14-004661BID University Hotel And Learning Center, Llc vs. University Of Central Florida Status: Closed Recommended Order on Wednesday, March 18, 2015.

Summary: UCF Reg. 7.130 Fla Bd Gov's Reg. 18.002 Petitioner failed to show that UCF's intent to award contract to construct hotel/conference center was contrary to specifications, arbitrary, or capricious.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNIVERSITY HOTEL AND

LEARNING CENTER, LLC,

Petitioner ,

Case No. 14 - 4661BID

vs.

UNIVERSITY OF CENTRAL

FLORIDA,

Respondent .

______ _________________________/

RECOMMENDED ORDER

D. R. Alexander, Administrative Law Judge of the Division

of Administrative Hearings , conducted the final hearing on

January 8 and 9, 201 5 , in Orlando, Florida.

APPEARANCES

For Petit ioner : Seann M. Frazier, Esquire

Parker, Hudson, Rainer & Dobbs, LLP

Suite 750

215 South Monroe Street

Tallahassee, Florida 32301 - 1804

For Respondent : Richar d E. Mitchell, Esquire

GrayRobinson, P.A.

Post Office Box 3068

Orlando, F lorida 32802 - 3068

Jordon P. Clark, Esquire

Office of the General C ounsel

University of Central Florida

Post Office Box 160015

Orlando, Florida 32816 - 0015

STATEMENT OF THE ISSUE

The issue is whether the University of Central Florida's

(UCF or Univers ity's ) Notice of Tentative A ward of Invitation to

Negotiate (ITN) Number 1317ZCSA to KUD International, LLC (KUD) ,

was contrary to UCF's governing statutes, r egulations , or

policies or to the ITN's specifications.

PRELIMINARY STATEMENT

On September 15, 2 014, UCF posted a Notice of Tentative

Award stating its intent to award ITN 1317ZCSA to KUD, wh ich

submitted the top - ranked offer. University Hotel & Learning

Center, LLC (UHLC) , wh ich submitted the second - ranked offer,

gave notice of its intent to protes t the award and timely filed

its Formal Protest of the Intended Award . The parties waived

the requirement that a final hearing be conducted within 40 days

after the filing of the protest. See Fla. Bd. Gov's Reg.

18.002 (13) .

At hearing, UHLC presented the testimony of seven

witness es . UHLC Exhibits 3 through 26, 28 through 32, 35

through 37, and 45 through 48 were accepted . UCF Exhibits 1 1 ,

17, and 18 were received. Finally, Joint Exhibits 1 through 10

were accepted.

A three - volume Transcript of the h earing has been prepared .

Both parties filed P roposed Recommended Order s , which have been

considered in the preparation of this Recommended Order.

FINDINGS OF FACT

A. The Parties

1. UHLC is a Florida limited liability company formed by

W.A. "Chip" Headl ey. He obtained an undergraduate and master's

degree from UCF , is a very loyal alumnus , and is a long - time

booster of the University . Mr. Headley explained that if KUD's

proposal had been "in the ballpark of what the other three

proposers had proposed , " and was not such a "bad financial deal"

for the University, he would have walked away without filing a

protest.

2. Mr. Headley formed UHLC in connection with the ITN.

UHLC is owned by SRP Hotel Partners, LLC, and J.P. Turner &

Company, LLC. SRP Hotel Pa rtners , LLC, in turn is owned by

Thomas Lee Group and Simonson Road Partners , LLC . Mr. Headley

leads Simonson Road Partners, LLC, a hospitality - focused

boutique real estate investment company.

3. UCF is a public research university located in Orlando,

Florida. It has a current enrollment of over 60,000 students,

making it the second largest university in the United States in

terms of student enrollment. Its annual budget is around $1.4

billion.

B. Events Prior to the Submission of Responses

4. The ITN was released on April 4, 2014. Its objective

was to enable UCF to enter into an agreement with a vendor "to

provide a boutique hotel and conference center situated on

11 .8 acres immediately adjacent to the UCF academic core." A s

further explained in section 1.1 of the ITN:

The boutique hotel and conference center

will serve as an enhancement to existing

academic facilities and will add a desirable

service component to the campus. The

facility will reflect a design and ambiance

congruent with the c ampus educational and

aesthetic objectives.

While the term boutique usually refers to

hotels of fewer than 150 rooms, the number

of rooms in this facility should be

determined by the overall program developed

for the site. It will aim to achieve the

feel and ambience of a boutique hotel

through its design architecture and

interiors.

