14-003549BID Life Insurance Company Of The Southwest vs. Broward County School Board Status: Closed Recommended Order on Wednesday, December 31, 2014.

Summary: Petitioner proved that other bidder's proposal for supplemental retirement annuity contract was non-responsive, materially deviated from the RFP, and violated provisions within Section 120.57(3)(f), Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LIFE INSURANCE COMPANY OF THE

SOUTHWEST,

Petitioner,

vs. Case No. 14 - 3549BID

BROWARD COUNTY SCHOOL BOARD,

Respondent.

_______________________________/

RECOMMENDED ORDER

This ca se came before Administrative Law Judge Darren A.

Schwartz for final hearing on October 1, 2014, in Fort

Lauderdale, Florida.

APPEARANCES

For Petitioner: Cynthia S. Tunnicliff, Esquire

Brian A. Newman, Esquire

Pennington, P.A.

Second Floor

215 South Monroe Street

Post Office Box 10095

Tallahassee, Florida 32302 - 2095

For Respondent: Robert Paul Vignola, Esquire

Office of the General Counsel

Eleventh Floor

600 Southeast Third Avenue

Fort Lauderdale, Florida 33301

STATEMENT OF THE ISSUE S

W hether the r ecommended decision to award AXA Equitable

Life Insurance Company ( " AXA Equitable " ) a contract to

provide 403(b) annuit y retirement products to employees of

Respondent, Broward County School Board ( " School Board " ), is

clearly erroneous, arbitrary, capricious, contrary to

competition, contrary to the School Board ' s governing statutes,

rules or policies, or contrary to the specifications within

Request for Proposal (" RFP ") 15 - 010P ; and, if so, whether

Petitioner, Life Insurance Company of the Southwest ( " LSW " ),

should be awarded a contra ct to provide annuity retirement

products to School Board employees pursuant to the RFP .

PRELIMINARY STATEMENT

On March 4, 2014, the School Board issued its RFP entitled

" 403(b)/457(b) Program for School Board Employees , " RFP 15 - 010P,

for the purpose of so liciting replies from vendors seeking to

provide 403(b) annuity and 457(b) mutual fund retirement

products to School Board employees. The School Board received

bids from 13 proposers on or before April 17, 2014.

On June 16, 2014, the School Board posted t he RFP ' s

Recommendation/Tabulation for award for 403(b)/457(b) Program

for School Board Employees to the following annuity vendors:

ING Life Insurance and Annuity Company ( " ING " ) , The Variable

Annuity Life Insurance Company ( " VALIC " ) , and AXA Equitable ; a nd

to the following mutual funds vendors: ING, Metropolitan Life

Insurance Company ("Met L ife") , and VALIC.

On June 17, 2014, LSW timely filed its Notice of Intent to

Protest. LSW timely filed its Formal Written Protest and

Petition f or Administrative Hea ring within ten days thereafter.

LSW ' s protest concerns only that portion of the School

Board ' s recommendation to award contracts for vendors proposing

to provide annuity retirement products. The recommendation to

award contracts for vendors proposing to provide mutual fund

retirement products is not in dispute in this proceeding.

On July 30, 2014, the School Board referred the matter to

the Division of Administrative Hearings ( " DOAH " ) to assign an

Administrative Law Judge to conduct the final hearing. On

July 31, 2014, a pre - hearing conference was held with the

parties, wherein the parties agreed to waive the statutory

deadline for conducting the final hearing. On August 1, 2014, a

Notice of Hearing was issued by the undersigned setting this

matter for a final hearing on October 1 through 3, 2014. On

September 29, 2014, LSW filed an unopposed motion for leave to

file amended petition, which was granted by the undersigned. 1/

The final hearing commenced as scheduled on October 1,

2014, with both parties pr esent. At the hearing, LSW presented

the in - person testimony of Dr. Dildra Martin - Ogburn, Maryann

Ellis, Jeffrey Angello, Virgil Cruz, Camille Ferguson, and Carol

Nicome - Brady. In addition, LSW offered the depositions of Annie

Feldman, Ted Victor, Jeff W hitney, Glynda Linton, Lisa Maxwell,

Eric Chisem, Dale Spear, Gerard Desmond, and Carol Nicome - Brady,

in lieu of their in - person testimony . 2 / The School Board did not

present any witnesses during its case - in - chief. The parties '

Joint Exhibits 1 through 1 8 were received into evidence upon

stipulation of the parties .

At the hearing, the parties requested that proposed

recommended orders be filed within 20 days after the filing of

the final hearing t ranscript. The final hearing Transcript was

filed on Octob er 30, 2014. On November 18, 2014, LSW filed an

unopposed motion to extend the deadline for the parties to file

proposed recommended orders until December 1, 2014. On

November 1 8 , 2014, the undersigned entered an O rder granting the

motion. The parties t imely filed proposed recommended orders,

which were given consideration in the preparation of this

Recommended Order.

Unless otherwise indicated, citations to the Florida

Statutes refer to the 2014 Florida Statutes.

FINDING S OF FACT

LSW

1. LSW is a life i nsurance company that s ells fixed

annuity deferred plans to school districts, hospitals, churches,

governments, and other qualified employer plans. LSW is an

active supplemental retirement benefit vendor in 5,300 school

districts throughout the country . LSW serves 321,000 annuity

policyholders with over $12.7 billion dollars invested. 3 /

2 . LSW is a current provider of supplemental retirement

benefits to the School Board, and it has over 3,700 existing

School Board employees as policyholders with over $69 million

dollars invested.

The School Board ' s RFP f or Annuities (RFP 15 - 010P)

3 . On March 4, 2014, the School Board issued its RFP

entitled " 403(b)/457(b) Program for School Board Employees , "

RFP 15 - 010P, for the purpose of soliciting replies from vendors

seeking to provide tax sheltered annuity and /or mutual fund

retirement products to the School Board ' s active, full - time

employees (approximately 25,139 employees) . The School Board

issued Addendum No. 1 to the RFP on March 26, 2014.

4 . The retirement be nefit products offered as a result of

this procurement are optional and supplement the retirement

benefits available to qualified School Board employees through

the Florida State Retirement System.

5 . In issuing the RFP, the School Board seeks to

" streaml ine its 403(b) and 457(b) offerings to a limited number

of vendors in an effort to generally improve retirement

awareness of all eligible employees and improve retirement

savings of participating employees. " The School Board seeks

proposals with competiti ve fee and expense structures and

m inimal to no surrender charges and/or sales charges. The RFP

d oes not limit the number of vendors that may be selected for

negotiation or award.

6 . The RFP was developed by the School Board ' s Benefit and

Employment Serv ices Department in collaboration with its

consultant, Gallagher Benefit Services ( " Gallagher " ). Gallagher

has served as the School Board ' s consultant on insurance matters

for over 20 years .

