05-001540BID Bay Point Schools, Inc. vs. Department Of Juvenile Justice Status: Closed Recommended Order on Tuesday, October 4, 2005.

Summary: The provisions of the request for proposal that delegated calculation of the financial responsibility score to Dun and Bradstreet, using a secret formula, and failed to include enforceable performance standard in the contract, are contrary to competition.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BAY POINT SCHOOLS, INC., )

)

Petitioner, )

)

vs. ) Case No. 05 - 1540BID

)

DEPARTMENT OF JUVENILE )

JUSTICE, )

)

Respondent. )

______________________________)

RECOMMENDED OR DER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Miami, Florida, on June 29 - 30, 2005.

APPEARANCES

For Petitioner: Joseph Klock, Jr.

Gavriel E. Nieto, P.A.

Rashida Ivy

Juan Carlos Antorcha

Steel, Hector & Davis, LLP

200 South Biscayne Boulevard

Suite 4000

Miami, Florida 33131 - 2398

For Respondent: Brian Berkowitz

Department of Juvenile Justice

Knight Building, Room 312V

2737 Centerview Drive, Suite 312

Tallahassee, Florida 32399 - 3100

STATEMEN T OF THE ISSUE

The issue is whether Petitioner has proved that the

challenged provisions in a Request for Proposal for an 88 - slot

conditional - release program in Circuit 11 are clearly erroneous,

contrary to competition, arbitrary, or capricious.

PRELIMINA RY STATEMENT

By letter dated March 8, 2005, to Respondent, Petitioner

filed a notice of protest, pursuant to Section 120.57(3),

Florida Statutes, to various provisions of Respondent's Request

for Proposal #K7K01 and Addendum #1. The letter states that a

number of provisions of the Request for Proposal vest "unbridled

discretion" in Respondent by allowing it to apply "hidden

conditions and arbitrarily award the contract with little or no

regard for the requirements of the bid specifications." These

provis ions allegedly include Attachment A -- Paragraph 10 and

related provisions that allow Respondent, after opening the

proposals, to decide whether the offeror must propose a

facility; Attachment A -- Paragraph 10, Attachment B -- Section V,

and related provisions that allow Respondent, after opening the

proposals, to decide what provisions of the Request for Proposal

are material; the definition of "Provider" in Attachment

B -- Section VI and other provisions in Attachment B -- Section

XVIII that arbitrarily and capric iously allow an offeror to gain

a scoring advantage, based on its Dun & Bradstreet Supplier

Evaluation Report score, without regard to the offeror's ability

to perform its obligations, if it were awarded a contract; the

definition of "Provider" in Attachme nt B -- Section VI and other

provisions in Attachment B -- Section XVIII that arbitrarily and

capriciously allow an offeror to gain a scoring advantage, based

on its Dun & Bradstreet Supplier Evaluation Report score, with

respect to its ability to pay its bill s, without regard to the

possibility that other offerors, with lower net worths, may pay

bills later because they rely on checks from the State of

Florida; Attachment B -- Section VII that reserves the right of

Respondent to disqualify any offeror that engag ed in any

unauthorized contact without a clear explanation of the meaning

of unauthorized contact; Attachment B -- Section XVII that

reserves to Respondent the "unbridled discretion" to decide,

after opening bids, which bids conform to the instructions and

w ill be evaluated; the omission of various services and

quality - of - service requirements applicable to previous

procurements, so as to favor one offeror over the other

offerors; the omission of a provision that fully accounts for

all children currently parti cipating in the present contract, so

as to avoid subjecting these children to significant risk; the

omission of points for community support, financial and

volunteer service contributions from non - contract sources, and

services provided for children and fa milies for which money is

not provided in the contract; the omission of any

acknowledgement that Petitioner's residential program is

integrated with a specially designed aftercare program that

serves 100 - 200 students.

By Amended Petition for Formal Admini strative Hearing and

Formal Written Protest of Contract Specifications for RFP #K7K01

and the Proposal Addendum #1 to RFP #K7K01, Petitioner filed a

formal written protest to certain provisions of Request for

Proposal #K7K01 and Addendum #1. In general, P etitioner alleges

that the Request for Proposal and Addendum are contrary to

Respondent's rules, designed to favor a particular offeror, vest

"unbridled" discretion in Respondent, and are otherwise clearly

erroneous, contrary to competition, arbitrary, or capricious.

The formal written protest alleges that, in 2004,

Respondent released an earlier request for proposal for the same

services -- RFP #K5K03. Petitioner alleged that it is capable of

performing under the requirements of this request for proposal

a nd that it has provided conditional - release programs in Circuit

11 for over six years. Petitioner alleged that, on August 23,

2004, Respondent improperly proposed to award a contract to

another provider. After Petitioner challenged the award,

Respondent allegedly withdrew the request for proposal and

issued the subject Request for Proposal. While settling the

dispute that arose after the issuance of the earlier request for

proposal, Respondent allegedly informed Petitioner that the

subject Request for Pr oposal would address the inter -

relationship between Petitioner's conditional release program

and its residential program. Consequently, Respondent also

allegedly withdrew a request for proposal for a residential

program, shortly after it canceled the requ est for proposal for

a conditional release program.