5. The ITN "emphasizes that the Respondent concentrate on

accuracy, completeness, and clarity of content." § 3.1.

6. UCF expressly reserved the right not to award based on

the highest proposed revenue to UCF. In fact, the ITN makes

clear that "UCF is not obligated to make an award under or as a

result of this ITN or to award such contract, if any, on the

basis of the lowest cost or highest commission offered."

§ 2.8 . C. It also reserved the right, at its sole discretion, to

"determine whether a deviation [from an ITN requirement] is

material." § 2.18 . A .

7 . Mr. William Merck serves as UCF's Vice President for

Administration and Finance. Together with Mr. Greg Robin son,

the University's Purchasing Director, Mr. Merck helped develop

the ITN's specifications and wrote the provision that the term

boutique usually refers to hotels of fewer than 150 rooms.

8. Mr. Merck was the final decision maker for the ITN .

While h e could give deference to the initial evaluation

committee's scores, he was not bound by them. In fact, the ITN

vested him with sole discretion to determine what "is in the

best interest of UCF, [and to] then make the final decision

whether or not to reco mmend the award of a contract to a

Respondent to this ITN, negotiate with the highest ranked

respondent(s), or cancel the ITN . " § 2.8.C.

9 . After publishing the ITN, on April 29, 2014, Mr. Merck

and Mr. Robinson held a mandatory pre - proposal conference f or

potential respondents to seek clarification on the ITN. UHLC

was represented by Mr. Headley at the pre - proposal conference.

He sought no clarification on the ITN.

10 . At the conference, UCF officials were asked whether

there was any desired size for the hotel. Mr. Merck told the

attendees that UCF did not want a hotel that was the size of the

Marriott World Center, a resort hotel near Disney Land with

around 2,000 rooms and several hundred thousand square feet of

meeting space. To the contrary, Mr. Merck indicated that he was

"looking for something relatively small" in terms of facility

size. Given this response , and a reference in the ITN to a

"boutique hotel" with "fewer than 150 rooms , " the undersigned

has reject ed a contention by UHLC that a lac k of clarity on the

size of the hotel gave KUD a competitive advantage.

11 . After the pre - proposal conference, the potential

respondents had several weeks to submit written requests for

clarification or alteration of any ITN provisions they perceived

as u nclear or restricting competition. Again, UHLC submitted no

clarification requests.

C. ITN Responses

1 2 . On June 24, 2014, UCF received six ITN responses.

Mr. Robinson checked to see if the proper boxes were checked on

a list of non - negotiable items, but he did not review every

section of each proposal for compliance with other provisions .

He left all other determinations regarding compliance or non -

compliance with the ITN specifications to the evaluators.

1 3 . Two responses were rejected by Mr. Robin son for

missing or unacceptable mandatory response forms. The ITN

responses by UHLC, KUD, and two others proceeded through the ITN

process.

i. UHLC's Response

1 4 . Before preparing its response, UHLC assembled a team

capable of developing the project. T he proposed hotel will cost

several million dollars. UHLC has a placement agreement with

J.P. Turner & Company, LLC, committing it to provide the capital

for the project. Other than that agreement, UHLC does not have

any other agreements in place for the proposed project.

However, this is true of all other respondents , including KUD.

15. Mr. Headley signed and submitted UHLC's response in

his capacity as manager of Simonson Road Partners, LLC, which

co - owns SRP Hotel Partners, LLC, which in turn co - owns UHLC.

The other co - owner of UHLC is J.P. Turner & Company, LLC, whose

90 percent ownership interest in UHLC "includes an undetermined

amount of equity that will be syndicated to retail and/or

institutional investors."

1 6 . UHLC's response included its ce rtificate of

registration with the Florida Department of State, but not for

any other entity.

17. UHLC omitted a conceptual site plan or facility design

from its proposal. Instead, it intentionally chose to describe

its concept for the proposed hotel i n broad terms to promote

col labo ration with the University. Because the site is located

at the main entrance, UHLC wanted the University to be actively

involved in its design.

1 8 . In researching the UCF market, UHLC also looked at

11 colleges with on - campus hotels, including the University of

Florida, Georgia Tech, and Auburn University. The average size

of those hotels was 238 rooms and 27,000 square feet of meeting

space. Based on that research, UHLC proposed to develop a hotel

at UCF with 225 to 300 rooms and approximately 25,000 to 40,000

square feet of meeting space. The development would use the

entire 11.8 - acre tract.

