13-003895BID Jones Lang Lasalle Americas, Inc. vs. Department Of Management Services Status: Closed Recommended Order on Friday, January 24, 2014.

Summary: Petitioner challenged intended award of contract for tenant broker and real estate consulting services to competing vendors, but failed to prove that DMS's award decision was clearly erroneous, contrary to competition, arbitrary or capricious.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CUSHMAN AND WAKEFIELD OF

FLORIDA, INC.,

Petitioner,

vs. Case Nos. 13 - 3894BID

13 - 3895BID

DEPARTMENT OF MANAGEMENT

SERVICES,

Respondent,

a nd

CBRE, INC., AND VERTICAL

INTEGRATION, INC.,

Intervenors.

/

RECOMMENDED ORDER

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

on November 12 and 13, 2013, in Tallahassee, Florida, before

W. David Watkins, the duly - designated Administrati ve Law Judge

of the Division of Administrative Hearings.

APPEARANCES

For Petitioner : Donna E. Blanton, Esq uire

Radey Law Firm

301 South Bronough, Suite 200

Tallahassee, Florida 32301

For Respondent: Matthew F. Minno, Esq uire

Katie Privett, Esq uire

Department of Management Services

4050 Esplanade Way

Tallahassee, F lorida 32399

For Intervenor CBRE, Inc.:

Robert H. Hosay, Esq uire

James A. McKee, Esq uire

Foley and Lardner, LLP

106 East College Avenue, Suite 900

Tallahassee, Florida 32301

For Intervenor Vertical Integration, Inc.:

Frederick J. Springer, Esq uire

Ryan B. Hobbs, Esq uire

Bryant Miller Olive, P.A.

101 North Monroe Street, Suite 900

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Pursuant to c hapter 287, Florida Statutes, and section

255.25, Florida Statutes, 1 / the Depa rtment of Management Services

( DMS) released an Invitation to Negotiate for a contract to

provide tenant broker and real estate consulting services to the

S tate of Florida under Invitation t o Negotiate No. DMS - 12/13 - 007

( ITN). After evaluating the replies, negotiating with five

vendors, and holding public meetings, DMS posted a notice of

intent to a ward a contract to CBRE, Inc. ( CBRE) and Vertical

Integration, Inc. (Vertical ). A t issue in this proceeding is

whether DMSÓs intended decision to award a contract for tenant

broker and real estate consulting services to CBRE and Vertical

is contrary to DMSÓs governing statutes, its rules or policies,

or the ITNÓs specifications , or was otherwise clearly erroneous,

contrary to competition, arbitrary, or capricious .

PRELIMINARY STATEMENT

On March 18, 2013, the Department issued ITN DMS - 12/13 - 007 2 /

seeking vendors to provide tenant broker and real estate

consulting services to the s tate of Florida. Thirteen vendors

submitte d r eplies to the ITN, including Cushman and Wakefield of

Florida, Inc. ( Cushman ), Jones Lang LaSalle Americas, Inc.

( JLL ) , Vertical, and CBRE.

DMS subsequently issued a notice of its intent to negotiate

with JLL, Vertica l, CBRE, and one other vendor . A fter

completion of the negotiations, DMS published its request for

best and final offers ("RBAFOs") from each vendor. The vendors

then submitted their best and final offers ("BAFOs"). The

Department thereafter posted a No tice of Agency Decision stating

its intent to award contracts to Vertical and CBRE.

Cushman and JLL protested the Department's Notice of Agency

Decision and intended awards. The protests were assigned DOAH

C ase Nos. 13 - 3894BID and 13 - 3895BID, and were con solidated

pursuant to Florida Administrative Code Rule 28 - 106.108.

Cushman and JLL filed Amended Protest Petitions on November 12,

2013. Vertical and CBRE were granted leave to intervene in the

consolidated proceedings.

On November 7, 2013, Cushman filed a motion to a mend its

petition . The amended petition raised two new issues: CBRE was

not responsive to the ITN because CBRE included a charge for

acquisitions and dispositions in its BAFO , which was co ntrary to

the RBAFO and the ITN. The amended petitio n also alleged that

the ITN and the contract resulting from the ITN violate section

255.25, Florida Statutes; thus, DMS does not have the authority

to award the contract. CBRE, Vertical, and DMS objected to the

amended petition, and CBRE filed a motion in limine to exclude

evidence and arguments contesting the specifications of the

ITN . 3 / The motion to file the amended petition was granted at

the outset of the hearing, and the motion in limine was denied.

On November 12, 2013, JLL filed a m otion in l imine to

exclude evidence and argument regarding JLL's responsiveness and

standing to maintain its protest. A fter hearing argument of

counsel, this motion was denied .

On November 12, 2013, CBRE filed a m otion to c ompel the

production of certain documents relat ed to JLL's responsiveness

and standing. The mot ion was granted, and responsive documents

were ordered to be produced by JLL by the end of the first day

of hearing.

Also on November 12, 2013, CBRE filed a m otion for o fficial

r ecognition of the fact that c ertain JLL representatives do not

hold Florida real estate licenses. Ruling on the motion was

reserved pending confirmation by JLL's counsel of the accuracy

of the licensing documents.

The parties filed a Joint Pre - Hearing Statement, which

stipulated to c ertain facts and the admission of a number of

joint exhibits.

The final hearing was held on November 12 and 13, 2013, as

noticed. After opening statements on the first day of hearing,

JLL made an ore tenus motion for leave to dismiss its Amended

Protest Petition. The motion was granted and JLL was dismissed

from the proceeding, leaving only Cushman's Amended Protest

Petition pending. 4 /

The parties stipulated to the introduction of 32 joint

exhibits into evidence, including the transcripts of the

depositi ons of Beth Sparkman and Bryan Bradner, two members of

the evaluation and negotiation teams for the ITN.

The following witnesses testified: Beth Sparkman, Bureau

Chief of Leasing of DMS, and DMSÓs designated agency

representative; Larry D. Richey, Senior M anaging Director of

Cushman; and Janice Ellison, Section Lead in the Land Asset

Management Section of the Department of Environmental Protection

(ÐDEPÑ). Joint Exhibits 1 - 32 were received into evidence. CBRE

Exhibits 1 - 3, 7 - 9, 13 and 14, were admitted wi thout o bjection.

VerticalÓs Exhibits 1 - A and 1 - C were admitted without objection.

The three - volume T ranscript of the final hearing was filed

with the Division of Administrati ve Hearings on December 2,

2013, and all remaining parties filed P roposed R ecomme nded

O rders on December 12, 2013. The evidence presented at the

hearing and the submissions from the parties have been carefully

considered in the preparation of this Recommended Order.

FINDINGS OF FACT

Based on the demeanor and credibility of the witnes ses and

other evidence presented at the final hearing and on the entire

record of this proceeding, the following findings of fact are

made:

Background 5 /

1 . DMS released Invitation to Negotiate No . DMS - 12/13 - 007

on March 18, 2013, and released a revised v ersion of the ITN on

May 14, 2013, for the selection of a company to provide tenant

broker and real estate consulting services to the S tate of

Florida.

2 . Thirteen vendors responded to the ITN. The replies

were evaluated by five people: Bryan Bradner, De puty Director of

REDM of DMS; Beth Sparkman, Bureau Chief of Leasing of DMS;

Rosalyn (ÐRozÑ) Ingram, Chief of Procurement, Land and Leasing

of the Department of Corrections; Clark Rogers, Purchasing and

Facilities Manager of the Department of Revenue; and Janice

Ellison, Section Lead in the Land Asset Management Section of

the Department of Environmental Protection.

3 . Five vendors advanced to the negotiation stage: Cushman

(score of 87), JLL (score of 87), CBRE (score of 87), Vertical

(score of 89), and DTZ (score of 86). DTZ is not a party to

this proceeding. The negotiation team consisted of Beth

Sparkman, Bryan Bradner, and Roz Ingram. Janice Ellison

participated as a subject matter expert.

4 . DMS held a first round of negotiations and then held a

public meeting on July 16, 2013.

5 . DMS held a second round of negotiations and then held a

second public meeting on August 1, 2013. A recording of this

meeting is not available, but minutes were taken. Also on

August 1, 2013, DMS posted Addendum 8, th e Request for Best and

Final Offers . This Addendum contained the notice that ÐFailure

to file a protest within the time prescribed in s ection

120.57(3) . . . shall constitute a waiver of proceedings under

chapter 120 of the Florida Statutes.Ñ

6 . The ven dors each submitted a BAFO. DMS held a final

public meeting on August 14, 2013, at which the negotiation team

discussed the recommendation of award. All three members of the

negotiation team recommended Vertical as one of the two vendors

to receive the a ward. For the second company, two of the three

negotiation team members recommended CBRE and one negotiation

team member recommended JLL.

