07-001242BID The Volunteer Way Inc. vs. Department Of Agriculture And Consumer Services Status: Closed Recommended Order on Tuesday, May 8, 2007.

Summary: Petitioner`s protest as to the award of the bid to another party is rejected.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THE VOLUNTEER WAY INC. , )

)

Petitioner , )

)

vs. ) Case No. 07 - 1242BID

)

DEPARTMENT OF AGRICULTURE AND )

CONSUMER SERVICES , )

)

Respondent . )

)

RECO MMENDED ORDER

On April 9, 2007, a hearing was held via video

teleconference with sites in Tallahassee and Tampa, Florida,

pursuant to the authority provided in Section 120.569 and

Subsection 120.57(1), Florida Statutes (2006) . 1 The case was

considered by R. Bruce McKibben, Administrative Law Judge ,

Division of Administrative Hearings (DOAH) .

APPEARANCES

For Petitioner: Lester Cypher, pro se

The Volunteer Way, Inc.

7820 Congress Street

New Port Richey, Florida 34653

For Respondent: Stephen M. Donelan, Esquire

Department of Agriculture

and Consumer Services

509 Mayo Building

407 South Calhoun Street

Tallahassee, Florida 32399 - 0800

STATEMENT OF THE ISSUE

Whether the Department of Agriculture and Consumer

Services' (the Department) decision to award the contract

contemplated in RFP No. DM - 06/07 - 30 is contrary to the

Department's governing statutes, the Department's rules and

policies or the proposal specifications.

PRELIMINARY STATEMENT

On February 5, 2007, the Department issued its notice of

intent to award RFP No. DM - 06/07 - 30 to Suncoast Harvest Food

Bank, Inc. (Suncoast). On M arch 1, 2007, Petitioner filed a

letter with the Department indicating its intent to challenge

the award. On that same date, a Petition was filed with the

Department formally challenging the award to Suncoast.

On March 15, 2007, the Department forwarded t he Petition to

the DOAH. At the final hearing, Joint Exhibits numbered 1 and 2

were admitted. Petitioner presented the testimony of one

witness, Lester Cypher, it's chief executive officer. The

Department presented one witness, Gloria Van Treese, c hief of

the Department's Bureau of Purchasing. Petitioner's E xhibits 1

and 2 were admitted into evidence.

A one - volume hearing T ranscript was filed with the D OAH on

April 20, 2007. Each party timely filed proposed findings of

fact and conclusions of law. Bot h parties' Proposed Recommended

Orders have been considered in the preparation of this

Recommended Order.

FINDINGS OF FACT

The first ten findings of fact below were stipulated to by

the parties.

1. RFP No. DM - 06/07 - 30 was initially posted on October 30,

2006.

2. No notice of protest or formal written protest was

filed with Respondent relative to the terms, conditions or

specifications contained in the RFP within the time limits set

forth in Subsection 120.57(3)(b), Florida Statutes.

3. Response awards w ere posted by the Department on

February 5, 2007.

4. Two responses were received for the distribution of

food in Pasco County under The Emergency Food Assistance Program

(TEFAP); one from Petitioner and one from Suncoast.

5. Respondents to the RFP were awarded five points for

providing proof of insurance for the value of TEFAP food in

their food storage facilities at the time of their respective

response submissions.

6. Petitioner’s response was initially ranked higher than

Suncoast’s response.

7. Sunc oast timely filed its Formal Written Protest on

February 15, 2007, alleging that Petitioner was erroneously

awarded five (5) points for having proof of insurance for the

value of TEFAP food in Petitioner’s storage facility at the time

of Petitioner’s respo nse submission.

8. P etitioner did not have insurance on the value of TEFAP

food in Petitioner’s storage facility at the time of its

response submission.

9. Respondent deducted the previously awarded five points

causing Petitioner’s score to drop below th at of Suncoast.

10. Petitioner has timely filed its Protest and bond or

other security.

11. The RFP addressed a proposal under TEFAP for the

receipt, storage, delivery, and distribution of USDA donated

commodities for the program. The geographic area of the RFP

relevant to this proceeding is Pasco County.

12. The Agency employed six evaluators to review various

parts of the bids submitted.

13. At page 53 of its RFP response, Petitioner indicated

that it does carry insurance for the value of TEFAP foo ds in its

own storage facility. Th is statement was a mistake; Petitioner

did not have TEFAP foods in a storage facility at the time of

the bid. Rather, Petitioner meant to indicate that it would

i nsure the foods during the term of the contract.

Terms of the RFP

14. The RFP is a 72 - page document which includes

13 Attachments. The RFP contains terms and conditions, as well

as definitions to be considered by all bidders.