7 . The RFP describes the School Board ' s current landscape

of nin e current active annuity vendors, which offer fixed

annuities, variable annuities, equity indexed annuities, and

mutual funds. The current active annuity vendors include the

three recommended annuity product awardees under the RFP ( ING,

VALIC, and AXA Equ itable ) , as well as LSW . In addition, the

School Board has 17 current inactive vendors with a total of

690 accounts . 4 /

8 . The RFP provides that mutual fund proposals and annuity

proposals will be evaluated and ranked separately.

9 . The RFP further provi des that the School Board " at its

sole option will then decide based on the top - ranked Proposer(s)

in each category , if a sole provider or multiple providers with

annuity and/or mutual fund options are more beneficial to SBBC

and its employees. "

1 0 . Under the RFP: " A sole provider is either one Awardee

for both annuity and mutual fund products or is the only vendor

for one of the product offerings. A multiple Awardee(s) is one

of many vendors for the same product offerings. "

1 1 . On or before April 17, 2 014, at 2:00 p.m., the School

Board ' s Supply Management and Logistics Department received

proposals in response to the RFP. Proposals for the annuity

products were submitted by AXA Equitable, Great American, Horace

Mann, ING, LSW, MetLife, and VALIC. Six companies submitted

proposals for mutual fund products. In addition, a proposal was

submitted by Aspire Financial Services, LLC. The proposals for

both annuities and mutual funds were delivered to the School

Board ' s Superintendent ' s Insurance Advisory C ommittee

( " Insurance Committee " ) members within two or three days of

receipt by the School Board on April 17, 2014. Each of the

proposals was several hundred pages in length and described as

being roughly the size of a telephone book.

1 2 . The proposals w ere evaluated by the Insurance

Committee . The Insurance Committee is a standing committee

composed of persons appointed by the s uperintendent of s chools,

including representatives of various labor unions and " meet and

confer " groups ( populations of employ ees that are not

represented by a labor union) . The purpose of the Insurance

Committee is to make recommendations regarding insurance matters

including the subject RFP . The Insurance Committee regularly

provides input in the development of the school dis trict ' s

competitive procurements for insurance and employee benefits and

evaluates proposals for such services. No member of the

Insurance Committee had any special expertise in mutual funds or

annuities. There was a training session and review of the RF P

at the Insurance Committee meetings on January 9 and 15, 2014.

1 3 . Section 5.1 of the RFP provides that the Insurance

Committee:

shall evaluate all Proposals received, which

meet or exceed Section 4.2, Minimum

Eligibility Requirements and Section 7.1

In demnification, according to the following

criteria:

CATEGORY MAXIMUM POINTS

A. Experience and

Qualifications 10

B. Scope of Services 40

C. Cost of Services 40

D. Supplier Diversity

& Outreach Program

D.1. Participation 3

D.2. Diversit y 4

D.3. Community

Outreach 3 __

TOTAL[:] 100

Failure to respond, provide detailed

information or to provide requested Proposal

elements may result in the reduction of

points in the evaluation process. The

Committee may recommend the rejecti on of any

Proposal containing material deviations from

the RFP. The Committee may recommend

waiving any irregularities and

technicalities.

1 4 . " Cost of Services " is an integral part of the RFP.

Section 4.7 of the RFP addresses C ost of S ervices and requ ires

proposers of annuity products to submit their C ost of S ervices

by completing the RFP ' s Attachment B1, Financial Response Form

( " B1 form " ).

1 5 . The B1 form requires a series of responses to various

items relating to the C ost of S ervice s offered for an nuity

products. The RFP and B1 form solicit two cost proposals, only:

one for " Sole Carrier " and one for " Multiple Carrier. " The B1

form has two columns: one for " Sole Carrier " and one for

" Multiple Carrier. " The RFP and B1 form do not allow for

propo sers to submit more than one multiple carrier proposal and

to alter the B1 form to include an additional column for more

than one multiple carrier proposal. The B1 form specifically

advises proposers in bold letters that : " If you are proposing

annuity pr oduct(s), please complete the following form for both

being a sole carrier or one of multiple carriers. " Reproduced

below are the two pages of the B1 form included within the RFP:

1 6 . Section 4.7 of the RFP unequivocally warns: " No

deviations f rom this form are permitted. No conditions or

qualifications (e.g., participation requirements) to the quoted

rates are acceptable. "

AXA Equitable ' s Non - Responsiveness Based o n Its

Alterations t o t he B1 Form and Two Multiple Vendor

Proposals, and the Insu rance Com mittee' s Evaluation of

AXA Equitable ' s Proposal s , Recommendation, and Award

1 7 . Notwithstanding the RFP ' s admonition against

alterations to the B1 form , AXA Equitable modified the B1 form

in responding to the RFP by adding an additional column a nd

provid ing two separate multiple carrier proposals.

Significantly, AXA Equitable labeled its modified B1 form to

provide the following three separate cost proposals: ( 1) " S ole

C arrier " ; ( 2) " M ultiple C arrier (2 - 4 I nvestment Providers) " ; and

( 3) " M ultip le C arrier (2 - 4 I nvestment Providers) . " Reproduced

below are the two pages of the B1 form submitted by AXA

Equitable:

1 8 . The last two columns of AXA Equitable ' s B1 form ,

although labeled the same, offer different costs for certain

categories. Sign ificantly, i n the second column, AXA Equitable

listed " 0.50% " for " Mortality, Expense, and Administrative

Charges. " However, in the third column, AXA Equitable listed

" 0.70% " for " Mortality, E x pense, and Administrative Charges. "

In the second column, AXA Equitable also listed a " 5 year

participant level " for " CDSC or Surrender Charges & Terms. "

However, in the third column, AXA Equitable listed a " 10 year

participant level " for " CDSC or Surrender Charges & Terms. "

19 . The form in AXA ' s proposal for annu ities was also

mislabeled " Attachment B2, " which is the form for mutual fund

submissions. Although AXA Equitable provided information on the

wrong form (B2 instead of B1), and mislabeled the second and

third columns on its Attachment B2, the information w ithin its

response to the RFP made it clear to Gallagher that the second

column on both pages was intended to contain AXA Equitable ' s two

separate multiple carrier proposals. The second column on both

pages was intended to contain AXA Equitable ' s two - to - f our

multiple vendor annuity proposal , and the third column on both

pages was intended to contain AXA Equitable ' s five or more

multiple vendor annuity proposal. 5 /

2 0 . No other proposer altered the B1 form or submitted

more than one multiple carrier proposa l . At the hearing, the

School Board conceded that it expected the proposers to complete

the B1 form without deviation , and that no deviation should be

permitted that would allow one vendor to obtain a competitive

advantage over another vendor. The School Board conceded at the

hearing that AXA Equitable deviated from the B1 form by

including an additional column in the form for two separate

multiple proposals that was unsolicited.

