10-000134BID Sunshine Towing At Broward, Inc. vs. Department Of Transportation Status: Closed Recommended Order on Tuesday, April 6, 2010.

Summary: Respondent's intended decision to award contract for towing and emergency roadside services to a corporation whose proposal suffered from a minor irregularity was not clearly erroneous, arbitary or capricious, or contrary to competion.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUNSHINE TOWING @ BROWARD, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 10-0134BID

)

DEPARTMENT OF TRANSPORTATION, )

) )

Respondent, )

)

and )

)

ANCHOR TOWING AND MARINE OF )

BROWARD, INC., )

)

Intervenor.

)

RECOMMENDED ORDER

This case came before Administrative Law Judge John G.

Van Laningham for final hearing on February 22, 2010, in Fort

Lauderdale, Florida.

APPEARANCES

For Petitioner: Mitchell A. Bierman, Esquire

Matthew H. Mandel, Esquire

Weiss Serota Helfman Pastoriza

Cole & Boniske, P.L.

2525 Ponce de Leon Boulevard

Suite 700

Coral Gables, Florida 33134-6045

For Respondent: C. Denise Johnson, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

For Intervenor: Miguel A. De Grandy, Esquire

Miguel De Grandy, P.A.

Douglas Entrance

800 Douglas Road, Suite 850

Coral Gables, Florida 33134

Stephen M. Cody, Esquire

Stephen Cody, P.A.

16610 Southwest 82 Court

Palmetto Bay, Florida 33157

STATEMENT OF THE ISSUES

The issues in this bid protest are, first, whether, as

Petitioner alleges, Intervenor's failure to attach copies of

"occupational licenses" to its proposal was a deviation from the

requirements of the Request for Proposal; second, whether any

such deviation was material; and third, whether Respondent's

preliminary decision to award Intervenor the contract at issue

was clearly erroneous, arbitrary or capricious, or contrary to

competition.

PRELIMINARY STATEMENT

On September 18, 2009, Respondent Department of

Transportation issued Request for Proposal No. RFP-DOT-09/10-

4007FS for the purpose of soliciting proposals on a contract for

towing and emergency roadside services. The Department received

four proposals, including one from Petitioner and one from

Intervenor. On November 30, 2009, the Department announced its

intent to award the subject contract to Intervenor, whose

proposal, though slightly more expensive than Petitioner's, had

received the highest total score during the evaluation.

Petitioner filed a formal written protest of the intended

award on December 10, 2009, alleging that Intervenor's proposal

should be rejected as nonresponsive. The case was referred to

the Division of Administrative Hearings ("DOAH"), where the

protest petition was filed January 12, 2010. Several days

later, the undersigned granted Intervenor's Petition to

Intervene on the side of Respondent.

The final hearing took place on February 22, 2010, as

scheduled with the agreement of the parties. At hearing, the

parties stipulated to a number of facts as set forth in their

Joint Pre-Hearing Statement.

In its case, Petitioner elicited testimony from Fernicia

Smart, who was the Department's purchasing agent for the instant

procurement. In addition, Petitioner's Exhibits 1-9, 11, and

13-15 were received in evidence. The Department presented the

testimony of Gaetano Francese, the project manager, and offered

no exhibits. Intervenor called one witness: Ann Margaret

Ramos, one of Petitioner's principals. Intervenor also

introduced Intervenor's Exhibits 5, 6, and 8, which were

admitted. Finally, at Intervenor's request, the undersigned

took official recognition of the Amended Recommended Order

entered in Sunshine Towing, Inc. v. Department of Transportation

and Anchor Towing, Inc. , DOAH Case No. 06-2451BID, 2006 Fla.

Div. Adm. Hear. LEXIS 550 (Fla.Div.Admin.Hrgs. Nov. 27, 2006).

The final hearing transcript was filed on March 10, 2010,

making the Proposed Recommended Orders due on March 22, 2010,

pursuant to the schedule established at the conclusion of the

final hearing. Each party timely filed a Proposed Recommended

Order. All of the parties' post-hearing submissions were

carefully considered during the preparation of this Recommended

Order.

Unless otherwise indicated, citations to the Florida

Statutes refer to the 2009 Florida Statutes.

FINDINGS OF FACT

1. On September 18, 2009, Respondent Department of

Transportation ("Department") issued Request for Proposal No.

RFP-DOT-09/10-4007FS (the "RFP"). Through the RFP, which is

entitled, "Treasure Coast Road Ranger Service Patrol," the

Department solicited written proposals from qualified providers

who would be willing and able to perform towing and emergency

roadside services on Interstate 95 in Martin County, St. Lucie

County, and Indian River County.

2. The Department intended to award a three-year contract

to the "responsive and responsible Proposer whose proposal is

determined to be the most advantageous to the Department." The

Department anticipated that the contract would have a term

beginning on December 1, 2009, and ending on November 31, 2012.

The annual contract price was not to exceed $1.59 million.

Proposals were due on October 13, 2009.

3. Four firms timely submitted proposals in response to

the RFP, including Petitioner Sunshine Towing @ Broward, Inc.

("Sunshine") and Intervenor Anchor Towing and Marine of Broward,

Inc. ("Anchor"). An evaluation ensued, pursuant to a process

described in the RFP, during which the Department rejected two

of the four proposals for failing to meet minimum requirements

relating to technical aspects of the project. As a result,

Sunshine and Anchor emerged as the only competitors eligible for

the award.