On February 17, 2005, the formal written protest states

that Respondent released the subject Request for Proposal,

#K7K01. Instead of addressing the inter - relationship between

Petitioner's residential a nd conditional - release programs, the

Request for Proposal allegedly contains modifications to the

earlier request for proposal that disguise the previously

identified deficiencies in the bid process, give Respondent

"unbridled" discretion to arbitrarily aw ard the contract to any

offeror that Respondent wishes, and eliminate any opportunity

for fair competition by tailoring the remaining criteria to the

offeror that Respondent had selected in the previous request for

proposal. On March 3, 2005, Respondent a dded Addendum #1, which

allegedly demonstrates that it is trying to vest in itself

"unbridled" discretion as to whether a proposal meets

Respondent's standards regarding a structure.

More particularly, the formal written protest alleges that

Request for P roposal #K7K01 and Addendum #1 contain terms,

conditions, or specifications that were crafted in bad faith to

allow an award to a predetermined offeror by deleting from the

earlier request for proposal the requirements of minimum

experience levels and cert ain facilities; that contain several

hidden or springing conditions that Respondent may use to

support an arbitrary award; that fail to address the need for an

inter - relationship between Petitioner's residential and

conditional - release programs; and that f ail to include

appropriate credit for contributions of services and program

features that are in excess of those provided by Respondent and

important to the integrated conditional - release program operated

by Petitioner.

Specific issues of material fact in clude whether Request

for Proposal #K7K01 and Addendum #1 allow Respondent to act

arbitrarily and capriciously, thus contravening fair competition

and determining scoring criteria after the opening of proposals

by reliance on vague, undefined, or springing scoring

conditions; whether the Request for Proposal and Addendum

erroneously, arbitrarily, capriciously, or in a manner that is

contrary to competition allow an offeror to gain a scoring

advantage by the credit of its parent or affiliates, even though

th e parent or affiliates will not incur a corresponding

obligation; whether the Request for Proposal and Addendum

erroneously, arbitrarily, capriciously, or in a manner that is

contrary to competition allow an offeror to gain a scoring

advantage by considera tion of a financial/credit profile that

bears no relationship to any real credit evaluation; whether the

Request for Proposal and Addendum erroneously, arbitrarily,

capriciously, or in a manner that is contrary to competition

allow an offeror to gain a sco ring advantage -- as to ten percent

of the total available points -- by Respondent's reliance on a

contractor's evaluation criteria, of which Respondent is without

knowledge; whether the failure of the Request for Proposal and

Addendum to specify whether a pro posal must include a facility

is contrary to competition, arbitrary, or capricious because the

omission provides an unfair monetary advantage to offerors whose

proposals lack a facility and thus require a smaller budget;

whether the elimination of various service and quality of

service requirements in the Request for Proposal and Addendum is

improper, erroneous, arbitrary, capricious, contrary to agency

practice or rules, contrary to competition, or designed to give

an unfair advantage to predetermined offe rors; whether the

elimination of various service and quality of service

requirements or statements of policy in the Request for Proposal

and Addendum are unpromulgated rules that require rulemaking;

and whether the Request for Proposal and Addendum violate the

settlement agreement between Petitioner and Respondent that

called for an independent inspection and evaluation of

Petitioner's program and the inter - relationship between its

conditional - release and residential programs.

At the hearing, Petitioner ca lled two witnesses and offered

into evidence ten exhibits: Petitioner Exhibits 1 - 2, 7 - 8, and

10 - 15. Respondent called three witnesses and offered into

evidence two exhibits: Respondent Exhibits 1 - 2. All exhibits

were admitted.

The court reporter filed the transcript by August 4, 2005.

The parties filed proposed recommended orders by August 22,

2005.

FINDINGS OF FACT

1. Since 1995, Petitioner has operated a moderate - risk

residential program in Miami for juveniles who have been

adjudicated delinquent by a juvenile court. Modeled after a

typical boarding school, Petitioner maintains 178 beds at three

locations in South Florida and provides full educational and

athletic programs for boys aged 13 - 18 years. The typical

student remains in Petitioner's reside ntial program for eight to

ten months, at which time he is conditionally released into the

community. If he completes the conditional - release period

successfully, the releasee is no longer subject to supervision.