2 1 . Gallagher prepared executive summaries of the annuit y

and mutual fund p roposals which assembled the proposers '

verbatim response s in a side - by - side format corresponding to the

RFP ' s evaluation scoring criteria. The Insurance Committee

received these summaries about one week prior to their June 11,

2014, meeting at which a de cision was to be made on the various

proposals . The summaries for the annuity proposals were over

800 pages in length. A similar - sized comparison was prepared

for the mutual fund proposals.

2 2 . The Insurance Committee met on June 11, 2014, to

evaluate t he annuity and mutual fund proposals. The meeting

started at 10:30 a.m. and adjourned at 5:30 p.m., with a break

for lunch. No proposal scoring was conducted before the

meeting.

2 3 . The Insurance Committee determined at the start of its

June 11, 2014, m eeting that Aspire ' s proposal was non - responsive

because it lacked the most recent three years of independent

audited financial statements required by Section 4.2.5 of the

RFP.

2 4 . S ubstantial discussion occurred during the June 11th

meeting as to how to score AXA Equitable because of its two

multiple vendor proposals. S ome of the Insurance Committee

members expressed concern over how to score AXA Equitable ' s

annuity proposal because of its three separate proposals and

modifications to the B1 form.

2 5 . I n response, Gallagher recommend ed during the June 11,

2014, meeting that AXA Equitable be scored separately and have

three separate scores . During the meeting, AXA Equitable was

treated differently than all of the other annuity proposals ,

because each of the other annuity proposals were scored only

twice while AXA Equitable receive three separate scores .

2 6 . Gallagher provided the Insurance Committee with a

separate scoring sheet just for AXA Equitable be cause of its

three separate proposals : one for sol e carrier, another for

two - to - four carriers , and the third proposal for five or more

carriers. Once the Insurance Committee scored and ranked each

of the proposals for all of the proposed annuity vendors, it was

recommended that only then should the commi ttee determine

whether the award should be given to a sole vendor or to

multiple vendors .

27 . At the conclusion of Gallagher ' s presentation on the

annuity and mutual fund proposals, the Insurance Committee was

given 20 to 30 minutes to score all of the pr oposals. Thirteen

members of the Insurance Committee scored the proposals. The

Insurance Committee ' s score s ranked the annuit y proposals as

follows:

Sole Vendor Total

ING 90

AXA Equitable 76.9

VALIC 74.2

MetLife 69.2

LSW 67.5

Great American 64. 2

Horace Mann 61.0

Multiple Vendors Total

ING 86.9

VALIC 71.2

AXA Equitable

(based on its 2 - 4 vendor 69.7

proposal)

LSW 67.0

AXA Equitable

(based on its 5 vendor 65.2

proposal)

MetLife 64.7

Great American 61.9

Horace Mann 59.5

28 . Thus , AXA Equitable ' s proposal was deemed responsive

by the Insurance Committee, and it received three separate

scores for its annuity proposal s : a score of 76.9 for its sole

vendor proposal; a score of 69.7 for its two - to - four vendor

proposal; and a score of 65.2 for its five or more vendor

proposal. The scoring sheets r eflect that AXA Equitable

received different scores for cost of services under its two

multiple vendor proposals. Notably, nine of the In surance

Committee member s scored AXA Equitable ' s two - to - four vendor

proposal higher for cost of services than AXA Equitable ' s five

or more vendor proposal for cost of services . 6 /

29 . After seeing the rankings of the scores during the

meeting, the committee proceeded to pass a motion authorizing

negotiations between the committee and the top three ranked

annuity vendors, only, until a successful negotiation with three

annuit y vendors is reached.

3 0 . Day two of the Insurance Committee ' s meeting (held

June 12, 2014) consisted of negotiations between the Insura nce

Committee and the three highest ranked vendors for annuity and

mutual fund products.

3 1 . After negotiating with the top three ranked proposers,

the Insurance Committee members voted to award the contracts for

annuities to ING, VALIC and AXA Equitable (under its two - to - four

vendor proposal), as the three top - ranked responsive proposers

with whom the Insurance Committee was able to successfully

conduct contract negotiations . The Insurance Committee also

voted to award the contracts for mutual fund servi ces to ING,

MetLife, and VALIC and to reject Aspire ' s proposal as non -

responsive for failure to meet the RFP ' s minimum eligibility

criteria. The s uperintendent accepted the Insurance Committee ' s

recommendations.

3 2 . On June 16, 2014, the School Board ' s S upply Management

and Logistics Department posted the School Board ' s intended

recommendation for the award of the RFP. The intended decision

is to: (a) award contracts for the provision of annuity

programs to ING, VALIC, and AXA Equitable (under its two - t o - four

vendor proposal); (b) award contracts for the provision of

mutual fund programs to ING, MetLife, and VALIC; and (c) to

reject Aspire ' s proposal as being non - responsive for failure to

meet the RFP ' s eligibility criteria.

3 3 . On June 17, 2014, LSW ti mely filed its Notice of

Protest. On Monday, June 30, 2014, LSW filed its Formal Written

Protest and Petition for Administrative Hearings and bid protest

bond with the School Board. Because the School Board was closed

on Friday, June 27, 2014, the formal written protest was timely

filed on the School Board ' s next business day.

3 4 . No bid specification protest was filed concerni ng

either the RFP or Addendum No . 1.

3 5 . AXA Equitable ' s alteration to the B1 f orm , which add s

a third column and offer s one sol e vendor proposal and two

separate multiple cost proposals , is non - responsive to the RFP

and a material deviation.

3 6 . AXA Equitable ' s alteration to the B1 form affected its

price by giving it the opportunity to fine - tune its bid and

submit a third cost p roposal that was not solicited.

37 . AXA Equitable ' s two multiple vendor proposals

contained different charges. The charges for " Mortality,

Expense, Administrative Charges " and " CDSC or Surrender Charges

& Terms " were higher for AXA Equitable ' s five or mo re multiple

vendor proposal than its two - to - four vendor proposal.

38 . AXA Equitable received three separate scores that were

evaluated by the committee while all other annuity proposals

received only two scores that were evaluated. Most of the

committee members gave AXA Equitable h igher scores for its two -

to - four cost of services proposal than its five or more cost of

services vendor proposal .

39 . AXA Equitable ' s two multiple vendor proposals , which

contained different cost proposals , and which were scor ed

separately , allowed AXA Equitable to receive an extra bite at

the apple not afforded to any of the other vendors competing for

the award and allowed AXA Equitable to gain an unfair

competitive advantage over all of the other proposers.

4 0 . Nevertheless , the School Board contends there is no

provision in the RFP which prohibits AXA Equitable from

submitting more than one multiple vendor proposal, and that at

best, AXA Equitable ' s alteration of the B1 f orm by adding a

third column and submitting three sep arate proposals , each of

which were scored separately, is a minor irregularity that can

be waived.