4. Sunshine offered to perform the contractual services

for an annual price of $1,531,548. This sum was less than the

price that Anchor proposed by $46,980 per year. Despite

Sunshine's lower cost, Anchor nevertheless edged Sunshine in the

final score, receiving 92.86 points (out of 100) from the

Department's evaluators, to Sunshine's 87.75. On November 30,

2009, the Department duly notified the public of its intent to

award the contract to Anchor.

5. Sunshine promptly initiated the instant protest,

whereby Sunshine seeks to have Anchor's proposal disqualified as

nonresponsive, in hopes that the Department will then award the

contract to Sunshine as the highest-ranked (indeed the sole)

responsive proposer. Sunshine alleges that Anchor's proposal

failed to conform strictly to the specifications of the RFP,

principally because Anchor did not attach copies of its

"occupational licenses" to the proposal. Anchor insists that

its proposal was responsive but argues, alternatively, that if

its proposal deviated from the specifications, the deviation was

merely a minor irregularity which the Department could waive.

Anchor further contends that Sunshine's proposal contains

material deviations for which it should be deemed nonresponsive.

The Department takes the position that Anchor's failure to

attach "occupational licenses" was a minor irregularity that

could be (and was) waived. 1

6. The RFP includes a "Special Conditions" section wherein

the specifications at the heart of this dispute are located. Of

particular interest is Special Condition No. 8, which specifies

the qualifications a provider must have to be considered

qualified to perform the services called for under the contract

to be awarded. Special Condition No. 8 provides as follows:

8) QUALIFICATIONS

8.1 General

The Department will determine whether the

Proposer is qualified to perform the

services being contracted based upon their

proposal demonstrating satisfactory

experience and capability in the work area.

The Proposer shall identify necessary

experienced personnel and facilities to

support the activities associated with this

proposal.

8.2 Qualifications of Key Personnel

Those individuals who will be directly

involved in the project should have

demonstrated experience in the areas

delineated in the scope of work.

Individuals whose qualifications are

presented will be committed to the project

for its duration unless otherwise excepted

by the Department's Project Manager. Where

State of Florida registration or

certification is deemed appropriate, a copy

of the registration or certificate should be

included in the proposal package.

8.3 Authorized To Do Business in the State

of Florida

In accordance with sections 607.1501,

608.501, and 620.169, Florida Statutes,

foreign corporations, foreign limited

liability companies, and foreign limited

partnerships must be authorized to do

business in the State of Florida. Such

authorization should be obtained by the

proposal due date and time, but in any case,

must be obtained prior to the posting of the

intended award of the contact. For

authorization, [contact the Florida

Department of State].[ 2 ]

8.4 Licensed to Conduct Business in the

State of Florida

If the business being provided requires that

individuals be licensed by the Department of

Business and Professional Regulation, such

licenses should be obtained by the proposal

due date and time, but in any case, must be

obtained prior to the posting of the

intended award of the contract. For

licensing, [contact the Florida Department

of Business and Professional Regulation].

8.5 References and experience must entail a

minimum of three (3) years of experience in

the towing industry in Florida.

NOTE: Copies of occupational licenses must

also be attached to the back of Form 'F'.

(Boldface in original.)

7. Special Condition No. 19, which defines the term

"responsive proposal," provides as follows:

19) RESPONSIVENESS OF PROPOSALS

19.1 Responsiveness of Proposals

Proposals will not be considered if not

received by the Department on or before the

date and time specified as the due date for

submission.

All proposals must be typed or printed in

ink. A responsive proposal is an offer to

perform the scope of services called for in

this Request for Proposal in accordance with

all the requirements of this Request for

Proposal and receiving fifty (50) points or

more on the Technical Proposal .[ 3 ]

Proposals found to be non-responsive shall

not be considered.

Proposals may be rejected if found to be

irregular or not in conformance with the

requirements and instructions herein

contained. A proposal may be found to be

irregular or non-responsive by reasons that

include, but are not limited to, failure to

utilize or complete prescribed forms,

conditional proposals, incomplete proposals,

indefinite or ambiguous proposals, and

improper and/or undated signatures.

(Emphasis and boldface in original.)

8. In the "General Instructions to Respondents" section of

the RFP there appears the following reservation of rights:

16. Minor Irregularities/Right to Reject.

The Buyer reserves the right to accept or

reject any and all bids, or separable

portions thereof, and to waive any minor

irregularity, technicality, or omission if

the Buyer determines that doing so will

serve the State's best interests. The Buyer

may reject any response not submitted in the

manner specified by the solicitation

documents.

9. Anchor did not attach copies of any "occupational

licenses" to the back of Form 'F' in its proposal. Anchor

contends that it did not need to attach such licenses because

none exists. This position is based on two undisputed facts:

(1) The Florida Department of Business and Professional

Regulation ("DBPR") does not regulate the business of providing

towing and emergency roadside assistance; therefore, neither

Anchor nor Sunshine held (or could hold) a state-issued license

to operate, and neither company fell under DBPR's regulatory

jurisdiction. (2) The instrument formerly known as an

"occupational license," which local governments had issued for

decades, not for regulatory purposes but as a means of raising

revenue, is presently called (at least formally) a "business tax

receipt," after the Florida Legislature, in 2006, amended

Chapter 205 of the Florida Statutes, changing the name of that

law from the "Local Occupational License Tax Act" to the "Local

Business Tax Act." See 2006 Fla. Laws ch. 152.

10. Sunshine asserts that the terms "occupational license"

and "business tax receipt" are synonymous and interchangeable,

and that the RFP required each offeror to attach copies of its

occupational licenses/business tax receipts to the proposal.

Sunshine insists that Anchor's failure to do so constituted a

material deviation from the specifications because, without such

documentation, the Department could not be sure whether an

offeror was authorized to do business in any given locality.

