10-009846BID Humana Dental Insurance Company/Comp Benefits Company vs. Lee County School Board Status: Closed Recommended Order on Thursday, December 2, 2010.

Summary: School Board properly rejected all bids for procedural errors, including allowing proposers to submit information which was omitted from their proposals and deviating from the terms and conditions of the RFP in evaluating proposals.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HUMANA DENTAL INSURANCE )

COMPANY/COMP BENEFITS COMPANY , )

)

Petitioner , )

)

vs. ) Case No. 10 - 9846BID

)

LEE COUNTY SCHOOL BOARD , )

)

Respondent . )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case

on November 15, 2010, in Fort Myers, Florida, before Susan B.

Harrell, a designated Administrative Law Judge of the Division

of Administrative Hearings.

APPEARANCES

For Petitioner: Robert A. Shimberg, Esquire

T. Bennett Acuff, Esquire

Hill, Ward & Henderson, P.A.

101 East Kennedy Boulevard, Suite 3700

Post Office Box 2231

Tampa, Florida 33602

For Respondent: Heather W. Hawkins, Esquire

Lee County School Board

2855 Colonial Boulevard

Fort Myers, Florida 33966

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent's intended

decision to reject all proposals submitted in response to

Request for Proposal No. R106885GM - Group Dental Insurance (the

RFP) is illegal, arbitrary, dishonest, or fraudulent.

PRELIMINARY STATEMENT

On September 24, 2010, Respondent, Lee County School Board

(School Board), issued a Notice of Intention to Reject All

Proposals, rescinding a Notice of Intent to Award issued

September 10, 2010, and rejecting all proposals submitted in

response to the RFP. Petitioner, Human a Dental Insurance

Company/Comp Benefits Company (Humana), filed a Petition for

Formal Administrative Hearing , protesting the reject ion of all

proposals. The protest was forwarded to the Division of

Administrative Hearings on October 22, 2010, for assignment to

an Administrative Law Judge to conduct the final hearing.

On November 12, 2010, Humana filed Petitioner's Motion to

Amend Its Petition for Formal Administrative Hearing in order to

request that its bid dispute deposit be returned and that it be

awarded attorney's fees and costs. The motion to amend was

granted at the final hearing, and the Amended Petition for

Formal Administra tive Hearing was deemed filed as of

November 15, 2010.

At the final hearing, Human a called the following

witnesses: Dr. Gregory Adkins, Susan Strong, and Barbara Crowe.

PetitionerÓs Exhibits 1 through 6, 8 through 15, 17, 19, and 20

were admitted in evid ence. The School Board presented the

testimony of Dr. Gregory Adkins. RespondentÓs Exhibits 1, 2,

and 4 through 8 were admitted in evidence.

No transcript of the final hearing was ordered. The

parties agreed to file their proposed recommended order on o r

before November 29, 2010. The parties timely filed their

Proposed Recommended Orders, which have been considered in the

preparation of this Recommended Order.

FINDINGS OF FACT

1. The Lee County School District (District) currently

offers two dental pla ns through Delta Dental, a DPO (Indemnity)

and a DHMO plan to its approximately 10,000 eligible employees.

Delta Dental has held the group insurance contra ct for

approximately 12 years.

2. The District had required its dental plan provider, if

an insuran ce carrier, to have an AM Best rating of A - or higher.

Delta Dental had had an AM Best rating of A - , but its rating had

slipped to a B. Delta Dental notified the District of the

change in its AM Best rating.

3. Upon learning of the change in the rating, the District

decided to issue a request for proposals for its group dental

plans. Susan Strong (Ms. Strong) , who has been the director of

insurance for the District for 15 years , chaired the insurance

task force (ITF), which was responsible for the procurement of

group insurance. Ms. Strong was also a member of the

subcommittee of the insurance task force, which was responsible

for drafting, issuing, and evaluating the proposals and making a

recommendation to the ITF.