2. In addition to, and as part of, the educ ational and

athletic programs, Petitioner provides a behavioral modification

program to teach the students how to live as productive members

of society and avoid further problems with the juvenile - or

criminal - justice system. Using principles of positive

reinforcement, the behavior modification program helps each

student earn self - esteem by providing a multi - step reward system

within the school. By demonstrating good behavior and positive

attitudes, each student works his way up to positions of

increasing responsibility within the school, such as serving as

a tutor or mentor to newer students or eventually serving in

student government. Some students may earn the right to

represent the school in the community, such as presenting

dropout prevention talks t o local high schools or civic groups.

3. Petitioner also uses positive reinforcement by allowing

students to earn the right to visit their homes on weekends,

prior to their release from the residential program. Because of

their adjudicated status, the st udents are not free to come and

go as they please. However, consistent with Petitioner's

reliance on inducing internal change, rather than coercing

external change, the school lacks bars, locked doors, shackled

students on off - campus trips, or solitary or punishment cells,

which are common features of other schools, boot camps, or

lockdown facilities that serve adjudicated juveniles of similar

risk, but apply the correctional, rather than educational,

philosophy. Very few of Petitioner's students choose t o

"escape" from their campus; students are generally deterred from

leaving due to the pressure of more senior peers, who have

learned to appreciate and value the responsibilities that

Petitioner imposes upon them and have, thus, taken a first step

toward m odifying their behavior in a positive direction.

4. Petitioner's program has generated considerable

contributions from the local community. Petitioner receives

$700,000 to $800,000 annually from private donations. Entering

into partnerships with local bus inesses, Petitioner provides its

students with three - month apprenticeships in local industries,

such as hospitality and homebuilding.

5. In 1998, Respondent requested Petitioner to provide an

after - care or conditional - release program for students who had

fi nished the residential program. Petitioner agreed to take all

boys from Dade and Broward counties who had completed

residential programs. Rejecting the traditional after - care

program, which is based on classroom contact that requires the

releasee to visi t the provider's counselor, Petitioner

essentially advanced the commencement of family intervention,

family therapy, and parenting classes, so that these supportive

programs began while the student was still in the residential

placement and continued after release -- with Petitioner's

counselors visiting the releasee at his home, school or

workplace.

6. Petitioner assigns each student in the residential

program a conditional - release counselor 60 - 90 days prior to the

student's anticipated release date. The s tudent's conditional -

release counselor works in close cooperation with the student's

onsite counselor, who works with the student at the school while

the student is in the residential program. The student's onsite

counselor, teachers, coaches, drug counse lors, and mental health

counselors give the conditional - release counselor all academic,

behavioral, and academic data on the student. The conditional -

release counselor also coordinates with the student's juvenile

probation officer.

7. Prior to the releas e of the student, the conditional -

release counselor establishes and maintains contact with each

student's family by visiting the home and counseling how they

can help the student avoid a return to the behavior that caused

him to be adjudicated. The condit ional - release counselor takes

a student home and counsels the family about such things as peer

pressure and the proper selection of friends. During these

visits, the counselor helps the family set up an acceptable

performance plan with academic and behavi oral requirements, such

as minimum grades to be earned at school and a curfew.

8. After the student is released from the residential

program, the conditional - release counselor makes unannounced

visits to the student's home, workplace, and school. For the

f irst month following release, the conditional - release counselor

meets four times weekly with the parent or guardian and once

weekly with the student. For the next five months, the rate of

contact is decreased, until it is once weekly with the parent or

gu ardian and once weekly with the student, although the

frequency of contact is increased if the student is performing

less than satisfactorily. For this six - month period following

release from the residential program, if the student is

performing satisfact orily, the student's juvenile probation

officer, who would normally be required to devote considerable

time to the student's case, merely monitors the releasee's

progress by reading the reports of the conditional - release

counselor.

9. The work of the co nditional - release counselor

integrates Petitioner's residential and conditional - release

programs. Investing considerable time with each student, who

typically has not had the benefit of consistency in his support

system, the conditional - release counselor earns the trust of

each student, usually over a period of three or four months.

Because of its good record at retaining counselors, Petitioner

ensures that the same counselor is personally involved with a

student for a substantial period of time prior to his release,

as well as after his release, and, by this means, Petitioner

raises the likelihood of a successful release.

10. Petitioner's program has been successful, largely due

to the integration of the residential and conditional - release

programs, but als o due to Petitioner's resourcefulness.

Receiving no state money for substance abuse treatment, even

though 85 - 90 percent of the students enter residential placement

with a drug problem, Petitioner provides the necessary resources

to the students who need them. Relying on private

contributions, Petitioner has also expanded its residential

capacity from the 65 slots (roughly equivalent to beds) funded

by Respondent under the present contract to 120 slots.

11. In 2004, Petitioner addressed the problem of stud ents

who, although eligible for release from residential placement,

had nowhere to go. Petitioner started a nonresidential

independent living program at fourth campus, also in South

Florida. This program is funded privately and is not under

Respondent's jurisdiction.