7 . DMS prepared a memorandum, dated August 14, 2013,

describing the negotiation teamÓs recommendation of award. Th e

memorandum comprises the following sections: Introduction; The

Services; Procurement Process (subsections for Evaluations and

Negotiations ); Best value (subsections for Selection Criteria,

Technical Analysis, Price Analysis, and Negotiation TeamÓs

Recomm endation); and Conclusion. Attached to the memorandum as

Attachment A was a memorandum dated April 30, 2013, appointing

the evaluation and negotiation committees, and attached as

Attachment B was a spreadsheet comparing the vendorsÓ BAFOs.

8 . DMS posted the N otice of I ntent to A ward to CBRE and

Vertical on August 16, 2013.

9 . Cushman and JLL timely filed notices of intent to

protest the Intent to Award.

10 . On August 29, 2013, JLL timely filed a formal protest

to the Intent to Award.

11 . On August 30, 2013, Cushman timely filed a formal

protest to the Intent to Award.

12 . An opportunity to resolve the protests was held on

September 9, 2013, and an impasse was eventually reached.

13 . On October 10, 2013, DMS forwarded the formal protest

petitions to D OAH.

14 . An Order consolidating JLLÓs protest and CushmanÓs

protest was entered on October 15, 2013.

Scope of Real Estate Services in the ITN

15 . Prior to the statutory authority of DMS to procure

real estate brokerage services, agencies used their ow n staff to

negotiate private property leases. Section 255.25(h), Flor ida

Statutes, arose out of the l egislatureÓs desire for trained real

estate professionals to assist the S tate of Florida with its

private leasing needs. The statutorily mandated use of tenant

brokers by agencies has saved the state an estimated $46 million

dollars.

16 . The primary purpose of the ITN was to re - procure the

expiring tenant broker contracts to assist state agencies in

private sector leasing transactions. Once under contra ct, the

selected vendors compete with each other for the opportunity to

act on behalf of individual agencies as their tenant broker, but

there is no guarantee particular vendors will get any business.

The core of the services sought in th e ITN was lease

t ransactions. The ITN also sought to provide a contract vehicle

to allow vendors to provide real estate consulting services,

including strategies for long and short - term leases, space

planning, and space management as part of the negotiation for

private le ases.

17 . As part of providing real estate consulting services,

vendors would also perform independent market analyses (IMAs)

and broker opinions of value (BOVs ) or broker price opinions

(B PO s ). In almost all instances, this would be provided at no

char ge as part of the other work performed for a commissionable

transaction under the resulting contract. However, the

resulting contract was designed to allow agencies to ask for an

IMA or BOV to be performed independently from a commissionable

transaction.

18 . In addition to the primary leasing transactions, the

contract would also allow state agencies to use the vendors for

other services such as the acquisition and disposition of land

and/or buildings. These services would be performed according

to a Sc ope of Work prepared by the individual agency, with

compensation at either the hourly rat es (set as ceiling rates in

the ITN), set fees for the service/project, or at the percentage

commission rate negotiated between the vendor and the individual

agency. However, these services were ancillary to the main

purpose of the contract, which was private leasing.

19 . In Florida, m ost state agencies are not authorized to

hold title to land. However, the Department of Environmental

Protection (DEP ) serves as staff for the Board of Trustees of

the Internal Improvement Trust Fund (ÐBoardÑ), which holds title

to land owned by the S tate of Florida. In that capacity, DEP

buys and sells land and other properties on behalf of the Board.

DEP recently began using the current DMS tenant broker contract

for acquisitions and dispositions. The process was cumbersome

under the current contract, so DEP asked to participate in the

ITN in order to make the contract more suitable for their

purposes. The ITN was revised to in clude DEPÓs proposed

changes, and DMS had Ms. Ellison serve first as an evaluator and

later as a subject matter expert. At hearing, Ms. Ellison

testified that she was able to participate fully, that her input

was taken seriously, and that the proposed con tract adequately

addressed DEPÓs concerns.

20 . While DEP anticipated that under the proposed contract

it would use more BOVs than it had previously, there was no

guarantee that DEP would use the proposed contract. DEP is not

obligated to use the contrac t and maintains the ability to

procure its own tenant brokers. Additionally, administration

and leadership changes may cause a switch of using in - house

agency employees instead of tenant brokers to perform real

estate acquisition and disposition services.

Specifics of the ITN

21 . The ITN directed vendors to submit a reply with the

following sections: a cover letter; completed attachments;

pass/fail requirements; Reply Evaluation Criteria; and a price

sheet. The Reply Evaluation Criteria included Part A

(Qualif ications) and Part B (Business P lan). Qualifications

were worth 40 points, the Business Plan was worth 50 points, and

the pr oposed pricing was worth 10 points. For the Business

Plan, the ITN requested a detailed narrative description of how

the ve ndors planned to meet DMSÓs needs as set forth in section

3.01, Scope of Work. The ITN requested that vendors describe

and identify the current and planned resources and employees to

be assigned to the project and how the resources would be

deployed.

22 . Section 3.01, Scope of Work, states that the primary

objective of the ITN is to Ðidentify brokers to assist and

represent the Department and other state agencies in private

sector leasing transactions.Ñ The ITN states that the

contractor will provide st ate agencies and other eligible users

with real estate transaction and management services, which

include Ðdocument creation and management, lease negotiation and

renegotiation, facility planning, construction oversight, and

lease closeout, agency real est ate business strategies, pricing

models related to relocation services, project management

services, acquisition services, and strategic consulting.Ñ Id.

The ITN also specifie s:

Other real estate consulting services such

as property acquisitions, disposi tions,

general property consulting, property

analysis and promotions, property marketing,

property negotiation, competitive bidding or

property, property auctions and direct sales

or those identified in the reply or

negotiation process and made part of the

Contract (e.g., financial services,

facilities management services, lease v. buy

analys e s).

23 . The ITN lists the following duties the contractor will

perform:

1. Act as the stateÓs tenant broker, to

competitively solicit, negotiate and

develop priv ate sector lease agreements;

2. Monitor landlord build - out on behalf of

state agencies;

3. Provide space management services, using

required space utilization standards;

4. Provide tenant representation services for

state agencies and other eligible users

during the term of a lease;

5. Identify and evaluate as directed strategic

opportunities for reducing occupancy costs

through consolidation, relocation,

reconfiguration, capital investment,

selling and/or the building or acquisition

of s pace;

6. Assist with property acquisitions,

dispositions, general property consulting,

property analysis and promotions, property

marketing, property negotiation,

competitive bidding property, property

auctions and direct sales ; and

7. Provide requested related real estate

consulting s ervices.

24 . The ITN set the commission percentage for new leases

at 4 percent for years 1 - 10 and 2 percent for each year over 10

years; 2 percent for lease renewals, extensions, or

modifications; and 2 percent for warehouse or storage space

leases. Id. For Ðother services,Ñ the ITN states:

With respect to all other services (e.g.,

space management services, general real

estate consulting services, property

acquisitions, dispositions, general property

consult ing, property analysis and

promotions, property marketing, property

negotiation, competitive bidding or

property, property auctions and direct

sales), compensation will be as outlined in

an agency prepared Scope of Work and will be

quoted based on hourly r ates (set as ceiling

rates in this ITN), set fees for the

service/project or by percentage commission

rate as offered and negotiated by the broker

and the using agency.

25 . The ITN also requir ed that vendors specify the number

of credit hours to be give n annually to DMS. Each vendor gives

a certain number of credit hours at the start of each year under

the contract. The state earns additional credit hours as the

vendors perform transactions. DMS manages the pool of

accumulated credit hours and gives t hem to individu al agencies

to use on a case - by - case basis as payment for individual

projects. These credit hours are commonly allocated to pay for

IMAs and BOVs that are not part of commissionable transactions.

With the exception of one legislatively man da ted project, DMS

has never exhaust ed its pool of credit hours.

26 . The ITN further specified that IMAs and BOVs must be

offered at no cost when performed as part of a commissionable

transaction. Historically , most IMAs and BOVs are performed as

part of a commissionable transaction. They have only been

performed separately from a commissionable transaction a handful

of times under the current contract, and many of these were

still provided at no cost through the allocation of free credit

hours available to the agencies. Therefore, most IMAs and BOVs

to be performed under the proposed contract will likely be at no

cost.