4 1 . The School Board did not determine prior to the filing

of LSW ' s bid protest that AXA Equitable ' s submission of two

multiple proposals was a minor irregu larity, and not a material

deviation.

4 2 . At hearing, the School Board argued that AXA

Equitable, or any other vendor for that matter , could have

submitted an infinite number of multiple proposals. The School

Board relies on the following language within Section 2.1 of the

RFP, which states:

SBBC is requesting Proposals with

competitive fee and expense structures;

minimal to no surrender charges and/or sales

charges; performance and/or guaranteed

returns that exceed objective benchmarks and

peer groups; a nd education resources and

to o ls that will help SBBC employees

understand the importance of retirement

savings and plan for the future. Proposers

should propose an investment lineup that is

in line with current trends in the 403(b)

and 457(b) market. For example, group

versus individual annuity products, open

architecture mutual funds, and institutional

share - classes. SBBC encourages the proposal

of features that may or may not be offered

today, such as designated Roth accounts,

investment advice, manage d portfolios, etc.

At its sole option, SBBC reserves the right

to annually review each Awardee and its

product offerings for such things including,

but not limited to: enrollment; fees and

expenses; performance; and benchmarks.

4 3 . This language request s the submission of competitive

cost proposals. I n no way , however, does this language allow

for the submission of more than one multiple vendor proposal and

AXA Equitable ' s modifications to the B1 form by including an

additional column and second multipl e vendor proposal.

4 4 . The School Board also contends that AXA Equitable ' s

alteration to the B1 form and submission of two multiple vendor

proposals is authorized by language within Section 4.7 of the

RFP that requires a proposer to complete a B1 form " fo r each

program offered. " This language, however, pertains to the

requirement to disclose the costs for each type of annuity

product offered. It does not allow the submission of a second

multiple vendor proposal and AXA Equitable ' s modification to the

B1 form by including an additional column and second multiple

vendor proposal.

4 5 . The School Board also relies on Section 5.1 of

the RFP , which states that the Insurance Committee " shall

evaluate all Proposals received, which meet or exceed

Section 4.2 , Min imum Eligibility Requirements and Section 7.1

Indemnification. " Section 4.2 of the RFP , entitled " Minimum

Eligibility, " provides as follows:

4.2 Minimum Eligi bi lity In order to be

considered for award and to be further

evaluated, Proposer must meet or exceed the

following criteria as of the opening date of

the Proposal. Proposer is responsible for

providing the following information in its

response. The Proposer must also include a

statement of acknowledgement for each item

below.

4.2.1 Proposer mus t agree to the language

in Section 7.1, Indemnification.

4.2.2 Proposer must be licensed in the

State of Florida. Provide a copy of the

current license and/or certificate that

allows Proposer to provide the services

proposed.

4.2.3 If Proposer is an i nsurance carrier,

Proposer must be licensed to provide the

proposed services in the State of Florida

with an AM Best rating of A - or higher and

financial size category of VI or larger. In

the alternative to the foregoing AM Best and

financial - size categor y, a licensed carrier

may satisfy the requirements of 4.2.4.

4.2.4 If Proposer is not an insurance

company or lacks an AM Best or financial

size category, Proposer must provide the

most recent three (3) years available of

independent , audited financial s tatements.

4.2.5 Each Awardee will agree to provide

SBBC an annual fee of $10 per active and

inactive participant.

4.2.6 Each Awardee will agree to provide an

annual fee of $12 per active and inactive

participant to fund third - party

administrative serv ices.

4 6 . The plain reading of Section 4.2 is that the phrase

" following criteria " as used therein pertains to the critera

within Section 4.2 (4.2.1, 4.2.2, 4.2.3, 4.2.4, 4.2.5, and

4.2.6) , only . To accept the School Board ' s position would

render meanin gless the admonitions in Section 4.7 of the RFP and

the B1 form against submitting more than one multiple vendor

proposal and deviating from the form.

47 . Contrary to the School Board ' s contention, nothing in

the RFP allows the alterations to the B1 form and submission of

more than one multiple vendor proposal, as submitted by AXA

Equitable. In fact, Section 4.7 of the RFP and the B1 form

un equivocally prohibit it.

48 . To accept the School Board ' s argument would have

allow ed AXA Equitable or any other pr oposer to submit any number

of separate multiple proposals with different costs of services

and have each of them scored separately. Under the School

Board ' s view, AXA Equitable could have submitted separate

multiple vendors of say, for example, one - to - th ree providers;

two - to - four providers; three - to - five providers; four - to - six

providers; five - to - seve n providers ; eight - to - nine providers,

etc. (each with different costs of services), until one of them

hits and is a winner .

49 . The School Board ' s argument f ails to consider that

each multiple proposal allowed the committee to give AXA

Equitable an extra look a nd opportunity to fine - tune its bid

with the hope that one of its proposals would stand out to the

committee and be chosen as a winner . That is precise ly what

happened in the instant case.

5 0 . Indeed, the Insurance C ommittee viewed each of AXA

Equitable ' s multiple proposals as a separate proposal and scored

them separately with different results . Only after each of the

multiple proposals were viewed an d scored did the committee then

cho o se to negotiate with the companies that submitted the three

topped - ranked proposals .

5 1 . The committee had the opportunity to view AXA

Equitable ' s five or more proposal along side its two - to - four

proposal and sole provid er proposal, view the scores from all

the proposals, and then determine which way it wanted to go in

terms of the number of vendors.

5 2 . After observing that AXA Equitable provided higher

costs of services for its five or more proposal than its two - to -

fou r proposal, most of the committee members gave AXA Equitable

higher scores for its lower two - to - four cost proposal, and then

the committee chose to go with the top three ranked proposals .

5 3 . The Insurance C ommittee had the opportunity to view

AXA Equitab le ' s two - to - four proposal and its five plus proposal

separately, rank each of these proposals separately along with

the one multiple proposals submitted by each of the other

vendors, and then the committee was able to stack each of the

proposals against ea ch other, compare them, and decide to go

with the top three. This clearly gave AXA Equitable a

competitive advantage over the other proposals, which was

prohibited by the RFP , and constitutes a material deviation that

c an not be waived.

AXA E quitable ' s Non - Responsiveness f or Failure to

Provide Cost Information Required by the RFP

54 . In addition, one of the questions asked in the B1 form

was: " What is the Net Revenue Pricing for this plan in basis

points? " For the sole carrier proposal, AXA Equitable st ated

that its net revenue pricing is 1.70. For each of its two

multiple carrier proposals, however, AXA Equitable stated:

" This would be higher than 1.70 if we are not the single

provider. "

55 . AXA Equitable failed to commit to a specific pricing

in bas is points for net revenue pricing in each of its two

multiple carrier proposals. Net revenue pricing is material to

the evaluation of a proposer ' s cost of services, yet AXA

Equitable failed to sufficiently respond to this question on the

B1 f orm in respon se to the RFP.

