15-001566BID Bsn Sports, Llc, A Deleware Limited Liability Company vs. School Board Of Palm Beach County, A Political Subdivision Of The State Of Florida Status: Closed Recommended Order on Wednesday, July 22, 2015.

Summary: Petitioner failed to demonstrate that the intended awardees, who had identical bids for a percentage discount on athletic merchandise, engaged in collusion. Recommend award of contracts as previously recommended by the School Board.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BSN SPORTS, LLC, A DEL A WARE

LIMITED LIABILITY COMPANY,

Petitioner,

vs. Case No. 15 - 1566BID

SCHOOL BOARD OF PALM BEACH

COUNTY, A POLITICAL SUBDIVISION

OF THE STATE OF FLORIDA,

Respondent,

and

D&J COMMERCE SOLUTIONS, INC.,

d/b/a OLC T EAM S OLUTIONS ,

Intervenor.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was

conducted before Administrative Law Judge Mary Li Creasy i n West

Palm Beach, Florida, on June 2, 2015.

APPEARANCES

For Petitioner: Gregory W. Coleman, Esquire

Santo DiGangi, E s quire

Critton, Luttier and Coleman

303 Banyan B ou l e v ar d , Suite 400

We st Palm Beach, Florida 33401

For Respondent: Kalinthia R. Dillard, Esquire

The School Board of Palm Beach

County, Florida

3300 Forest Hill Boulevard , Suite C - 323

West Palm Beach, Flor ida 33406

For Intervenor: Brady J. Cobb, Esquire

Cobb Eddy, PLLC

642 Northeast Third Avenue

Fort Lauderdale, Florida 33304

STATEMENT OF THE ISSUE S

W hether , when making a recommendation to award I TB

No. 15C - 26K (Term Contract for the Purchase of Physical

Education/Athletic Supplies, Equipment, and Uniforms) to

( 1) Matty ' s Sports (Matty ' s) , ( 2) Simmons Team Sports (Simmons) ,

( 3) D&J Commerce Solutions, Inc., d/b/a OLC Team Solutions (D &J) ,

and ( 4) P alm Beach Sports (PB Sports) , Respondent , School Board

of Palm Beach County (School Board), acted contrary to one or

more governing statutes, rules, policies, or procurement

specifications, or any combination thereof; and if so, for each

such instance, whe ther the misstep was clearly erroneous,

arbitrary or capricious, or contrary to competition.

PRELIMINARY STATEMENT

On November 4, 2014, the School Board issued ITB No. 15C - 26K

for the provision of athletic equipment (hard goods) and athletic

clothing, incl uding uniforms (soft goods). The sealed bids were

opened on November 26, 2014. On January 28, 2015, the School

District of Palm Beach County ' s Director of Purchasing posted a

recommendation to award ITB No. 15C - 26K to the three responsive

and responsible bidder(s) offering the highest discount to be

deducted from their catalog list prices, retail pricing, or

prices on company webpage for each of the 26 items set fort h in

the solicitation document.

On February 2, 2015, Petitioner, BSN Sports, LLC

(BSN), se rved a notice of protest of the Award

Recommendation/Tabulation. After receiving the bid protest,

the School Board held an Informal Meeting to try to resolve the

issues in the protest in accordance with section 120.57(3),

Florida Statutes, and School Boar d Policy 6.14. The parties were

not able to reach a resolution .

BSN timely filed a formal Petition on March 12, 2015. In

its Petition, BSN challenges the School Board ' s recom mendation

for award to ( 1) Matty ' s, ( 2) Simmons, ( 3) D& J , and ( 4) PB Sports

for Items 1 through 26. Specifically, BSN assert ed that the

School Board ' s proposed agency action is improper because the

bids of the four proposed awardees enumerated above suggested to

the School Board that th ose bidders " clearly engaged in collusio n

in sub mitting their responses " in violation of Sec tion 2 of the

Instructions to Bidders. BSN did not contest the sugg ested award

to bidders Runner ' s Edge, Inc. (Items 11 and 13) , or Hatworld,

Inc. , d/b/a Lids Team Sports (Item 26).

Additionally, BSN asserted th at the School Board should have

required the actual prices of various products to be supplied by

the winning bidders. For relief, BSN requested that the School

Board cancel the recommended bid award to the four proposed

bidders and remove the four entitie s from all bid lists for the

School Board. The Petition was referred to the Division of

Administrative Hearings (DOAH) on March 19, 2015 .