12. However, just prior to the re - location of the

independent living program to a new building, one of

Respondent's auditors, assigned to audit Petitioner's

residential program, instead audited the independent living

program and found deficie ncies in the facility, for which

Respondent may have had partial responsibility. Based on this

audit, Respondent canceled Petitioner's conditional - release

contract, but eventually reinstated it, and it remains in effect

until the resolution of this disput e and the successful letting

of a new contract.

13. Petitioner's record in preparing its students for life

after release, without future problems with the law, has been

very good, as compared to the record of other providers of

residential placements for adj udicated juveniles. The record is

not exceptionally well developed on this point, however.

14. Not long after the short - lived termination of

Petitioner's conditional - release program, Respondent issued

Request for Proposal #K5K03 (First RFP), which sought a pr ovider

for a stand - alone conditional - release program. Previously,

Respondent had not solicited bids for the conditional - release

services that Petitioner had been providing, probably because

Petitioner had originally provided these services on a pilot

basi s and as an adjunct to its residential program.

15. The First RFP required an offeror to identify a

specific facility, to produce a minimum success rate of 85

percent of the releasees remaining crime - free for one year after

release, and to participate in the "Going Home Grant Re - entry

Project." Respondent proposed to award the contract to Eckerd

Youth, even though it had failed to meet these three

requirements -- most baldly, as for the 85 percent success

criterion, Eckerd Youth proposed only 79 percent. Ecke rd Youth

outscored Petitioner on the First RFP solely due to its higher

Dun & Bradstreet score -- a factor that is discussed in more

detail below, in connection with the present Request for

Proposal and Addendum.

16. Petitioner protested the proposed award to Ec kerd

Youth. In discovery, Petitioner found an earlier draft of the

First RFP, which had specified a success rate of 79 percent.

The inference is inescapable that the early inclusion of a

success rate of 79 percent was to allow Eckerd Youth to compete

for the contract. However, the inference is not inescapable

that Eckerd Youth representatives communicated their success

rate to Respondent's employees while they were drafting the

First RFP; it is equally likely that Eckerd Youth's success rate

was already known to them. Respondent withdrew the proposed

award to Eckerd Youth prior to hearing.

17. On February 17, 2005, Respondent issued Request for

Proposal #K7K01, which, as amended by various addenda, is the

subject of this case (Second RFP). Although procurin g the same

conditional - release services sought in the First RFP, the Second

RFP omits each of the three above - described requirements of the

First RFP.

18. At hearing, Respondent's witnesses persuasively

explained that the previous requirements of a facility and

participation in a specific grant program had unduly limited the

number of potential offerors. This explanation makes sense,

given that no offeror is required to use a specific physical

location for any purpose besides storing records. Likewise, the

Second RFP did not sacrifice anything by not requiring offerors

to be participants in the Going Home Grant Re - entry Project at

the time of submitting the proposal; the Second RFP allows an

offeror to become a participant within 30 days of contract

executio n.

19. However, Respondent's witnesses could not explain the

omission of the 85 percent success criterion or the failure to

identify another quantifiable success criterion in its place.

The specific language stating the success criterion in the First

RFP occu rs in the form contract attached to the two requests for

proposal.

20. Exhibit 1, Section VIII.C, of the contract attached to

the First RFP requires the provider to

document evidence of compliance with outcome

measures as stated below:

1. A minimum of 100 % of all youth shall be

developed [sic; based on the language of the

form contract attached to the Second RFP,

this probably should read "shall have an

Individualized Supervision Plan developed"]

upon admission and reevaluated as the youth

progresses throu gh the program.

2. A minimum of 95% of all youth shall

participate in the appropriate

educational/academic program, pre - employment

and employment skills training, technical or

vocational program, individual group and

family counseling[,] behavior managem ent

systems, and recreational and leisure

activities.

3. A minimum of 85% of the youth admitted

to the conditional release program shall

successfully complete the program by direct

discharge.

4. A minimum of 85% of the youth placed in

the conditional r elease program shall remain

crime free during their supervision.

5. A minimum of 85% of youth released from

the conditional release program shall remain

crime free for one year after release.

21. Exhibit 1, Section VIII.B, of the contract attached to

the Se cond RFP is identical (or identical after corrections) as

to paragraphs 1, 2, and 3 of the contract attached to the First

RFP. The contract attached to the Second RFP omits paragraphs 4

and 5 of the First RFP's contract and adds two new paragraphs,

which due to re - numbering are as follows:

2. 100% of the youth shall have a face - to -

face contact with his/her assigned Case

Manager within 24 hours (excluding weekends

and legal holidays) of the youth's return

home from the commitment program.

5. 100% of the youth files shall document

that the Case Manager reviews the

supervision plans with the youth every 14

calendar days and with the youth and

parent/guardian every 30 calendar days.