4. The RFP required that the proposers who were insurance

carriers have an AM Best rating of A - or higher. On June 3,

2010, the RFP was issued by the District.

5. Dr. James W. Browder (Dr. Browder) , who was at tha t

time the superintendent of schools for Lee County, approached

Ms. Strong requesting that she convene the ITF to consider

lowering the AM Best rating so that Delta Dental could qualify

to submit a proposal. The ITF was convened and voted to lower

the AM Best rating to B. An addendum to the RFP was issued on

June 25, 2010, lowering the AM Best rating to B and changing

the date for submittal of proposals to July 8, 2010.

6. Pertinent provisions of the RFP provide:

2.1 Objective :

The objective of this Request for Proposal

(RFP) is to provide a comprehensive Group

Dental Insurance, with benefits equal to or

superior to those of the current dental

insurance plan, to the employees of the

School District of Lee County, Florida

(hereafter referred to as "SD LC"). SDLC is

soliciting Proposals for DHMO and

DPO/Indemnity group dental benefits. The

vendors are requested to quote DHMO,

DPO/Indemnity options , or both. If you

cannot provide all of the plan options

requested, you may propose one or more of

the opt ions. The successful vendor should

also offer its product(s) at competitive

prices, similar to the current dental

insurance plan, and guarantee rates for a

minimum of two (2) years to ensure price

stability for plan members.

2.2 Background :

* * *

In order to properly evaluate the financial

impact of these plans, this RFP requests

data necessary to properly evaluate the plan

proposed. Proposers who do not provide the

requested information may be negatively

impacted during the scoring process.

* * *

2.10 One manually signed original (clearly

marked as such), ONE (1) electronic version

in Word 6.0 or higher on CD or diskette and

SIX (6) Photocopies of the proposal must be

sealed in one package and clearly labeled

" REQUEST FOR PROPOSAL F OR GROUP DENTAL

INSURANCE " on the outside of the package.

The legal name, address, proposal's contact

person, and telephone number must also be

clearly annotated on the outside of the

package. ( Emphasis in original )

* * *

4.2 Minimum Eligibility In order to be

considered for award and to be further

evaluated, proposer must meet or exceed the

following criteria. The proposer is

responsible for providing the following

information in their responses. The

proposer should also include a statement of

acknowledgement for the item below.

4.2.1 Proposer shall be appropriately

licensed in the State of Florida to provide

dental insurance.

* * *

5.1 The Insurance Task Force Sub - Committee

(hereinafter referred to as "Committee"),

SDLC, or both reserve the right to ask

questions of a clarifying nature once

proposals have been opened, interview any or

all proposers that respond to the RFP, or

make their recommendations based solely on

the information contained in the proposals

submit ted. The Committee shall evaluate all

proposals received, which meet or exceed

Section 4.2, Minimum Eligibility

Requirements. The Committee reserves the

right to ask questions of a clarifying

nature and interview any or all proposers

that meet or exceed Section 4.2. . . .

5.2 The Evaluation Committee reserves the

right to interview any or all proposer(s)

and to require a formal presentation and

clarification questions with the key people

who will administer and be assigned to work

on the contract before recommendation of

award. The interview is to be based upon

the written proposal received.

5.3 The Superintendent will recommend to

the School Board, the award or rejection of

any or all proposal(s).

5.4 The School Board may award or reject

any or all proposals.

* * *

5.7 The District will make an award to the

company whose proposal is most advantageous

to the District with respect to

benefits/services, costs and other factors.

5.8 All proposals sh ould be submitted

initially with the most favorable terms. If

additional information or clarification is

required, the proposer shall be prepared to

submit such information in a timely manner.

5.9 Award of benefits/services contracts is

subject to negotiation, and the District may

undertake sim ultaneous negotiations with

those companies who have submitted

proposals.

5.10 The District reserves the right to

waive formalities, technicalities, or

irregularities in any proposal, to reject

any or all proposals in whole or in part,

with or without ca use, to re - advertise, or

to accept the proposal which , in its

judgment, will be in its best interest.