The School Board moved to dismiss the Petition on two

grounds. First, the School Board asserted that BSN untimely

as serted its claim that the School Board should have required the

actual prices of various products to be supplied. Additionally,

the School Board argued that BSN lacked standing to challenge the

recommended contracts for Items 1, 3, 5, 7, 11, 15, 17, 19, 2 1,

or 25. BSN withdrew its claim that the School Board should have

required the actual prices of various products to be supplied by

the winning bidders. The undersigned denied the Motion to

Dismiss and the final hearing was conducted on June 2, 2015 , as

scheduled.

Prior to the h earing, the parties filed a Joint Pre - h earing

Stipulation, which contained a 16 - p aragraph statement of facts

which were admitted and di d not require proof at hearing . Joint

Exhibits 1 through 23 and 25 were admitted in evidence wi thout

objection .

Terrence M. Babilla , BSN ' s President, Chief Operating

Officer, General Counsel , and Secretary; Adam Rhein, BSN ' s

Man a ger of its East Coast bid department ; Sharon Swan , Palm Beach

County School District (District) Director of Purchasing; J an

Butts, Purchasing Agent III for the District; D avid Bens on, owner

of D&J ; Fred Car r, owner of PB Sports; Matthew Wilkin, owner of

Matty ' s Sports; Tim Simmons, owner of Simmons ; and Barry

Zuccarini owner of Recre ation Spo r ts, Inc., appeared as witnesses

at the f inal hearing.

During the final hearing and after taking the testimony of

several witnesses, BSN made an ore tenus amendment of its

P etition and removed Matty ' s as one of the named colluding

parties . H owever, BSN indicated it was still challenging the

School Board ' s award of the bid.

A two - volume Transcript of the f inal h earing was filed with

DOAH on June 11, 2015. BSN and the School Board filed proposed

recommended orders which were considered in the preparation of

this Recommended Order. Unless otherwise noted, citation to the

Florida Statutes and Florida Administrative Code refer to the

version s in effect on January 13, 2015.

FINDING S OF FACT

ITB No. 15C - 26K and the Bid Process

1. On November 4, 2015, the School Board issued Invitation

to Bid ( ITB) No. 15C - 26K entitled " Term C ontract for the Purchase

of Physical Education/Athletic Supplies, Equipment and Uniforms "

for the provision of athletic equipment (hard goods) and athletic

clothing, including uniforms (soft goods).

2. The ITB offered pros pective vendors the opportunity to

bid on 26 items but did not require that a vendor offer a bid for

each of the 26 identified items. The odd - numbered items were for

hard goods and the even - numbered items were soft goods.

3. Paragraph G , AWARD of the SPE CIAL CONDI TIONS of ITB

No. 15C - 26K , stated:

In order to meet the needs of the various

schools and departments, the contract shall

be awarded to the three (3) responsive

responsible bidders offering the greatest

discount for each Item referenced in the Bid

Summary Document, after adjustments have been

made for all prefe rences that may be

applicable.

4. Paragraph P , FIXED P E RCENTAGE DISCOUNT of the SPECIAL

CONDITIONS of ITB No. 15C - 26K , stated:

The discounts, terms and conditions of this

bid are to remain f irm throughout the

contract period. Additional discounts are

always accepted. Bidder shall indicate in

spaces provided on the Bid Summary Document

their single fixed percentage discount to be

deducted from the catalog list prices, retail

pricing or price s on company webpage.

5. As part of their bid submissions, BSN, D&J , Matty ' s,

Simmons, and P B Sports signed a Bidder Ack nowledgement form that

stated, " By electronically submitting your bid, the bidder

certifies that they have not divulged, discussed or compared

their bid with other bidders and have not colluded with any other

bidder or par ties to the bid whatever [sic]. "

6 . BSN, D&J, Matty ' s, Simmons, and PB Sports timely

submitted their bid proposals. The sealed bids were opened on

November 26, 2014. Thi r ty - six bids were received that bid on at

least one item .

7. The District ' s Director of Purchasing posted a

recommendation of award ITB No. 15C - 26K to th e three responsive

and responsible bidder s offering the highest discount to be

deducted from their catalog list prices, retail pricing, or

prices on company webpage for each of the 26 items set forth in

the solicitation document.

8. For Items 1 through 25, Matty ' s, Simmons, D&J, and PB

Sports bid a 3 5% discount on all equipment (hard goods) and a

4 5% discount o n clothing (soft goods). For Item 26, both D&J and

PB Sports bid a 2 0% discount , thus matching on all 26 items.

Similarly, Simmons and Matty ' s both offered a 4 5% discount for

Item 26, thus having identical bids for all 26 items.

9. D&J was rec ommended for award on Items 2 through 6, 8 ,

10, 12, 14 , 15, 17 through 20, and 22 through 25. Hat World,

Inc. , d/b/a Lids Team Sports , was recommended for award on

Item 26. Matty ' s was recommended for award on Items 1 through 3,

6 through 8, 10, 12 throu gh 18, 20 , 21, 23 through 25, and 26.