22. Disclosing that the mission of Respondent is to reduce

juvenile crime, one of Respondent's witnesses, Genanne Wilson,

Operations and Management Consultant Manager, admitted the

superiority of the measurement of outputs rather than inputs

when applying performance measures. Another of Respondent's

witnesses, Perry Anderson, who i s Regional Director South of

Juvenile Probation and Community Services, was left the task of

harmonizing the role of performance measures in achieving

Respondent's mission with the removal of any quantifiable

success criterion from the Second RFP.

23. Mr. Per ry provided a working definition of recidivism

as the ability of a releasee to remain free of any conviction or

adjudication of any misdemeanor or felony committed during the

first year after release. However, he tried to justify the

omission of a quantif iable success criterion, such as 85 percent

of the releasees remaining crime free for one year after

release, by citing the difficulty of obtaining good data

concerning a releasee's subsequent criminal record. Later in

his testimony, Mr. Perry backed off this claim and conceded

that Respondent has started to look at evidence - based outcomes.

24. Toward the end of his testimony, Mr. Perry revealed

why Petitioner has fallen into disfavor among certain of

Respondent's employees. A conditional - release provider in

Florida City is 35 percent below capacity because Petitioner,

relying on private donations, serves more students than

Respondent pays it to serve. Pressed to explain the importance

of bringing the Florida City program up to capacity, Mr. Perry

testified that the Florida City program is closer to the homes

of some conditional releasees now served by Petitioner.

However, Mr. Perry failed to credit the fact that Petitioner's

location is irrelevant to these releasees because, unlike the

situation in a conven tional program, Petitioner's counselors

travel to the releasees -- the releasees do not travel to

Petitioner's counselors.

25. Confronted with the fact that the inclusion of remote

releasees in Petitioner's conditional - release program might be a

hardship to Peti tioner's conditional - release counselors, but

would not be a hardship to the releasees, Mr. Perry added a

couple more reasons why it was important for Petitioner to share

its slots with other conditional - release providers. First, he

claimed that Respondent 's needs are unmet by the integration of

a conditional - release program with a residential program. This

point does not address why it is necessary to spread around the

conditional - release business. Second, Mr. Perry claimed that,

by serving double the nu mber of students for which it is paid,

Petitioner may not be able to serve its students appropriately.

This point, which, if true, would justify spreading around the

conditional - release business, lacks support in the present

record.

26. In evaluating the Se cond RFP in terms of its

imposition of any measurable success criterion, other provisions

require consideration. Section VII.AB.1 and 2 of the contract

attached to the Second RFP provides, in identical language to

that found in the contract attached to th e First RFP (at Section

VII.AA.1 and 2), that:

AB. Quality Assurance Standards

1. The Department will evaluate the

Provider's program, in accordance with

section 985.412, Florida Statutes, to

determine if the Provider is meeting minimum

thresholds of performance pursuant to

quality assurance standards.

2. The [P]rovider shall achieve and

maintain at least an overall performance

rating in the "minimal" range for applicable

quality assurance standards. Failure to

achieve at least an overall perfor mance

rating in the "minimal" range shall cause

the Department to conduct a second quality

assurance review, within six (6) months.

Such failure shall cause the Department to

cancel the [P]rovider's contract unless the

[P]rovider achieves compliance with minimum

thresholds within six (6) months or unless

there are documented extenuating

circumstances. In addition, the Department

may not contract with the same [P]rovider

for the canceled service for a period of

twelve (12) months.

27. An obvious shortcoming o f the provisions cited in the

preceding paragraph is that they promise a future undertaking by

Respondent to establish performance standards for the

conditional - release contract. However, these paragraphs imply --

correctly -- that Respondent is choosing not to identify the

performance standard prior to entering into the contract,

risking instead a disruption in the delivery of services if the

provider that wins this contract is unable to meet Respondent's

performance standards.

28. Section IV.B of the contract at tached to the Second

RFP, as well as Section IV.B of the contract attached to the

First RFP, provides that Respondent may terminate the contract,

"without cause [and] for its convenience" on 30 days' notice.

Given the specificity of the contract language cited in Section

VII.AB.1 and 2, its explicit focus on provider nonperformance,

and its provision for a cure period, it is unlikely that

Respondent may rely on Section IV.B to terminate a provider for

a failure to meet performance standards.

29. As Petitione r objects to these three items that the

Second RFP omits or changes, when compared to the First RFP, so

does Petitioner object to an item that the Second RFP carries

forward from the First RFP -- the Dun & Bradstreet (D&B) Supplier

Qualification Report (SQR) score. Section XVIII.D.2 of

Attachment B of the Second RFP instructs the offerors as

follows:

Supplier Qualification Report (SQR) . . .

a. The Department will assign evaluation

points on the prospective Provider's

financial capability to perform the services

outlined in this RFP. The Department

requires submission of the prospective

Provider's Supplier Qualifier Report (SQR)

prepared by Dun & Bradstreet (D&B). The

Supplier Qualifier Report is a standard

report detailing financial and operational

ca pability. . . .