6.1.1 The District reserves the right to

accept or reject any or all proposals.

6.1.2 The District reserves the right to

waive any irregularities and technicalities

and may, at i t s sole discretion, request a

clarification or other information to

evaluate any or all proposals.

6.1.3 The District reserves the right,

before awarding the contract, to require

proposer(s) to submit evidence of

qualifications, contact references or any

other information the District may deem

necessary.

* * *

6.1.5 The District reserves the right to:

(1) accept the proposals of any or all of

the items it deems, at its sole discretion,

to be in the best interest of the District;

and (2) the District reserves the right to

reject any or all items proposed or award to

multiple proposer(s).

* * *

6.3.1 Bidders are hereby advised that they

are not to lobby with any District Personnel

or Board Membe rs related to or involved with

this bid. All inquiries must be written and

directed to the Department of Procurement

Services. ( Emphasis in original )

Lobbying is defined as any action taken by

an individual, firm, association, joint

venture, partnership , syndicate,

corporation, and all other groups who seek

to influence the governmental decision of a

Board Member or District Personnel on the

award of this contract.

Any bidder or any individuals that lobby on

behalf of a bidder will result in

rejection/d isqualification of said bid.

6.4.1 In order to maintain comparability

and enhance the review process, it is

required that proposals be organized in the

manner specified in Section 4.1. Include

all information in your proposal. It is

required that SIX ( 6) copies of the proposal

be submitted with the original proposal

(clearly marked as such) and ONE (1)

electronic version in Word 6.0 or higher on

CD or diskette. ( Emphasis in original )

7. The proposals in response to the RFP were submitted on

July 8, 2 010. Among the proposers who submitted proposals were

Ameritas Life Insurance (Ameritas); CIGNA Dental & Connecticut

Life Insurance Company (CIGNA); Delta Dental, Humana, United

Concordia Dental C are; Metlife; and the Standard.

8. On July 8, 2010, after the proposals had been opened,

an e - mail was sent by the District to Amerit a s , requesting that

Ameritas provide the electronic version of the proposal as

required by Sections 2.10 and 6.4.1 of the RFP. On July 9,

2010, the District sent an e - mail to the Standard, requesting

that it supply an electronic version of its proposal in a

CD format. The Standard had supplied a PDF format, which was

not acceptable.

9. On July 20, 2010, an e - mail was sent by the District to

several proposers , requesting that a c opy of their licenses to

provide dental insurance in Florida be sent. The e - mail stated

that the submittal of the license was required pursuant to

Section 4.2.1 of the RFP. However, Section 4.2.1 does not

require that a copy of the license be submitted; it requires

only that the proposer be licensed. No evidence was presented

that details how these proposers addressed the issue of

licensure in their proposals. Section 6.1.3 of the RFP does

allow the District to require the proposer to submit evidence of

qualification prior to the award of the contract.

10. On July 26, 2010, e - mails were sent by the District to

Ameritas and United Concordia Dental Care , stating:

On the DPO/Indemnity Plan Questionnaire,

Question 11 asked the following: "In the

chart below , provide information regarding

DPO/Indemnity contracted rates and employee

cost sharing for SDLC." There were two

columns for your company to complete -- "DPO

Allowable" and "Indemnity Allowable." You

did not provide amounts for the "DPO

Allowable" c olumn. This information is

critical to our evaluation process.

Could you please supply the DPO Allowable

rates as soon as possible, but no later than

2:00 PM, Wednesday, July 28th?

11. United Concordia Dental Care submitted the omitted DPO

Allowable r ates on July 27, 2010. Ameritas submitted the

omitted information on July 28, 2010.

12. The evaluation committee reviewed and scored the

proposals. Based on their evaluation, Humana, Delta Dental, and

CIGNA were determined to be the top three proposers to be

shortlisted.

13. On August 4, 2010, the District sent an e - mail to

Humana, Delta Dental, and CIGNA, requesting that they respond to

a number of clarification questions. Additionally, the School

Board stated:

SDLC would be interested in offering a low

option DPO in lieu of a DHMO product with

premiums similar to its current DHMO.