P B Sports was recommended for award on Items 1 through 12, 14,

16, 19, 21, and 22. Runner ' s Edge, Inc. , was recommended for

award for Items 11 and 13. Simmons was recommended for award for

Items 1, 4 , 5, 7, 9, 11, 1 3, and 15 through 26.

10. For Items 1 through 25, BSN bid an 18 % discount on al l

equipment (hard goods) and a 3 5% discount o n clothing (soft

goods). BSN was not recommended as an awardee. BSN timely

filed a notice of protest on February 2, 2015, and a letter of

protest on February 9, 2015. BSN timely filed a formal protest

petition on March 12, 2015.

Basis of the Bid Protest and Allegation of Collusion

11. In its Petition, BSN challenge s the School Board ' s

recommendation for award to ( 1) Matty ' s, ( 2) Simmons, ( 3) D&J,

and ( 4) PB Sports , as contrary to the School Board ' s solicitation

specifications for Items 1 through 26. 1/ Specifically, BSN

assert s that the School Board ' s proposed agency action is

improper because the bid responses of the four propose d awardees

enumerated above suggests that those bidders " clearly engaged

in collusio n in submitting their responses " in violation of

Section 2 of the Instructions to Bidders.

12. BSN argues that collusion between the se four must be

inferred due to the nea rly identical bidding pattern for all

items, the close personal relationships between the owners of

these businesses, and the g eographic proximity o f these

businesses with 60 miles of each other. Further, D&J and PB

Sports both had their bids notarized by the same person, a full -

time employee of D&J , and D&J and PB Sports provided an identical

vendor list.

13. The four alleged colluders all deny that they had any

assistance in preparing their bids or that they worked together

in preparing their bids.

Bidd ing Patterns

14 . As admitted by BSN ' s President, Terrance Babilla

(Babilla) , and explained at final hearing by Janet Butts (Butts)

of the Di s trict ' s Purchasing Department, patterns that appear in

bidding do not, standing alone, suggest collusion.

15 . The very nature of this ITB , of having all odd - numbered

items represent hard goods and even - numbered items re presen t soft

goods, invited a pattern of bidding a straight percentage for all

odd numbered items and the same or another percentage for even

items. For example, Bob ' s Athletic and K nockout Sportswear had

the identical bid pattern because both companies chose not to bid

on any hard goods , and both bid a 2 0% discount across the board

on all soft goods. Similarly, the bids of Coastal Enterprises,

Neff M otivation, Inc., and RASA ' s, Inc., were identical in that

all three chose not to bid on hard goods and bid a 5% discount on

soft goods.

16 . Numerous bidders matched on the percentage offered on

either hard or soft goods. Aluminum Athletic Equipm ent Compa ny

and BSN both bid 18 % on all hard goods. Pyramid and S&S

Worldwide both offered a 2 0% discount on the hard goods for which

they bid . HSA Enterprises , Inc. , and Nasco both bid a 1 0%

discount on hard goods. Bob ' s Athletic, Pyramid School Products,

and S cotty ' s Sport Shop all bid a 2 0% discount on the soft goods

for which they bid .

17 . According to BSN ' s witnesses, the fact that four

bidders matched percentage discounts offered on 25 of 26 items is

beyond coincidence . Even if true, it does not necessari ly follow

that that the identical even/odd pattern of bidding is the result

of collusion.

18 . D&J, PB Sports, and Matty ' s were aware that the Broward

County S chool B oard (BCSB) , which oversees a district

geographically connected, and a school system demog raphically

similar to that of Palm Beach County, awarded its latest contract

for athletic wear and equipment to Matty ' s , which bid a 3 5%

discount for hard goods and generally a 4 5% discount for soft

goods. Unlike the School Board ' s ITN, the BC S B ITN was broken

down by vendor for hard and soft goods. Matty ' s successfully bid

a 45% discount for Adidas brand soft goods to secure the BC S B

contract.

19 . In fact, D&J was an unsuccessful bidder on the BC S B ITB

because it offered a 4 0% discount on soft goods. D&J primarily

sells Adidas products. After D&J was an unsuccessful bidder for

BCSB , but prior to the issuance of the School Board ' s ITB at

issue in this case , David Benson (Benson) , owner of D&J, and Fred

Carr (Carr) , owner of PB Sports, discussed the fa ct that the next

time a similar ITB was issued, a bidder could not go less than

4 5% for soft goods in order to beat or tie Matty ' s . Based upon

the BCSB bid process, b oth Benson and Carr believed 45% to be the

new " benchmark " for soft goods.