11. Sunshine presses this argument a step further based on

some additional undisputed facts. As it happened, at the time

the proposals were opened, Anchor held a local business tax

receipt from the City of Pembroke Pines, which is the

municipality in which Anchor maintains its principal place of

business. Anchor had not, however, paid local business taxes to

Broward County when they became due, respectively, on July 1,

2008, and July 1, 2009. Anchor corrected this problem on

December 14, 2009, which was about two weeks after the

Department had posted notice of its intent to award Anchor the

contract, paying Broward County a grand total of $248.45 in back

taxes, collection costs, and late penalties. As of this

writing, all of Anchor's local business tax obligations are paid

in full.

12. Sunshine contends, however, that during the period of

time that Anchor's Broward County business taxes were

delinquent, Anchor was not authorized to do business in Broward

County and hence was not a "responsible" proposer eligible for

award of the contract. In support of this proposition, Sunshine

relies upon Section 20-15 of the Broward County, Florida, Code

of Ordinances ("Broward Code"), which states:

Pursuant to the authority granted by Chapter

205, Florida Statutes, no person shall

engage in or manage any business, profession

or occupation, as the same are contemplated

by Chapter 205, Florida Statutes, unless

such person first obtains a business tax

receipt as required by this article, unless

other exempt from this requirement . . . .

13. On this latter point regarding Anchor's authority to

operate in Broward County, Sunshine appears to be correct, at

least in a narrow legal sense. It is abundantly clear, however,

and the undersigned finds, that, as a matter of fact, Anchor was

never in any danger of being shut down by the county. Indeed,

even under the strict letter of the local law, Anchor was

entitled to continue operating in Broward County unless and

until the county took steps to compel the payment of the

delinquent taxes. Broward Code Section 20-22, which deals with

the enforcement of the business tax provisions, provides:

Whenever any person who is subject to the

payment of a business tax or privilege tax

provided by this article shall fail to pay

the same when due, the tax collector, within

three (3) years from the due date of the

tax, may issue a warrant directed to the

Broward County Sheriff, commanding him/her

to levy upon and sell any real or personal

property of such person liable for said tax

for the amount thereof and the cost of

executing the warrant and to return such

warrant to the tax collector and to pay

him/her the money collected by virtue

thereof within sixty (60) days from the date

of the warrant. . . . The tax collector

may file a copy of the warrant with the

Clerk of the Circuit Court of Broward

County[, which shall be recorded in the

public records and thereby] become a lien

for seven (7) years from the due date of the

tax. . . . Any person subject to, and who

fails to pay, a business tax or privilege

tax required by this article, shall, on

petition of the tax collector, be enjoined

by the Circuit Court from engaging in the

business for which he/she has failed to pay

said business tax, until such time as he/she

shall pay the same with costs of such

action.

14. There is no evidence suggesting that the county ever

sought to enjoin, or that a court ever issued an injunction

prohibiting, Anchor from engaging in business, nor does it

appear, based on the evidence, that a tax warrant ever was

issued, filed, or executed to force Anchor to pay its back

taxes. Given the relatively small amount of tax due, the

likelihood of such enforcement actions being taken must

reasonably be reckoned as slim to none. While paying taxes when

due is certainly the obligation of a good corporate citizen, it

would not be reasonable, based on the facts established in this

case, to infer that Anchor is a scofflaw for failing to timely

pay a local tax amounting to about $80 per year. Anchor, in

short, was a responsible proposer.

15. Sunshine's other argument has more going for it. The

RFP clearly and unambiguously mandated that "occupational

licenses" be attached to a proposal. If, as Sunshine maintains,

the terms "occupational license" and "business tax receipt" are

clearly synonymous, then Anchor's proposal was noncompliant.

16. For reasons that will be explained below, however, the

undersigned has concluded, as a matter of law, that the term

"occupational license" does not unambiguously denote a "business

tax receipt"——at least not in the context of Special Condition

No. 8. The specification, in other words, is ambiguous.

17. No one protested the specification or otherwise sought

clarification of the Department's intent. The evidence shows,

and the undersigned finds, that the Department understood and

intended the term "occupational license" to mean the instrument

now known as a "business tax receipt." The Department simply

used the outdated name, as many others probably still do, owing

to that facet of human nature captured by the expression, "old

habits die hard."

18. The Department's interpretation of the ambiguous

specification is not clearly erroneous and therefore should not

be disturbed in this proceeding. Based on the Department's

interpretation of Special Condition No. 8, the undersigned finds

that Anchor's failure to attach copies of its occupational

licenses was a deviation from the requirements of the RFP.

19. That is not the end of the matter, however, for a

deviation is not necessarily disqualifying unless it is found to

be material. The letting authority may, in the exercise of

discretion, choose to waive a minor irregularity if doing so

will not compromise the integrity and fairness of the

competition.

20. There is no persuasive direct evidence in the record

that the Department made a conscious decision to waive the

irregularity in Anchor's proposal. Documents in the

Department's procurement file show, however, that the Department

knew that Anchor's proposal lacked copies of occupational

licenses, and in any event this was a patent defect, inasmuch as

nothing was attached to the back of Anchor's Form 'F'. It is

therefore reasonable to infer that the Department elected to

waive the irregularity, and the undersigned so finds.

Necessarily implicit in the Department's action (waiving the

deficiency) is an agency determination that that the

irregularity was a minor one.

21. The question of whether or not Anchor's noncompliance

with Special Condition No. 8 was material is fairly debatable.

Ultimately, however, the undersigned is unable to find, for

reasons more fully developed below, that the Department's

determination in this regard was clearly erroneous. Because the

Department's determination was not clearly erroneous, the

undersigned accepts that Anchor's failure to submit occupational

licenses was a minor irregularity, which the Department could

waive.