27 . The ITN states that p oints to be awarded under the

price criterion will be awarded based on the number of annual

credit hours offer ed and the commission rate paid per

transaction per hour of commission received.

28 . The ITN further provides that DMS will evaluate and

rank replies in order to establish a competitive range of

replies reasonably susceptible to award, and then the team wi ll

proceed to negotiations. Regarding negotiations, the ITN

states:

E. The focus of the negotiations will be

on achieving the solution that provides

the best value to the state based upon

the selection criteria and the

requirements of this solicitatio n. The

selection criteria include, but are not

limited to, the RespondentÓs

demonstrated ability to effectively

provide the services, technical

proposal and price. The Department

reserves the right to utilize subject

matter experts, subject matter adviso rs

and multi - agency or legislative

advisors to assist the negotia tion team

with finalizing the section criteria.

The negotiation process will also

include negotiation of the terms and

conditions of the Contract.

The ITN also states:

H. At the conclus ion of negotiations, the

Department will issue a written request for

best and final offer(s) (BAFOs) to one or

more of the Respondents with which the

negotiation team has conducted negotiations.

At a minimum, based upon the negotiation

process, the BAFOs must contain:

¤ A revised Statement of Work;

¤ All negotiated terms and conditions

to be included in Contract; and

¤ A final cost offer.

The RespondentÓs BAFO will be delivered to

the negotiation team for review.

Thereafter , the negotiation tea m will meet

in a public meeting to determine which offer

constitutes the best value to the state

based upon the selection criteria.

I. The Department does not anticipate

reopening negotiations after receiving

BAFOs, but reserves the right to do so if it

bel ieves doing so will be in the best

interests of the State.

29 . The ITN and draft co ntract permit subcontractors to

perform under the contract and provide an avenue for a

contractor to add subcontractors by submitting a written request

to DMSÓs contract manager with particular information.

Best and Final Offers

30 . After the conclusion of negotiations, the negotiation

team requested each vendor to submit a BAFO, to be filled out in

accordance with the RBAFO format. The RBAFO noted that each

vendor wou ld get a set percentage commission for leasing

transactions, but asked vendors to submit their prices for IMAs,

BOVs, and BPOs performed outside a commissionable transaction

and to submit the number of annual credit hours vendors would

give DMS at the star t of the new contract.

31 . In an effort to increase potential savings to the

state, DMS lowered the percentage rates of the commissions for

lease transactions in the RBAFO below the rates initially set in

the ITN. By selecting only two vendors instead o f three, the

additional potential volume for each vendor on the contract

could support the lower commission rates being requested of

tenant brokers. The s tate would ultimately save money due to

the impact of the reduced commissions on the overall economic

structure of each lease. Beth Sparkman, Bureau Chief of Leasing

of DMS, expounded on the rationale for reducing the number of

vendors under the new contract to two:

The Court: To me, itÓs counterintuitive

that having fewer vendors would result in

more f avorable pricing for the state of

Florida; and yet you said that was the

anticipated result of reducing the number of

vendors from three to two Î

The Witness: Correct.

The Court: -- for the new contract. IÓm

unclear. Tell me the basis for the teamÓs

anticipation that having fewer vendors would

result in better pricing.

The Witness : When the original ITN was

released, it had the same percentages in

there that are under the current contract.

And IÓll talk, for context, new leases,

which right now is at 4 percent. So the

discussion was Î and 4 percent is typical of

the industry. ThatÓs typical for what the

industry pays across the board.

So the desire was to reduce the

commission, to reduce those commission

amounts to drive that percentage down . So

we went out with the first BAFO that had a

range that said for leases that cost between

zero Î and I canÓt remember Î zero and a

half million, what would your percentage be?

Thinking that when we had a tiered

arrangement, those percentages would com e

down. They really didnÓt.

So when we sat down as a team and

discussed: Well, why didnÓt they Î and you

know, because typical is 4 percent. So we

came back and said: Well, if we reduce the

percentage on new leases to 3.25 but

restrict the reward to two vendors, each

vendor has the potential to make as much

money as they would have made at 4 percent,

but the savings would be rolled back into

the state.

32 . Each of the five vendors invited to negotiate

submitted a BAFO, agreeing as part of their submissions to

comply with the terms and conditions of the draft of the

proposed contract and agreeing to the lowered set percentage

commission rates in the RBAFO.

33 . The RBAFO listed selection criteria by which the

vendors would be chosen, to further refine the broad criteria

listed in the ITN. The RBAFO listed the following nine items as

selection criteria: performance measures (if necessary), sliding

scale/cap, IMA set fee, brokerÓs opinion of value, balance of

line (can be quoted per hour or lump s um), contract concerns,

credit hours (both annual and per deal hour), hourly rates, and

vendor experience and capability.

34 . CBREÓs BAFO submission followed the format indicated

in the RBAFO, but CBRE included an additional section giving its

proposed c ommission rates for acquisitions and dispositions of

land. These rates were also submitted by other vendors at other

parts of the procurement process, but CBRE was the only vendor

to include such rates as part of its BAFO submission. DMS

considered this addition a minor irregularity that it waived.

35 . In its BAFO submission, Cushman offered a three - tiered

approach to its pricing for IMAs and BOVs. For the first tier,

Cushman offered to perform IMAs and BOVs for free as part of a

commissionable transac tion. This is redundant, as the ITN

require d all vendors to perform IMAs and BOVs at no cost when

part of a commissionable transaction. For the second tier,

Cushman offered to perform IMAs and BOVs at no cost when the

user agency has previously hired Cus hman on tenant

rep resentative work. Ms. Sparkman testified that this provision

was unclear, as Cushman did not define the scope of this

provision or what amount of work qualified the agency for free

services. For the third tier, Cushman offered to perfor m IMAs

and BOVs for $240 when not part of a commissionable transaction

for an agency with which it had never done business.

Best Value Determination

36 . The five BAFOs were sent to the negotiation team for

review on August 8, 2013, and on August 14, 2013 , the team met

in a public meeting to discuss the BAFOs, consider the selection

criteria, discuss the teamÓs award recommendation, and draft a

written award recommendation memorandum.

37 . During the August 14, 2013 , meeting the team

determined that CBRE and Vertical rep resented the best value to

the state , by a majority vote for CBRE and by a unanimous vote

for Vertical. Ms. Sparkman stated at the meeting that , from her

perspective, CBRE and Vertical represented a better value than

the other vendors beca use they were more forward thinking in

their long term business strategies for managing FloridaÓs

po rtfolio.

38 . Also at this meeting, Ms. Sparkman noted that CBREÓs

prices for IMAs and BOVs were somewhat high but that she would

attempt to convince CBRE to lower its prices during the contract

execution phase. This was part of an attempt to equalize costs

to ensure user agencies selected vendors based on individual

needs rather than cost. However, CBRE rep resented the best

value to the s tate regardless o f whether its pricing changed.

At hearing, Ms. Sparkman testified that if CBRE had refused to

lower its pricing, DMS would still have signed a contract with

them based on the pricing submitted in its BAFO.

39 . Ms. Sparkman also stated at the public meet ing that if

she were unable to come to contract with both CBRE and Vertical ,

she would arrange for another public meeting to select a third

vendor with whom to proceed to the contract execution phase.

This statement did not refer to DMS selecting a third vendor to

replace CBRE should CBRE refuse to lower its price , but rather

reflected the possibility that during the contract execution

phase, DMS and either one of the vendors could potentially be

unable to sign a contract because the vendor was unwilling t o

execute the written terms and conditions. The Ðcontract

negotiationsÑ referenced during the public meeting are the

remaining processes to be worked out during the contract

execution phase and are distinct and separate from the

negotiation phase. At hea ring, Ms. Sparkman testified that in

the past, vendors have refused to sign a contract because their

legal counsel was unwilling to sign off on what the business

representatives agreed to. Thus, i f either CBRE or Vertical

refused to sign the contract alto gether, DMS would potentially

have select ed a third - place vendor in order to have a second

vendor on the contract , according to Ms. Sparkman .

