wa s then converted into points.

Thus the formula for scoring technical proposals is not based

on a comparison of one vendor's proposal to the others, but is

based on how well each vendor did within a possible score of

36.

45. Section 6.3.4 of the RFP sets forth the formula for

scoring the technical proposals:

The prospective vendor with the highest

rating in this section (36 points) shall be

awarded 75% (75 points) of the maximum

possible score. Other prospective vendors

are awarded points using the follo wing

formula: The rating is divided by 48 to

determine the points awarded (36/48=75%).

Section 6.3.4 of the RFP also provided three examples applying

the formula for awarding points to technical proposals, with

each example showing a vendor's points div ided by 48.

46. The numerator of the above formula was derived by

taking the average of the total points assigned by each of the

four evaluators, which was then divided by 48.

47. The average of the evaluators' scores for

Petitioner's technical proposa l was 30.75. The average of the

evaluators' scores for the APS technical proposal was 29.5.

Accordingly, when the formula was applied, Petitioner's

technical proposal score was 64.06 (30.75/48=64.06%) and

Intervenor's technical proposal score was 61.45

( 29.5/48=61.45%).

48. Petitioner argues that because it received the

highest technical score of 30.75, it was entitled to 75 points

for its technical proposal.

49. Petitioner, nor any other vendor, received a score

of 36, the highest possible score for the technical proposal.

Because no vendor received the maximum possible technical

rating of 36 points, no vendor was awarded the maximum

possible score of 75 points for the technical proposals. The

agency applied the formula to the three vendors in a

con sistent manner.

50. While the wording of Section 6.3.4 is awkward, the

Agency's interpretation of that section is a reasonable one

that was applied equally to all vendors.

Petitioner's Proposal

51. Finally, Intervenor asserts that Petitioner's

proposal w as non - responsive because it is dependant upon

Petitioner continuing to provide services under its existing

contract with the Agency. Petitioner's proposal was prepared

using a methodology that contemplated allocating some costs to

its existing contract a nd some costs to the contract solicited

by the RFP because Petitioner already has certain resources

that can be employed to provide services in the solicited

contract.

52. There is no dispute that Petitioner holds a current

related contract. The Agency's determination that

Petitioner's proposal was responsive in this regard was

reasonable. How the costs are to be allocated was subject to

evaluation and scoring by the evaluation committee.

CONCLUSIONS OF LAW

53. The Division of Administrative Hearings h as

jurisdiction over the parties and subject matter in this case

pursuant to Sections 120.569, 120.57(1), and 120.57(3),

Florida Statutes.

54. Petitioner has challenged the Department's proposed

agency action to award the APSAR contract to APS.

55. The burden of proof resides with the Petitioner.

The standard of proof in this proceeding is whether the agency

action was clearly erroneous, contrary to competition,

arbitrary, or capricious. § 120.57(3)(f), Fla. Stat.

56. The underlying findings of fa ct in this case are

based on a preponderance of the evidence. § 120.57(1)(j),

Fla. Stat.

57. This de novo proceeding was conducted for the

purpose of evaluating the action that was taken by the agency

in an attempt to determine whether that action is co ntrary to

the agency's governing statutes, the agency's rules or

policies, or the RFP specifications. See § 120.57(3)(f), Fla.

Stat., and State Contracting and Engineering Corporation v.

Department of Transportation , 709 So. 2d 607 (Fla. 1st DCA

1998).

58. An agency action is capricious if the agency takes

the action without thought or reason or irrationality. An

agency decision is arbitrary if it is not supported by facts

or logic. Agrico Chemical Co. v. State Department of

Environmental Regulation , 365 So. 2d 759, 763 (Fla. 1st DCA

1978).

59. Petitioner argues that the Agency's determination

that Intervenor met the "one - year experience" criterion is

arbitrary. However, the Agency's conclusion that Intervenor

demonstrated one - year of the reque sted experience is supported

by the facts as set forth above, and is not arbitrary.

60. Petitioner argues that the Agency's review of the

cost proposals was arbitrary and capricious in that it only

took into consideration the total costs opposed to a m ore

detailed examination of the cost proposals. However, Section

6.3.3 of the RFP, quoted above, clearly states that the

prospective vendor with the lowest total price shall be

awarded 25 points or 25% of the maximum total score. Thus,

the scoring of the cost proposal was not arbitrary or

capricious or contrary to the requirements of the RFP.

61. Petitioner argues that the Agency erroneously

applied the formula set out in Section 6.3.4 in scoring its

technical proposal. However, the RFP states that a s core of

36 would receive 75 points. None of the prospective vendors

scored 36. Thus, the Agency's action in calculating the score

of the technical proposals was not contrary to the language of

the RFP.

62. The formula set forth in Section 6.3.4 of the RFP

was applied consistently to all three prospective vendor's

scores of the technical proposals, and, therefore did not give

a competitive advantage to any proposed vendor.

63. Petitioner has not shown that the Agency's proposed

action is contrary to the Agency's governing statutes, rules,

or policies, or that it is contrary to the RFP specifications.

64. Petitioner has not met its burden of proving by a

preponderance of the evidence that the Agency's proposed

action of awarding the contract to APS is clearly erroneous,

arbitrary, capricious, or contrary to competition.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law set forth herein, it is

RECOMMENDED:

That the Agency for Persons with Disabilities enter a

final order dismissing Petitioner's protest.

DONE AND ENTERED this 15th day of March, 2005, in

Tallahassee, Leon County, Florida.

S

BARBARA J. STAROS

Administrative Law Judge

Division of Administrative Hearings

1 230 Apalachee Parkway

The DeSoto Building

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 15th day of March, 2005.

ENDNOTES

1/ The Notice of Intended Award referred to simply APS

Healthcare.

2 / At hearing, Petitioner also argued that Intervenor's cost

proposal was defective in that the grid containing Intervenor's

pricing schedule does not include the unit co st and number of

units for years two and three of the contract. However,

Petitioner, in its Proposed Recommended Order, appears to have

abandoned that argument. In any event, the evidence does not

establish that this was a requirement of the RFP.

COPIE S FURNISHED:

David C. Asburn, Esquire

Greenberg Traurig, P.A.

Post Office Drawer 1838

Tallahassee, Florida 32302

Mary Piccard Vance, Esquire

Vezina, Piccard & Piscitelli, P. A.

318 North Calhoun Street

Tallahassee, Florida 32301

Karen D. Walker, Esqui re

Holland & Knight, LLP

315 South Calhoun Street, Suite 600

Tallahassee, Florida 32301

Shelly Brantley, Director

Agency for Persons With Disabilities

4030 Esplanade Way, Suite 380

Tallahassee, Florida 32399 - 0950

P. Kathlyne Jameson, General Counsel

Agency for Persons With Disabilities

4030 Esplanade Way, Suite 380

Tallahassee, Florida 32399 - 0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 days from the date of this recommended o rder. Any exceptions

to this recommended order should be filed with the agency that

will issue the final order in this case.