22. The Department's decision to waive the minor

irregularity is entitled to great deference and should be upheld

unless it was arbitrary or capricious. The undersigned cannot

say that waiving the deficiency in question was illogical,

despotic, thoughtless, or otherwise an abuse of discretion; to

the contrary, once it has been concluded that the irregularity

is minor and immaterial, as the Department not incorrectly did

here, waiver seems the reasonable and logical course of action.

23. The upshot is that the proposed award to Anchor should

be allowed to stand.

24. The foregoing determination renders moot the disputed

issues of fact arising from Anchor's allegation that Sunshine's

proposal was nonresponsive. It is unnecessary, therefore, for

the undersigned to make additional findings on that subject.

CONCLUSIONS OF LAW

25. DOAH has personal and subject matter jurisdiction in

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

120.57(3), Florida Statutes, and the parties have standing.

26. Pursuant to Section 120.57(3)(f), Florida Statutes,

the burden of proof rests with the party opposing the proposed

agency action, here Sunshine. See State Contracting and

Engineering Corp. v. Department of Transp. , 709 So. 2d 607, 609

(Fla. 1st DCA 1998). Sunshine must sustain its burden of proof

by a preponderance of the evidence. Florida Dep't of Transp. v.

J.W.C. Co., Inc ., 396 So. 2d 778, 787 (Fla. 1st DCA 1981).

27. Section 120.57(3)(f), Florida Statutes, spells out the

rules of decision applicable in bid protests. In pertinent

part, the statute provides:

In a competitive-procurement protest, other

than a rejection of all bids, the

administrative law judge shall conduct a de

novo proceeding to determine whether the

agency's proposed action is contrary to the

agency's governing statutes, the agency's

rules or policies, or the bid or proposal

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

28. The First District Court of Appeal has construed the

term "de novo proceeding," as used in Section 120.57(3)(f),

Florida Statutes, to "describe a form of intra-agency review.

The judge may receive evidence, as with any formal hearing under

section 120.57(1), but the object of the proceeding is to

evaluate the action taken by the agency." State Contracting ,

709 So. 2d at 609. In deciding State Contracting , the court

followed Intercontinental Properties, Inc. v. State Dep't of

Health and Rehabilitative Services , 606 So. 2d 380, 386 (Fla.

1st DCA 1992), an earlier decision——it predates the present

version of the bid protest statute——in which the court had

reasoned:

Although the hearing before the hearing

officer was a de novo proceeding, that

simply means that there was an evidentiary

hearing during which each party had a full

and fair opportunity to develop an

evidentiary record for administrative review

purposes. It does not mean, as the hearing

officer apparently thought, that the hearing

officer sits as a substitute for the

Department and makes a determination whether

to award the bid de novo. Instead, the

hearing officer sits in a review capacity,

and must determine whether the bid review

criteria . . . have been satisfied.

29. In framing the ultimate issue to be decided in this de

novo proceeding as being "whether the agency's proposed action

is contrary to the agency's governing statutes, the agency's

rules or policies, or the bid or proposal specifications," the

statute effectively establishes a standard of conduct for the

agency, which is that, in soliciting, evaluating, and accepting

bids or proposals, the agency must obey its governing statutes,

rules, and the project specifications. If the agency breaches

this standard of conduct, its proposed action is subject to

(recommended) reversal by the administrative law judge in a

protest proceeding.

30. Consequently, the party protesting the intended award

must identify and prove, by the greater weight of the evidence,

a specific instance or instances where the agency's conduct in

taking its proposed action was either: (a) contrary to the

agency's governing statutes; (b) contrary to the agency's rules

or policies; or (c) contrary to the bid or proposal

specifications.

31. It is not sufficient, however, for the protester to

prove merely that the agency violated the general standard of

conduct. By virtue of the applicable standards of "proof,"

which are best understood as standards of review, 4 the protester

additionally must establish that the agency's misstep was: (a)

clearly erroneous; (b) contrary to competition; or (c) an abuse

of discretion.

32. The three review standards mentioned in the preceding

paragraph are markedly different from one another. The abuse of

discretion standard, for example, is more deferential (or

narrower) than the clearly erroneous standard. The bid protest

review process thus necessarily entails a decision or decisions

regarding which of the several standards of review to use in

evaluating a particular action. To do this requires that the

meaning and applicability of each standard be carefully

considered.

33. The clearly erroneous standard is generally applied in

reviewing a lower tribunal's findings of fact. In Anderson v.

City of Bessemer City, N.C. , 470 U.S. 564, 573-74, 105 S. Ct.

1504, 1511, 84 L. Ed. 2d 518, 528 (1985), the United States

Supreme Court expounded on the meaning of the phrase "clearly

erroneous," explaining:

Although the meaning of the phrase "clearly

erroneous" is not immediately apparent,

certain general principles governing the

exercise of the appellate court's power to

overturn findings of a [trial] court may be

derived from our cases. The foremost of

these principles . . . is that "[a] finding

is 'clearly erroneous' when although there

is evidence to support it, the reviewing

court on the entire evidence is left with

the definite and firm conviction that a

mistake has been committed." . . . . This

standard plainly does not entitle a

reviewing court to reverse the finding of

the trier of fact simply because it is

convinced that it would have decided the

case differently. The reviewing court

oversteps the bounds of its duty . . . if it

undertakes to duplicate the role of the

lower court. "In applying the clearly

erroneous standard to the findings of a

[trial] court sitting without a jury,

appellate courts must constantly have in

mind that their function is not to decide

factual issues de novo. " . . . . If the

[trial] court's account of the evidence is

plausible in light of the record viewed in

its entirety, the court of appeals may not

reverse it even though convinced that had it

been sitting as the trier of fact, it would

have weighed the evidence differently.