40 . I nternational experience weighed in favor of CBRE and

Vertical , according to team member comments made at th e public

meeting . Although the phrase Ðinternational experienceÑ was not

specifically listed in the selection criteria of the ITN or

RBAFO, many vendors highlighted their international experience

as part of the general category of vendor experience. Vend or

experience and capability is specified in both the ITN and RBAFO

as part of the selection criteria. Ms. Sparkman testified that

international experience is indicative of high quality general

vendor experience because international real estate market

tr ends change more rapidly than domestic market trends.

41 . None of the n egotiation t eam member s recommended

Cushman for a contract award, and in fact, Cushman's name was

not even discussed at the award meeting.

The Award Memorandum

42 . Also during the A ugust 14, 2013 , public meeting the

negotiation team prepared a memorandum setting forth the

negotiation teamÓs best value recommendation of CBRE and

Vertical , and many of its reasons for the recommendation. There

was no requirement that the memorandum lis t every single reason

that went into the decision. For example, the memorandum did

not state that the team found CBRE and VerticalÓs focus on long

term strategies more impressive than CushmanÓs focus on past

performance under the current contract.

43 . T he award memorandum included a ÐSelection CriteriaÑ

section which simply repeat ed the nine selection criteria that

had been previously identified in the RB AFO. The memorandum

then went on to include a section labeled ÐB. Technical

AnalysisÑ that stated :

A nalysis of pricing is provided in section C

below. As to the remaining selection

criteria items, the Team identified the

following key elements for the service to be

provided:

¤ Long term strategies

¤ Key performance indicators

¤ Management of the por tfolio

¤ Top ranked vendors had comprehensive

business plans

¤ Pricing on the BOV and IMAs.

The selection criteria provided above were

used by the Team to make its best value

recommendation.

44 . Ms. Sparkman testifi ed that while the choice of

word ing may have been imprecise, the items listed in th e

Technical Analysis section were simply elaborations of the

selection criteria in the ITN and RBAFO , and not new criteria.

The first four are subsumed within vendor experience and

capability, and the fift h was specifically listed in the RBAFO.

Indeed, CushmanÓs Senior Managing Director testified at hearing

that Cushman had addressed the first four items in their

presentation to DMS during the negotiation phase to demo nstrate

why Cushman should be chosen fo r the contract.

45 . The memorandum failed to note that CBRE had included

non - solicited information in its BAFO regarding proposed rates

for the acquisition and disposition of land. However, the

negotiation team considered CBREÓs inclusion of these propos ed

rates a minor irregularity that could be waived in accordance

with the ITN and addressed in the contr act execution phase,

since those rates were for ancillary services , and there was no

guaranteed work to be done for DEP under that fee structure.

46 . The memorandum included a chart , identified as

Attachment B , that compared the proposed number of credit hours

and some of the pricing for IMAs and BOVs submitted by the

vendors in their BAFOs. The chart listed CushmanÓs price for

IMAs and BOVs as $240 a nd failed to include all the information

regarding the three - tiered approach to IMAs and BOVs Cushman

listed in its BAFO. However, Ms. Sparkman testified that the

chart was meant to be a side - by - side basic summary that compared

similar information, not an exhaustive listing.

The Cushman Protest

A. Negotiations After Award of the Contract

47 . Cushman alleges that DMSÓs selection of CBRE violates

the ITN specifications because DMS selected CBRE with the intent

of conducting further negotiations regarding pric e, which

provided CBRE with an unfair advantage. Cushman further argues

that the procedure of awarding to one vendor and then possibly

adding another vendor if contract negotiations fail violates

FloridaÓs statutes and the ITN. Amended Pet. ¶¶ 23, 28 & 3 1.

48 . Section 2.14 of the ITN spec ifically reserved DMS 's

right to reopen negotiations after receipt of BAFOs if it

believed such was in the best interests of the s tate.

Specifically, section 2.14 A. provides:

The highest ranked Respondent(s) will be

in vited to negotiate a Contract.

Respondents are cautioned to propose their

best possible offers in their initial Reply

as failing to do so may result in not being

selected to proceed to negotiations. If

necessary, the Department will request

revisions to the approach submitted by the

top - rated Respondent(s) until it is

satisfied that the contract model will serve

the s tateÓs needs and is determined to

provide the best value to the s tate.

49 . T he statements made by Ms. Sparkman at the August 14,

2013, pu blic meeting and in the award memorandum , that DMS would

attempt to reduce CBRE's prices for ancillary services during

the contract execution process were not contrary to the ITN or

unfair to the other vendors. Both Ms. Sparkman and Mr. Br adner,

the two n egotiation t eam members who voted to award to CBRE,

testified that they recommended CBRE as providing the best value

even considering its arguably higher prices for ancillary

services. Ms. Sparkman further confirmed that even if CBRE

refused to lower its prices during the contract execution phase,

DMS would still sign the contract, as CBRE's proposal would

still r epresent the best value to the s tate. The anticipated

efforts to obtain lower prices from CBRE were simply an attempt

to obtain an even better b est value for the s tate.

50 . Ms. Sparkman also testified that section 2.14 F.

allowed continued negotiations , even though it was silent as to

t imeframe. Paragraph F states:

In submitting a Reply a Respondent agrees to

be bound to the terms of Section 5 Î General

Contract Conditions (PUR 1000) and Section 4

Î Special Contract Conditions. Respondents

should assume those terms will apply to the

final contract, but the Department reserves

the right to negotiate different terms and

related price adjustments if the Department

determines that it provides the best value

to the s tate.

51 . Ms. Sparkman also cited section 2.14 I. as authority

for reopening negotiations following receipt of the BAFOÓs.

That section provides:

The Department does not anticipate re opening

negotiations after receiving the BAFOs, but

reserves the right to do so if it believes

doing so will be in the best interests of

the s tate.

52 . Ms. Sparkman Ós statement that if DMS failed, for any

reason, to successfully contract with either of t he two vendors

selected, it would consider pulling in another vendor , is not

inconsistent with the clear language of the ITN .

B. Selection Criteria

53 . Cushman alleges that DMS used criteria to determine

the awards that were not listed in the ITN or the RBAFO.

Amended Pet. ¶ 25.

54 . Section 2.14 E of the ITN established broad selection

c riteria, stating:

The focus of the negotiations will be on

achieving the solution that provides the

best value to the state based upon the

selection criteria and the req uirements of

this solicitation. The selection criteria

include, but are not limited to, the

Respondent's demonstrated ability to

effectively provide the services, technical

proposal and price. The Department reserves

the right to utilize subject matter e xperts,

subject matter advisors and multi - agency or

legislative advisors to assist the

negotiation team with finalizing the

selection criteria. The negotiation process

will also include negotiation of the terms

and cond itions of the Contract.

( e mphasis a dded).

55 . Following the negotiations, and with the assistance of

its subject matter expert, the n egotiation t eam provided in the

RBAFO additional clarity as to the selection criteria, and

identified the "Basis of Award/Selection Criteria" as follows:

Pe rformance Measures (if necessary)

Sliding scale/cap

IMA set fee

Broker's opinion of value

Balance of line (can be quoted per hour

or lump sum)

Contract concerns

Credit hours (both annual and per deal

hour)

Hourly rates

Vendor experience and capability

5 6 . The foregoing selection criteria, as well as the

selection criteria stated initially in the ITN, make clear that

pricing was only one of the criteria upon which the award was to

be made. Indeed, Cushman's representative, Larry Richey,

acknowledged dur ing his testimony that criteria such as

"Performance Measures," "Contract Concerns," and "Vendor

Experience and Capability" did not refer to pricing, but rather

to the expected quality of the vendor's performance if awarded

the contract .

57 . As the princ ipal draftsman of the ITN and DMS 's lead

negotiator, Ms. Sparkman explained that the RBAFO's statement of

the selection criteria was intended to provide greater detail to

the broad selection criteria identified in the ITN, and was used

by the negotiation t eam in making its best value determination.

Ms. Sparkman further testified that the best value d etermination

resulted from the n egotiation t eam's lengthy and extensive

evaluation o f the vendors' initial written r eplies to the ITN,

review of the vendors' qu alifications and comprehensive business

plans, participation in approximately two and a half hours of

oral presentations by each vendor (including a question and

answer session with regard to the proposed implementation and

management of the contracts), and a review of the vendors'

BAFOs.

58 . Applying the selection criteria contained in the ITN

and the RBAFO, the n egotiation t eam selected Vertical for

several reasons, including its performance indicators, employees

with ADA certification, computer progr ams and employee training

not offered by other vendors, its presence in Fl orida, and the

strength of its business plan and presentation.

