06-001916BID Mic Development, Llc vs. Department Of Transportation Status: Closed Recommended Order on Thursday, January 18, 2007.

Summary: Respondent did not act illegally, arbitrarily, dishonestly, or fraudently when it decided to reject the proposal it received in response to request for competitive proposals to develop commercial projects for a complex of major transportation facilities.

Case No. 06-1916BID

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MIC DEVELOPMENT, LLC, ) ) ) ) ) ) ) ) ) )

Petitioner, RECOMMENDED ORDER

vs.

DEPARTMENT OF TRANSPORTATION,

Respondent.

__

This case came before Administrative Law Judge John G. Van

Laningham for final hearing on October 30 and 31, 2006, in Miami,

Florida.

APPEARANCES

For Petitioner: Joseph M. Goldstein, Esquire

Shutts & Bowen, LLP

Wachovia Center, Suite 2100

200 East Broward Boulevard

Fort Lauderdale, Florida 33301

For Respondent: Thomas Barnhart, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue in this bid protest is whether Respondent acted

illegally, arbitrarily, dishonestly, or fraudulently when it

decided to reject the sole proposal it had received in response

to a solicitation asking "master developers" to submit

competitive proposals for the development of various commercial

projects that Respondent plans to make part of the Miami

Intermodal Center, a complex of major transportation facilities

being built near the Miami International Airport.

PRELIMINARY STATEMENT

On November 26, 2002, Respondent Department of

Transportation issued a request for proposals that solicited

offers from qualified developers interested in designing,

constructing, financing, and managing the "joint development"

component of a major transportation project being built adjacent

to the Miami International Airport. On March 3, 2003, Petitioner

MIC Development LLC submitted the only proposal that the

Department received in response to this solicitation.

On June 14, 2005, MIC Development LLC filed a notice of

intent to protest Respondent's preliminary decision——which had

been communicated via letters dated May 31, 2005——to reject "all"

proposals. On June 23, 2005, Petitioner filed its formal written

protest. The Department referred the matter to the Division of

Administrative Hearings ("DOAH") on August 11, 2005, for the sole

purpose of litigating the issue of whether Petitioner's notice of

intent to protest had been timely filed. This maneuver, which

effectively severed the Department's affirmative defense (waiver)

from Petitioner's protest of the agency's decision to reject all

bids, went unchallenged, and a final hearing on the narrow issue

of timeliness followed.

The undersigned, who heard the previous case, entered a

Recommended Order on April 20, 2006, which urged the Department

to refer the matter to DOAH for a final hearing on the merits of

Petitioner's protest. See MIC Development, LLC v. Department Of

Transportation , 2006 Fla. Div. Adm. Hear. LEXIS 156 (Fla. Div.

Adm. Hear. 2006). The Department complied, returning the protest

on May 22, 2006.

The final hearing on the merits of Petitioner's protest took

place as scheduled on October 30 and 31, 2006. At the hearing,

Joint Exhibits 1-26 and 28-37 were admitted into evidence. In

addition, MIC Development LLC called the following witnesses:

David C. Garrett, III of MIC Development LLC; Nick Serianni, a

consultant to the Department; Steven E. Thompson, also a

consultant to the Department; Gary Donn, Korouche Mohandes, and

John Martinez, each of whom is an employee (or former employee)

of the Department; and (by deposition) Department employees Gus

Pego and Javier Rodriguez.

During its case, the Department presented the testimony of

Mr. Serianni, who was re-called as a witness. The Department

also offered Respondent's Exhibits 1-17, which were received in

evidence.

The final hearing transcript was filed on November 29, 2006.

Thereafter, the parties timely filed proposed recommended orders,

which have been considered.

Unless otherwise indicated, citations to the Florida

Statutes refer to the 2006 Florida Statutes.

FINDINGS OF FACT

1. On November 26, 2002, the Florida Department of

Transportation (the "Department" or "FDOT") issued a Request for

Proposals for Joint Development (the "RFP"), the purpose of which

was to solicit competitive proposals from "nationally recognized

Master Developers" interested in participating in certain aspects

of the ongoing Miami Intermodal Center project (the "MIC"). The

MIC is a complex of major transportation facilities being built

adjacent to the Miami International Airport ("MIA"). It is

envisioned that, eventually, all of the various means of ground

transport (e.g. private vehicle, rental car, bus, train, taxi,

shuttle, etc.) will converge at the MIC.

2. The "joint development" component of the MIC, with which

the RFP was concerned, focuses on certain commercial (i.e. money-

making) facilities ancillary to what is referred to as the "MIC

Core." The MIC Core constitutes the "hub" of the MIC, to which

all the roads (and tracks) will lead. The RFP described the MIC

Core as follows:

At full build-out, the MIC Core will become a

major transportation hub and accommodate a

variety of transportation modes, including

rail, bus, and other vehicular traffic

. . . . The MIC Core will accommodate

extensions of the Metrorail, become the

future terminus for AMTRAK and ultimately

house a future East-West rail line. It will

likewise provide station facilities for

existing and future Tri-Rail commuter rail

service. The MIC/MIA Connector station,

serving the RCF [that is, the Rental Car

Facility] and the MIC Core, will link MIC

Core facilities and services to the main

terminal at MIA. Bus terminal facilities

will accommodate local (MDTA) and intercity

(Greyhound) bus services, as well as a

variety of courtesy buses/vehicles (rental

car companies, hotels, cruise lines, etc.).