Where there are two permissible views of the

evidence, the factfinder's choice between

them cannot be clearly erroneous. . . . .

(Citations omitted)(emphasis added).

34. The Florida Supreme Court has used somewhat different

language to give this standard essentially the same meaning:

A finding of fact by the trial court in a

non-jury case will not be set aside on

review unless there is no substantial

evidence to sustain it, unless it is clearly

against the weight of the evidence, or

unless it was induced by an erroneous view

of the law. A finding which rests on

conclusions drawn from undisputed evidence,

rather than on conflicts in the testimony,

does not carry with it the same

conclusiveness as a finding resting on

probative disputed facts, but is rather in

the nature of a legal conclusion. . . . .

When the appellate court is convinced that

an express or inferential finding of the

trial court is without support of any

substantial evidence, is clearly against the

weight of the evidence or that the trial

court has misapplied the law to the

established facts, then the decision is

'clearly erroneous' and the appellate court

will reverse because the trial court has

'failed to give legal effect to the

evidence' in its entirety.

Holland v. Gross , 89 So. 2d 255, 258 (Fla. 1956)(citation

omitted).

35. Because administrative law judges are the triers of

fact charged with resolving disputed issues of material fact

based upon the evidence presented at hearing, and because bid

protests are fundamentally de novo proceedings, the undersigned

is not required to defer to the letting authority in regard to

any findings of objective historical fact that might have been

made in the run-up to preliminary agency action. It is

exclusively the administrative law judge's responsibility, as

the trier of fact, to ascertain from the competent, substantial

evidence in the record what actually happened in the past or

what reality presently exists, as if no findings previously had

been made.

36. If, however, the challenged agency action involves an

ultimate factual determination——for example, an agency's

conclusion that a proposal's departure from the project

specifications was a minor irregularity as opposed to a material

deviation——then some deference is in order, according to the

clearly erroneous standard of review. 5 To prevail on an

objection to an ultimate finding, therefore, the protester must

substantially undermine the factual predicate for the agency’s

conclusion or convince the judge that a defect in the agency's

logic led it unequivocally to commit a mistake.

37. There is another species of agency action that also is

entitled to review under the clearly erroneous standard:

interpretations of statutes for whose administration the agency

is responsible, and interpretations of the agency's own rules.

See State Contracting and Engineering Corp. v. Department of

Transp. , 709 So. 2d 607, 610 (Fla. 1st DCA 1998). In deference

to the agency's expertise, such interpretations will not be

overturned unless clearly erroneous. Id. 6

38. This means that if the protester objects to the

proposed agency action on the ground that it violates either a

governing statute within the agency's substantive jurisdiction

or the agency's own rule, and if, further, the validity of the

objection turns on the meaning, which is in dispute, of the

subject statute or rule, then the agency's interpretation should

be accorded deference; the challenged action should stand unless

the agency's interpretation is clearly erroneous (assuming the

agency acted in accordance therewith).

39. The same standard of review also applies, in a protest

following the announcement of an intended award, with regard to

preliminary agency action taken upon the agency's interpretation

of the project specifications——but for a reason other than

deference to agency expertise. Section 120.57(3)(b), Florida

Statutes, provides a remedy for badly written or ambiguous

specifications: they may be protested within 72 hours after the

posting of the specifications. The failure to avail oneself of

this remedy results in a waiver of the right to complain about

the specifications per se.

40. Consequently, if the dispute in a protest challenging

a proposed award turns on the interpretation of an ambiguous,

vague, or unreasonable specification, which could have been

corrected or clarified prior to acceptance of the bids or

proposals had a timely specifications protest been brought, and

if the agency has acted thereafter in accordance with a

permissible interpretation of the specification ( i.e. one that

is not clearly erroneous), then the agency's intended action

should be upheld——not out of deference to agency expertise, but

as a result of the protester's waiver of the right to seek

relief based on a faulty specification. 7

41. The statute requires that agency action (in violation

of the applicable standard of conduct) which is "arbitrary, or

capricious" be set aside. Earlier, the phrase "arbitrary, or

capricious" was equated with the abuse of discretion standard,

see endnote 4, supra , because the concepts are practically

indistinguishable——and because use of the term "discretion"

serves as a useful reminder regarding the kind of agency action

reviewable under this highly deferential standard.

42. It has been observed that an arbitrary decision is one

that is not supported by facts or logic, or is despotic. Agrico

Chemical Co. v. State Dep't of Environmental Regulation , 365 So.

2d 759, 763 (Fla. 1st DCA 1978), cert. denied , 376 So. 2d 74

(Fla. 1979). Thus, under the arbitrary or 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 Dep't of Environmental Regulation , 553 So. 2d 1260,

1273 (Fla. 1st DCA 1989). Nevertheless,

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.

43. The second district framed the "arbitrary or

capricious" review standard in these terms: "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 Dep't

of Transp. , 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.

44. Compare the foregoing "arbitrary or capricious"

analysis with the test for reviewing discretionary decisions:

"Discretion, in this sense, is abused when

the judicial action is arbitrary, fanciful,

or unreasonable, which is another way of

saying that discretion is abused only where

no reasonable man would take the view

adopted by the trial court. If reasonable

men could differ as to the propriety of the

action taken by the trial court, then it

cannot be said that the trial court abused

its discretion."

Canakaris v. Canakaris , 382 So. 2d 1197, 1203 (Fla. 1980),

quoting Delno v. Market St. Ry. Co. , 124 F.2d 965, 967 (9th Cir.