20 . D&J use d its standard all - school rate of a 3 5% discount

for the hard goods number offered to the School Board . Carr used

the standard 35% discount for hard goods to schools offered by

Adidas, the brand he primarily carries .

21 . Simmons, who s e business opened in January 2014, was not

familiar with the BCSB bid but based his bid on his prior

experience working as a salesman for D1 Sport s , which sold Adidas

and Under Armour soft goods to schools at a 40% discount and hard

goods at a 30% discount . He decided to inc rease those amount s by

5% in an effort to win the bid.

2 2 . Matty ' s , of course, was aware of the amounts it bid to

successfully secure the BCSB bid. Because it had to propose one

percentage for the School Board rather than numerous percentages

for various vendor s as it did for BCSB, it chose the 45% discount

used for Adidas goods. Matty ' s often used the 35% on hard goods

and 45% on soft goods to successfully secure contracts with other

school districts . Additionally, Matty ' s belongs to a purchasing

gro up of approximately 250 sporting goods suppliers , Sports Inc.,

that provides a significant discount from vendors so that Matty ' s

could still be profitable with 35 % and 45% discounts.

2 3 . The explanations offered by D&J, PB Sports, Simmons,

and Matty ' s, fo r how each business came to the ir 35 % and 45%

discounts for odd and even numbered items , are credible , rational

and strongly weigh against any possible inference of collusion.

Relationships Between the Owners of the Winning Bidders

A. Benson and Carr

24 . According to BSN, the specter of collusion is raised

when the nearly identical bidding patterns and the personal

relationships among the successful bidders is revealed.

25 . Benson, the owner of D&J, and Carr, the owner of PB

Sports, have known each other and worked with each other through

their roles with various sport s companies in South Florida over

the last 11 to 13 years , and they have the closest relationship

among the winning bidders . When Benson worked for Websters Team

Sports, Carr served as Webs ters ' Adidas representative.

Thereafter, Carr became the owner of D1 Sports which then

purchased athletic supplies f rom D&J in D&J ' s capacity as a

wholesaler. Carr continued to purchase primarily Adidas products

through D&J when he became owner of PB Spo rts.

26 . D&J was a winner on several line items on the 2012

BC S B athletic supplies bid. The School Board " piggybacked " off

this BCSB contract and allowed Pal m Beach County schools to use

those winners as authorized vendors for Palm Beach County

schools. As such, schools in Palm Beach County could utilize D&J

as a vendor for certain products prior to ITB No. 15C - 26K .

27 . Up through the time ITB No. 15C - 26K was issued, Carr

served as a subcontractor for Benson in Palm Beach County. As a

subcontractor, C arr sold athletic supplies to Palm Beach County

schools through D&J. In this capacity, Carr used D&J letterhead

to invoice schools, had full access to D&J ' s vendor costs for all

athletic supplies, and was able to call different vendors and

place his order s using D&J ' s name. The School Board had some

nominal knowledge of a business relationship between the two , but

did not know the exact nature of that relationship.

28 . Benson still serves as a wholesaler to Carr (in his

capacity as owner of PB Sports) pe rmitting Carr to purchase goods

at Benson ' s cost and selling Carr between 65 % to 70% of his

athletic supplies. Further, Benson sells Carr between 95 % to 99%

of the Adidas products which Carr then re - sells to third - parties .

Carr considers D&J to be his " e xclusive Adidas provider. " Carr

is not an authorized dealer of Adidas products (or " open " with

Adidas) and is unable to purchase items directly from Adidas.

However, if PB Sports is awarded the contract at issue in this

case, Carr anticipates being able to buy direct from Adidas.

29 . In exchange for permitting Carr to use Benson ' s vendors

to purchase various athletic supplies, Benson provides a 10%

" upcharge " on every item PB Sports purchases from D&J. The

relationship is mutually beneficial because Ben son receives a 10%

profit on every item Carr purchases through D&J ' s vendors , and

Carr is able to sell these products to D&J ' s customers in Palm

Beach and to PB Sports ' customers as well. As a result of this

relationship, Benson is purchasing a higher vol ume of supplies

because he is ordering for both D&J and for Carr. Carr and

Benson are able to obtain higher discounts as a result of

consolidating their purchases from several of D&J ' s vendors,

particularly Adidas .

30 . BS N suggests that the arrangement b etween D&J and PB

S ports is " unheard of, at least in this industry. " However, BS N

is not open with Adidas so it does not know whether Adidas would

prohibit the relationship between Carr and Benson.

31 . It should also be noted that there is a significant

difference in the volume of business enjoyed by BSN and those

entities alleged to have engaged in collusion. BSN does

approximately 1500 to 2000 bids annually across the nation.

