18-001574BID Tallahassee Corporate Center, Llc vs. Department Of Health Status: Closed Recommended Order on Thursday, May 31, 2018.

Summary: Petitioner did not prove the Department's decision that Petitioner's reply was nonresponsive, was contrary to the Department's statutes, rules, policies, or the ITN specifications; or was clearly erroneous, contrary to competiton, arbitrary or capricious.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TALLAHASSEE CORPORATE CENTER,

LLC,

Petitioner,

vs. Case No. 18 - 1574BID

DEPARTMENT OF HEALTH,

Respondent,

and

TALLAHASSEE RETAIL VENTURES,

LLC,

Intervenor.

_______________________________/

RECOMMENDED ORDER

A final hearing was held in this case on April 16, 2018,

in Tallahassee, Florida, before Suzanne Van Wyk, a designated

Administrative Law Judge of the Division of Administrative

Hearings (ÐDivisionÑ).

APPEARANCES

For P etitioner: David K. Miller, Esquire

John F. Loar, Esquire

Broad and Cassel

215 South Monroe Street, Suite 400

Post Office Drawer 11300

Tallahassee, Florida 3230 2 - 330 0

For Respondent: Eduardo S. Lombard, Esquire

Vezina, Lawrence and Piscitelli, P.A.

413 East Park Avenue

Tallahassee, Florida 32301

For Intervenor: Brian A. Newman, Esquire

Pennington P.A.

215 South Monroe Street, Suite 200

Post Office Box 10095

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE S

Whether the Florida Department of HealthÓs (ÐRespondentÑ

or ÐDepartmentÑ) determination that Tallahassee Corporate

Center, LLC (ÐPetitionerÑ or ÐTCCÑ) submitted a nonresponsive

reply to the DepartmentÓs Invitation to Negotiate (ÐITNÑ)

No. 640:0040 is contrary to the DepartmentÓs governing

statutes, rules, policies, or the solicitation specifications;

and, if so, whether the decision was clearly erroneous,

contrary to competition, arbi trary, or capricious.

PRELIMINARY STATEMENT

On September 19, 2017, the Department issued the ITN

soliciting replies for leased office space in Tallahassee,

Florida, with a lease term to begin September 1, 2019. Both

Petitioner and Intervenor submitted a t imely reply to the ITN.

On February 27, 2018, the Department posted its Notice of

Intent to award the contract to Tallahassee Retail Ventures, LLC

(ÐTRVÑ). Petitioner timely submitted its Notice of Intent to

protest the award of the ITN. On March 12, 201 8, TCC timely

filed its Formal Protest and Petition for Formal Administrative

Hearing (ÐPetitionÑ), which was referred to the Division on

March 23, 2018, and assigned to the undersigned for scheduling a

final hearing. TRV filed a Notice of Intervention on March 28,

2018. 1/

The undersigned conducted a telephonic scheduling

conference on March 26, 2018, and the final hearing was

scheduled for April 16 and 17, 2018.

On April 2, 2018, the Department filed a Motion for

Protective Order (ÐMotionÑ) seeking to lim it the matters to be

explored during deposition of its representatives to the reasons

the Department deemed TCCÓs reply nonresponsive, and prohibit

questions relating to the merits of TRVÓs reply. The Motion was

based on the matters noticed in PetitionerÓ s Notice of Taking

Deposition Duces Tecum of the DepartmentÓs representatives:

Contract Officer Kimberly Cowling, and an unnamed corporate

representative. However, in response to the Motion, Petitioner

filed a Response arguing the Motion was moot and fil ed a Notice

of Taking Depositions of Kimberly Cowli ng and the Department of

Health Representative Witness, in which Petitioner narrowed the

topic to the DepartmentÓs determination that TCCÓs reply was

nonresponsive. At the telephonic hearing on the Motion ,

Petitioner also withdrew its requ est to depose the DepartmentÓs

B roker, Jerry Thornbury. The undersigned denied the Motion as

moot, refusing to speculate that Petitioner would inquire beyond

the stated relevant issues during Ms. CowlingÓs deposition. T he

undersignedÓs Order Denying RespondentÓs Motion for Protective

Order specifically stated, ÐIn the event Petitioner seeks the

deposition of Mr. Thornbury, and the parties cannot agree on the

issues to be covered in Mr. ThornburyÓs deposition, the

undersi gned will entertain reinstatement of RespondentÓs Motion

for Protective Order, which may be disposed of without a

hearing.Ñ Petitioner did not subsequently depose Mr. Thornbury.

On April 11, 2018, TRV filed a Motion to Dismiss Petition

and Alternative Mot ion for a More Definite Statement, to which

TCC filed a response on April 12, 2018. In the Motion to

Dismiss, TRV argued Petitioner had admitted through discovery

that its reply to the ITN was nonresponsive, thus no disputed

issue of fact remained to be l itigated. The Motion to Dismiss

was denied. TRVÓs Motion for a More Definite Statement had some

merit. The issues raised by TCC in the Petition were not fully

fleshed out given the abbreviated timeframe for filing a Notice

of Intent to Protest the award . As Petitioner acknowledged in

the Petition, discovery was necessary to flesh out the reasons

its reply had been deemed nonresponsive. Given that the

partiesÓ pre - hearing stipulation was due the following day, the

undersigned denied the Motion for More Definite Statement to

allow the parties to work on the stipulation, which would bind

the parties to the disputed issues contained therein. See Gunn

Plumbing, Inc. v. Dania , 252 So. 2d 1, 4 (Fla. 1971); Delgado v.