1942). Further,

[t]he trial court's discretionary power is

subject only to the test of reasonableness,

but that test requires a determination of

whether there is logic and justification for

the result. The trial courts' discretionary

power was never intended to be exercised in

accordance with whim or caprice of the judge

nor in an inconsistent manner. Judges

dealing with cases essentially alike should

reach the same result. Different results

reached from substantially the same facts

comport with neither logic nor

reasonableness.

Canakaris , 382 So. 2d at 1203.

45. Whether the standard is called "arbitrary or

capricious" or "abuse of discretion," the scope of review, which

demands maximum deference, is the same. Clearly, then, the

narrow "arbitrary or capricious" standard of review cannot

properly be applied in evaluating all agency actions that might

be challenged in a bid protest; rather, this highly deferential

standard appropriately applies only to those decisions which are

committed to the agency's discretion.

46. Therefore, where the protester objects to agency

action that entails the exercise of discretion, but only in such

instances, the objection cannot be sustained unless the agency

abused its discretion, i.e. acted arbitrarily or capriciously.

47. The third standard of review articulated in Section

120.57(3)(f) is unique to bid protests. The "contrary to

competition" test is a catch-all which applies to agency actions

that do not turn on the interpretation of a statute or rule, do

not involve the exercise of discretion, and do not depend upon

(or amount to) a determination of ultimate fact.

48. Although the contrary to competition standard, being

unique to bid protests, is less well defined than the other

review standards, the undersigned concludes that the set of

proscribed actions should include, at a minimum, those which:

(a) create the appearance of and opportunity for favoritism; (b)

erode public confidence that contracts are awarded equitably and

economically; (c) cause the procurement process to be genuinely

unfair or unreasonably exclusive; or (d) are unethical,

dishonest, illegal, or fraudulent. See , e.g. , R. N. Expertise,

Inc. v. Miami-Dade County School Bd., et al. , Case No. 01-

2663BID, 2002 Fla. Div. Adm. Hear. LEXIS 163 , *58

(Fla.Div.Admin.Hrgs. Feb. 4, 2002 ); see also E-Builder v. Miami-

Dade County School Bd. et al. , Case No. 03-1581BID, 2003 WL

22347989, *10 (Fla.Div.Admin.Hrgs. Oct. 10, 2003).

49. Turning to the merits of this case, Sunshine's protest

hinges largely on the objection that Anchor failed to attach

copies of its "occupational licenses" to its proposal, in

contravention of a clear directive in the RFP. That being the

case, asserts Sunshine, Anchor's proposal deviated materially

from the provisions of Special Condition No. 8 and hence must be

rejected as nonresponsive.

50. Whether Anchor's proposal was irregular turns on the

meaning of Special Condition No. 8. Because no one timely

protested the specifications, the Department's interpretation of

this provision should stand if (a) the specification at issue is

unclear, vague, or ambiguous; and (b) the Department's

interpretation is not clearly erroneous. On the other hand, if

the provision were unambiguous and otherwise lawful, then the

Department's interpretation would be entitled to no deference

(for plain language requires no interpretation); the question,

in that event, would be whether the Department implemented the

clear and unambiguous language of the RFP. If not, then the

Department's action would be clearly erroneous or contrary to

competition.

51. As found above, Special Condition No. 8 includes the

following instruction:

NOTE: Copies of occupational licenses must

also be attached to the back of Form 'F'.

This language seems clear on its face, but it suffers,

potentially, from a latent ambiguity stemming from the use of

the term "occupational license," which, as discussed previously,

was used historically to describe documents issued by local

governments as a means of raising revenue from businesses

operating within their jurisdictions. Following the enactment,

in 2006, of amendments to the statutes governing such business

taxes, the instruments formerly known as "occupational licenses"

have been (or properly should be) referred to as "business tax

receipts."

52. If this were the only source of potential uncertainty,

the instruction to attach copies of occupational licenses might

be considered unambiguous. It seems likely, after all, that

many people still use the term "occupational license" when

speaking about a "business tax receipt" and would understand

what was meant. At a minimum, it is reasonable to interpret the

instruction to attach copies of "occupational licenses" as a

directive concerning the instruments historically known by that

name, which is the meaning that the Department meant to convey.

53. In Special Condition No. 8, however, the note

concerning "occupational licenses" is situated close below

Paragraph 8.4, which requires that offerors be licensed by DBPR

if the contractual services under consideration cannot lawfully

be performed without such a license. Because the term

"occupational license" is no longer a term of art denoting a

source of local tax revenue, the "note" in Special Condition No.

8 reasonably can be read as requiring the attachment of any

relevant regulatory occupational licenses issued by DBPR and

held by the offeror. This is how Anchor understood the

specification. Under this interpretation, it was not necessary,

in this procurement, for an offeror to attach anything to Form

'F' because DBPR does not regulate the business of providing

towing services and roadside assistance.

54. Because the relevant language of the RFP is

susceptible to more than one reasonable interpretation, the

undersigned concludes that it is ambiguous. See , e.g. , Saunders

v. Bassett , 923 So. 2d 546, 548 (Fla. 1st DCA 2006)(" Ambiguity

exists where more than one literal interpretation is

reasonable.") .

55. As we have seen, the Department interprets the

ambiguous specification at issue as a mandate that offerors

attach their occupational licenses/business tax receipts. The

undersigned concludes that the Department's interpretation of

it's own specification is within the range of permissible

interpretations of the ambiguous language and hence is not

clearly erroneous.

56. Accordingly, it is concluded that Anchor's proposal

deviated from the requirements of Special Condition No. 8.