1 9 . Although U HLC prepared a financial pro forma to

develop its proposed lease terms, it was designed to be an

internal docum ent and included information targeted at potential

investors. The ITN did not require a pro forma.

20 . U HLC assumed that the hotel would have 225 rooms, an

average daily rate of $149.00 in 2017, a stabilized occupancy of

72 percent, and an average growth rate of three percent. Based

on this pro forma, U HLC proposed two lease term options in its

response. Under option 1, UHLC would make total payments to the

University over 50 years of $26,175,000.00, including a lump sum

payment of $7.5 million in year one. Under option 2, UHLC would

make annual payments in increasing amounts to the University

over the course of the lease term totaling $36,185,000.00 over

50 years. U nder both options, U HLC proposed to charge a "UCF

Fee" equal to three percent of the da ily rate on each occupied

room. Over a 40 - year period, t his would generate an additional

$19,850,000.00 to UCF. Thus, under either option, UHLC proposed

a financial return to the University in excess of $50 million

over a 50 - year period . This was compar able to the return

proposed by two other respondents , but was much higher than the

return proposed by KUD.

ii. KUD's Response

2 1. KUD has 40 years' experience developing projects in

the hospitality, convention, education, museum, performing arts,

commerc ial, broadcast, and sports industries.

2 2 . In 2007, KUD managed a large development project for

UCF, and a section of KUD's webpage lists a quote attributed to

Mr. Merck complimenting KUD's work on that project. However,

since that time, KUD has done no other work for UCF.

2 3 . KUD's response was signed and submitted by its

executive vice president and includes its certificate of

registration with the Florida Department of State, but not for

any other entity.

2 4 . A section of KUD's response makes referen ce to an

entity not yet formed, New C o , LLC, as a potential special

purpose entity to be part of the project's future ownership

structure, which would be approved or not at UCF's sole

discretion.

2 5 . KUD proposes to develop a hotel with 100 to 130 rooms,

15,000 square feet of conference space, a 200 - space parking lot,

a conceptual site plan and facility elevation, and a market

feasibility study to help determine appropriate facility sizing.

Notably, it proposes using just 7.4 of the available 11.8 - acre

s ite for the project . The remaining acreage would be retained

by the University for another purpose.

2 6 . KUD proposed lease payments of $150,000.00 per year

for 50 years , no upfront payment , and no increase in rent over

the lease term. In its response, h owever, it states that:

The value for the land being provided by UCF

is a complex issue that revolves around the

number of rooms that can be supported by the

anticipated market demand. Therefore, a

boutique hotel of 100 rooms cannot possibly

make the same investment in land than that

of a 200 room hotel . . . .

We understand, however, that UCF must be

able to justify the use of this land against

other long term potential uses. Therefore,

we have established land payments that have

a minimum current valu e of $7.5 million

dollars over the proposed initial term of

the land lease. This value is established

as a land lease payment of $150,000 per year

or 1% of the gross operating revenues,

whichever is greater. Based on

approximately 7.4 acres, this equates to

approximately $1.0 million per acre.

Jt. Ex. 2 at 11.

2 7 . KUD's response included a projected financial pro

forma based on 100 hotel rooms, including anticipated revenues,

expenses, and net operating income. The response identifies its

proposed hot el operator as The Olympia Companies (Olympia) ,

which also operates a boutique hotel called the Alfond Inn for

Rollins College in Winter Park. Another vendor also identified

Olympia as its potential hotel operator.

D. The Evaluation Process

2 8 . To eva luate and score the proposals, Mr. Merck formed

an initial evaluation committee composed of a diverse group of

U niversity constituents . All seven members met the ITN's

qualifications requirements.

29. Section 2.8.C. of the ITN provided that "each

evaluat ion committee member shall function independently of all

other persons including, without limitation, the other committee

members, and, throughout the entire evaluation process, each

evaluation committee member is strictly prohibited from meeting

with or o therwise discussing this ITN and any aspect thereof

including, without limitation, the offers and their content with

any other individual whatsoever." However, evaluators were not

told to refrain from conducting internet research on the

respondents or the ir team members.

30 . On June 26, 2014, or two days after the filing of the

responses, Mr. Merck and Mr. Robinson met with the evaluation

committee and provided them with instructions, the ITN, and the

four responses to be evaluated . Mr. Robinson briefed the

members on how to conduct their evaluations. During the

meeting, they reviewed the description of a hotel with a typical

size of 150 rooms or less and noted the instruction that the

size of the hotel might vary depending on each proposer's

project sco pe.