Selected MIA related terminal functions are

also proposed to be relocated to the MIC Core

in the future (ticketing, baggage handling,

etc.).

RFP at 8. As the above description makes clear, the joint

development component, though significant in its own right, is

nevertheless only a piece of the MIC; it is not the entire

project, by any means. Other important pieces of the MIC include

such transportation components as the MIC Core, a Rental Car

Facility ("RCF"), the MIC/MIA Connector (a light-rail "people

mover"), and the MIC Terminal Access Roads ("MTAR").

3. The goal which the Department sought to realize through

the RFP was to negotiate and enter into a long-term lease

agreement with a master developer who would design, finance,

build, and manage the commercial elements of the MIC, paying rent

to FDOT for the right to use and occupy the public property on

which the joint development project will be situated. To make

the joint development project economically sustainable,

interested developers were required to submit plans for such

revenue generating facilities as a hotel/conference center,

retail establishments, and commercial office buildings. The

RFP's approach to the scope of the undertaking was flexible,

giving proposers leeway in the following respects:

!" Proposers may offer to finance,

construct and manage the transportation

facilities, as well as commercial

development, as an integrated overall

project;

!" Alternatively, FDOT may provide funding

for, construct and own distinct

transportation components of the MIC

Core, or the Proposer may offer to

finance and build the entire project and

lease the transportation facilities back

to FDOT.

!" Proposers may modify the mix of

commercial uses contemplated for the MIC

based upon their own experience and

market information, as long as the

proposed program remains within the

parameters set by the MIC Record of

Decision and related development

agreements obtained for the MIC . . . .

RFP at 5.

4. At the time it issued the RFP, the Department expected

that "landside" operations currently being conducted in the MIA

terminal would be moved to the MIC Core. Landside operations

include ticketing, passenger check-in, and baggage handling. The

RFP explained:

Spatial planning to date has been premised on

the future relocation to the MIC Core of

selected MIA terminal/land-side functions.

The MIC Core Pre-Schematic Program Analysis

(Exhibit IV) contains an analysis of site

alternatives and a preferred pre-schematic

proposal for the MIC Core site organization

that optimizes the integration of surface

transportation modes, MIA land-side functions

and a MIC joint development program.

RFP at 9. The upshot is that FDOT envisioned that a substantial

amount of the MIC Core's square footage would be given over to

landside functions, based on the premise that such functions one

day would be carried out in the MIC Core.

5. Proposers were required to submit a "base plan"

"providing for hotel, office, parking, and ancillary retail"

uses. The RFP instructed further that the base plan needed to

conform to the pre-schematic proposal (referenced in paragraph 4

above). Thus, in their base plans, proposers had to accommodate

the Department's premise that landside functions requiring

substantial square footage eventually would be moved to the MIC

Core. Proposers were allowed, additionally, to submit one

"alternative plan" that could deviate from the base plan "both as

to site organization and mix of proposed uses."

6. To choose a developer for the joint development

component of the MIC, the RFP called for a multi-step selection

process involving two formal committees: a Technical Review

Committee ("TRC") appointed by FDOT, and a Selection Committee

consisting of FDOT management. In the initial, "feasibility

determination" phase, the TRC would determine whether each

proposal met "threshold criteria" for "feasibility." After

making its feasibility determination with regard to each of the

proposals, the TRC would recommend to the Selection Committee

which proposals should be deemed feasible and which infeasible

(without ranking them). Then the Selection Committee, taking

into account the TRC's recommendations, would decide which

proposals were feasible and responsive to the RFP, and which were

not one or the other (or were neither). Any proposal deemed by

the Selection Committee to be infeasible, non-responsive, or both

would be dropped from further consideration at that point.

Feasible and responsive proposals would be returned to the TRC

for the next level of review.

7. During the ensuing "evaluation" phase of the selection

process, the TRC would invite each proposer whose proposal was

deemed feasible and responsive to make an oral presentation to

the committee. Following the oral presentations, the TRC would

evaluate, score, and rank the competing proposals. The TRC's

recommended ranking of the proposals would be submitted to the

Selection Committee, which would make the "final selection" and

determine the "official ranking" based on the TRC's

recommendation.

8. After the completion of the evaluation phase, the

selection process would proceed to the negotiation phase, during

which FDOT would

negotiate a lease agreement with the first

ranked Proposer. If negotiations [could] not

be concluded in a reasonable period of time,

then FDOT [would] have the option to cease

negotiations with the first ranked Proposer

and begin to negotiate with the second ranked

Proposer. The process [could] continue until

a contract [were] successfully negotiated, or

FDOT [could] re-advertise for proposals or

use a different procurement process.