D&J has participated in three bids all in South Florida . ITB

No. 15C - 26K was the first bid submitted by Simmons and PB Sports.

Understandably, there is a significant difference in business

models between BSN and the alleged colluders.

3 2 . BSN itself is a member of the general purchasing

organization, U.S. Commodities , and utiliz ed U.S. Commodities

standard 18% discount for athletic hard goods, the same

percentage discount offered by Aluminum Athletic , for the bid at

issue in this case.

3 3 . As discussed above, Matty ' s is a member of S ports ,

Inc., t he largest athletic clothing and equipment buying group ,

with 250 buyers in the United States and Canada. Although

Matthew Wilkin (Wilkin) , Matty ' s owner, does not share pricing

with other members of Sports , Inc., he is aware of the discount

offered to members who do a similar volume of business as

Matty ' s. Wilkin explained he does not share pricing with S ports,

Inc. , members because they are not in the same geographic

location . According to Wilk i n, it is common in the industry to

buy or sell to other local dealers.

3 4 . Interestingly, Barry Zu ccarini (Zuccarini) , owner of

R ecreation S ports, another unsuccessful bidder, testif ied he

purchases from A thletic C onnection, a subsidiary of BSN , and he

sees Athletic C onnection pricing.

3 5 . Butts, the School Board ' s bid facilitator for ITB

No. 15C - 26K, explained that she was not alarmed when she saw

patterns among the four successful bidders because she assumed

that they were part of a consortium.

3 6 . The anti - collusion policy prohibits working together on

the bid, not generally working togeth er. Sharon Swan (Swan) , the

S chool B oard ' s Director of P urchasing , best explained it as

follows :

T he relationship that was described here

today about one vendor buying through another

vendor is not an unusual situation in my

world. I have vendors who buy from

wholesalers, from resellers, from

manufacturers, and that is allowed. And

whenever one party b uys through another

party, it increases their volume of business

and that results possibly in them getting

additional discount . . . I do not believe

that fact creates a situation of proof of

collusion between any of the vendors.

Transc ript page 306, lines 10 - 22.

37 . Both Carr and Benson credibly testified that they were

competitors, rather than wholesaler and subcontractor, when

participating in response to ITB No. 15C - 26K.

38. BSN makes much of the fact that on one page , the bids

of D&J and PB Sports were both notarized by the same individual,

Ophelia Duggan (Duggan) , an employee of D&J. Carr explained that

he was aware that Duggan was a notary , and so , he stopped to have

her notarize his Beneficial Interest and Disclosure of Ownership

Affidavit page of the bid packet prior to its submission. Benson

was not aware that Carr used D uggan to notarize the form . There

was no testimony to suggest that Duggan reviewed any other

portion of either bid submission or shared their contents.

39. BSN also asserts that the fact that PB Sports submitted

a vendor list , that was prepared by D&J, in response to the

S chool B oard ' s request after the bids were opened , smack s of

collusion. Carr reasonably explained that because PB Sports

purchases more than 95% of his goods from D & J, it made sense to

use its vendor list. 2/

B. Carr and Simmons

40. As noted above, p rior to owning PB Sports, Carr owned

and was a partner at D1 Sports, which also engaged in the

business of selling sporting goods. From approximately 2009 to

2014, Tim Simmons, owner of Simmons, was a salaried employee of

D1 Sport s and worked under Carr.

41. Carr and Tim Simmons still communicate with each other,

sometimes as many times as several times a week. Carr also

purchases goods from Tim Simmons and utilizes his heat press for

jersey numbers. On different occasions, Tim Simmons has ordered

items f r om Carr in Carr ' s capacity as a subcontractor for D&J.

C arr and Tim Simmons consider each other competitors and do not

have access to each other ' s pricing like Benson and Carr.

Sim mons does not maintain an inven t or y of soft or hard goods , and

did not have an established line of hard goods wi th which he

worked at the time o f bid submission. However, inventory was not

a requirement of the bid specifications.

C. Wilkin

42. Wilkin has owned and operated Matty ' s and its

predecessor, Cycle Sports, in South Florida for approximately

30 years. He has never done bus iness with Carr or Tim Simmons

and recalls only one or two instances of purchasing goods from

Benson. Wilkin considers D&J to be a competitor and has never

shared pricing with competitors. BSN contacted Wilkin in early

2015 to discuss the possibility of purchasing Matty ' s. During

the final hearing, BSN dropped the allegations of collusion

against Matty ' s.