3 1 . The next day, June 27, 2014, Mr. Robinson emailed the

committee members additional related documents, and his cover

email included some financial information attributed to the

Alfond Inn "because boutique hotels are something new for the

universit y. Nobody was really familiar with it." He did not

provide this information to any proposer , and there is no

evidence that any proposer knew the committee had received this

information prior to responding to the ITN .

3 2. The ITN specifie d the followin g weighted criteria for

the evaluation committee's scoring:

1. Experience and qualifications in

designing and managing hotel/confe re nce

center facilities;

2. Proposed financial return to the

university through ground rent or other

financial benefit;

3. Experience of personnel assigned to the

project;

4. Financial viability of the respondent;

5. Overall viability of the concept;

6. Compatibility of the proposed concept

with the UCF Campus area; and

7. Conformance with the ITN's preferred

conditions an d requirements.

§ 2.8.C.

3 3. As to the proposed financial return, Mr. Merck pointed

out that "financial return from a project like this, when it's

on the university, is important, it's meaningful, but that's not

the primary driver in the decision or in the goal we were

seeking with the hotel." The University's current annual budg et

of $1.4 billion puts this statement in perspective. Mr. Merck's

main desire was to get a "quality product," which outweighed

everything else, including financial return, in the

solicitation. Therefore, the financial return only accounted

for 20 percent of the total awardable points, while the other

six criteria combine for a total of 80 percent.

3 4 . After the evaluation committee completed its review ,

scored the proposals, and ranked KUD as number one, Mr. Merck

concluded that KUD's response "looked very good" based on its

partial use of the available land; the conceptual site plan and

facility elevation; a "very conservative base case" financial

pro forma based on 100 hotel rooms; a clear project team

identification, including a "very important" hotel operator; and

a suggested market feasibility study, which he found impressive.

In contrast, he considered UHLC's response oversized as to the

facility, vague as to its propose d conceptual idea and hotel

operator, and lacking substance as to some of its numbers.

Thus, he decided that KUD should be selected for pre - award

negotiations , which eventually led to UCF's decision to award

the contract to KUD .

E . Grounds Raised by Peti tioner

35. In the parties' Joint Pre - Hearing Stipulation, UHLC

contends that the proposed award to KUD should be rescinded and

the contract awarded to UHLC, or alternatively, the ITN reissued

and the process started anew . It alleges generally that the

fi nancial return to UCF is not in the University's best

interests and that UHLC submitted a superior financial return ;

that KUD 's response materially deviated from the state corporate

registration requirement in section 2.15 of the ITN; that KUD

received an unfair competitive advantage due to the evaluation

committee's receipt of information about the Alfond Inn; that

th re e of the seven evaluators improperly scored the proposals of

KUD and UHLC ; that Mr. Merck improperly conferred with the

evaluation committe e members after receiving their scores; that

UCF improperly communicated with KUD in pre - award

communications; that KUD was allowed to amend its proposal after

it was opened; and that UHLC was not given a point of entry to

challenge the pre - award meeting b etween the negotiating team and

KUD. Incorporated into t hese broad allegations are several

other contentions . These allegations are discussed below.

i. Financial Return to the University

36. UHLC contends that even though financial return made

up 20 p ercent of the total evaluation points, the ITN

specifications were never changed to reflect the decreased

importance given to financial return by Mr. Merck.

37. As noted in Finding of Fact 33, financial return was

n ever the driving for ce for UCF on this project. This was

consistent with section 2.8.C. of the ITN, which specifically

provided that "UCF is not obligated to make an award under or as

a result of this ITN or to award such contract, if any, on the

basis of lowest cost or highest commission off ered." Also,

section 2.3 of the ITN allowed UHLC to request clarification on

"any conditions or requirements which [it believed] remain

unclear or which restrict competition." No clarification

regarding financial return was ever sought. UHLC's suggestio n

that financial return should be the overarching dispositive

factor in awarding the contract is rejected.

i i . Violation of Section 2.15

3 8 . UHLC contends that by listing a not - yet - formed entity ,

NewCo, LLC, to be a part of the project's future owners hip

structure, but not attaching that entity's state corporate

registration certificate, KUD violated a material requirement of

the ITN, section 2.15 .