RFP at 27-28.

9. In the RFP, the Department reserved "all rights

available to it by law." Among the rights specifically reserved

were

the rights to reject any and all proposals at

any time, to request or retain additional

information for any proposals, to require

reasonable changes in the selected proposal

to more fully achieve the purposes and

objectives of [the] RFP, and to elect not to

enter into a lease agreement, unless FDOT is

fully satisfied that all conditions precedent

have been fully met.

RFP at 7. In addition, prospective proposers were notified that

the

RFP is solely a request for expressions of

interest and statements for feasible

proposals. . . . No contractual or other

legal obligations or relations between FDOT

and any Proposer shall be created except by

and through, in the sole discretion of FDOT,

a negotiated and fully executed lease

agreement between a proposer and FDOT.

In considering any proposals submitted in

response to this RFP, FDOT reserves the

absolute and unfettered discretion to:

* * *

!" Receive and review proposals in

accordance with this RFP, without being

obligated in any way to select the

Proposer or proposal.

!" Request clarification after the dates

and times set out in this RFP from any

one or more of the Proposers with

respect to proposals submitted.

RFP at 28.

10. On March 3, 2003, Petitioner MIC Development LLC

("MDL") timely submitted a proposal in response to the RFP.

MDL's proposal was the only one that FDOT received.

11. MDL is a joint venture between Mallory & Evans

Development LLC and Codina Group, Inc. that was formed

specifically for this procurement. In preparing its proposal,

MDL assembled a team of professionals that possess the necessary

experience and expertise to develop a project of the nature and

magnitude contemplated by the RFP.

12. MDL offered both a base plan, as required, and an

alternative plan, as the RFP permitted. Though its base plan

conformed to FDOT's premises, MDL doubted that landside

operations requiring a substantial amount of space would ever be

moved to the MIC Core, as FDOT had directed proposers to assume.

MDL stated in its response that the prospect was "unlikely that

actual terminal ticketing would occur at the MIC."

13. MDL also expressed in its proposal a desire to assume

overall responsibility for managing the development of the MIC:

The current planning calls for independent

development of MIC-related facilities. We

believe, from both a public——as well as

private——sector perspective, the project

would benefit from having a single point of

responsibility: a Master Developer

responsible for delivering the entire project

on-schedule and within budget. Both the

schedule and the budget would be approved by

FDOT prior to entry into the Master Lease.

. . .

* * *

Therefore, our proposal provides for Master-

Developer funding for the following project

elements: MTAR, RCF and MIC/MIA Connector.

Each of these projects would be turned over

to FDOT upon completion.

Though authorized under the RFP's specifications, MDL's offer to

take control of the management of the entire project, including

pieces outside of the joint development component (e.g. the MTAR,

RCF, and the MIC/MIA Connector), would have expanded the role of

the "master developer" beyond that for which FDOT had planned

when it issued the RFP.

14. Regarding the potential for the project to generate

revenue for the Department, MDL's response was guarded:

After substantial and intense analysis, the

[MDL] team has concluded that the RFP's

approach, while admirable in many ways,

contemplates a project that may not be viable

without substantial, long-term government

subsidies. Why? Because, the "joint

development" elements of the project require

an extraordinary amount of time to develop

into positive revenue generators. The

project economics will not allow for payments

to FDOT until the construction has been

completed; even then, it will be necessary to

ramp up payments over time.

15. MDL's proposal for the base plan was conditioned on

several assumptions, namely:

 Relocation of terminal ticketing and

baggage claim from MIA to the MIC;

 Restriction of access to current airport

terminal areas to official MIA or public

safety-related vehicles or vehicles

entering on-airport decks;

 Verification of market demand for full

build-out of the MIC Hotel/Conference

Center and the MIC Office Buildings;

 Acceptance by FDOT of the Master

Developer-financed and managed,

comprehensive project delivery, as set

forth above, or agreement by FDOT to

assume responsibility for all damages to

Master Developer arising out of delays

associated with currently proposed

project delivery method;

 No Ground Rental payments due to FDOT

until completion of Construction.

16. MDL's alternative plan proposed to re-organize the

joint development uses in ways that MDL believed would make the

project more conducive to commercial endeavors, while at the same

time enhancing the utility and convenience of the transportation

elements. Consistent with its skepticism concerning the putative

need to devote huge amounts of space to landside operations, MDL

offered in its alternative plan to scale down the size of the

area set aside for such purposes. Like the base plan, MDL's

alternative plan was subject to several conditions, to wit:

 Relocation of terminal ticketing and

baggage claim from MIA to the MIC or

mutually acceptable re-planning of the

facility to remove this function and its

associate space from the MIC Core

project scope;

 Restriction of access to current airport

terminal areas to official MIA or public

safety-related vehicles or vehicles

entering on-airport decks;

 Acceptance by FDOT of the Master

Developer-financed and managed,

comprehensive project delivery, as set

forth above or agreement by FDOT to

assume responsibility for all damages to

Master Developer arising out of delays

associated with currently proposed

project delivery method;

 No Ground Rental payments due to FDOT

until completion of Construction.