What type of a DPO plan could you design

with monthly premiums of $20 - 22 Employee,

$30 - 35 Employee/Spouse, $30 - 35

Employee/Child; $50 - 60 Employee/Family.

Provider [sic] de tails for each level of

coverage in the table below.

Deductable per Individual/Family

Annual Maximum Benefit

Diagnostic/Preventive Benefit

Basic Benefit/Level II

Major Benefit/Level III

Orthodontic Benefit/Level IV

Other Benefits

14. None of the other proposers were asked to propose a

separate l ow - o ption DPO plan. Section 2.1 of the RFP provided

that proposers could submit a DHMO option or a DPO/Indemnity

option or both options. Although some of the proposers did

submit Low - Opti on DPO/Indemnity plans, none of the top three

proposers submitted such options. CIGNA, Delta Dental, and

Humana submitted a Low - Option/Indemnity plan in response to the

District's e - m ail of August 4 , 2010 .

15. The District interviewed e ach of the top three

proposers.

16. On August 27, 2010, Ginny Monroe, the procurement

agent for the District, sent an e - mail to Humana, which stated:

Congratulations, as the top ranked proposer

the SDLC wishes to enter into negotiations.

Attached please find a scanned negotiation

letter. Please sign and return this letter

via fax or email no later than Monday,

August 30, 2010 at 2:00 pm.

17. On August 30, 2010, Dr. Gregory Adkins (Dr. Adkins) ,

who is the chief human resources officer for the District, asked

Ms. Strong to provide several bullet points highlighting the

reasons Humana was selected as the dental provider. On

September 7, 2010, Dr. Browder requested Ms. Strong to prepare a

summary of the reasons the evaluation committee had chosen

Humana. Ms. Strong prepared the summary and had it delivered to

Dr. Browder on September 8, 2010.

18. On September 9, 2010, Dr. Adkins requested Ms. Strong

to prepare a side - by - side comparison of the top th ree proposers.

She did as requested and took the comparison analys is to

Dr. Adkins, who discussed them with Dr. Browder.

19. On September 9, 2010, Delta Dental sent a letter to

Dr. Browder, stating that Delta Dental had received the dental

carrier finalist information. Delta Dental proceeded to address

each of the issu es set forth in the comparison prepared by

Ms. Strong. The letter by Delta Dental was in violation of the

RFP proh ibitions concerning lobbying.

20. On September 10, 2010, the Lee County School District

posted an intended award to Humana, stating: "Based on the

review of the individual scoring sheets by the evaluation

committee, the Superintendent will recommend to The School Board

of Lee County that Humana Dental Insurance Company/Comp Benefits

Company be accepted as the awarded vendor having submitted t he

overall best responsive proposal and that purchase order(s) be

forwarded to same."

21. On September 10, 2010, Dr. Adkins sent an e - mail to

Ms. Strong , questioning whether Humana's premiums were truly

lower than Delta's. Ms. Strong told Dr. Adkins that she would

prepare a premium analysis. She forwarded the premium analysis

to Dr. Adkins on September 13, 2010.

22. On September 13, 2010, Dr. Adkins met with Dr. Browder

and others concerning the intended award. Dr. Browder wanted to

reject all bids bas ed on concerns by School Board members about

the premiums and lack of clarity of the benefits offered and

instructed Greta Campbell (Ms. Campbell), an employee in the

procurement department , to post a rejection of all bids.

Dr. Adkins asked Dr. Browder to wait on the rejection of all

bids until Dr. Adkins had time to discuss the matter with

Ms. Strong. At that time, the only explanation that Dr. Adkins

gave Ms. Strong was that some School Board members were

concerned about the premiums and benefits.

23. D r. Browder requested the legal staff for the District

to review the procurement process before a rejection of all bids

was posted. Heather Hawkins (Ms. Hawkins) reviewed the

procurement and found that there were some procedural errors

that had occurred.