39 . This section of the ITN was highlighted by Mr. Merck

at the pre - proposal conference . It provides as follows:

2.15 State Licensing Requirements

All corporations seeking to do business with

the State of Florida shall, at the time of

submitting an offer in response to this ITN,

either be on file or have applied for

registration with the Florida Departm ent of

State in accordance with the provisions of

Chapter 607, Florida Statutes. A copy of

the registration/application must be

furnished to UCF when submitting the offer.

4 0 . Notably, t his provision is not included as a part of

the "nonnegotiable cond itions and requirements" pursuant to ITN

section 2.50 and Appendix II. Therefore, while the requirement

is important, a failure to strictly comply with that provision

did not mean that a proposal would be deemed non - res ponsive , as

UHLC argues .

4 1 . KUD's response was signed and submitted by KUD's

executive vice president under the name KUD International , and

it includes the Florida corporate registration certificate for

that entity. Thus, KUD was the respondent to the ITN, not

NewCo, LLC.

4 2 . UHLC's re sponse was signed by Mr. Headley in his

capacity as manager of Simonson Road Partners, LLC, which is a

second level parent/owner of UHLC. Its response did not include

the corporate registration certification of Simonson Road

Partners, LLC, and provided no documentation indicating Sim onson

Road Partners, LLC's authority to submit the response on behalf

of SRP Hotels Partners , LLC, or UHLC.

4 3 . Mr. Robinson reviewed both responses and determined

they sufficiently conformed to the ITN. Even if there was

a rguably a de viation from the specification , he considered the

deviation to be im material and one that could be waived. See

§ 2.18 . A . ("UCF will, at UCF's sole discretion, determine

whether a deviation is material . "). No advantage or benefit

accrued to either respondent by UCF waiving strict adherence to

this r equirement .

iii. Information Regarding the Alfond Inn

4 4 . UHLC asserts that UCF materially deviated from the

ITN's specifications by providing the evaluation committee with

information concern ing the Alfond Inn shortly after the

evaluation process began , and abused its discretion in

permitting the committee to receive such information . As noted

earlier, the Alfond Inn is located on the Rollins College campus

and is managed by Olympia, which KU D intends to use to manage

its hotel if awarded the contract.

4 5 . On June 26, 2014, or t wo days after the opening of the

proposals, Mr. Merck organized a group and individual meeting

with the evaluators. At that meeting, the specifications were

reviewed, and a description of a "typical" hotel of around

150 rooms or less was given. However, the evaluators were told

that the size of the hotel might vary depending on each

proposer's project scope.

4 6 . The next day, Mr. Robinson sent an email to all

eval uators that included Addendum 1 and 2 to the ITN. The email

also included information concerning the Alfond Inn. Because a

boutique hotel is a new concept in hotels, Mr. Robinson believed

the information would be helpful to the evaluators. The email

poi nted out that the Alfond Inn had achieved an occupancy rate

as high as 94 percent and that it had exceeded its revenue

projections. The email did not identify the Alfond Inn's

developer, architect, operator, number of rooms, or conference

space. Mr. Robi nson interpreted the ITN as permitting the

committee to receive this type of information in its review

process . This was a reasonable interpretation of the ITN and

did not constitute a n abuse of discretion.

4 7 . There is no evidence that any evaluator materially

relied on Mr. Robinson's email in scoring his/her proposal . The

evidence does not support a finding that any respondent received

a competitive advantage by this action.

iv. Evaluation Committee Members' Scores

4 8 . Petitioner contends that thr ee members of the

committee acted arbitrarily and capriciously in the manner in

which they scored the financial return criteria for both UHLC

and KUD . It also contends that one of those members erroneously

scored UHLC's response on the criteri a of financi al viability

and the experience and qualifications in designing and managing

hotel/conference center facilities. As relief, UHLC asks that

KUD's total score be reduced from 596.5 to 537.5, and that

UHLC's total score be raised from 567.0 to 597.0.

49 . On this issue, the record shows that t he challenged

committee members gave reasonable explanations for their scoring

based on facts and logic.

5 0. Petitioner also contends that the scoring process was

flawed because the evaluators improperly used external s ources

to obtain information about the respondents.

51. Section 2.25 allows UCF to "make investigations to

determine the ability of the Respondent to perform under the

ITN." UCF's interpretation of this section to mean that

evaluators could use the int ernet and company websites in their

evaluation process was not unreasonable.

5 2 . Many of the evaluators testified that they relied on

the internet and company websites to assist them in their

evaluation. One evaluator noticed on KUD's website an

endors ement by Mr. Merck of KUD based on its work on a project

that ended in 2007. However, he was not influenced by that

information when he scored the proposals.