* * *

30. As in the First RFP, Attachment D of the Second RFP

states that the SQR score accounts for 100 of the 1000 points

available for most offerors. Attachment D explains that an SQR

score of 1, which is the lo west risk, earns 100 points. For

each point of higher risk, the offeror loses 10 points, except

that the offeror receives no points if its score is 9, which is

the highest risk.

31. The SQR score is a matter of considerable importance

to Petitioner. It is th e only measure of financial

responsibility of an offeror and counts equally with an

offeror's price. (As did the First RFP, the Second RFP presents

a maximum contract price -- for the Second RFP, this price is

$934,370.80. The proposal offering the lowest price receives

100 points, and the remaining proposals receive points in

indirect proportion to their variance from the lowest price.)

In the award process for the First RFP, Petitioner lost to

Eckerd Youth only due to the latter's superior score on the S QR,

which was the only item for which Eckerd Youth received a higher

score than Petitioner.

32. A D&B sales manager, Michael Kohrt, testified about

the SQR, but only in generalities because D&B protects the

confidentiality of the proprietary formula that it us es to

produce an SQR. Mr. Kohrt could testify only that the SQR

measures how long an entity has been in business, its timeliness

in paying its bills, as well as unspecified other factors, and

applies them in a formula that he was not at liberty to

describ e. Mr. Kohrt testified that the SQR does not rely on the

size of an entity, the amount of its revenue, or the financial

resources of its parent corporation. However, on cross -

examination, Mr. Kohrt had to admit that, if a better -

capitalized entity chose to pay its payables out of capital,

rather than from receivables that it had not yet collected, this

entity would receive a higher SQR score than the entity that

lacked the assets to do so, but instead had to wait until it had

collected sufficient receivab les to pay the payable.

33. Ms. Wilson offered two reasons for using D&B's SQR for

evaluating the financial responsibility of an offeror -- one good

and one not good. The legitimate reason is that Respondent may

not have employees with the necessary competence to read and

understand financial statements; this explanation justifies why

Respondent has elected not to perform this task with its

employees. However, Ms. Wilson testified that outside certified

public accountants were not generally available due to

con flicts; this explanation is unsupported by the record.

34. Despite its good intentions, Respondent may not

delegate ten percent of the points to be awarded in this

procurement to an outside contractor that declines to identify

the factors that generate a score . In such a case, potential

offerors cannot inform themselves of how they can better arrange

their financial affairs so as to earn more points, nor can they

make informed decisions as to whether to expend the funds to

prepare proposals. Hidden criteria, even though applied by a

reputable entity like D&B, impedes the procurement process,

whether the criteria apply to the financial section or the

technical section of a request for proposal.

35. On the other hand, little merit attaches to one basis

of Petitioner 's challenge to Respondent's use of the SQR or, by

inference, any other measure of the timeliness with which an

offeror pays its bills. Petitioner incorrectly contends that

measuring the timeliness of payment is of no value for an

entity, such as Petition er, that pays its payables as it

receives its receivables -- essentially, all from the State of

Florida. This argument ignores the possibility -- not applicable

to Petitioner, of course -- that a State vendor might divert some

of its receivables from their prop er destination -- the vendor's

creditors.

36. Petitioner objects to other provisions in the Second

RFP. Three of these reserve the right to Respondent to waive

any "minor irregularity" (Attachment A.15), to modify

"non - material terms of the RFP" (Attachment B .IV.E), or to "seek

clarifications or request any information deemed necessary for

proper evaluation of submissions" (Attachment A.14). These

objections are to provisions whose potential to influence the

award process, in such a way as to confer a competi tive

advantage upon one offeror over another, is nil, pursuant to

case law.

37. More substantive objections of Petitioner are to the

Second RFP's procurement of conditional - release services

distinct from the procurement of residential services. The

record amp ly demonstrates that the integration of these programs

has been an important part of Petitioner's success, but nothing

in the record precludes Respondent, in the exercise of its

discretion in procuring these services, to separate these

programs. The other "omissions" of which Petitioner complains,

such as the failure to credit experience or community

contributions, also fall within Respondent's discretion.

CONCLUSIONS OF LAW

38. The Division of Administrative Hearings has

jurisdiction over the subject matter . § 120.57(3)(e), Fla.

Stat.(2005). Section 120.57(3)(b), Florida Statutes, provides

for a potential offeror to challenge of provisions of a request

for proposal, and Petitioner, in doing so, has met all of the

applicable statutory deadlines.