Geographic Proximity

43. BSN argues that the geographic proximity of these

awardees, within 60 miles of each other, in conjunction with the

other fact s discussed above, inevitably leads to the conclusion

of collusion. 3/

44. Given the fact that the School Board runs one of the

largest school districts in the nation, it is not surprising that

many of the 36 bidders were from around the country and based

outside of Florida . It is also not surprising that vendors of

a thletic merchan dise headquartered in South Flor ida , and which

have established business and personal relationships with certain

schools, teams and coaches, were keenly aware of this particular

bid process as well as that of Broward County , and bid steep

discounts to secure the business in their own backyard.

Finding of Ultimate Fact

45 . No inference of nefarious dealing or collusion

necessarily flow s from the foregoing F indings of F act. There is

no persuasive evidence that the integrity of the bid process in

this case was compromised in any way. The School Board acted in

accordance with its governing statutes, rules, policies, and

procurement specifications.

CONCLUSIONS OF LAW

46 . DOAH has p ersonal and subject matter jurisdiction in

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

120.57(3), Florida Statutes.

Petitioner ' s Burden and Standards of Proof

47. Pursuant to section 120.57(3)(f), Florida Statutes, the

burden of proof re sts with BSN 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). BSN must

sustain its burden of proof by a preponderance of the evidence.

Dep ' t of Transp. v. J. W.C. Co. , 396 So. 2d 778, 787 (Fla. 1st DCA

1981).

48. Section 120.57(3)(f) spells out the rules of decision

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

In a protest to an invitation to bid or

request for proposals procurement, no

sub missions 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 shall rest with the party protesting

the proposed agency action. In a

compet itive - 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 agen cy ' 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.

49. The First District Court of Appeal has construed the

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

" describe a form of intra - agency review. The judge may receive

evidence, as with any formal hearing under section 120.57(1), but

the object of the proceeding is to eva luate the action taken by

the agency. " State Contracting , 709 So. 2d at 609.

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

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

contrary to the agency ' s governing statutes, the a gency ' s rules

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

effectively establishes a standard of conduct for the agency,

which is that, in soliciting, evaluating, and accepting bids or

proposals, the agency must obey its governing statu tes, rules,

and the project specifications. If the agency breaches this

standard of conduct, its proposed action is subject to reversal

in a protest proceeding.

51. Consequently, the party protesting the intended award

must identify and prove, by the gr eater weight of the evidence, a

specific instance or instances where the agency ' s conduct in

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

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

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

specifications.

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

prove merely that the agency violated the general standard of

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

are best understood as standards of revie w, the protester

additionally must establish that as a result of this misstep, the

agency's action was: (a) clearly erroneous; (b) contrary to

competition; or (c) an abuse of discretion.

53. The three review standards mentioned in the preceding

paragrap h are markedly different from one another. The abuse of

discretion standard, for example, is more deferential (or

narrower) than the clearly erroneous standard. The bid protest

review process thus necessarily entails a decision or decisions

regarding whi ch 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.

54. The clearly erroneous standard is generally applied in

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

Supreme Court has 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 cl early against the

weight of the evidence, or unless it was

induced by an erroneous view of the law. A

finding which rests on conclusions drawn from

undisputed evidence, rather than on conflicts

in the testimony, does not carry with it the

same conclusiven ess as a finding resting on

probative disputed facts, but is rather in

the nature of a legal conclusion. . . . When

the appellate court is convinced that an

express or inferential finding of the trial

court is without support of any substantial

evidence, is clearly against the weight of

the evidence or that the trial court has

misapplied the law to the established facts,

then the decision is ' clearly erroneous ' and

the appellate court will reverse because the

trial court has ' failed to give legal effect

to the evidence ' in its en tirety.

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

omitted).

55. Because administrative law judges (ALJs) are the triers

of fact charged with resolving disputed issues of material fact

based upon the evidence presen ted at hearing, and because bid

protests are fundamentally de novo proceedings, the undersigned

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

any findings of objective historical fact that might have been

made prior to the agency ' s propose d action. It is exclusively

the ALJ ' s responsibility, as the trier of fact, to ascertain from

the competent, substantial evidence in the record what actually

happened in the past or what reality presently exists, as if no

findings previously had been made .

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

ultimate factual determination 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 substantially undermine the factual predicate for

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

the agency ' s logic unequivocally led to a mistake.

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

entitled to review under t he clearly erroneous standard:

interpretations of statutes for whose administration the agency

is responsible, and interpretations of the agency ' 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

agency ' s expertise, such interpretations will not be overturned

unless clearly erroneous. Id.

58. This means that if the protester objects to the

proposed agency action on the ground that it violates either a

governing statute within the agency ' s substantive jurisdiction or

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

objection turns on the meaning 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).

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

following the announcement of an intended award, with regard to

preliminary agen cy 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 badly written or ambiguous specifications: they may

be protested within 72 hours after the posting of the

specifications. The failure to avail oneself of this remedy

results in a waiver of the right to complain about the

specifications per se.