5 3 . There is no evidence that any evaluator relied on

opinions of friends or others in scoring the proposals.

5 4 . Notably, under th e terms of section 2.8.C . of the ITN,

Mr. Merck was not bound by the scores of the evaluation

committee. The ITN vested in him the discretion to choose KUD

even if the evaluators had ranked it below UHLC. In Mr. Merc k's

judgment, UHLC's proposal was to o oversized as to the facility ,

vague as to its proposed conceptual idea and hotel operator , and

unsubstantiated as to some of its numbers . He was also

concerned that an excessive number of hotel rooms might suffer

from lower occupancy rates, leading to decreased maintenance and

service in order to maintain profit margins. In sum, he

concluded it was in the best interest of the University to begin

pre - award negotiations with KUD, wh ich he believed submitted the

best pro posal.

5 5 . UHLC further contends that KUD was given a competitive

advantage because the initial scoring summary sent to Mr. Merck

was incorrect and ranked UHLC as number four, rather than number

two.

5 6 . After the evaluation team completed its assignme nt,

the score sheets were sent to Mr. Robinson. He then cut and

pasted those scores onto an Excel s pread sheet. Though he

correctly transposed individual scores for each evaluator, the

Excel spreadsheet that he used contained formulas that

incorrectly tal lied total scores.

5 7 . When first computed, Mr. Robinson's summary identified

KUD in first place, but listed UHLC as number four. Although

UHLC should have been ranked second, the summary listed Avista

Management (Avista) as the second ranked proposal. The

incorrect scores were forwarded to Mr. Merck on July 26, 2014 ,

and were not corrected until Mr. Robinson returned from vacation

on August 11, 2014.

5 8 . Using the incorrect score sheets, Mr. Merck prepared a

summary of the four proposals, as well as an outline reviewing

the total scores to the evaluators. Based upon his review,

Mr. Merck intended to begin pre - award negotiations with KUD, the

top ranked vendor, but if they were unsuccessful, negotiations

would begin with the second ranked respondent , who he believed

at that time was Avista.

59 . When the incorrect summary was given to Mr. Merck, he

concluded that "KUD should be the one that we pick," and the

incorrect ranking of UHLC as number four instead of number two

had no bearing on his decision . At that point in the process,

Mr. Merck decided that there was no reason to discuss the merits

of the other three proposals, and he wanted to confirm that the

evaluators were comfortable with KUD as the highest ranked

respondent. KUD did not receive an unfair competitive advantage

by the incorrect summary.

v. Improper Collaboration Among Evaluators and Mr. Merck

6 0 . UHLC contends that by meeting with the evaluators

after the proposals were opened, but before an award was made,

Mr. Merck violated the t erms of the ITN in a material respect.

6 1 . In support of this contention, UHLC points out that

t he ITN instructed the evaluators to "[w]ork independently " and

to " not discuss the Offers or your evaluation with anyone."

App. I, ITN. It also cites to anot her provision in the ITN that

allowed evaluators to meet with Mr. Merck while the ITN

specifications were being formed, but not after offers were

opened on June 24. See § 2.8.C .

6 2 . Notwithstanding the se provisions, section 2.8.C. also

included the fo llowing important language:

At the time of such delivery [of score

sheets] to the Purchasing Person, the

evaluation committee members shall cease to

participate further in this ITN process

unless expressly requested by Decision

Maker . The Decision Maker s hall review, in

the manner and to the extent he/she deems

reasonable under the circumstances, the ITN,

the offers, and the committee members'

scoring forms . . . . The Decision Maker

may, at any time during this ITN process,

assign one (1) or more UCF sta ff members to

assist the Decision Maker's review prior to

his/her decision - making in this process.

(Emphasis added . )

63. This language clearly allowed Mr. Merck to request a

meeting with the evaluators at any time during the ITN process

when expressly re quested by Mr. Merck. Relying on that

authority, both Mr. Merck and Mr. Robinson concluded that

conferrals by Mr. Merck with the committee after receiving their

scores were permitted. Here, Mr. Merck deemed it appropriate to

confer with the evaluation co mmittee members as a group to

assess their overall level of comfort with KUD and their

feelings on opening negotiations with both KUD and UHLC, or just

KUD. The conferrals were not clearly erroneous, contrary to

competition, arbitrary, or capricious, as a lleged by UHLC.

vi. Pre - Award Communications With KUD

6 4 . Section 2.6 of t he ITN prohibited respondents from

making offers or amendments to their proposals once they were

opened. UHLC contends that section 2.6 was materially violated

when a member of t he evaluation team requested clarification on

an item in KUD's proposal, and KUD was allowed to correct a

typographical error in its proposal.