39. Section 120 .57(3)(f), Florida Statutes, provides:

. . . Unless otherwise provided by statute,

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, proposals, or

replies, 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 statutes,

the agency's rules or policies, or the

solicitation specifications. The standard

of proof for such proceedings shall be

whether the proposed agency action was

clearly erroneous, contrary to competition,

arbitrary, or capricious. . . .

40. Petitioner has proved that the Second RFP is clearly

erroneous and contrary to competition with respec t to the

omission of any success criterion, expressed as a percentage of

releasees not convicted or adjudicated of any crime within a

specified period, such as one year, after completion of the

conditional - release program. Petitioner has also proved that

the omission of any success criterion is contrary to

Respondent's governing statutes.

41. Section 985.412, Florida Statutes, provides:

(1) It is the intent of the Legislature that

the department:

(a) Ensure that information be provided

to decisionmakers in a timely manner so that

resources are allocated to programs of the

department which achieve desired performance

levels.

(b) Provide information about the cost of

such programs and their differential

effectiveness so that the quality of such

program s can be compared and improvements

made continually.

(c) Provide information to aid in

developing related policy issues and

concerns.

(d) Provide information to the public

about the effectiveness of such programs in

meeting established goals and objectives.

(e) Provide a basis for a system of

accountability so that each client is

afforded the best programs to meet his or her

needs.

(f) Improve service delivery to clients.

(g) Modify or eliminate activities that

are not effective.

(2) As used in this section, the term:

* * *

(b) "Program component" means an

aggregation of generally related objectives

which, because of their special character,

related workload, and interrelated output,

can logical ly be considered an entity for

purposes of organization, management,

accounting, reporting, and budgeting.

(c) "Program effectiveness" means the

ability of the program to achieve desired

client outcomes, goals, and objectives.

* * *

(5) The department shall:

(a) Establish a comprehensive quality

assurance system for each program operated by

the department or operated by a provider

under contract with the department. Each

contract entered into by the department must

provide for quality assurance.

(b) Provide operational definitions of

and criteria for quality assurance for each

specific program component.

(c) Establish quality assurance goals and

objectives for each specific program

component.

(d) Esta blish the information and

specific data elements required for the

quality assurance program.

(e) Develop a quality assurance manual of

specific, standardized terminology and

procedures to be followed by each program.

(f) Evaluate each program ope rated by the

department or a provider under a contract

with the department and establish minimum

thresholds for each program component. If a

provider fails to meet the established

minimum thresholds, such failure shall cause

the department to cancel the p rovider's

contract unless the provider achieves

compliance with minimum thresholds within 6

months or unless there are documented

extenuating circumstances. In addition, the

department may not contract with the same

provider for the canceled service for a

period of 12 months. . . .

The department shall submit an annual report

to the President of the Senate, the Speaker

of the House of Representatives, the Minority

Leader of each house of the Legislature, the

appropriate substantive and fiscal committees

of each house of the Legislature, and the

Governor, no later than February 1 of each

year. The annual report must contain, at a

minimum, for each specific program component:

a comprehensive description of the population

served by the program; a specific d escription

of the services provided by the program;

cost; a comparison of expenditures to federal

and state funding; immediate and long - range

concerns; and recommendations to maintain,

expand, improve, modify, or eliminate each

program component so that ch anges in services

lead to enhancement in program quality. The

department shall ensure the reliability and

validity of the information contained in the

report.

(6) The department shall collect and analyze

available statistical data for the purpose of

ong oing evaluation of all programs. The

department shall provide the Legislature with

necessary information and reports to enable

the Legislature to make informed decisions

regarding the effectiveness of, and any

needed changes in, services, programs,

polici es, and laws.

(7) No later than November 1, 2001, the

department shall submit a proposal to the

Legislature concerning funding incentives and

disincentives for the department and for

providers under contract with the department.

The recommendations for funding incentives

and disincentives shall be based upon both

quality assurance performance and cost -

effectiveness performance. The proposal

should strive to achieve consistency in

incentives and disincentives for both

department - operated and contractor - p rovided

programs. The department may include

recommendations for the use of liquidated

damages in the proposal; however, the

department is not presently authorized to

contract for liquidated damages in non -

hardware - secure facilities until January 1,

2002.

42. Section 985.03(13), Florida Statutes, leaves no doubt

as to the purpose of conditional - release programs in reducing

recidivism:

"Conditional release" means the care,

treatment, help, and supervision provided to

a juvenile released from a residential

comm itment program which is intended to

promote rehabilitation and prevent

recidivism. The purpose of conditional

release is to protect the public, reduce

recidivism, increase responsible productive

behavior, and provide for a successful

transition of the you th from the department

to the family. Conditional release

includes, but is not limited to,

nonresidential community - based programs.