59 . Similarly, the n egotiation t eam selected CBRE for an

award based on the strength of its ITN Reply, its broad look at

long - term strategies, its key performance indicators, the

experience and knowledge of its staff, the comprehensiveness of

its proposal and business plan, size of its firm, and creative

ideas such as use of a scorecard in transactions.

60 . Ms. Sparkman observed that both Vertical and CBRE

specifically identified the CBRE staff who would manage the

s tate's business and daily transactions, while it was not clear

from Cushman's ITN r eply and related submissions who would

actually be working on the account. Cushman likewise did not

discuss out - of - state leases and how such leases were going to be

handled, which was a significant concern because DMS considered

out - of - state leases to be particularly complex.

61 . Ms. Sparkman also noted that with respect to t he

vendors' business plans, both Vertical and CBRE focused

primarily on strategic realignment and plans for the future,

whereas Cushman discussed their current transactions at length,

but did not demonstrate forward thinking to the negotiation

t eam.

62 . C ushman's r eply to the ITN also included various

discrepancies noted at the final hearing. While Cushman's ITN

r eply identifies a Tallahassee office, Cushman does not in fact

have a Tallahassee office, but instead listed its

subcontractorÓs office. 6 / Addi tionally, two of the business

referen ces presented in Cushman's ITN R eply appear not in fact

to be for Cushman, but instead for its subcontractor, Daniel

Wagnon, as Cushman's name was clearly typed in above

Mr. Wagnon's name after the references were writt en. Finally,

Cushman failed to provide in its ITN Reply the required

subcontractor disclosure information for at least one of its

"Project Management Partners," Ajax Construction.

63 . Based on all of the above, DMS 's decision to award

contracts to Vertic al and CBRE as providing the best value to

the s tate was not arbitrary, capricious, clearly erroneous, or

contrary to competition. Simply stated, and as the n egotiation

t eam determined, the submissions by Vertical and CBRE were more

comprehensive and reas onably found to offer better value to the

s tate than Cushman's submission. Indeed the n egotiation t eam

did not even mention Cushman as a potential contract awardee,

but instead identified only Vertical, CBRE and JLL in their

deliberations as to best value .

64 . Cushman's argument that DMS a ward m emorandum

improperly relies on the following as "key elements" related to

services does not alter this analysis:

Long term strategies

Key performance indicators

Management of the portfolio

Top ranked vendors had co mprehensive

business plans

Pricing on the BOV and IMAs.

While Ms. Sparkman acknowledged that the choice of language in

the m emorandum could have been better, it is clear that the

foregoing are indeed "elements" of the selection criteria stated

in the IT N and RBAFO, as the first four elements plainly relate

to the vendors' ability to effectively provide the services,

their technical proposal, performance measures, and vendor

experience and capability, while the last element relates to the

pricing portion of the criteria.

65 . Cushman also argues that the award memorandum failed

to inform the final decision - maker that Cushman offered IMAs and

BOVs at no charge when Cushman was engaged in a commissionable

transaction or was performing other work for an agen cy under the

contract. As a result, Cushman asserts, the Deputy Secretary

was provided with inaccurate information relating to price.

66 . Cushman's argument that the award process was flawed

because the pricing chart attached to the a ward m emorandum did

not accurately reflect Cushman's proposed pricing is without

merit. As Ms. Sparkman testified, th e chart was prepared by the

negotiation t eam to provide f or the decision - maker an apples - to -

apples broad summary comparison of the vendor's proposed pricing

for the proposed ancillary services. The chart was not intended

to identify all variations or conditions for potential different

pricing as proposed by Cushman. 7 /

C. Best Value Determination

67 . Cushman contends that the negotiation teamÓs decision

to awar d a contract to CBRE did not result in the best value to

the state. Amended Pet. ¶¶ 26, 28 & 29. Cushman further argue s

that DMS did not meaningfully consider differences in proposed

pricing. T he failure to consider price for potential ancillary

service s , Cushman argues , was contrary to competition as it gave

an unfair advantage to CBRE whose prices were higher than

CushmanÓs prices in all but one category.

68 . Although pricing for the potential ancillary services

was relevant, the ITN's initial scorin g cr iteria made clear that

DMS was primarily focused on evaluating the experience and

capability of the vendors to provide the proposed services. For

this reason, the ITN's initial scoring criteria awarded 90

percent of the points based upon the qualifica tions and business

plan of the vendors, and only 10 percent of the points based on

the pricing for potential ancillary services. The n egotiation

t eam members testified that this same focus on qualifications

and the vendors' business plan continued during the negotiation

phase and award decision, although without reliance on the

mathematical scoring process utilized during the initial

evaluation phase. Nothing in the ITN specifications altered

this focus, and the negotiations were directed to gaining a

gre ater understanding of the vendors' proposed services, the

qualifications and bios of individuals who would actually do the

work, vendors' approach to the work and parameters the vendors

would use to evaluate their performance.

69 . Pricing remained of rel atively minor significance

primarily because the RBAFO established a uniform lease

commission rate for all vendors, effectively removing pricing as

a means to differentiate between the vendors. As a result,

vendors were required to quote pricing only for certain

potential ancillary services, including IMAs and BOVs, and the

number of free credit hours to be provided to the s tate.

70 . Pricing for these potential ancillary services was not

considered particularly important , since historically these

service s were seldom used, and the ITN required all vendors to

provide IMAs and BOVs free of charge when related to a

commissionable transaction (thereby greatly reducing the impact

of any "free" IMA or BOV services). For these reasons, the

n egotiation t eam cons idered the potential ancillary services and

pricing for these services not to be significant in the award

decision and only incidental to the core purpose and mission of

the intended contract, to wit, leasing and leasing commissions.

As a result, the n egot iation t eam referred to these potential

ancillary services as "balance of line" items which were n ominal

and added little value to the contract.

71 . Notwithstanding Cushman's argument that it should have

been awarded the c ontract because it offered the lo west pricing

for these ancillary services, its prices were not in fact the

lowest offered by the vendors. Indeed JLL offered to provide

all IMA and BO V services ( with no preconditions ) at no cost.

Cushman's pricing for the ancillary services also was not

materially different than CBRE's pricing. CBRE's consulting

services rates are comparable, if not lower, than Cushman's

rates, and the difference between Cushman's and CBRE's p roposed

charges for IMAs and BOV s is only a few hundred dollars .

72 . W hen con sidered in terms of the anticipated number of

times the ancillary services will be requested (rarely, based on

the prior contract), the total "extra" amount to be spent for

CBRE's services would be at most a few thousand dollars. The

n egotiation t eam reas onably considered this to be insignificant

in comparison to the multimillion dollar leasing work which was

the core purpose of the intended contract . 8 /

73 . Because pricing for the potential ancillary services

was of lesser significance to DMS 's award dec ision, Cushman's

posi tion that DMS should have awarded Cushman a contract based

up on its pricing for ancillary services is not consistent with

the ITN and does not render DMS 's intended awards to Vertical

and CBRE arbitrary, capricious, clearly erroneous o r contrary to

competition. To the contrary, DMS articulated a rational,

reasonable and logical explanation for the award.

D. CBREÓ s Proposal Non - Responsive to ITN and RBAFO?

74 . Cushman alleges that CBRE Ós BAFO was not responsive to

the ITN and the RBAFO b ecause CBRE included a set rate for

acquisitions and dispositions in its proposal . Amended Pet. 30.

Since CBRE's BAFO materially deviated fr om the ITN's

specifications, CBRE Ós proposal should have been deemed non -

responsive and therefore rejected, Cushma n argues.

75 . The ITN originally requested pricing related only to

credit hours as the ITN set the rates for leases. The ITN

stated that Ðother servicesÑ would be determined on a case - by -

case basis as negotiated by the agencies. However, a s part of

the ITN process, DMS discussed with the vendors the potential

for them to assist the s tate in the sale and acquisition of

property, and what commission rates might be charged for this

work. For this reason, CBRE included proposed commission rates

for acquisit ion and disposition services in its BAFO.

76 . DMS considered the inclusion of potential rates for

acquisitions and dispositions to be a minor irregularity which

did not render CBRE's BAFO non - responsive. This determination

is consistent with the terms of the ITN, which at s ection

2.14(g) states "[t]he Department reserves the right to waive

minor irregularities in replies."

77 . The form PUR 1001 incorporated by reference in to the

ITN likewise reserves to DMS the right to waive minor

irregularities and sta tes:

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

ser ve the s tate's best interests. The Buyer

may reject any response not submitted in the

manner specified by the solicitation

documents.