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

proposed award turns o n the interpretation of an ambiguous,

vague, or unreasonable specification, which could have been

corrected or clarified prior to acceptance of the bids or

proposals had a timely specifications protest been brought, and

if the agency has acted thereafter i n accordance with a

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

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

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

as a result of the protester ' s waiver of the ri ght to seek relief

based on a faulty specification.

61. The statute also requires that agency action (in

violation of the applicable standard of conduct) which is

" arbitrary, or capricious " be set aside. The phrase " arbitrary,

or capricious " can be equat ed with the abuse of discretion

standard because the concepts are practically indistinguishable --

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

reminder regarding the kind of agency action reviewable under

this highly deferential standard.

6 2. It has been observed that an arbitrary decision is one

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

Chemical Co. v. 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. " A dam Smith Enters., Inc. v. Dep ' t of Envtl. Reg. ,

553 So. 2d 1260, 1273 (Fla. 1st DCA 1989). Nevertheless, the

reviewing court must consider whether the agency: (1) has

considered all relevant factors; (2) has given actual, good faith

consideration to th ose factors; and (3) has used reason rather

than whim to progress from consideration of each of these factors

to its final decision. Id.

63. Whether the standard is called " arbitrary or

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

dem ands maximum deference, is the same. Clearly, then, the

narrow " arbitrary or capricious " standard of review cannot

properly be applied in evaluating all agency actions that might

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

standard app ropriately applies only to those decisions which are

committed to the agency ' s discretion.

64. Therefore, where the protester objects to agency action

that entails the exercise of discretion, but only in such

instances, the objection cannot be sustained unless the agency

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

65. 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 agenc y actions

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

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

(or amount to) a determination of ultimate fact.

66. Although the contrary to competition standard, being

unique to bi d protests, is less well defined than the other

review standards, the undersigned concludes that the set of

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

(a) create the appearance of and opportunity for

favoritism;

(b) erode public confi dence that contracts are awarded

equitably and economically;

(c) cause the procurement process to be genuinely unfair or

unreasonably exclusive; or

(d) are unethical, dishonest, illegal, or fraudulent. See,

e.g. , Phil ' s Expert Tree Service, Inc. v. Br oward C n ty . Sch . Bd . ,

Case No. 06 - 4499BID, 2006 Fla. Div. Adm. Hear. LEXIS 161, *24

(DOAH March 19, 2007; BCSB May 8, 2007); R. N. Expertise, Inc. v.

Miami - Dade Cnty. Sch. Bd. , Case No. 01 - 2663BID, 2002 Fla. Div.

Adm. Hear. LEXIS 163 , *58 (DOAH Feb. 4, 2 002; MDCSB Mar. 14,

2002); see also , E - Builder v. Miami - Dade Cnty. Sch. Bd. , Case

No. 03 - 1581BID, 2003 WL 22347989, *10 (DOAH Oct. 10, 2003; MDCSB

Nov. 25, 2003) .

The Specifics of This Bid Protest

67. BSN alleges that the intended actions of the S chool

Bo ard are contrary to the bid or proposal specification, in

particular, the anti - collusion provision. Benson, Carr, and Tim

Simmons each signed their bid for their respective companies and

certified that they understood the contents of this clause and

did n ot engage in any collusion with any other bidder to ITB

No. 15C - 26K. Collusion between bidders would clearly be contrary

to the bid specifications.

68. No direct evidence of collusion was presented at the

final hearing. 4/ The evidence presented by BSN w as circumstantial

which BSN argues gives rise to the inference of collusion. It is

well - settled that " fraud is rarely susceptible of direct and

positive proof " and that while evidence must be presented to show

fraud occurred, such " evidence need not be di rect " and " may be

wholly circumstantial, or a combination of direct and

circumstantial evidence. " Fla . E . Coast Ry. v. Thompson , 93 Fla.

30, 111 So. 525 (1927); see , e.g. , Cohen v. Kravit Estate Buyers ,

843 So. 2d 989 (Fla. 4th DCA 2003); S&S Toyota v. Ki rby , 649 So.

2d 916 (Fla. 5th DCA 1995). Intent is rarely proven by direct

evidence but typically must be established based upon surrounding

circumstances. See Brewer v. State , 413 So. 2d 1217 (Fla. 5th

DCA 1982).

69. The following excerpt, from 24 Fla. Jur. 2d Evidence

and Witnesses § 484, accurately states the general rule as to the

sufficiency of circumstantial evidence in a civil o r

administrative proceeding:

The proper test for the sufficiency of

circumstantial evidence in civil [or

administrative] cases is that circumstantial

evidence need not exclude every other

reasonable hypothesis than the one contended

for, but must outweigh all contrary

inferences to such extent as to amount to a

preponderance of all reasonable inferences

that might be drawn f rom the same

circumstances .