57. It has long been recognized that "although a bid

containing a material variance is unacceptable, not every

deviation from the invitation to bid is material. [A deviation]

is material if it gives the bidder a substantial advantage over

the other bidders and thereby restricts or stifles competition."

Tropabest Foods, Inc. v. State Dep't of General Services , 493

So. 2d 50, 52 (Fla. 1st DCA 1986). "The test for measuring

whether a deviation in a bid is sufficiently material to destroy

its competitive character is whether the variation affects the

amount of the bid by giving the bidder an advantage or benefit

not enjoyed by other bidders." Harry Pepper & Assocs., Inc. v.

City of Cape Coral , 352 So. 2d 1190, 1193 (Fla. 2d DCA 1977).

58. In addition to the foregoing rules, courts have

considered the following criteria in determining whether a

variance is material and hence nonwaivable:

[F]irst, whether the effect of a waiver

would be to deprive the municipality of its

assurance that the contract will be entered

into, performed and guaranteed according to

its specified requirements, and second,

whether it is of such a nature that its

waiver would adversely affect competitive

bidding by placing a bidder in a position of

advantage over other bidders or by otherwise

undermining the necessary common standard of

competition.

[S]ometimes it is said that a bid may be

rejected or disregarded if there is a

material variance between the bid and the

advertisement. A minor variance, however,

will not invalidate the bid. In this

context a variance is material if it gives

the bidder a substantial advantage over the

other bidders, and thereby restricts or

stifles competition.

Robinson Electrical Co. v. Dade County , 417 So. 2d 1032, 1034

(Fla. 3d DCA 1982), quoting 10 McQuillan, Municipal Corporations

§ 29.65 (3d ed. rev. 1981)(footnotes omitted).

59. The touchstone of these tests for materiality——

substantial advantage——is an elusive concept, to say the least,

easier to state than to apply. Obviously, waiving any defect

that might disqualify an otherwise winning bid gives the

beneficiary of the waiver an advantage or benefit over the other

bidders. In practice, differentiating between, on the one hand,

"fair" advantages—— i.e. those that are tolerable because they do

not defeat the object and integrity of the competitive

procurement process——and "unfair" (or intolerable) advantages,

on the other, is exceptionally difficult; and, making matters

worse, there are not (as far as the undersigned is aware) many

generally recognized, consistently applied, neutral principles

available for the decision-maker's use in drawing the

distinction between a "substantial" advantage and a "mere"

advantage.

60. That said, the undersigned believes that a bidder's

noncompliance with a specification which was designed to winnow

the field——especially one which prescribes particular

characteristics that the successful bidder must possess——should

rarely, if ever, be waived as immaterial. This is because such

a provision acts as a barrier to access into the competition,

potentially discouraging some would-be participants, namely

those who lack a required characteristic, from submitting a bid.

See Syslogic Technology Services, Inc. v. South Florida Water

Management District , Case No. 01-4385BID, 2002 Fla. Div. Adm.

Hear. LEXIS 235, *77 n.23 (Fla.Div.Admin.Hrgs. Jan. 18,

2002)("Of course, it will usually not be known how many, if any,

potential proposers were dissuaded from submitting a proposal

because of one project specification or another. That is why

specifications that have the capacity to act as a barrier to

access into the competition . . . should generally be considered

material and non-waivable[.]"); Cf. City of Opa-Locka v.

Trustees of the Plumbing Industry Promotion Fund , 193 So. 2d 29,

32 (Fla. 3d DCA 1966)(Permitting city to waive necessity that

bidder have a certificate of competency prior to bidding would

give that bidder "an unfair advantage over those who must

prequalify. . . . [I]t would [also promote] favoritism by

allowing some bidders to qualify after their bids are accepted

while refusing to consider bids of others on the ground that

they did not prequalify.").

61. The "occupational licenses" requirement resembles the

sort of "gatekeeper" provision that should not ordinarily be

waiveable. But this is because the term "license" frequently

refers to a regulatory instrument that is held only by those who

have demonstrated some degree of proficiency or competence as a

condition of becoming licensed. An "occupational license"——as

the Department used and understood the term——is not such a

regulatory instrument. Rather, it is available to anyone who

pays the local business tax, regardless of qualifications or

fitness. 8 The tax in question, moreover, is a relatively small

one as compared to the value of the subject contract; it is

highly improbable that any serious, would-be competitor for this

project, which is worth about $1.5 million per year, would have

declined to submit a proposal because of the RFP's requirement

that proposers demonstrate payment of local business taxes

totaling, probably, in the hundreds of dollars annually, at

most.

62. The undersigned concludes, therefore, that the

Department did not unequivocally make a mistake when it

determined that Anchor's failure to attach copies of

occupational licenses was an immaterial defect; the Department's

decision in this regard was not, in other words, clearly

erroneous.

63. Finally, the undersigned concludes that the

Department's decision to waive the minor irregularity in

Anchor's proposal was neither arbitrary nor capricious; it was,

rather, a reasonable response under the circumstances, one that

is justifiable both factually and logically, for reasons

discussed above.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department enter a Final Order

consistent with its preliminary decision to award Anchor the

contract at issue.

DONE AND ENTERED this 6th day of April, 2010, in

Tallahassee, Leon County, Florida.

___________________________________

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Administrative Hearings

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 6th day of April, 2010.

ENDNOTES

1 / The Department likewise views any deficiencies in Sunshine's

proposal as minor matters and has shown little interest in

Anchor's counterpunches, which of course are practically

irrelevant if, as both the Department and Anchor maintain,

Anchor's proposal should not be rejected as nonresponsive.