17. On or about April 2, 2003, the Department sent MDL an

extensive request for clarification of its proposal, which

consisted of 43 numbered questions, some entailing many subparts.

A few days later, MDL informed FDOT that it would submit a formal

written response to the request for clarification on or before

May 2, 2003.

18. Meantime, by letter dated April 22, 2003, an FDOT

district manager reminded the Miami-Dade Aviation Department

("MDAD") that the Department had "initiated the procurement

process for the selection of a Master Developer" with a view

toward "negotiat[ing] a lease agreement with the selected Master

Developer and begin[ning] in earnest the design process for the

MIC Core/transportation hub." In light of that, to "reconfirm

[FDOT's] planning assumptions," MDAD was asked to answer the

following questions regarding its plans for the relocation of

landside functions to the MIC:

1. Does the County/MIA still plan to

relocate selected airport landside facilities

to the MIC Core/transportation hub?

2. If so, what type of landside facilities

would be relocated?

3. What is the approximate timeframe for

this relocation to occur?

19. MDAD's response, delivered via letter dated May 5,

2003, was noncommittal, to say the least. Mostly, the letter

recounted the history of the "MOVE Committee" that had been

appointed by the mayor in 1998 to study, and make recommendations

concerning, the development and financing of the MIC. In this

regard, the letter stated, in pertinent part, as follows:

[V]arious alternatives for transferring

baggage between the MIC and Miami

International Airport (MIA) [were studied].

. . . [A]ll options studied were not

logistically feasible and/or [were] cost

prohibitive. Most importantly, the airlines

expressed no desire to relocate these

functions from the MIA terminal. . . .

[Ultimately, in late 1999, it was] resolved

to allow users and planners to continue to

develop future baggage handling plans for the

short-term and long-term scenarios.

After providing this historical background, the letter concluded:

To date, there has [sic] been no baggage

handling solutions submitted to [MDAD],

airlines, or the Transportation Security

Administration for review and approval.

Furthermore, MDAD's approved Capital

Improvement Program does not provide for the

relocation of landside functions to the MIC.

Please keep us informed as the MIC Core

design progresses.

20. The Department interpreted MDAD's letter as expressing

MDAD's final decision that landside operations would never be

relocated to the MIC Core; throughout these proceedings, the

Department has adhered to this interpretation. The undersigned,

having only MDAD's letter as proof of MDAD's intentions (for no

one from MDAD testified at the hearing), does not detect as much

decisiveness in the text; rather, as the undersigned reads the

letter, MDAD gave an ambiguous, non-responsive answer to FDOT's

specific questions, expressing no enthusiasm for moving landside

operations to the MIC, to be sure, but not quite saying no, thank

you either——at least not forthrightly. Given the importance that

FDOT had attached to the relocation of landside functions to the

MIC Core, and because MDAD's supposed "decision" upset FDOT's

assumptions about MDAD's plans, it puzzles the undersigned that

the Department passively accepted the May 5, 2003, letter as a

definitive position-statement, without aggressively following up

to find out what exactly MDAD had in mind with regard to this

issue. At any rate, the parties have stipulated that MDAD

decided not to move landside functions to the MIC——and so the

undersigned finds that to be the case.

21. There is conflicting evidence regarding the extent to

which MDAD's change of heart concerning landside functions caught

the Department off guard. Yet, whether the letter of May 5,

2003, came as a genuine surprise or not, the Department can

fairly be criticized for having failed to nail down this

important matter before issuing the RFP, an oversight for which

the undersigned can find no explanation in the record. But such

criticism cannot change the fact that, as of May 5, 2003, a major

premise on which the RFP was based had been discredited, making

obsolete the base plan's site organization of the MIC Core.

Without landside functions, the MIC Core probably would not need

to be as large as FDOT had thought, and the planned mix of uses

for the hub would need to be reconsidered.

22. On May 2, 2003, MDL submitted its lengthy, formal

response to FDOT's first request for clarification. The TRC

then met on May 28, 2003, to determine the feasibility of MDL's

proposal, as clarified. At that meeting, the TRC voted in favor

of recommending to the Selection Committee that MDL's proposal be

found feasible.

23. Shortly thereafter, the Selection Committee accepted

the TRC's recommendation. The Department notified MDL of this

decision via an email dated May 30, 2003, which provided in

pertinent part as follows:

On behalf of the [Department], this formal

notification addresses FDOT's determination

of feasibility of [MDL's] proposal . . . .