70. Collusion is not the only , and certainly is n o t the

most logical, inference to be drawn from the bidding pattern,

relationships between owners, geographic proximity , and other

facts presented in this case.

71. The remaini ng three alleged colluders, D&J, PB Sports,

and Simmons , or their principals , have been in the business of

selling athletic merchandise to schools in South Florida in some

capacity for a substantial period of time. All three were

certainly aware that a pr ofit could be made on Adidas merchandise

while offering a 45% discount. Certainly D&J and PB Sports were

aware of the discounts offered by Matty ' s to win Broward County.

All three companies bid as competitively as they could to be able

to service those s chools, teams , and coaches with which they have

existing relationships .

72. Du e to the nature of the bid solic i tation , D&J, PB

Sports , Simmons , and Matty ' s came up with the same percentage

discounts for the two types of goods sought ÏÏ hard goods and soft

g oods.

73. The School Board ' s decision, that collusion did not

occur , and that the intended award should stand, was made after

consideration of all relevant factors and based upon facts and

logic.

74 . BSN failed to demonstrate by a preponderance of the

ev idence that the School Board erred by not determining the

successful bidders engaged in collusion. Accordingly, BSN failed

to meet its burden to demonstrate that the School Board acted

contrary to one or more governing statutes, rules, policies, or

procur ement specifications, or any combination thereof .

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the School Board of Palm Beach County

enter a final order that adopts the Findings of Fact and

Conclusio ns of Law contained herein, dismisses the protest filed

by BSN Sports, LLC, and upholds the awards of contracts ITB

No. 15C - 26K to Matty ' s Sports , Simmons Team Sports, D&J Commerce

Solutions, Inc., and Palm Beach Sports .

DONE AND ENTERED this 22nd day of J uly , 2015 , in

Tallahassee, Leon County, Florida.

S

MARY LI CREASY

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 22nd day of July , 2015 .

ENDNOTE S

1/ BSN withdrew its claim against Matty ' s during the f inal

h earing and indicated that it no longer believ es that the fact

that Simmons and Matty ' s had identical bids meant that the two

vendors had engaged in collusion in violation of the solicitation

documents.

2/ BSN offered the testimony of Zuccarini, owner of Recreation

Sports, an unsuccessful bidder, r egarding a purported

conversation that he had with Carr at the informal hearing

conducted by the School Board in an effort to resolve the bid

dispute. According to Zuccarini, he approached Carr afte r the

meeting to say hello , and Z uccarini commented on wh at he

considered an unusual bid format. Carr stated , " Well I didn ' t

know , so I just copied it. " Zuccarini testified he did not k n ow

what Carr meant when he referred to " it. " BSN argues that " it "

must refer to the bid in this case.

Carr was not questi oned at hearing regarding whether he made such

a statement or to what he might have been referring. It seems

possible and quite logic al that if Carr made such a statement, he

was referring to the BCSB bid which he admits he used as a basis

for his discoun t percentages . Accordingly, the alleged statement

does not constitute direct evidence of collusion as suggested by

BSN.

3/ Inter e stingly, BSN ' s bid specialist , who prepared its proposal

in this case , is located in Pennsylvania, in close proximity to

Alu minum Athletic Equipment Company (Aluminum) , another

unsuccessful bidder who also bid a straight 18% discount on hard

goods, just like BSN. BSN ' s President testified this could raise

the specter of collusion , but he did not admit any relationship

or collu sion between BSN and Aluminum.

4/ See discussion above in endnote 2.

COPIES FURNISHED:

Kalinthia R. Dillard, Esquire

The School Board of Palm Beach

County, Florida

3300 Forest Hill Boulevard , Suite C - 323

West Palm Beach, Florida 33406

(eServed)

Gr egory W. Coleman, Esquire

Santo DiGangi, Esquire

Critton, Luttier and Coleman

303 Banyan B ou l e v ard, Suite 400

West Palm Beach, Florida 33401

(eServed)

Brady J. Cobb, Esquire

Cobb Eddy, PLLC

642 Northeast Third Avenue

Fort Lauderdale, Florida 33304

(eSer ved)

Matthew Mears , General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

Robert Avossa, Ed.D. , Superintendent

Palm Beach County School Board

Fulton - Holland Educational Services Center

3300 Forest Hill Boulevard

West Palm Beach, Florida 33406

(eServed)

Pam Stewart

Commissioner of Education

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

(eServed)

NOTICE O F RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.