6 5 . Dr. Young was a member of the evaluation team. During

her review of KUD's response, she raised a questio n regarding

how much land KUD proposed to use. She did so because KUD's

proposal indicated on page 1 that 7.4 acres would be used, but

in another place indicated that 4.4 acres would be used. As it

turned out, the latter figure (4.4) was a typographical error.

6 6 . To clarify this issue, Dr. Young sent an email to

Mr. Merck, who forwarded it to Mr. Robinson. Mr. Robinson

sought clarification from KUD, who provided an email response

that 7.4 acres (shown on page 1) was the correct figure. In

response t o a second question from Dr. Young, KUD also provided

information regarding Olympia , one of its team members. All

evaluators were given a copy of Dr. Young's original question,

along with KUD's response. However, these were permissible

communications und er section 2.25 of the ITN, which allows UCF

to "make investigations to determine the ability of the

Respondent to perform under the ITN." Moreover, by simply

allowing KUD to c orrect a typographical error when the correct

acreage was listed elsewhere in i ts proposal, KUD was not given

a competitive advantage.

6 7 . UHLC also contends that UFC was prohibited from

communicating with KUD prior to issuing the tentative award.

6 8 . By August 11, 2014, Mr. Merck had decided that KUD

submitted the best proposal . Accordingly, that same day , he

advised Mr. Robinson that a negotiation committee would be

formed to proceed with pre - award negotiations with KUD, and

except for one individual, the evaluation committee members

would comprise that group. The group met wi th KUD on

September 9, 2014. Notice of the meeting was not given to other

respondents . Three days later, Mr. Merck advised Mr. Robinson

to publish a notice of intended award to KUD.

6 9 . Mr. Merck explained that the point of the meeting with

KUD was "not so much to drill down on exactly the specifics of

what they would deliver, but more to -- for use to develop a

comfort level that the team they were putting forth was a -- was

a fit for the university and that generally what they orally

suggested to u s was consistent with what they had put in writing

in their proposal. It was more an additional kick the tires

exercise." This type of meeting is authorized in numerous

places throughout the ITN. See § 2.25 (" A s part of its

evaluation process, UCF may m ake investigations to determine the

ability of the Respondent to perform under this ITN . ");

§ 1.2.E. ("UCF reserves the right to conduct negotiations with

the highest ranked offerer(s) . "); § 2.8.A. ( " UCF reserves the

right to conduct negotiations i f [Mr. Merck] . . . determines

negotiations to be in the best interest of the university . ");

§ 2.8.C . (Mr. Merck retains the right to negotiate with the

highest ranked respondent). The University's interpretation of

the se provisions was not clearly err oneous , contrary to

competition, arbitrary, or capricious, as alleged by UHLC.

vi i. Failure to Offer Point of Entry Before Entering Pre -

Award Negotiations with KUD

70 . UHLC contends that it was entitled to a point of entry

to challenge Mr. Merck 's decisi on on August 11 to begin pre -

award negotiations with KUD. However, at that time, UHLC was

not yet eliminated from consideration , and Mr. Merck had not

made a final decision to reject the other proposals . See Fla.

Bd. Gov's Reg. 18.002(3)(c)(an intended o r final decision occurs

only after all responses have been rejected). Moreover, s ection

2.8.C. allows UCF the discretion to communicate with both KUD

and UHLC, or any other respondent . If negotiations with KUD

were unsuccessful, UCF intended to engage wi th UHLC as the

second ranked proposer. Pursuant to section 2.9, UHLC's

meaningful point of entry was provided when a notice of intent

to award a contract was posted on September 15, 2014.

CONCLUSIONS OF LAW

7 1 . This proceeding is governed by regulation s adopted by

the Florida Board of Governors. Board of Governors' Regulation

18.002 sets forth the procedures for protests related to the

University's Contract Procurement Process. Paragraphs (13)(f)

and (g) of that regulation contain the following standa rds that

are applicable to this proceeding:

The [administrative law judge] shall conduct

a de novo proceeding to determine whether

the university's decision or intended

decision is contrary to the statutes,

regulations, or policies governing the

university , or contrary to the

Specifications. The standard of proof in

this proceeding shall be whether the

proposed university action was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

7 2 . " The burden of proof rests with the party prote sting

the u niversity action. " Id. Thus, P etitioner m ust establish by

a preponderance of the evidence that UCF's intent to award a

contract to KUD violated applicable rules and ITN specifications

in a manner that was clearly erroneous, contrary to competi tion,

arbitrary, or capricious.