78 . Consistent with the above - cited provisions, the

n egotiation t eam noted at its August 14, 2013, meeting that

CBRE's inclusion of the proposed rates was not material, and

that during the contr act execution process, DMS would either

exclude the proposed rates from the contract, or possibly

include such as a cap for these services. Both of these

alternatives were availabl e to DMS given CBRE's commitment to

follow the terms of the draft contract, which specifically

stated that fees for acquisitions and dispositions would be

negotiated on a case - by - case basis.

79 . Finally, CBRE's inclusion of proposed commission rates

for a cquisitions and dispositions did not give CBRE an advantage

over the other vendors, or impair the competition, because

Cushman and JLL also submitted, as part of their ITN responses,

proposed commission rates for the acquisition and disposition of

property .

E. Do the ITN Specifications Violate Section 255.25 ?

80 . Cushman's final argument is that the ITN

specifications, and the proposed contract, violate section

255.25(3)(h)5 . , Florida Statutes, which states that " [a] ll terms

relating to the compensation of t he real estate consultant or

tenant broker shall be specified in the term contract and may

not be supplemented or modified by the state agency using the

contract." Cushman's argument has two components.

81 . First, Cushman argues that the specifications included

at Tab 5, page 13 of the ITN violate the statute by providing:

"With respect to all other [ancillary] services, . . . ,

compensation shall be as outlined in an agency prepared Scope of

Work and will be quoted based on an hourly rate (set as ceilin g

rates in this ITN), set fees for the service/project or by a

percentage commission rate as offered and negotiated by the

using agency. Ñ

82 . Cushman also argues that the language in the award

memorandum stating that the BOV rates are "caps" and "may be

negotiated down by agencies prior to individual transactions,"

violates the statute. This latter reference to "caps"

correlates to the "ceiling rates" stated in the above quoted ITN

specification.

83 . Section 120.57(3)(b), Florida Statutes, requires

ven dors to file a protest to an ITNÓs terms, conditions, or

specifications within 72 hours of the release of the ITN or

amendment; failure to protest constitutes a waiver of such

arguments. DMS included this language with the release of the

ITN and each amen dment, so Cushman was on notice of its protest

rights.

84 . Cushman's challenge to the ITN specifications as

violating section 255.25 is untimely and has been waived.

Having been fully informed of this specification since May 14,

2013, when the revised I TN was published, Cushman could not wait

until the ITN process was completed some four months later, and

then argue that the ITN specification s do not comply with

section 255.25 and must be changed. Such argument plainly

constitutes a specifications chall enge, and such a challenge is

now time - barred.

85 . Even were CushmanÓ s challenge not time - barred, it

would still fail. S ection 255.25 requires only that " [a] ll

terms relating to the compensation of the real estate consultant

or tenant broker shall be s pecified in the term contract," and

not that all terms identifying the compensation be specified.

86 . Th e challenged ITN specification, actually added via

Adden dum 2 at the request of DEP and its subject matter expert,

does specify the approved methods b y which the s tate could

compensate the vendor, which DMS determined wou ld best be

determined on a case - by - case basis. By stating the approved

methods which can be used by the state agencies, the ITN

specifications and term contract did specify the terms " relating

to" the compensation of the vendor, i.e., an hourly rate (set as

ceiling rates in the ITN), set fees for the service/project , or

a percentage commission rate. DMS established these terms

because the exact compensation would best be determined b y the

state agency on a case - by - case basis in a Statement of Work

utilizing one of the specified compensation methods. 9 /

CONCLUSIONS OF LAW

87 . DOAH has jurisdiction over the subject matter of and

parties to this proceeding in accordance with sections 120. 569,

120.57(1) and (3), Florida Statutes.

88 . Cushman has standing to file this protest by virtue of

responding to the ITN and being selected for negotiations. See

Fairbanks, Inc. v. DepÓt of Transp. , 635 So. 2d 58, 59 (Fla. 1st

DCA 1986). DMS selected two vendors for award, but the

negotiation team did not rank the vendors. Thus, Cushman, as

one of the vendors who negotiated, has a stake in the award and

the requisite substantial interest. Cf. Cap e letti Bros., Inc.

v. State DepÓt of Gen . Servs. , 432 So. 2d 1359, 1360 n.1 (Fla.

1st DCA 1983).

89 . Section 120.57( 3)(f) provides that:

T he 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, o r

replies, the administrative law judge shall

conduct a de novo proceeding 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

o f proof for such proceedings shall be

whether the proposed agency action was

clearly erroneous, contrary to competition,

arbitrary, or capricious.

90 . The nature of the de novo review in a bid protest

proceeding has been established as follows:

[T]he phrase 'de novo hearing' is used 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. See

Intercont inental Properties, Inc. v. State

Department of Health and Rehabilitative

Services , 606 So. 2d 380 (Fla. 3d DCA 1992).

State Contracting and EngÓg Corp. v. DepÓt

of Transp. , 709 So. 2d, 607, 609 (Fla. 1st

DCA 1998).

91 . The standard of review of the agencyÓs proposed action

in a bid protest proceeding has been generally described as

follows:

[A] Ð public body has wide discretion Ñ in the

bidding process and Ð its decision, when

based on an honest exercise Ñ of the

discretion, should not be overturned Ð e ven

if it may appear erroneous and even if

reasonable persons may disagree. Ñ Dep Ó t of

Transp . v. Groves - Watkins Constructors , 530

So. 2d 912, 913 (Fla. 1988) (quoting Liberty

County v. Baxter's Asphalt & Concrete, Inc. ,

421 So. 2d 505 (Fla. 1982)) (emphas is in

original). Ð The hearing officer's sole

responsibility is to ascertain whether the

agency acted fraudulently, arbitrarily,

illegally, or dishonestly. Ñ Groves - Watkins ,

530 So. 2d at 914.

Scientific Games, Inc. v. Dittler Bros. , 586 So. 2d 1128, 113 1

(Fla. 1st DCA 1991).

92 . A decision is 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. 364, 395 (1948). See also Floridian Constr. & Dev. Co.

v. DepÓt of Envtl. Prot. , Case No. 0 9 - 0858BID ( Fla. DOAH May 1,

2009 ; Fla. DEP June 1, 2009 ) (ÐA decision is clearly erroneous

when unsupported by substantial evidence or contr ary to the

clear weight of the evidence or is induced by an erroneous view

of the law.Ñ). An agency action is capricious if the agency

takes the action without thought or reason or irrationally, and

agency action is arbitrary if is not supported by facts or

logic. Agrico Chemical Co. v. State DepÓt of Envtl. Reg. , 365

So. 2d 759, 763 (Fla. 1st DCA 1978). See also

§ 120.57(1)(e)2.d., Fla. Stat. An agency decision is contrary

to competition if it unreasonably interferes with the objectives

of competitive bidding. See Wester v. Belote , 138 So. 2d 721,

723 - 24 ( Fla. 1931).

93 . An act is "contrary to competition" if it runs contrary

to the objectives of competitive bidding, which have been long

held as follows:

. . . to protect the public against

collusive contracts; to secure fair

competition upon equal terms to all bidders;

to remove not only collusion but temptation

for collusion and opportunity for gain at

public expense; to close all avenues to

favoritism and fraud in various forms; to

secure the best v alues for the [public] at

the lowest possible expense Wester v.

Belote , 138 So. 2d 721, 723 - 24 (Fla. 1931);

see also Harry Pepper & Assoc., Inc. v. City

of Cape Coral , 352 So. 2d 1190, 1192 (Fla.

2d DCA 1977).

94 . Where the agency action does not follo w the stated bid

procedures or the agency acts contrary to the procedures or bid

documents, the agency action is arbitrary and capricious, and

clearly erroneous. See Emerald Correctional Mgmt. v. Bay Cnty .

Bd. of Cnty . Comm Ó rs , 955 So. 2d 647, 653 (Fla. 1 st DCA 2007)

("[A] public body is not entitled to omit or alter material

provisions required by the RFP because in doing so the public

body fails to inspire public confidence in the fairness of the

[RFP] process.") (quoting Dep't of Lottery v. Gtech Corp . , 816

So. 2d 648 (Fla. 1st DCA 2001)); Coin Laundry Equip. v. Univ. of

W. Fla. , Case No. 96 - 0962BID, (Fla. DOAH July 5, 1996 ; Fla. UWF

Oct . 1, 1996 ) ("The failure of a public entity to follow its own

bid specifications is an arbitrary and capricious act and

undermines the integrity of the bid process.").