The Selection Committee, in accordance with

the RFP . . . , has determined that [MDL's]

response and clarification is feasible,

subject to the reservations stated below. In

accordance with the RFP, the proposal will be

evaluated and an oral presentation/interview

will be convened.

This letter also requests that [MDL] provide

clarification of its proposal in response to

the May 5, 2003, letter from [MDAD] . . . .

Specifically, please describe the impact on

your proposal, if any, of the lack of any

airport landside functions being located at

the MIC and any changes that you would make

to the [MDL] proposal.

24. Although the formal notification of feasibility did not

explicitly say so, the Selection Committee's determination

necessarily implied a finding that MDL's proposal was responsive

as well as feasible, because the selection process established

under the RFP required the Selection Committee to determine both

feasibility and responsiveness following the TRC's initial

feasibility determination. The Selection Committee's duty to

determine responsiveness arose from the RFP's prescriptions that

(a) only feasible and responsive proposals would be further

evaluated after the feasibility determination phase (RFP at 25),

and (b) the opportunity to make an oral presentation to the TRC

would be provided, not to all proposers, but to proposers

"receiving notice that their proposals have been determined to be

responsive and feasible" (RFP at 27). 1

25. On June 13, 2003, MDL submitted a response to FDOT's

request for clarification relating to the likely absence of

landside operations at the MIC. Given that its alternative plan

took account of this contingency, MDL naturally viewed MDAD's

decision as "not unexpected" and urged that the situation be

embraced as a positive opportunity to place additional revenue

generating, commercial uses in and around the MIC Core.

26. The TRC met on July 9, 2003, to consider this second

clarification of MDL's response to the RFP. By this point, FDOT

had a number of concerns about moving forward with the

procurement, concerns that were making the Department reluctant

to proceed with formal negotiations. Instead of strictly

following the prescribed multi-step evaluation process, which

contemplated that formal negotiations with the first ranked

proposer would commence after (a) the TRC had evaluated, scored,

and ranked the feasible, responsive proposals, and (b) the

Selection Committee had established the official ranking thereof

based on the TRC's recommendation, the Department, acting through

the TRC as its agent, effectively engaged in informal

negotiations with MDL, conflating the evaluation and negotiation

phases. In retrospect, it can be seen that a de facto

negotiation phase had begun with FDOT's initial request for

clarification on April 2, 2003, which was the first of several

such requests that were tantamount to bargaining.

27. These negotiations were decidedly one-sided. Because

FDOT evidently was in no hurry at that time to complete the joint

development component of the MIC, it was prepared to tolerate, as

an alternative to accepting conditions in MDL's proposal that

were believed to be disadvantageous, the uncertainty and delay

that would follow from rejecting all proposals and starting over

with a new RFP, a course of action which, despite its drawbacks,

at least held out the hope of securing a better deal. As the

only proposer, moreover, MDL was forced to compete, in effect,

not against any actual proposal, but against a hypothetical one

more to the Department's liking, which might (or might not)

materialize in a future procurement. Occupying the superior

bargaining position, the Department was able to ask MDL

repeatedly for more information, and MDL had no choice (if it

wanted to remain under consideration for the contract) but to

comply.

28. It is no surprise, therefore, that the Department's

requests "for clarification" were in essence demands that MDL

make concessions regarding aspects of its proposal that the

Department was not inclined to accept. Broadly speaking, the

major sticking points stemmed from: (1) the apparent need to

consider a wider variety of commercial uses for the MIC Core, to

compensate for the absence of landside functions (and attendant

loss of passenger traffic therefrom); (2) MDL's desire to be in

charge of managing the construction of entire project, including

the transportation elements; and (3) disagreements regarding the

amount and timing of ground rental payments.

29. To give a flavor of the parties' disagreements without

going into great detail, the following is a very brief sketch.

Regarding the mix of uses, MDL believed that, in the interest of

making the joint development a financial success, it was

necessary to explore such commercial options as residential

apartments and "big box" retail, which could potentially bring

people (i.e. customers) to the MIC——an especially critical need

if landside operations would not be the draw. For its part, FDOT

was skeptical about the market demand for these particular uses

and believed that they might be inconsistent with the overall

concept, if not legally impermissible.

30. MDL consistently maintained that, in order to make

reasonable projections regarding the timing and amount of income

expected to flow from the commercial elements——projections which

were necessary, among other reasons, to secure project

financing——a schedule for completing the various phases of the

MIC would need to be drawn up and adhered to; furthermore, if the

construction schedule were not met, MDL would be exposed to

liability for damages caused by the delay. MDL was unwilling to

assume the risks of loss arising from any delays whose causes it

could not control. MDL's solution was to take control of the

entire MIC construction project, which would put MDL in a

position to bring about the timely completion of the various

phases——or be directly responsible for any delays.

Alternatively, MDL wanted FDOT to give performance guarantees,

effectively putting the risk of loss from construction delays on

FDOT. FDOT, however, was reluctant to surrender complete control

of the project to MDL, and it refused to assume the risk of loss

from delays.