7 3 . Agency action will be found to be clearly erroneous if

it is without rational support and , consequently, the

Administrative Law Judge has a "definite and firm conviction

that a mistake has been committed." U.S. v. U.S . Gypsum Co. ,

333 U.S. 364, 395 (1948).

7 4 . An act is contrary to competition if it (1) creates

the appearance o r opportunity for favoritism; (2) erodes public

confidence that contracts are awarded equitably and

economically; (3) causes the procurement pr ocess to be genuinely

unfair or unreasonably exclusive; or (4) is unethical,

dishonest, illegal, or fraudulent. Syslogic Tech. Servs., Inc.

v. S. Fla. Water Mgmt. Dist. , Case No 01 - 4385BID (Fla. DOAH Jan.

18, 2002), modified in part , Case No. 2002 - 051 (SF WMD Mar. 6,

2002).

7 5 . A decision is ar bitrary if it is not supported by

facts or logic or is despotic. Agrico Chem. Co. v. State , Dep't

of Envtl. Reg. , 386 So. 2d 759, 763 (Fla. 1st DCA 1978). To act

capriciously is to act without thought or reason or to act

irrationally. Id. If agency action is justifiable under any

analysis that a reasonable person would use to reach a decision

of similar importance, the decision is neither arbitrary nor

capricious. Dravo Basic Mat erial s Co. v. State , Dep't of

Tran sp. , 602 So. 2d 632, 634n.3 (Fla. 2nd DCA 1992).

7 6 . When the foregoing principles governing procurement

protests are applied to the established facts, it is concluded

that U HLC has failed to prove by a preponderance of the evidence

that during its review of the proposals, U CF violated applicable

rules and specifications in a manner that was clearly erroneous,

contrary to competition, arbitrary, or capricious. Therefore,

UHLC's protest should be denied and the decision to award the

contract to KUD sustain ed.

7 7 . Finally, i n its Proposed Recommended Order, UCF

requests that it be awarded attorney's fees and costs pursuant

to Florida Board of Governors' Regulation 18.002(22) , which

allows for an award of attorney's fees and costs if "the non -

prevailing part y has participated in the hearing for an improper

purpose." Like similar provisions in chapter 120, an "improper

purpose" is defined in the regulation as "participation in the

protest proceeding primarily to harass, cause unnecessary delay,

[or for a] fri volous purpose; needlessly increasing the costs of

litigation, licensing, or securing the approval of an activity;

or filing a meritless protest." Having reviewed UHLC's protest,

the undersigned cannot conclude that it was filed for an

improper purpose. The request is accordingly denied.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the University of Central Florida enter a

final order denying UHLC's Formal Protest of the Intended Award

and sustainin g its intention to award the contract to KUD.

DONE AND ENTERED this 18th day of March , 2015, in

Talla hassee, Leon County, Florida.

S

D . R. ALEXANDER

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 18th day of March , 2015.

COPIES FURNISHED:

W. Scott Cole, General Counsel

Office of the General Cou nsel

University of Central Florida

Post Office Box 160015

Orlando, Florida 32816 - 0015

Seann M. Frazier, Esquire

Parker Hudson Rainer & Dobbs, LLP

Suite 750

215 South Monroe Street

Tallahassee, Florida 323 01 - 1804

(eServed)

Richard E. Mitch ell, Esquire

GrayRobinson, P.A.

Post Office Box 3068

Orlando, Florida 32802 - 3068

(eServed)

Jordan P. Clark, Esquire

Office of the General Counsel

University of Central Florida

Post Office Box 160015

Orlando, Florida 328 16 - 0015

(eServed)

RIGHT OF RE VIEW

Pursuant to Regulation 18.002(13)(j), within fourteen days after

rendition of this Recommended Order, the President of University

of Central Florida shall issue a Preliminary Order and serve the

parties with a notice of such order. If the Protestor takes

exception to the Preliminary Order, the Protestor must timely

file its written exceptions with the President within fourteen

days after the date of this Recommended Order is issued. The

Preliminary Order shall provide that, "This Preliminary Order i s

the Final Order unless the Protestor files written exceptions to

the Preliminary Order with the President no later than 14 days

after the date this Preliminary Order is issued."