Governing Statutes , Regulations and Policies

95 . DM S procurements are governed by c hapter 287, F lorida

Statutes. Additionally, c hapter 255 governs public property and

publicly owned buildings. An agency Ós interpretation of its own

rules and statutes that the agency is required to implement is

entitled to deference. Such interpretations are not to be

disregarded unless clearly erroneous. See Sullivan v. Fla.

DepÓt of Envtl. Prot. , 890 So. 2d 417 (Fla. 1 st DCA 2004);

Bd. Of Podiatric Med. v . Fla. Med. AssÓn. , 779 So. 2d 658 (Fla.

1st DCA 2001).

A. Chapter 255, Florida Statutes

96 . Section 25 5.25(3)(h)1 . states that the tenant broker

Ðcontract may be made with up to three tenant brokersÑ but does

not give a minimum. Petitioner failed to prove that DMSÓs

decision to award the contract to two vendors instead of the

maximum of three was arbitrary or capricious . DMSÓs decision

was rational ly bas ed on the goal of driv ing down the set

commission costs for leasin g transactions, w ith resultant

savings to the state due to the reduced commissions on the

overall economic structure of each lease. Additionally, the

possibility that DMS might select a third vendor if either CBRE

or Vertical refused to sign the contract is consistent with

section 255.25(3)(h) 1., which allows DMS to decide whether to

put one, two, or three tenant brokers onto the contract in order

to serve the state Ós needs in the marketplace.

97 . CushmanÓs amended protest petition argues that DMS

vio lated section 255.25(3)(h)5 .1 , which provid es that Ðall terms

relating to the compensation of the real estate consultant or

tenant broker shall be specified in the term contract and may

not be supplemented or modified by the state agency using the

contract .Ñ However, t his provision pertains to leasing

transactions, not acquisitions and dispositions of land. The

ITN and RBAFO adequately identify the terms relating to

compensation of the tenant brokers for private leasing

transactions.

98 . Se ction 255.25 does not restrict DMSÓs ability to

negotiate land acquisition and disposition services via

individual Statements of Work. This statutory provision was

enacted in 2007, when the l egislature directed in section

255.249(6) that DMS Ðshall develop and impleme nt a strategic

leasing planÑ and in 255.249(11) that DMS Ðmay contract for real

estate consulting or tenant brokerage services in order to carry

out its duties relating to the strategic leasing plan under

subsection (6).Ñ Section 255.25 outlines implement ation

requirements for these leasing services, not for acquisition and

disposition services.

99 . Even assuming, arguendo, that section 255 .25(3)(h)5 .,

did pertain to land acquisitions and dispositions, Petitioner

failed to prove that DMS violated its pro visions. The statute

requires that Ðall terms relating to the compensationÑ of tenant

brokers be specified. As noted in the Findings of Fact, the ITN

states that the user agency will prepare an individual Scope of

W ork utilizing one of the three specifie d compensation methods -

an hourly rate (set as ceiling rates in the ITN), set fees for

the service/project, or a percentage commission rate. The

acquisition and disposition portions of the ITN were added at

the request of and with the expertise of DEP, whi ch determined

that this individualized method of compensation met DEPÓs needs.

This ITN specification satisfies section 255.25(3)(h)5 . , because

tenant brokers were required to use one of the specified methods

of compensation and could not use any other des ired form of

payment. The statute does not require that the contract

identify the specific compensation the state agency would pay

for each transaction; it simply requires that all terms relating

to compensation be specified.

B. Chapter 287, Florida Statute s

100 . Section 287.057(3), states that agencies must specify

the criteria for determining the acceptability of invitation to

negotiate responses and the selection of vendors. Section

287.057(1)(c)4 . , requires agencies to award the contract to the

respons ive and responsible vendors representing the best value

to the state based on the selection criteria after negotiations

are conducted. The statute does not specify how much weight

agencies must give to pricing in determining the best value of

an invitatio n to negotiate. This is in contrast to an

invitation to bid pursuant to section 287.057(1)(a)4 . , which

requires agencies to award to the lowest responsive bidder.

While price is a consideration, the applicable statutes do not

require that price be given paramount importance in determining

best value.

101 . Cushman maintains that asking CBRE to lower its

prices after the negotiation phase has ended is improper. Under

this interpretation, agencies would never be allowed to ask

vendors on a contract for a l ower price once a BAFO has been

submitted. This argument is not supported by the applicable

statutes, or logic . There is no prohibition on an agency

attempting to maximize best value for the state by ask ing a

selected vendor to lower its pricing, even wh en they cannot

force a vendor to do so. 10 /

102 . In its Proposed Recommended Order, Cushman cites

Dep artmen t of Lottery v. Gtech Corp oration , 816 So. 2d 648 (Fla.

1st DCA 2001) as authority for its argument that an agency

cannot freely negotiate material te rms of a contract once the

competitors had been eliminated from the solicitation. However,

the facts of the case sub judice are clearly distinguishable

from those in Gtech . In Gtech , the court ruled that it was

impermissible for the Department of Lottery to negotiate a

contract with a vendor after the N otice of I ntent to A ward was

announced with terms and conditions materially different than

the vendor had initially proposed. However, the solicitation in

Gtech wa s a Request for Proposals (RFP ) rather tha n an

Invitation to Negotiate. The ITN process offers agencies much

more discretion in negotiating with vendors than do es the RFP

process circumscribed by section 287.057 (b) . Additionally, the

request that CBRE lower its prices would not have made the

res ulting contract materially different from CBREÓs submissions

because the prices pertained to ancillary services under the

contract, not the main private leasing transactions.

103 . Competent evidence of record established that the

team determined CBRE and Vertical rep resented the best value to

the s tate, regardless of whether CBRE agreed to lower i ts prices

for IMAs and BOVs. DMS was simply trying to make the price even

better for the state. Petitioner failed to prove DMS illegally

extended the negotiatio n phase beyond the Notice of Intent to

Award or that the best value determination was dependent on

post - award negotiations.

104 . There was no competent evidence presented that DMS

acted contrary to its administrative rules or policies.

Therefore, Petitio ner has failed to meet its burden of proof

that DMS acted contrary to its rules or policies.

The ITN Specifications

105 . The unsolicited information CBRE i ncluded in its BAFO

was a minor irregularity that DMS had the authority to waive.

CBREÓs BAFO other wise conformed to the RBAFO format DMS

provided. The inclusion of extra information was not fatal and

simply included information other vendors (including Cushman)

had included in their earlier submittals. CBREÓs inclusion of

proposed acquisition and dis position rates did not give it a

substantial advantage over other vendors or otherwise restrict

or stifle competition, so the deviation is not material .

106 . "Although a bid containing a material variance is

unacceptable, not every deviation from the inv itation is

material." Robinson Elec. Co. v. Dade Cnty . , 417 So. 2d 1032,

1034 (Fla. 3d DCA 1982); Tropabest Foods, Inc. v. State, Dep't

of Gen. Servs. , 493 So. 2d 50, 52 (Fla. 1st DCA 1986); Glatstein

v. Miami , 399 So. 2d 1005 (Fla. 3d DCA 1981 ) , rev . den ied , 407

So. 2d 1102 (Fla. 1981). "It is only material if it gives the

bidder a substantial advantage over the other bidders and

thereby restricts or stifles competition." Tropabest , 493 So.

2d at 52; Harry Pepper & Assocs. v. City of Cape Coral , 352 So.

2d 1190, 1193 (Fla. 2d DCA 1977); Procacci Commercial Realty v.

Dep't of HRS , 690 So. 2d 603, 606 (Fla. 1st DCA 1997).

107 . CBRE's inclusion of proposed commission rates for

acquisitions and dispositions did not give CBRE an advantage

over the other vend ors, and did not impair competition. These

potential services were ancillary to the contract, and Cushman

and JLL also provided their proposed rates as part of the ITN

process. Finally, CBRE's commitment to adhere to the terms of

the draft contract, whic h specifically stated that fees for

acquisitions and dispositions would be negotiated on a case - by -

case basis, rendered the inclusion of the proposed rates of

little significance as found by the negotiation t eam.

108 . DMS 's decision to waive the minor i rregularity in

CBRE's BAFO was not arbitrary, capricious, clearly erroneous or

contrary to competition.