56 . Some of the Insurance Committee members did not

understand what the phrase " net revenue pricing " meant or

appreciate the significance of this omission from AXA

Equitable ' s multiple vendor proposals. The evidence presented

at hearing fa iled to establish that any of the committee members

deducted points because AXA Equitable failed to provide net

revenue pricing for its multiple vendor proposals.

57. AXA Equitable ' s failure to provide net pricing in

basis points in the B1 form for its mu ltiple proposals

constitutes a material deviation from the RFP, provided AXA

Equitable with a competitive advantage, and is not a minor

irregularity that can be waived. The proposers were required to

provide the net revenue pricing for their annuity produ ct cost

offerings. Net revenue pricing is material to the cost of the

services. Thus, AXA Equitable was non - responsive to the RFP by

failing to include its net pricing in basis points for its

multiple vendor proposals.

5 8 . Nevertheless, the School Board contends that AXA

Equitable ' s omission of net revenue pricing is simply a factor

that the committee could consider when scoring its cost

proposal. The School Board relies upon Section 5.1 of the RFP,

which provides that a " failure to respond, provide det ailed

information or to provide requested Proposal elements may result

in the reduction of points in the evaluation process " and does

not require a rejection of AXA Equitable ' s proposal.

5 9 . The School Board's reliance on Section 5.1 of the RFP

is misplac ed. T he Insurance C ommittee members did not

understand what the phrase " net revenue pricing " meant or

appreciate the significance of this omission from the proposal.

The evidence did not show that any of the members deduct ed

points because of AXA Equitab le ' s failure to provide net revenue

pricing for i ts multiple carrier proposals.

60 . The School Board did not determine prior to the filing

of LSW ' s bid protest that AXA Equitable ' s failure to provide net

pricing in basis points in the B1 form for its mult iple

proposals was a minor irregularity, and not a material

deviation.

The Existence of Legacy Carriers Did Not Preclude

Nego ti ations with the Three Top Ranked Annuity

Vendors

61 . Alternatively, LSW contends that even if AXA

Equitable ' s two - to - four vendo r proposal is not rejected as non -

responsive, the Insurance Committee lacked the authority to

choose to negotiate with the three top - ranked annuity vendors

given the number of " legacy carriers " (more than four ) that can

continue to participate in the payro ll deduction even if not

selected as a vendor going forward pursuant to the instant RFP .

Although it is unnecessary for the undersigned to reach this

issue, LSW ' s contention in this regard is without merit.

62 . A selection of the top three vendors in res ponse to

the instant RFP does not mean that the legacy carriers must be

counted toward the number of vendors ultimately allowed to offer

products under the instant RFP. Simply put, the legacy carriers

and inactive vendors may continue to provide products to its

existing employees alongside the top three vendors chosen

pursuant to the instant RFP.

CONCLUSIONS OF LAW

63 . DOAH has personal and subject matter jurisdiction in

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

120.57(3), Florida Statu tes.

6 4 . Pursuant to section 120.57(3)(f), the burden of proof

rests with LSW as the party opposing the proposed agency action.

State Contracting & Eng ' g Corp. v. Dep ' t of Transp. , 709 So. 2d

607, 609 (Fla. 1st DCA 1998). LSW must sustain its burden of

proof by a preponderance of the evidence. See Dep ' t of Transp.

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

6 5 . Section 120.57(3)(f) describes the rules of decision

applicable in bid protests and, in pertinent part, provides:

In a prot est 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 . . . . Unless

otherwise provided by statute, the burden of

proof sha ll 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 proceeding to determine

whether the agency ' s proposed action is

contrary to the agency ' s governing statutes,

the agency ' s rules or policies, or the

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.

6 6 . T he phrase " de novo proceeding, " as used in

section 120.57(3)(f), describe s a form of intra - agency review.

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

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

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

709 So. 2d at 609.

6 7 . In framing the ultimate issue to be decided in this de

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

is contrary to the agency ' s go verning statutes, the agency ' s

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

statute effectively establishes a standard of conduct for the

School Board , which is that, in soliciting, evaluating, and

accepting bids or proposals, the School Board must obey its

governing statutes, rules, and the project specifications. If

the School Board breaches this standard of conduct, its proposed

action is subject to reversal in a protest proceeding. Phil's

Expert Tree S er v., Inc. v. Broward Cnty. Sch. Bd. , Case No. 06 -

4499BID, 2007 Fla. Div. Admin. Hear. LEXIS 161 , *13 - 14 (Fla.

DOAH Mar. 19, 2007) ; Care Access PSN, LLC v. Ag. for Health

Care Admin. , Case No. 13 - 4113BID, 2014 Fla. Div. Admin. Hear.

LEXIS 3, *42 - 43 (Fla. DOAH Jan. 2, 2014) .

6 8 . Conseque ntly, the party protesting the intended award

must prove, by the greater weight of the evidence, a specific

instance where the School Board ' s conduct in taking its proposed

action was either: (a) contrary to the agency ' s governing

statutes; (b) contrary t o the agency ' s rules or policies; or

(c) contrary to the bid or proposal specifications. Phil's

Expert Tree Serv., Inc. , 2007 Fla. Div. Admin. Hear. LEXIS 161,

at *13 - 14; Care Access PSN, LLC , 2014 Fla. Div. Admin. Hear.

LEXIS 3, at *43.

6 9 . It is not su fficient, however, for the protester to

merely prove that the agency violated the general standard of

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

which are best understood as standards of review, the protester

additionally must establish th at the agency ' s misstep was:

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

abuse of discretion. Phil's Expert Tree Serv., Inc. , 2007 Fla.

Div. Admin. Hear. LEXIS 161, at * 14 ; Care Access PSN, LLC , 2014

Fla. Div. Admin. Hear. LEXIS 3, at *43.

70 . The three review standards mentioned in the preceding

paragraph are markedly different from one another. The abuse of

discretion standard is more deferential (or narrower) than the

clearly erroneous standard. The bid protest review process

nece ssarily entails a decision regarding which of the several

standards of review to use in evaluating a particular action.

To do this requires that the meaning and applicability of each

standard be carefully considered. Phil's Expert Tree Serv.,

Inc. , 2007 Fla. Div. Admin. Hear. LEXIS 161, at * 14 - 15 ; Care

Access PSN, LLC , 2014 Fla. Div. Admin. Hear. LEXIS 3, at *44 .