2 4. On September 23, 2010, Dr. Browder, Dr. Adkins,

Ms. Hawkins, Ms. Campbell, Keith Martin, and Dr. Lawrence D.

Tihen, who was to become the interim superintendent after

Dr. Browder's departure, met to discuss Ms. Hawkins' findings.

The procedural errors discussed concerned the District allowing

proposers to supply missing information after their proposals

had been submitted; the District making requests for

clarifications ; and the District requesting that the top three

proposers submit low - option DPO pla ns.

25. On September 24, 2010, the District posted a Notice of

Intent to Reject All Proposals, which stated:

Please be advised that the Notice of

Intention to Award issued September 10 in

the above - referenced matter is hereby

rescinded. The Superintenden t will

recommend to the School Board of Lee County

at its October 19th meeting that all

proposals received in the above - referenced

solicitation be rejected due to a procedural

error.

CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has

juri sdiction over the parties to and the subject matter of this

proceeding. §§ 120.569 and 120.57(3), Fla. Stat. (2010). 1

27. Subsection 120.57, Florida Statutes, sets forth the

procedures to be followed in protesting contract awards by

agencies. Subsection 120l.57(3)(f), Florida Statutes , provides:

(f) In a protest to an invitation to bid or

request for proposals procurement, no

submissions made after the bid or proposal

opening which amend or supplement the bid or

proposal shall be considered. In a protest

to an invitation to negotiate procurement,

no submissions made after the agency

announces its intent to award a contract,

reject all replies, or withdraw the

solicitation which amend or supplement the

reply shall be considered. Unless otherwise

pr ovided by statute, the burden of proof

shall rest with the party protesting the

proposed agency action. In a competitive -

procurement protest, other than a rejection

of all bids, proposals, or replies, the

administrative law judge shall conduct a de

novo p roceeding to determine whether the

agencyÓs proposed action is contrary to the

agencyÓs governing statutes, the agencyÓs

rules or policies, or the solicitation

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious. In any bid -

protest proceeding contesting an intended

agency action to reject all bids, proposals,

or replies, the standard of review by an

administrative law judge shall be w hether

the agencyÓs intended action is illegal,

arbitrary, dishonest, or fraudulent.

( Emphasis supplied )

28. In the instant case, the agency decision is to reject

all proposals; thus, the standard of review is whether the

intended action is illegal, arbitr ary, dishonest, or fraudulent.

29. The reason given for the rejection of all proposals

was procedural error. Thus, the first issue is to determine

whether there were procedural errors committed by the District.

30. The RFP provided that the Distri ct could ask proposers

clarifying questions and request additional information.

Although the RFP allowed clarifying information to be submitted

after the proposals were opened, it cannot be read to allow

proposers to submit information that was required b y the RFP,

but was omitted from the proposals. To do so would be in

violation of Subsection 120.57(3)(f), Florida Statutes, which

prohibits submissions after the proposals are opened which amend

or supplement the proposals. The failure to submit a CD of the

proposal may be considered a minor irregularity because the

proposal itself is not changed. 2 However, allowing proposers to

amend their proposals after the proposals are opened by

submitting omitted information that is needed in the evaluation

of the proposals , such as DPO Allowable Amounts, is in violation

of Subsection 120.57(3)(f), Florida Statutes.

31. Section 4.2.1 of the RFP requires that the proposers

be appropriately licensed in the State of Florida to provide

dental insurance. The provision does not require that a copy of

the license to sell dental insurance be included in the

proposal. Section 6.1.3 of the RFP allows the District to

request proposers to submit evidence of their qualifications

prior to the award of a contract. Requiring sub mittal of the

insurance license would fall under the kind of request that

would be allowed under Section 6.1.3. The submission of

evidence of a license does not affect whether the proposer was

licensed at the time of the submittal of the proposal. The

pr oposer was either licensed or not licensed.