31. On the matter of ground rents, the parties were never

able to agree on the amounts MDL would pay. Probably the bigger

point of contention, though, concerned the timing of the

payments. MDL held that rents could not become due and payable

until various phases of the construction were completed, when

anticipated income streams would begin to flow. FDOT, in

contrast, insisted that ground rent be payable from the date of

the execution of the lease, including during the "holding period"

when the joint development component would not be generating

revenue for the lessee.

32. These points were not resolved at the TRC meeting on

July 9, 2003; to the contrary, more questions were raised,

resulting in FDOT sending yet another request for information to

MDL, to which the latter responded by memorandum dated

September 19, 2003. The TRC met again——and for the last time——on

October 27, 2003, to consider MDL's latest submission. The TRC

reached no conclusions and made no recommendations, leaving the

still unresolved points of concern unresolved. Practically

speaking, the selection process had stalled.

33. After that, there would be a couple of meetings,

scheduled at the instance of MDL, between the principals of MDL

and public officials who had not been directly involved in the

selection process as members of either the TRC or the Selection

Committee. At the first of these, which occurred on November 4,

2003, FDOT management and MDL representatives discussed the

Department's concerns and considered ways to jump start the

procurement. Agreeing that an independent appraisal of the

property might help bring the parties together on the issue of

ground rent, it was decided at this meeting that such an

appraisal would be conducted.

34. For reasons not entirely clear, however, the appraisal

process did not begin straightaway, and consequently MDL arranged

through the Governor's Office to meet with Secretary Simon of the

Department of Management Services. This meeting took place

sometime in February 2004. Two months later, in April 2004, the

Department initiated an appraisal process that continued through

the end of the year, resulting in a pair of appraisal reports,

one that was issued in December 2004, another in February 2005.

35. The appraisals did not resolve the outstanding issues

relating to ground rent. Nor, between November 2003 and February

2005, had the parties been able to reach agreement on the other

points of contention. At the risk of oversimplifying some fairly

complex issues, it is reasonably accurate to say that, as of

February 2005, the Department remained unconvinced that, among

other things: (1) MDL's proposed mix of uses for the MIC Core

was appropriate; (2) placing MDL in overall control of

construction management would add value to the project; and (3)

the economics of the joint development project required that

ground rents not become due and payable until after the

completion of various phases of the construction. In short, the

parties had reached an impasse.

36. On September 20, 2005, the Selection Committee met and

determined, by a unanimous vote, to reject all proposals.

Ultimate Factual Determinations

37. MDL argues that the process by which FDOT arrived at

its decision to reject all bids was arbitrary and flawed. MDL

complains, in part, that the TRC actively worked against MDL

because some of the TRC's members were (and as of the final

hearing continued to be) private consultants to FDOT on the MIC

project who have earned substantial fees for providing the

Department with construction management services and are in line

to continue receiving such fees——unless a firm such as MDL is

chosen to take control of the entire project or portions thereof.

In other words, MDL alleges that the TRC had a conflict of

interest that prevented it from fairly and objectively analyzing

MDL's proposal.

38. MDL contends, additionally, that in rejecting all

proposals, the Section Committee——which did not act on a

recommendation of the TRC——relied on false or incomplete

information concerning MDL's proposal, and hence behaved

irrationally or capriciously. In furtherance of this argument,

MDL points out——correctly——that the minutes of the Selection

Committee's relatively brief (less than 30 minutes) meeting are

silent as to the grounds for rejecting all proposals.

39. MDL's criticisms of the process, though ultimately not

decisive, are not trivial either. For instance, FDOT in fact has

paid its consultants nearly $60 million in fees for work on the

MIC. While it is understandable that, in carrying out the joint

development project, the Department would desire and solicit the

advice of its trusted and knowledgeable consultants, it is also

true that placing some of these consultants on a review panel

responsible for selecting a developer who might propose to assume

some portion of the consultants' responsibilities gives rise to

the appearance, at least, of a potential conflict of interest.

To avoid even the appearance of such a conflict, the Department,

in exercising its wide discretion over procurement decisions,

could have used an independent "board of advisors" for the

technical review of proposals, as permitted under Section

337.251(3), Florida Statutes, and Florida Administrative Code

Rule 14-109.0011(4)(d)1. While the undersigned believes that, as

a general proposition, relying on an outside board of advisors is

a wise approach, which is no doubt why the legislature authorized

the use of boards of advisors in this type of procurement, it is

nevertheless determined that the Department's appointment of

private consultants to serve on the TRC was not an abuse of

discretion, but a legally permissible policy decision; there is

no persuasive evidence that FDOT acted dishonestly, fraudulently,

or arbitrarily in this regard. 2

40. There is some truth as well in MDL's charge that the

selection process did not unfold in strict conformity to the RFP.