71 . The clearly erroneous standard is generally applied in

reviewing a lower tribunal ' s findings of fact. The Florida

Supreme Court explained this standard as follows:

A finding of fact by the trial court in a

non - jury case will not be set aside on

review unless there is no substantial

evidence to sustain it, unless it is clearly

against the weight of the evidence, or

unless it was induced by a n erroneous view

of the law. A finding which rests on

conclusions drawn from undisputed evidence,

rather than on conflicts in the testimony,

does not carry with it the same

conclusiveness as a finding resting on

probative disputed facts, but is rather in

the nature of a legal conclusion. . . .

When the appellate court is convinced that

an express or inferential finding of the

trial court is without support of any

substantial evidence, is clearly against the

weight of the evidence or that the trial

court h as misapplied the law to the

established facts, then the decision is

" clearly erroneous " and the appellate court

will reverse because the trial court has

" failed to give legal effect to the

evidence " in its entirety.

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

omitted).

72 . Because a dministrative l aw j udges are the triers of

fact charged with resolving disputed issues of material fact

based upon the evidence presented at hearing, and because bid

protests are fundamentally de novo proceeding s, the undersigned

is not required to defer to the School Board w i th regard to any

findings of objective historical fact that might have been made

prior to the School Board ' s proposed action. It is exclusively

the undersigned ' s responsibility, as the trie r of fact, to

ascertain from the competent, substantial evidence in the record

what actually happened in the past or what facts presently

exist, as if no findings previously had been made. Phil's

Expert Tree S er v., Inc. , 2007 Fla. Div. Admin. Hear. LEXIS 161,

at *17 - 18 ; Care Access PSN, LLC , 2014 Fla. Div. Admin. Hear.

LEXIS 3, at *46 - 47 .

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

ultimate factual determination ÏÏ for example, an agency ' s

conclusion that a proposal ' s departure from the projec t

specifications was a minor irregularity as opposed to a material

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

clearly erroneous standard of review. To prevail on an

objection to an ultimate finding, therefore, the protester must

substant ially undermine the factual predicate for the agency ' s

conclusion or convince the undersigned that a defect in the

agency ' s logic unequivocally led to a mistake. Phil's Expert

Tree Serv., Inc. , 2007 Fla. Div. Admin. Hear. LEXIS 161, at * 18 ;

Care Access PS N, LLC , 2014 Fla. Div. Admin. Hear. LEXIS 3,

at *47 .

7 4 . There is another species of agency action that also is

entitled to review under the clearly erroneous standard:

interpretations of statutes for whose administration the School

Board is responsible, and interpretations of the School Board ' s

own rules. State Contracting & Eng ' g Corp. v. Dep ' t of Transp. ,

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

School Board ' s expertise, such interpretations will not be

overturned unless clearly e rroneous. Id.

7 5 . This means that if a p etitioner objects to the

proposed agency action on the ground that it violates either a

governing statute within the agency ' s substantive jurisdiction

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

o bjection turns on the meaning of the subject statute or rule,

then the agency ' s interpretation should be accorded deference;

the challenged action should stand unless the agency ' s

interpretation is clearly erroneous (assuming the agency acted

in accordance therewith). Phil's Expert Tree S erv ., Inc. , 2007

Fla. Div. Admin. Hear. LEXIS 161, at *19 ; Care Access PSN, LLC ,

2014 Fla. Div. Admin. Hear. LEXIS 3, at *49 .

7 6 . The same standard of review also applies in a protest

following the announcement of an inte nded award, with regard to

preliminary agency action taken upon the agency ' s interpretation

of the project specifications ÏÏ but for a reason other than

deference to agency expertise. Section 120.57(3)(b) provides a

remedy for vague or ambiguous specificati ons: they may be

protested within 72 hours after the posting of the

specifications. The failure to avail oneself of this remedy

results in a waiver of the right to complain about the

specifications. Phil's Expert Tree Serv., Inc. , 2007 Fla. Div.

Admin. Hear. LEXIS 161, at *45 - 46, n.6 ; Care Access PSN, LLC ,

2014 Fla. Div. Admin. Hear. LEXIS 3, at *50.

7 7 . Consequently, if the dispute in a protest challenging

a proposed award turns on the interpretation of an ambiguous or

vague s pecification, which could have been corrected or

clarified prior to acceptance of the bids or proposals had a

timely specifications protest been brought, and if the agency

has acted thereafter in accordance with a permissible

interpretation of the specification (i.e., one that is n ot

clearly erroneous), then the agency ' s intended action should be

upheld ÏÏ not out of deference to agency expertise, but as a

result of the protester ' s waiver of the right to seek relief

based on a faulty specification. Phil's Expert Tree Serv.,

Inc. , 200 7 Fla. Div. Admin. Hear. LEXIS 161, at *45 - 46, n.6;

Care Access PSN, LLC , 2014 Fla. Div. Admin. Hear. LEXIS 3, at

*49 - 50.

7 8 . The statute also requires that agency action (in

violation of the applicable standard of conduct) which is

" arbitrary, or caprici ous " be set aside. The phrase " arbitrary,

or capricious " can be equated with the abuse of discretion

standard because the concepts are practically indistinguishable Ï

and because use of the term " discretion " serves as a useful

reminder regarding the kind of agency action reviewable under

this highly deferential standard. Phil's Expert Tree Serv.,

Inc. , 2007 Fla. Div. Admin. Hear. LEXIS 161, at *19 ; Care Access

PSN, LLC , 2014 Fla. Div. Admin. Hear. LEXIS 3, at *51 .

7 9 . A n arbitrary decision is one that is n ot supported by

facts or logic, or is despotic. Agrico Chemical Co. v. Dep ' t of

Envtl. Reg. , 365 So. 2d 759, 763 (Fla. 1st DCA 1978), cert.

denied , 376 So. 2d 74 (Fla. 1979). Thus, under the arbitrary or

capricious standard, " an agency is to be subjected only to the

most rudimentary command of rationality. The reviewing court is

not authorized to examine whether the agency ' s empirical

conclusions have support in substantial evidence. " Adam Smith

Enters., Inc. v. Dep ' t of Envtl. Reg. , 553 So. 2d 1260, 12 73

(Fla. 1st DCA 1989). Nevertheless,

the reviewing court must consider whether

the agency: (1) has considered all relevant

factors; (2) has given actual, good faith

consideration to those factors; and (3) has

used reason rather than whim to progress

fr om consideration of each of these factors

to its final decision.

Id.

80 . Whether the standard is called " arbitrary or

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

demands maximum deference, is the same. Accordingly , the narrow

" arbit rary or capricious " standard of review cannot properly be

applied in evaluating all agency actions that might be

challenged in a bid protest; rather, this highly deferential

standard appropriately applies only to those decisions which are

committed to the agency ' s discretion. Phil's Expert Tree S erv .,

Inc. , 2007 Fla. Div. Admin. Hear. LEXIS 161, at *22 ; Care Access

PSN, LLC , 2014 Fla. Div. Admin. Hear. LEXIS 3, at *53 - 54 .