32. The District changed the terms of the RFP when it

required the top three proposers to submit low - option DPO plans

for evaluation. There is nothing in the RFP which provides for

a selection of the three prop osers with the highest score and

then to further evaluate those proposers on plans that were

developed and submitted after the proposals were opened. If the

District had wanted to use that evaluation process, it could

have stated so in the RFP. Additiona lly, if the District had

wanted a low - option DPO plan designed to specific criteria, it

should have included that in the RFP.

33. Humana states in its Proposed Recommended Order that

the District was negotiating simultaneously with the top three

proposer s . The District was not negotiating with the top three

proposers simultaneously. If that were so, the District would

not have issued the e - mail to Humana on August 27, 2010, that

the District wished to enter into negotiations with Humana. The

District wa s continuing the evaluation of proposals when it

asked for a low - option DPO plan designed to the District's

specifications.

34. Another procedural error was the failure to reject the

proposal of Delta Dental for lobbying by sending the

September 9, 2009, letter to Dr. Browder .

35. There were procedural errors as discussed above that

were sufficient to cause the District to reject all bids.

Humana argues that Dr. Browder's first call for rejection of all

bids was not based on procedural errors , and such a rgument is

not relevant. Dr. Browder called for a legal opinion on the

legality of the procurement process that was used, and counsel

for the District found that there were errors. The procedural

errors and not the concern of School Board members was the final

cause for the rejection of all bids.

36. The intended decision to reject all bids was not

illegal, dishonest, or fraudulent. To have awarded the contract

to Humana with the irregularities in the procurement process

would have been in violation of S ubs ection 120.57(3)(f), Florida

Statutes , and the RF P specifications.

37. The intended decision was not arbitrary. An arbitrary

decision is one that is not supported by facts or logic. Agrico

Chemical Co. v. Department of Environmental Regulation , 365 So.

2d 759, 763 (Fla. 1st DCA 1978 ). The determination of whether

an agency has acted arbitrarily is based on "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 these

factors to its final decision." Adam Smith Enterprises, Inc. v.

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

(Fla. 1st DCA 1989). The District did consider all relevant

fact ors and requested a legal opinion on the propriety of the

procurement. The District discussed the procedural errors that

Ms. Hawkins' review revealed and concluded that irregularities

had occurred. Because of the procedural errors the District

decided to reject all proposals.

38. Humana has failed to establish that the rejection of

all proposals was fraudulent, illegal, dishonest, or arbitrary.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a f inal o rder be entered finding

that the rejection of all proposals was not fraudulent, illegal,

dishonest , or arbitrary and dismissing Human a 's protest.

DONE AND ENTERED this 2nd day of December, 2010 , in

Tallahassee, Leon County, Florida.

S

SUSAN B. HARRELL

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 2nd day of December, 2010 .

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2010 codification.

2/ Sections 5.10 and 6.1.2 of the RFP allow the District to

waive irregularities and technicalities. "The purpose of

competitive bidding is to secure the lowest responsible offer

and . . . the [agency] may waive minor irregularities in

effectuating that pu rpose." Robinson Electrical Co., Inc. v.

Dade County , 417 So. 2d 1032, 1034 (Fla. 3rd DCA 1982). A minor

irregularity does not give "the bidder a substantial advantage

over the other bidders, and thereby restrict[] or stifle[]

competition." Id.

COPIES FURNISHED :

Robert A. Shimberg, Esquire

T. Bennett Acuff, Esquire

Hill, Ward & Henderson, P.A.

101 East Kennedy Boulevard, Suite 3700

Post Office Box 2231

Tampa, Florida 33602

Heather W. Hawkins, Esquire

Lee County School Board

2855 Colonial Boulevard

Fo rt Myers, Florida 33966

Deborah K. Kearney, General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Dr. Eric J. Smith, Commissioner of Education

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Dr. Lawrence D. Tihen, Interim Superintendent

Lee County School Board

2855 Colonial Boulevard

Fort Myers, Florida 33966 - 1012

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 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.