109 . Petitio ner failed to present persuasive evidence that

the positive comments made in the public meeting (and later

referenced in the award memoran dum) about CBREÓs international

experience indicate the negotiation team based their best value

determination on improper selection criteria. I nternational

experience is reasonably included as part of general vendor

experience and capability category, whi ch is noted in the ITN

and RBAFO. Ms. SparkmanÓs testimony explaining that tenant

brokers with international experience are generally quicker at

adapting to real estate trends and market shifts indicates that

such international experience was noted for ho w it related to

vendor experience and capability and not for how tenant brokers

would specifically handle international transactions.

110 . Competent evidence of record established that t he

section within the award memorandum labeled as ÐB. Technical

Anal ysisÑ did not constitute separate selection criteria the

team relied on in determining best value, apart from the

criteria listed in the ITN and RBAFO. While the exact

terminology in this section appears slightly modified, it is

clear that the items liste d in this section are reworded

elaborations of existing selection criteria in the ITN and

RBAFO. The word choice of Ðremaining selection criteriaÑ is

factually inaccurate, as the section actually consists of

highlights of the ways the winning vendors exem plified the

already existing selection criteria. Petitioner has failed to

prove that these Ðremaining selection criteriaÑ were improper

selection criteria.

111 . Petitioner has also failed to prove that the BAFO

comparison chart included in the award mem orandum kept the DMS

Deputy Secretary from making an informed decision, even though

it did not contain the entirety of CushmanÓs approach to IMA and

BOV pricing. Persuasive evidence establish ed that the chart was

meant to be a summary, not an exhaustive l ist of all pricing

information submitted by the vendors. As all vendors would have

to perform IMAs and B OVs for free on most engagements , giving

the side by side approach of showing what each vendor would

charge , if they charged at all , was an appropriate way to

organize the information. Additionally, the Deputy Secretary

has the option to reject the negotiation teamÓs recommendation.

See Caber Systems, Inc. v. DepÓt of Gen . Svcs . , 530 So. 2d 325

(Fla. 1st DCA 1988); Gulf Real Props., Inc. v. DepÓt of HRS , 687

So. 2d 1336 (Fla. 1st DCA 1997).

112 . Finally, s ectio n 120.57(3)(b) , requires vendors to

file a protest to an ITNÓs terms, conditions, or specifications

within 72 hours of the release of the ITN or amendment; failure

to protest constitutes a waiver of such arguments. DMS included

this language with the release of the ITN and each amendment, so

Cushman was on notice of its protest rights.

113 . Once vendors have waived a protest to the

specifications of the ITN, they cannot later challenge these

spec ifications after the notice of intent to award has been

announced. See , e.g. , Consultech of Jacksonville, Inc., v.

DepÓt of Health , 876 So. 2d 731, 734 (Fla. 1st DCA 2004);

Capeletti Bros. v. DepÓt of Transp. , 499 So. 2d 855, 857 (Fla.

1st DCA 1986); Opti plan, Inc. v. Sch . Bd. of Broward Cnty . , 710

So. 2d 569, 572 (Fla. 4th DCA 1998).

114 . Vendors cannot challenge specifications once they

have waived their protest rights even where they claim that such

specifications violate Florida Statutes. In CCA of Tenn essee ,

LLC v. Dep artmen t of M ana g e m ent S er v i c e s , DOAH Case No. 13 -

0880BID at ¶160 (Fla. DOAH July 12, 2013) rejected in part , Case

No. 13 - 0079 (Fla. DMS Aug . 14, 2013) , it was held that by

failing to protest within 72 hours of the release of the ITN,

t he vendor waived its objection to the agencyÓs use of an

invitation to negotiate.

115 . Petitioner has failed to prove by a preponderance of

the evidence that DMS violated its governing statutes, its rules

and policies, or the ITN in awarding the contract to CBRE and

Vertical. Under the facts found herein, DMSÓs intended award

decision is not clearly erroneous, contrary to competition,

arbitrary or capricious. Therefore, the Notice of Intent to

Award should not be disturbed.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is RECOMMENDED:

T hat a final order be entered denying the petition of

Cushman & Wakefield of Florida, Inc., and affirming the Notice

of Intent to Award to CBRE, Inc., and Vertical Integration, Inc.

DON E AND ENTERED this 24th day of January , 2014 , in

Tallahassee, Leon County, Florida.

S

W. DAVID WATKINS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, F lorida 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 24th day of January , 2014 .

ENDNOTES

1 / All references to th e Florida Statutes are to the 2013

version unless otherwise stated.

2 / T he "ITN" was later amended by Addendum Two on May 14, 2013 .

All references to the "ITN" refer to the ITN as amended.

3 / In its Proposed Recommended Order, Cushman clarified its

p osition on the issue as follows:

C ushman is not challenging the ITNÓs

specifications. Cushman is challenging the

authority of DMS to award the contract under

section 255.25, Florida Statutes. As in B&L

Service, Inc. v. Department of Health and

Rehabilit ative Services , 624 So. 2d 805,

805 - 06 (Fla. 1st DCA 1993), Cushman is

challenging Ðthe agencyÓs ultimate authority

to award [the] contract.Ñ

(Cushman Proposed Recommended Order, p. 3)

4 / JLLÓs dismissal mooted the pending m otion for o fficial

r e cognition filed by CBRE.

5 / All Findings of Fact set forth in this section are from the

partiesÓ Joint Pre - Hearing Stipulation, pgs. 14 - 16.

6 / Cushman's ITN Reply also represented that it had a Fort Myers

office. However, Mr. Richey acknowledged at he aring this was

not entirely accurate , as the office is actually a

subcontractor's office.

7 / Unlike the other vendors, Cushman's proposed pricing for the

IMAs and BOVs involved a three - tiered approach. The first tier

involved no charge for IMAs and BOVs when they were related to a

commissionable transaction. B ut as noted previously, all

vendors were required to provide these same services at no

charge and Cushman's proposal therefore did not offer any

additional benefit. Cushman's second tier provided that such

services would be at no cost "when an Agency/User has hired

[Cushman] on other work under the contract." Ms. Sparkman

testified it was not clear what exactly was meant by this

proposal. Cushman's third tier provided unconditioned pricing

for th e services, and it i s this pricing the negotiation t eam

included in its summary chart to allow for the apples - to - apples

pricing comparison they sought.

8 / While Ms. Ellison testified that DEP intended to use BO V s a

great deal more than they had in the pa st, DMS had no assurance

that DEP , the primary agency that might utilize such ancil lary

offerings, would in fact procure any servi ces under the

contract. Moreover , Ms. Ellison testified that she felt the

n egotiation t eam did a good job in analyzin g the is sues she was

concerned with , and that the resulting contracts could be

utilized by DEP. She also noted that DEP had the authority to

procure and negotiate its own contr act for ancillary services

(such as IMAs and BOV s) and need not use the awarded contrac ts

if it so chose .

9 / This practice is also consistent with the ITN and the term

contract's concept of continuing competition between the awarded

vendors to this contract, who must still compete with each other

before they are "hired" by agencies for spec ific scopes of work

related to the ancillary services.

10 / This is consistent with the general intent of c hapter 287,

which contemplates that agencies should always attempt to

negotiate lower pricing. For example, section 287.057(13),

states that for act ive contract renewals, Ðthe price of the

commodity or contractual services to be renewed must be

specified in the bid, proposal, or reply, except that an agency

may negotiate lower pricing.Ñ

COPIES FURNISHED :

Donna Elizabeth Blanton, Esquire

Radey, Th omas, Yon and Clark, P.A.

Suite 200

301 South Bronough

Tallahassee, Florida 32301

Matthew Fraher Minno, Esquire

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399

Frederick John Springer, Esquire

Bryant Miller Olive PA

Suit e 900

101 North Monroe Street

Tallahassee, Florida 32301

Robert H. Hosay, Esquire

Foley and Lardner, LLP

Suite 900

106 East College Avenue

Tallahassee, Florida 32301

James A. McKee, Esquire

Foley and Lardner, LLP

Suite 900

106 East College Avenue

Ta llahassee, Florida 32301

Ryan B. Hobbs, Esquire

Bryant Miller Olive, P.A.

101 North Monroe Street

Tallahassee, Florida 32301

John A. Tucker, Esquire

Foley and Lardner, LLP

Suite 1300

1 Independent Drive

Jacksonville, Florida 32202

Craig Nichols, Secr etary

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399

Josefina M. Tamayo, General Counsel

Office of the General Counsel

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399

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.