81 . Therefore, where a p etitioner objects to agency action

that entails the exercise of discretion, but only in such

instances, the objection cannot be sustained unless the agency

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

Phil's Expert Tree Serv., Inc. , 2007 Fla. Div. Admin. Hear.

LEXIS 161, at *22; Care Access PSN, LLC , 2014 Fla. Div. Admin.

Hear. LEXIS 3, at *54.

82 . The third standard of review articulated in

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

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

actions that do not turn on th e interpretation of a statute or

rule, do not involve the exercise of discretion, and do not

depend upon a determination of ultimate fact. Phil's Expert

Tree Serv., Inc. , 2007 Fla. Div. Admin. Hear. LEXIS 161, at *23 ;

Care Access PSN, LLC , 2014 Fla. Div. Admin. Hear. LEXIS 3,

at *54 .

83 . Although the contrary to competition standard is less

well defined than the other review standards, the undersigned

concludes that the set of proscribed actions should include, at

a minimum, those which: (a) create the a ppearance of and

opportunity for favoritism; (b) erode public confidence that

contracts are awarded equitably and economically; (c) cause the

procurement process to be genuinely unfair or unreasonably

exclusive; or (d) are unethical, dishonest, illegal, or

fraudulent. Phil's Expert Tree Serv., Inc. , 2007 Fla. Div.

Admin. Hear. LEXIS 161, at *23 ; Care Access PSN, LLC , 2014 Fla.

Div. Admin. Hear. LEXIS 3, at *54 .

8 4 . Turning to the merits of the instant case, AXA

Equitable ' s bid was non - responsive and devia ted materially from

the RFP by altering the B1 form to add a third column with three

separate cost proposals. The B1 form solicits two cost

proposals, one for " Sole Carrier " and one for " Multiple

Carrier. " The RFP and B1 form do not allow for proposers t o

include more than one multiple carrier proposal.

8 5 . To be sure, t he form specifically advises proposers in

bold letters that: " If you are proposing annuity product(s),

please complete the following form for both being a sole carrier

or one of multiple carriers. " Section 4.7 of the RFP

unequivocally warns: " No deviations from this form are

permitted. No conditions or qualifications (e.g., participation

requirements) to the quoted rates are acceptable. "

8 6 . Clearly, the B1 form unambiguously requires proposers

of annuity products to complete the form " for both being a sole

carrier or one of multiple carriers . " (emphasis added). There

are only two columns on the form, one for being a sole carrier,

and another column for being " one of multiple carrier s. "

(emphasis added). The use of the word " one " in the instructions

unambiguously refers to the singular and a requirement to submit

only one multiple proposal, as opposed to any number of multiple

proposals in excess of one .

8 7 . Had the School Board int ended to allow the submission

of more than one multiple propos al and an alteration of the B1

form to include more than one multiple proposal, i t would have

said so. It did not. It used the word " one " for a reason, to

disallow more than one multiple propo sal. It also provided only

one column for a single multiple carrier proposal.

8 8 . The resolution of this issue of responsiveness

necessarily turns on the meaning of the terms used in the RFP.

Because no one timely protested the specifications, the Schoo l

Board ' s interpretation of this provision would stand unless

clearly erroneous, provided the terms were ambiguous, vague, or

unreasonable. On the other hand, if the terms were unambiguous

and otherwise lawful, then the School Board ' s interpretation is

no t entitled to deference because plain language requires no

interpretation. The question, in that instance, would be

whether the School Board implemented the clear and unambiguous

language of the RFP. If not, then the School Board ' s action

would be clearl y erroneous or contrary to competition.

8 9 . Th e School Board does not contend that the language

within the RFP is ambiguous. Instead, the School Board argues

that AXA Equitable ' s multiple vendor proposals met or exceeded

Sections 4.2 and 7.1 and were con sistent with the RFP ' s terms

and conditions or, in the alternative, constituted waivable

technicalities under Sections 5.1 and 7.33 . 2 of the RFP. The

School Board ' s arguments are without merit.

90 . The plain reading of Section 4.2 is that the phrase

" fol lowing criteria " as used therein pertains to the critera

within Section 4.2 (4.2.1, 4.2.2, 4.2.3, 4.2.4, 4.2.5, and

4.2.6) , only . To accept the School Board ' s position would

render meaningless the admonitions in Section 4.7 of the RFP and

the B1 form agai nst submitting more than one multiple vendor

proposal and deviating from the form .

91 . Section 7.1 of the RFP relates to " Indemnification ,"

and in no way relates to whether multiple vendor proposals or

alterations to the B1 form are allowe d.

92. Contrary to the School Board's contention, nothing in

the RFP allows the alteration to the B1 form and submission of

more than one multiple vendor proposal, as submitted by AXA

Equitable.

9 3 . The undersigned thus concludes, as a matter of law,

that the RFP is una mbiguous in its requirement to limit each

proposer to one multiple vendor proposal. Consequently, the

language does not need to be interpreted; it can be applied to

the circumstances at hand as a fact - finding function. Pottsburg

Utilities, Inc. v. Daugha rty , 309 So. 2d 199, 202 (Fla. 1st DCA

1975)( " Where a contract is plain and unambiguous, there is no

room for, and the court may not resort to, construction or

interpretation, but must apply the contract as it is written. " ).

9 4 . Even if the RFP were ambig uous, which it is not, the

School Board ' s interpretation would be clearly erroneous.

9 5 . For the above reasons, the undersigned determines, as

a matter of ultimate fact, that AXA Equitable ' s bid was not

responsive to the plain language of the RFP by inclu ding an

additional column and two multiple carrier proposals.

9 6 . It remains to be determined whether the School Board ' s

intended award might be upheld on the theory that the

irregularity in AXA Equitable ' s bid was a minor one that the

School Board could waive. Because the School Board found AXA

Equitable ' s bid to be responsive, however, the intended award

was not based on a finding that AXA Equitable ' s alterations to

the B1 form by adding an additional column and two multiple

carrier proposals constitute d a minor deviation, which means

that there exists no ultimate factual determination in this

regard to review for clear error.

9 7 . " When an agency asserts for the first time as a party

litigant in a bid protest that an irregularity was immaterial,

the con tention must be treated, not with deference as a

presumptively neutral finding of ultimate fact, but with fair

impartiality as a legal argument; in other words, the agency is

entitled to nothing more or less than to be heard on an equal

footing with the pr otester. " Phil ' s Expert Tree S er v . , Inc. v.

Broward Cnty . Sch . Bd . , Case No. 06 - 4499BID, 200 7 Fla. Div. Adm.

Hear. LEXIS 161, *24 (Fla. DOAH Mar . 19, 2007).