43. Section 985.404(10)(d), Florida Statutes, acknowledges

the importance of enlisting the cooperation of providers in

comply ing with quality assurance requirements and, evidently a

separate issue, evaluating program outcomes:

Each programmatic, residential, and service

contract or agreement entered into by the

department must include a cooperation clause

for purposes of complyi ng with the

department's quality assurance requirements,

cost - accounting requirements, and the

program outcome evaluation requirements.

44. The Legislature has spoken and has not left the

identification of enforceable performance measures, in

procurement do cuments, to Respondent's discretion. The Second

RFP disserves these clear Legislative directives by the omission

of a success criterion based on recidivism. Section

985.412(2)(b), Florida Statutes, focuses on outputs, like

success rates, not inputs, like the percentage of releasees who

receive plans, have face - to - face contacts, participate in

education or training programs, or even complete the program.

The success criterion of interest to the law - abiding public,

which is a factor under Section 985.03(13 ), Florida Statutes, is

one: recidivism, not how much effort a provider put into its

program. Respondent's attempt to fold this performance

criterion into some vague assurance of compliance with an as -

yet - unstated quality - assurance criteria - set obscures the

distinction, as recognized in Section 985.404(10)(d), Florida

Statutes, between quality assurance and evaluative criteria and

defies the mandate of Section 985.412(5), Florida Statutes, to

establish clear performance standards now, so they can be

incor porated into the contract and enforced by Respondent

against the provider and the Legislative against Respondent.

This statutory authority does not support the deferral of the

identification of enforceable performance standards, when they

can only be awkw ardly superimposed on an existing contract.

45. For the same reasons, the omission of an enforceable

success criterion is contrary to competition. The competition

to which Section 120.57(3)(f), Florida Statutes, refers is not

limited to the competition among offerors seeking to do business

with the State of Florida, but it extends to the services that

Respondent is procuring and the efficiency with which providers

serve the releasees and, indirectly, the public. A request for

proposal that restricts itself to measuring inputs, especially

when data about outputs in the form of recidivism are so readily

available, is contrary to competition.

46. Petitioner has proved that the Second RFP is clearly

erroneous, contrary to competition, arbitrary, and capricious by

dele gating the scoring of the financial - responsibility section

of the Second RFP to D&B, pursuant to an undisclosed formula

with factors whose weight is unknown to Respondent or its

offerors and insulated from meaningful review in a bid - protest

proceeding. Fl orida law entitles parties participating in

public procurement to challenge the specifications by which

their proposals or bids will be evaluated -- as has occurred in

this case -- or the application of these specifications in the

evaluation of their proposals or bids. These important rights

may not be abridged by Respondent's use of the proprietary SQR

score, which essentially requires interested persons to trust

that D&B has compiled a formula that fairly accounts for the

financial - responsibility factors of legitimate interest in a

particular procurement, to trust that D&B obtained accurate data

on each offeror or bidder, to trust that D&B accurately applied

the data to the formula, and to trust that D&B accurately

conveyed the SQR scores to Respondent. Resp ondent's commendable

desire to obtain an informed, disinterested evaluation of the

relevant financial - responsibility characteristics of each

offeror may be served by a variety of alternatives, such as by

stating the factors and their weight in a request fo r proposal

and informing the offerors that this part of the evaluation will

be scored by a certified public accounting or accounting firm or

using a modified SQR formula, if D&B could prepare such a

formula that it would subject to the rigorous scrutiny th at

attaches to public procurements in the State of Florida.

47. Petitioner has failed to prove that any other

provisions of the Second RFP fail to comply with applicable law.

RECOMMENDATION

It is

RECOMMENDED that the Department of Juvenile Justice enter a

final order sustaining the formal written protest to the Second

RFP, but only as to its omission of any success criterion based

on recidivism rates and its delegation of the scoring of the

financial - responsibility section of the request for proposal to

Dun & Bradstreet, based on an undisclosed formula using factors

with undisclosed weights.

DONE AND ENTERED this 4th day of October, 2005, in

Tallahassee, Leon County, Florida.

S

_________________________ __________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalache e 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 4th day of October, 2005.

COPIES FURNISHED:

Anthony Schembri, Secretary

Department of Juvenile Justice

Knight Building

2737 Cen terview Drive

Tallahassee, Florida 32399 - 3100

Robert N. Sechen, General Counsel

Department of Juvenile Justice

Knight Building

2737 Centerview Drive

Tallahassee, Florida 32399 - 3100

Brian Berkowitz

Department of Juvenile Justice

Knight Building, Room 31 2V

2737 Centerview Drive

Tallahassee, Florida 32399 - 3100

Joseph P. Klock, Jr.

Gavriel E. Nieto, P.A.

Rashida Ivy

Juan Carlos Antorcha

Steel, Hector & Davis, LLP

200 South Biscayne Boulevard, Suite 4000

Miami, Florida 33131 - 2398

NOTICE OF RIGHT TO SUBM IT EXCEPTIONS

All parties have the right to submit written exceptions within

10 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.