2 / Anchor, which is a Florida corporation, did not attach to its

proposal any proof that it is authorized to do business in

Florida. Sunshine argues that Anchor's proposal was

noncompliant as a result, urging that Paragraph 8.3 should be

read as implicitly requiring Florida corporations to demonstrate

their authority to operate in this state. This specification,

however, clearly and unambiguously applies only to foreign

business associations. Anchor therefore was not obligated to

prove its authority to do business in Florida.

3 / Paragraph 28.1 of Special Condition No. 28 states that

"Proposing firms must attain a score of seventy (70) points or

higher on the Technical Proposal to be considered responsive.

Should a Proposer receive fewer than seventy (70) points for

their Technical Proposal score, the Price Proposal will not be

opened." The total number of points available for the Technical

Proposal was 70. None of the offerors was awarded a perfect

score for the Technical Proposal. The undersigned assumes that

Paragraph 28.1 contains a typographical error, and finds that

Paragraph 19.1 specifies the correct number of points that a

proposal needed to earn to be considered responsive.

4 / The term "standard of proof" as used in § 120.57(3)(f)

reasonably may be interpreted to reference standards of review .

This is because, while the "standard of proof" sentence fails to

mention any common standards of proof, it does articulate two

accepted standards of review: (1) the "clearly erroneous"

standard and (2) the abuse of discretion (="arbitrary, or

capricious") standard. (The "contrary to competition"

standard——whether it be a standard of proof or standard of

review——is unique to bid protests.)

5 / An ultimate factual determination is a conclusion derived by

reasoning from objective facts; it frequently involves the

application of a legal principle or rule to historical facts:

e.g. the driver failed to use reasonable care under the

circumstances and therefore was negligent; and it may be infused

with policy considerations. Reaching an ultimate factual

finding requires that judgment calls be made which are unlike

those that attend the pure fact finding functions of weighing

evidence and choosing between conflicting but permissible views

of reality.

6 / From the general principle of deference follows the more

specific rule that an agency's interpretation need not be the

sole possible interpretation or even the most desirable one; it

need only be within the range of permissible interpretations.

State Bd. of Optometry v. Florida Soc. of Ophthalmology , 538 So.

2d 878, 885 (Fla. 1st DCA 1988); see also Suddath Van Lines,

Inc. v. Department of Envtl. Protection , 668 So. 2d 209, 212

(Fla. 1st DCA 1996). However, "[t]he deference granted an

agency's interpretation is not absolute." Department of Natural

Resources v. Wingfield Dev. Co. , 581 So. 2d 193, 197 (Fla. 1st

DCA 1991). Obviously, an agency cannot implement any

conceivable construction of a statute or rule no matter how

strained, stilted, or fanciful it might be. Id. Rather, "only

a permissible construction" will be upheld by the courts.

Florida Soc. of Ophthalmology , 538 So. 2d at 885. Accordingly,

"[w]hen the agency's construction clearly contradicts the

unambiguous language of the rule, the construction is clearly

erroneous and cannot stand." Woodley v. Department of Health

and Rehabilitative Services , 505 So. 2d 676, 678 (Fla. 1st DCA

1987); see also Legal Envtl. Assistance Found. v. Board of

County Comm'rs of Brevard County , 642 So. 2d 1081, 1083-84 (Fla.

1994)("unreasonable interpretation" will not be sustained).

7 / If, on the other hand, the agency has followed a clearly

erroneous interpretation of an ambiguous specification, then its

proposed action ordinarily should not be implemented. Finally,

if the agency has sought to proceed in a manner that is contrary

to the plain language of a lawful specification, then the

agency's proposed action should probably be corrected, for the

preliminary agency action likely would be clearly erroneous or

contrary to competition; in that situation, there should be no

waiver, because a reasonable person would not protest an

unambiguous specification that facially conforms to Florida

procurement law.

8 / The statement in the text is true in general and true in this

case. If, however, a first-time applicant for a business tax

receipt is paying the tax to engage in a business or profession

regulated by DBPR, that person must exhibit his state license as

a condition of obtaining a business tax receipt. See §

205.194(1), Fla. Stat. There are similar requirements for a

handful of other occupations in which one cannot lawfully engage

without a state-issued license. See § 205.196, Fla. Stat.

(pharmacies and pharmacists); § 201.1965, Fla. Stat. (assisted

living facilities); § 201.1967, Fla. Stat. (pest control

Fla. Stat. (sellers of travel); § 201.1973, Fla. Stat.

(telemarketing businesses); § 201.1975, Fla. Stat. (household

moving services). Thus, in some instances, an occupational

license or business tax receipt might serve as a proxy for a

regulatory license——but not in this case because the state does

not regulate the business of providing towing services.

COPIES FURNISHED :

Mitchell A. Bierman, Esquire

Matthew H. Mandel, Esquire

Weiss Serota Helfman Pastoriza

Cole & Boniske, P.L.

2525 Ponce de Leon Boulevard, Suite 700

Coral Gables, Florida 33134-6045

C. Denise Johnson, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

Miguel A. De Grandy, Esquire

Miguel De Grandy, P.A.

Douglas Entrance

800 Douglas Road, Suite 850

Coral Gables, Florida 33134

Stephen M. Cody, Esquire

Stephen Cody, P.A.

16610 Southwest 82 Court

Palmetto Bay, Florida 33157

Deanna Hurt

Clerk of Agency Proceedings

Department of Transportation

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Stephanie C. Kopelousos, Secretary

Department of Transportation

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Alexis M. Yarbrough, General Counsel

Department of Transportation

605 Suwannee Street, Mail Station 58

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.