9 8 . As a result, the question whether AXA Equitable ' s

alterations to the B1 form by adding an ad ditional column and

two multiple carrier proposals is a minor deficiency must be

decided de novo.

9 9 . It has long been recognized that " although a bid

containing a material variance is unacceptable, not every

deviation from the invitation to bid is materi al. [A deviation]

is material if it gives the bidder a substantial advantage over

the other bidders and thereby restricts or stifles competition. "

Tropabest Foods, Inc. v. State Dep ' t of Gen . Serv s. , 493 So. 2d

50, 52 (Fla. 1st DCA 1986). " The test for measuring whether a

deviation in a bid is sufficiently material to destroy its

competitive character is whether the variation affects the

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

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

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

100 . In the present case, the evidence adduced at hearing

demonstrates that AXA Equitable ' s alteration to the B1 form by

adding an additional column and two multiple vendor proposals is

material. As detailed above, the alterations affected the price

of the bid. AXA Equitable submitted multiple cost proposals

with different prices which allowed it to fine - tune its bid, get

an extra look, and gain a competitive advantage over other

bidde rs who submitted only one multiple vendor proposal.

10 1 . For the same reasons detailed above, AXA Equitable ' s

failure to provide a figure for net revenue pricing on the B1

fo r m is non - responsive , material , and allowed it to obtain a

competitive advantage over other bidders . The failure to

provide a figure for net pricing affect ed the price of the bid.

To suggest, in response to the two multiple vendor proposals

that: " This would be higher than 1.70 if we are not the single

provider, " says nothing about what the net revenue pricing will

be. AXA Equitable was required to commit to a figure in basis

points for net revenue pricing in response to the RFP, and its

failure to do so was non - responsive and material.

10 2 . Finally, LSW contends that the Insurance Committee ' s

scoring of AXA Equitable as being the third - ranked multiple

vendor should be rejected as arbitrary and capricious because

the members lacked experience in supplemental retirement

benefits, annuities, or mutual funds, and they were not given

su fficient time to evaluate thoughtfully and score the

proposals . This argument is rejected.

10 3 . The evidence adduced at hearing demonstrates that the

Insurance Committee routinely develops RFP ' s and evaluate s other

vendor responses for insurance and empl oyee benefits programs.

The Insurance Committee ' s deliberations on the RFP were in

conjunction with recommendations from district staff, legal

counsel, and the School Board ' s consultant Gallagher. Gallagher

provided the Insurance Committee with an overvi ew of tax

sheltered annuities and a Powerpoint presentation of the

gloss a ry of terms concerning annuities and mutual funds in

advance of the release of the RFP.

10 4 . The Insurance Committee members had ample opportunity

to review the proposals prior to th e scoring. The Insurance

Committee received the RFP responses a month before the scoring

meeting. Gallagher provided the Insurance Committee with

executive summaries which placed the various proposers ' verbatim

responses in a side - by - side format. Gallag her made a

presentation to the Insurance Committee at its scoring meeting,

and committee members asked questions during that meeting of the

insurance consultant, school district staff, and legal counsel

regarding the RFP responses and evaluation process.

1 0 5 . Although the Insurance Committee members spent

approximately 20 to 30 minutes scoring the proposals, no

evidence was presented to demonstrate that any committee member

lacked sufficient time to complete the scoring of the proposals.

R ECOMMENDATION

Bas ed on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Broward County School Board

enter a f inal o rder rescinding the proposed award to AXA

Equitable for annuity products in favor of an award to LSW as

the third - ranked resp onsive and responsible vendor for

supplemental annuity retirement benefits.

DONE AND ENTERED this 3 1st day of December , 2014 , in

Tallahassee, Leon County, Florida.

S

DARREN A. SCHWARTZ

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 3 1s t day of December , 2014 .

ENDNOTE S

1/ On August 1, 2014, the undersigned also issued the Order of

Pre - hearing Instructions. Among other things, this Order

required the School Board's counsel to "forthwith furnish to all

bidders other than the Petitioner a copy of the fo rmal protest

in this case, a copy of the Notice of Hearing in this case, and

a copy of this Order. " At the same time, counsel for the School

Board was required to " notify all bidders other than the

Petitioner that their substantial interests may be affect ed by

the ultimate disposition of this proceeding and that, if they

wish to participate as a party in this proceeding, they must

file a petition to intervene as a party. " The Order of Pre -

hearing Instructions further states that: " Any petition to

interve ne must substantially conform with the requirements of

Florida Administrative Code Rule 28 - 106.205 and should be filed

at the earliest practicable date. "

In the present case, no petitions to intervene were filed by any

of the bidders. However, a represen tative of AXA Equitable was

present during the hearing and observed the hearing.

2/ The parties stipulated at the final hearing that these

witnesses were unavailable for the final hearing, and therefore,

their depositions could be received into evidence and considered

by the undersigned in lieu of their live testimony.

3 / LSW is headquartered in Addison, Texas, and is a wholly - owned

subsidiary of the National Life Insurance Group. LSW operates

throughout the country, with its major sales in Florida,

Ca lifornia, and Texas.

4 / The RFP states: " For inactive vendors, at SBBC ' s sole

option, SBBC may or may not continue to maintain payroll

deductions for participating employees; however, all new

enrollments will be discontinued. " School Board Policy 3601

prohibits the discontinuance of payroll deduction for existing

enrollees. School Board Policy 3601 provides: " Any company

currently participating in the TSA program but not recommended

will be authorized to continue payroll deductions and service

activit y for their existing enrollees only. Acceptance of new

enrollments will be suspended. "

5 / Gallagher determined that the last column of AXA Equitable ' s

B1 form should have been its five or more multiple vendor

annuity proposal based on a review of the di fferent " Mortality,

Expense, and Administrative Charges, " which are set forth in the

three columns of AXA Equitable ' s B1 form.

6 / Three of the Insurance Committee members scored AXA

Equitable's two - to - four vendor proposal the same for the cost of

service s as AXA Equitable's five or more vendor proposal. Only

one Insurance Committee member scored AXA Equitable's five or

more vendor proposal for cost of services higher than its two -

to - four vendor proposal.

COPIES FURNISHED:

Robert Paul Vignola, Esquire

Office of the General Counsel

Eleventh Floor

600 Southeast Third Avenue

Fort Lauderdale, Florida 33301

(eServed)

Cynthia S. Tunnicliff, Esquire

Brian A. Newman, Esquire

Pennington, P.A.

Second Floor

215 South Monroe Street

Post Office Box 10095

Tall ahassee, Florida 32302 - 2095

(eServed)

Lois S. Tepper, Interim General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

Robert W. Runcie, Superintendent

Broward County Scho ol Board

600 Southeast Third Avenue

Fort Lauderdale, Florida 33301 - 3125

(eServed)

Pam Stewart, Commissioner

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

NOTICE OF RIGHT TO SUB MIT 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.