15. At page 7, paragraph 34 of the RFP, the following

language appears:

During the Contract term, the Contractor at

its sole expense shall provide commercial

insurance of such a type and with such terms

and limits as may be reasonably associated

with the Contract. Providing and

maintaining adequate insurance is a material

obligation of the Contractor. Upon request,

the Contractor shall provide certificate of

insurance. The limits of coverage under

each policy maintained by the Contractor

shall not be interpreted as limiting the

Contractor's ability and obligations under

the Contract. All insurance policies shall

be through insurers authorized or eligible

to write policies in Florida.

16. The "Contract term" is apparently not defined in the

RFP, per se, but the following definition appears in the Special

Terms, Conditions and Specifi cations at page 12:

Contract Period The anticipated contract

period will be from October 1, 2007 through

September 20, 2008.

17. Paragraph 13 at page 14 of the RFP states:

[Bidder must] [p] rovide insurance on the

content of the organization's warehouse or

storage facility. Insurance must be in

sufficient amount equal to the maximum value

of USDA commodities in storage at any one

time at the organizations ['] owned or

contracted storage facility.

18. Paragraph 5 on page 17 addresses food storage. The

re levant portions of that paragraph state:

b. Any locally negotiated warehouse

contracts for storage must provide adequate

insurance coverage equal to the maximum

value of TEFAP food which would be stored at

any one time by the commercial warehouse.

Proof of insurance must be submitted to the

Bureau annually with the TEFAP contract

renewal.

* * *

d. Contractor must submit a copy of any

locally negotiated warehouse contract to the

Bureau within 60 days of the effective date

of the contract.

19. Insurance coverage for commodities is addressed once

again in the Special Provisions section beginning at page 22 of

the RFP, which provides in pertinent part:

A. Responsibilities - The Contractor

accepts full responsibility inclusive of its

sub - distrib uting sites for compliance with

all provisions of this contract, including

liability for any TEFAP food lost through

negligence, underutilization, etc. or for

any reimbursement received for any

fraudulently or inadequately documented

costs. Contractor wil l insure the contents

of the warehouse storing USDA commodities as

well as the physical structure itself and

provide proof of insurance to the Bureau

annually with the contract renewal.

Contractor shall comply with all applicable

State and local fire safe ty, food storage/

handling requirements and health codes.

* * *

J. Insurance - Storage facility: The

contractor shall maintain insurance coverage

in an amount equal to the maximum value of

TEFAP commodities which would be stored in

its own ware house or storage facility at any

one time.

Insurance Coverage

20. In its response to the RFP, Petitioner understood the

above provisions concerning insurance to contemplate c overage

during the term of the c ontract. Its submitted responses were

intended to show that it would obtain all necessary insurance

coverage for the TEFA B foods during the term of the c ontract.

21. Section 5 of the RFP, beginning at page 52, addresses

the applicant's storage and distribution capabilities. In its

response, Petitio ner identified a warehouse that it currently

owns. At page 53, the RFP then asks whether the applicant

carries insurance for the value of TEFAP foods in its storage

facility. The question also asks the amount of coverage in

existence and asks for proof o f insurance.

22. In response to that question, Petitioner asserted the

existence of coverage at the time of the response when in fact

it had none. Petitioner did not intentionally falsify the

response; rather, it believed at that time that insurance

cove rage was in place at its storage facility. Petitioner had

previously managed TEFAP foods and had always maintained

insurance as required. It believed the prior insurance policy

was still in place. As it turned out, its insurance agency had

recently gone out of business, and Petitioner did not have the

coverage it believed to exist. Nonetheless, its response to the

RFP was in error.

23. Nothing in the RFP required a respondent to have

insurance in place. A respondent was given additional credit if

it had insurance, but no points were removed for not having

existing insurance. The additional credit was based on the

Department's belief that having insurance coverage in place was

an indication of fiscal responsibility.

24. When the Department ascertaine d that Petitioner did

not actually have current insurance coverage, it undertook a re -

evaluation of the bids. Petitioner's initial scores were

reduced five points by each reviewer. In the initial review

Petitioner had outscored Suncoast 107.5 to 107.1 in the average

score category. Upon re - evaluation, Suncoast's score remained

unchanged but Petitioner's score dropped to 102.5, thus

finishing second to Suncoast.

25. Petitioner had responded to the question at page 53

only in part. While it stated that i nsurance was in place,

Petitioner did not fill in the amount of coverage. Rather,

Petitioner attached a copy of the Declarations Page from its

last known policy. It is difficult to ascertain how that was

responsive to the question concerning insurance c overage.

CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has

jurisdiction over the subject matter of and the parties to this

action in accordance with Section 120.569 and Subsection

120.57(1), Florida Statutes.

27. Petitioner has the burd en to establish that the

decision to award the contract to Suncoast must be invalidated.

A de novo hearing was conducted to evaluate the action taken by

the Department. See § 120.57(3)(f), Fla . Stat. "In this

context, the phrase 'de novo hearing' is use d to describe a form

of intra - agency review." State Contracting and Engineering

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

1st DCA 1998). Th e A dministrative L aw J udge may receive

evidence, as with any hearing held pursuant to S ubs ec tion

120.57(1), Florida Statutes, but the purpose of the proceeding

is to evaluate the action taken by the agency based on the

information available to the agency at the time it took the

action. Id.

28. Agencies enjoy wide discretion when it comes to

sol iciting and accepting proposals, and , an agency's decision,

when based upon an honest exercise of such discretion, will not

be set aside even where it may appear erroneous or if reasonable

persons may disagree. Baxter's Asphalt and Concrete, Inc. v.

Depar tment of Transportation , 475 So. 2d 1284, 1287 (Fla. 1st

DCA 1985); Capeletti Brothers, Inc. v. State, Department of

General Services , 432 So. 2d 1359, 1363 (Fla. 1st DCA 1983).

S ubs ection 120.57(3)(f) , Florida Statutes, establishes the

standard of proof as to whether the proposed action was clearly

erroneous, contrary to competition, arbitrary or capricious.

29. A decision is considered to be clearly erroneous when

although there is evidence to support it, after review of the

entire record , the tribunal is left with the definite and firm

conviction that a mistake has been committed. United States v.

U.S. Gypsum Co. , 333 U.S. 3 6 4, 395 (1948). An agency action is

capricious if the agency takes the action without thought or

reason or irrationally. Agency action is arbitrary if it is not

supported by facts or logic. See Agrico Chemical Co. v. State

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

(Fla. 1st DCA 1978).

30. To the extent that Petitioner is challenging the

policies of Respondent, a nd the procedures for evaluating the

proposals, Petitioner's argument must fail. In order to

challenge the adequacy of the selection procedures, Petitioner

must have filed a challenge to the RFP specifications. Having

failed to do so, it cannot challenge the adequacy of those

procedures in this proceeding. Capeletti Brothers, Inc. v.

Department of Transportation , 499 So. 2d 855 (Fla. 1st DCA

1986).

31. Much of Petitioner's challenge is not, in reality, a

challenge to the actions of the agency in evaluat ing the

proposals. It is a challenge to the construction of the RFP

itself, and whether the insurance requirement contemplates

purchasing insurance prior to the term of the contract.

32. Petitioner takes issue with the Department's awarding

of points for some bidders who already own or lease storage

facilities while denying points to bidders who choose to acquire

the facilities only upon approval. There is no requirement in

the RFP that insurance has to already exist. Rather, the plain

language of the R FP is that insurance is required during the

term of the contract. However, Respondent elucidated a valid

rationale for awarding points to applicants with insurance

already in place: Those applicants indicate a level of fiscal

responsibility deemed prefe rable to Respondent.

33. Respondent's reduction of Petitioner's score due to

lack of insurance is reasonable and consistent with the RFP.

The Department's decision is not contrary to its governing

statutes, rules or policies.

RECOMMENDATION

Upon consider ation of the foregoing Findings of Fact and

Conclusions of Law, it is

RECOMMENDED that a final order be entered dismissing

Petitioner's Formal Written Protest.

DONE AND ENTERED this 8th day of May , 2007 , in Tallahassee,

Leon County, Florida.

S

R. BRUCE MCKIBBEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.u s

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of May , 2007 .

ENDNOTE

1/ All references to Florida Statutes are to Florida Statutes

(2006), unless otherwise indicated.

COPIES FURNISHED :

Stephen M. Donelan, Esquire

Dep artment of Agriculture

and Consumer Services

509 Mayo Building

407 South Calhoun Street

Tallahassee, Florida 32399 - 0800

Lester Cypher

The Volunteer Way, Inc.

7820 Congress Street

New Port Richey, Florida 34653

Richard Ditschler, General Counsel

D epartment of Agriculture

and Consumer Services

407 South Calhoun Street, Suite 520

Tallahassee, Florida 32399 - 0800

Honorable Charles H. Bronson

Commissioner of Agriculture

Department of Agriculture

a nd Consumer Services

The Capitol, Plaza Level 10

Ta llahassee, Florida 32399 - 0810

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.