What the evidence fails to establish, however, is that the

process was so compromised as to produce an arbitrary (or

otherwise impermissibly founded) decision, the purpose or effect

of which was to defeat the object and integrity of competitive

procurement. As the undersigned sees it, the selection process

was not undone by malfeasance or misfeasance, as MDL posits;

instead, the process was modified somewhat in consequence of

FDOT's receipt of just one proposal. Because there was only one

proposal to review, some elements of the evaluation process, e.g.

scoring and ranking, were essentially superfluous. Indeed, once

feasibility and responsiveness were decided, the real question

became whether FDOT and MDL could come to a meeting of the minds

with regard to the lease agreement pursuant to which the joint

development would occur. Accordingly, in an honest attempt to

answer the salient question, the TRC engaged in negotiations with

MDL over the points of the latter's proposal that the Department

considered most problematic. While this deviated from the RFP,

the TRC's conduct of de facto negotiations was not unfair to MDL,

even though FDOT clearly had the upper hand in the exchange,

because the informal bargaining kept the process alive at times

when the alternative would have been simply to reject all

proposals and start over. There is no persuasive evidence that

the selection process, though imperfect, was illegal, arbitrary,

dishonest, or fraudulent.

41. As for the Selection Committee's decision to reject all

proposals, while the grounds therefor should have been better

documented (in the minutes, for example), the record as a whole

makes clear the numerous reasons behind the committee's action.

In a nutshell, FDOT was dissatisfied with certain elements of

MDL's proposal, as set forth above, and believed that a more

attractive offer might be elicited if another request for

proposals were issued. Being under no apparent time-pressure to

do the deal, the Department took hard bargaining positions and

basically refused to budge. Whether the Department will later

regret releasing a bird in the hand, time will tell. But on

business decisions regarding matters such as the mix of uses for

the MIC Core, the timing and amount of ground rent, and control

of the construction management, the Department has wide

discretion, to which the undersigned must defer, lest he

substitute his judgment for the agency's. The wisdom——and even,

to a large degree, the reasonableness——of the Department's

judgments in these matters is not subject to review. The issue,

rather, is whether the ultimate decision was illegal, arbitrary,

dishonest, or fraudulent. Here, the evidence fails to persuade

that it was.

42. To the contrary, the evidence establishes that FDOT had

several honest and rational grounds for rejecting all proposals.

The first——and simplest——reason was that only one response to the

RFP had been received. By itself, that fact was sufficient to

warrant the decision not to proceed. Beyond that, however, the

Department articulated legitimate reservations about MDL's

proposal——reservations grounded in logic and reason, not whim——

which caused the Department to conclude in good faith that MDL's

proposal failed to meet its (FDOT's) expectations. Now, it might

turn out that the Department's logic is flawed, or that its

present expectations are unrealistic——indeed, the day might come

when FDOT regrets having turned MDL down. But nothing in the law

or the RFP compelled the Department to accept, for example, MDL's

condition that responsibility for overall construction management

be ceded to MDL, or MDL's offer to begin paying ground rent, not

upon the signing of a lease, but only as various phases of the

construction were completed. MDL's business decision to re-

advertise the joint development project in hopes of finding a

better deal might prove to be brilliant, or it might someday be

thought ill-advised, but it was not illegal, arbitrary,

dishonest, or fraudulent.

CONCLUSIONS OF LAW

43. DOAH has personal and subject matter jurisdiction in

this proceeding pursuant to Sections 120.569 and 120.57(1),

Florida Statutes, and the parties have standing.

44. Section 120.57(3)(f), Florida Statutes, provides that

in a proceeding brought to protest the intended rejection of all

competitive proposals, the standard of review shall be whether

the proposed agency action is "illegal, arbitrary, dishonest or

fraudulent." This standard derives from Department of

Transportation v. Groves-Watkins Constructors , 530 So. 2d 912,

914 (Fla. 1988), a case in which the Florida Supreme Court held

that the administrative law judge's "sole responsibility [in

reviewing a decision to reject all bids] is to ascertain whether

the agency acted fraudulently, arbitrarily, illegally or

dishonestly."

45. The burden of proof rests with the party opposing the

proposed agency action. See State Contracting and Engineering

Corp. v. Department of Transportation , 709 So. 2d 607, 609 (Fla.

1998). As the protesting party, MDL must sustain its burden of

proof by a preponderance of the evidence. Department of

Transportation v. J.W.C. Co., Inc ., 396 So. 2d 778, 787 (Fla. 1st

DCA 1981).

46. In Scientific Games, Inc. v. Dittler Brothers, Inc .,

586 So. 2d 1128, 1131 (Fla. 1st DCA 1991), the First District

Court of Appeal described the deference to be accorded an agency

in connection with a competitive procurement:

The Hearing Officer need not, in effect,

second guess the members of the evaluation

committee to determine whether he and/or

other reasonable and well-informed persons

might have reached a contrary result.

Rather, a "public body has wide discretion "

in the bidding process and "its discretion,

when based on an honest exercise" of the

discretion, should not be overturned "even if

it may appear erroneous and even if reasonable persons

may disagree."

(Citations omitted; emphasis in original).

47. In Gulf Real Properties, Inc. v. Department of Health

and Rehabilitative Services , 687 So. 2d 1336, 1338 (Fla. 1st DCA

1997), the court upheld an agency's intended rejection of all

bids, stating that "an agency's rejection of all bids must stand,

absent a showing that the 'purpose or effect of the rejection is

to defeat the object and integrity of competitive bidding.'"

48. An arbitrary decision is one that is not supported by

facts or logic, or is despotic. Agrico Chemical Co. v.

Department of Environmental Regulation , 365 So. 2d 759, 763 (Fla.

1st DCA 1978). Under the arbitrary and capricious standard, "an

agency is to be subjected only to the most rudimentary command of

rationality. The reviewing court is not authorized to examine

whether the agency's empirical conclusions have support in

substantial evidence." Adam Smith Enterprises, Inc. v. State

Department of Environmental Regulation , 553 So. 2d 1260, 1273

(Fla. 1st DCA 1989). Still,

the reviewing court must consider whether the

agency: (1) has considered all relevant

factors; (2) has given actual, good faith

consideration to those factors; and (3) has

used reason rather than whim to progress from

consideration of each of these factors to its

final decision.

Id.

49. The second district has supplied the following test for

determining whether a decision was arbitrary: "If an

administrative decision is justifiable under any analysis that a

reasonable person would use to reach a decision of similar

importance, it would seem that the decision is neither arbitrary

nor capricious." Dravo Basic Materials Co., Inc. v. State

Department of Transportation , 602 So. 2d 632, 634 n.3 (Fla. 2d

DCA 1992). As the court observed, this "is usually a fact-

intensive determination." Id. at 634.

50. The undersigned believes that a reasonable person,

seeking competitive proposals on a major construction project,

could reasonably decide, after receiving just one proposal, that

he would prefer, as an alternative to entering presently into a

contract with the sole proposer, to repeat the solicitation

process in hopes of obtaining a wider selection of proposals from

which to choose, even though doing so will cause delay, not to

mention put at risk the only proposal he has, while offering no

guarantee that he will wind up with a better deal. Thus, the

undersigned has concluded that FDOT's decision to reject all

proposals in this instance was justifiable, if for no other

reason, on the ground that MDL's proposal was the only one

received. See Rosiek Construction Co., Inc., v. Department of

Transportation , 2005 Fla. Div. Adm. Hear. LEXIS 1110, *24 (Fla.

Div. Adm. Hear. 2005)("DOT did not act illegally or arbitrarily

when it rejected the [protester's] bid solely on the basis that

it was the only bid received.").

51. Moreover, the evidence shows, as found above, that FDOT

considered other relevant factors and determined, not

whimsically, but on the basis of logic and reasoning, that MDL's

proposal was insufficiently attractive under the circumstances——a

decision that falls squarely within the agency's wide discretion.

Accordingly, as set forth in the Findings of Fact, the trier has

determined as matter of ultimate fact that FDOT's decision was

not illegal, arbitrary, dishonest, or fraudulent.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department enter a final order

affirming that its decision to reject all proposals was not

illegal, dishonest, fraudulent, or arbitrary.

DONE AND ENTERED this 18th day of February, 2007, in

Tallahassee, Leon County, Florida.

S

___________________________________

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 18th day of February, 2007.

ENDNOTES

1 / In its Proposed Recommended Order, the Department argues at

length that MDL's proposal was non-responsive and hence subject

to rejection on that basis. As far as the undersigned can tell,

however, this rationale was not invoked during the run-up to the

instant litigation, nor was it raised previously herein.

Tellingly, the parties' Joint Pre-Hearing Stipulation does not

identify any issues of law or fact concerning the alleged non-

responsiveness of MDL's proposal. Doubting the propriety of

taking up this issue, of which MDL had no advance notice, the

undersigned will not discuss the subject of responsiveness in

detail. Suffice it to say that there is no persuasive evidence

that the Selection Committee's implicit determination regarding

the responsiveness of MDL's proposal was in error, much less

illegal, arbitrary, dishonest, or fraudulent.

2 / As an aside, if the instant procurement were as thoroughly

tainted by the consultants' participation as MIC contends, one

permissible (though not the only conceivable) remedy for that

would be——ironically——to scuttle the procurement and start anew.

COPIES FURNISHED :

Joseph M. Goldstein, Esquire

Shutts & Bowen, LLP

Wachovia Center, Suite 2100

200 East Broward Boulevard

Fort Lauderdale, Florida 33301

Thomas Barnhart, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

James C. Myers, Agency Clerk

Department of Transportation

Hayden Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Pamela Leslie, General Counsel

Department of Transportation

Hayden Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Stephanie Kopelousos, Interim Secretary

Department of Transportation

Hayden Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450

NOTICE OF RIGHT TO SUBMIT 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 should be filed with the agency that will

issue the Final Order in this case.