Ag. for Health Care Admin. , 2018 Fla. App. LEXIS 1012 at *9

(Fla. 1st DCA 2018) (holding that a stipulation that limits the

issues to be tried amounts to a binding waiver and elimination

of all issues not included); Heartland Envtl. Council, Inc. v.

DepÓt of Cmty. Aff. , Case No. 94 - 2095 (Fla. DOA H Nov. 16, 1996;

Fla. DCA Nov. 25, 1996).

Petitioner timely filed a Pre - hearing Statement which

contains the following statement of factual issues to be decided

by the undersigned:

Whether RespondentÓs failure to evaluate the

space proposed by TCC (that Re spondent

occupies), for consistency with its space

occupancy needs, and failure to permit TCC

to proceed to negotiation and make a best

and final offer was contrary to governing

statutes, rules or policies, or the

solicitation specifications (mixed questio n

of law and fact).

In its statement of position, Petitioner argued that its

response to Item IV.G. of the ITN did not properly disqualify

TCCÓs reply. Petitioner stated that, during its deposition of

Ms. Cowling, she identified TCCÓs reply to Item IV.G. as the

only reason TCCÓs reply was deemed nonresponsive. Petitioner

raised two additional issues , alleging as follows: ÐDOH may

now claim that TCCÓs reply should be [found] nonresponsive,Ñ

including failure to demonstrate control of the property and

pay the required Tenant Broker commission. With regard to the

property control issue, Petitioner stated, ÐAny omitted

information in TCCÓs ownership disclosure is a minor

irregularity that was not material, and did not afford TCC a

competitive advantage, and should be corrected by allowing TCC

to clarify or supply any missing information, not by

disqualifying TCCÓs reply.Ñ

The final hearing commenced as scheduled on Monday,

April 16, 2018. At the outset, the undersigned heard argument

on three Motions in Lim ine filed by the Department on Friday,

April 13, 2018, to which TCC filed responses on the morning of

April 16 , 2018 . The motions sought to prohibit testimony and

documentary evidence regarding TCCÓs attempts to change or

supplement its original ITN reply ; TCCÓs argument that its

reply was Ðfunctionally equivalentÑ to the proposed office

space sought in the ITN; and the DepartmentÓs scoring of other

replies to the ITN and negotiations with entities who submitted

responsive replies. The undersigned granted each of the three

Motions in Limine.

Petitioner presented the testimony of Todd Hakimi, TCC co -

owner, and Jerry Thornbury, the DepartmentÓs Broker Dealer.

Petitioner introduced Exhibits P2, P8, and P23, which were

admitted in evidence. Petition erÓs Exhi bits P4 through P7,

P9 through P12, and P15 were ruled inadmissible, but are

traveling with the record on PetitionerÓs proffer of same.

The Department presented the testimony of Mr. Thornbury

and introduced Exhibits R1 through R6, R8, R12, and R13, which

w ere admitted in evidence.

Intervenor offered no witnesses and introduced Exhibits I1

and I2, which were admitted in evidence.

During examination of Mr. Thornbury, Petitioner sought to

elicit testimony regarding the responsiveness of other

applicantsÓ repli es on the issue of control of the property, as

well as introduce excerpts from those ITN replies as exhibits.

The undersigned declined to allow the proffered testimony and

exhibits, which were beyond the scope of disputed issues of

fact for the final hear ing. 2/

However, the undersigned granted, in part, PetitionerÓs

Motion for Reconsideration of that ruling and admitted in

evi dence PetitionerÓs Exhibits P20 through P22 to rebut

RespondentÓs assertion that PetitionerÓs ITN reply was

nonresponsive on the i ssue of control of the property. In the

Order granting PetitionerÓs Motion for Reconsideration, the

undersigned gave the parties five days from the date of the

Order to request a hearing to take testimony regarding whether

Exhibits P20 through P22 support a finding that PetitionerÓs

ITN reply was responsive on the issue of control of the

property. No party requested a hearing. Respondent did file

RespondentÓs Exhibits R17 through R19, complete copies of

PetitionerÓs Exhibits P20 through P22, which are he reby

admitted in evidence.

The one - volume Transcript of the final hearing was filed

on May 1, 2018. 3/ Petitioner filed a timely Proposed

Recommended Order. Respondent filed a timely Proposed

Recommended Order in which Intervenor joined. Intervenor

timel y filed Supplemental Proposed Findings of Fact and

Conclusions of Law in which Respondent joined. The partiesÓ

post - hearing filings have been considered in the preparation of

this Recommended Order.

All references herein to the Florida Statutes are to the

2017 version.

FINDING S OF FACT

The ITN

1. The Department is a state agency that seeks space for

administrative offices, a call - center facility, and claimant

hearings. The Department currently leases office space from

TCC, which lease expires on October 31, 2019.

2. On July 19, 2017, the Department issued the ITN seeking

vendors that could provide 135,815 square feet of office space

for lease. The Department issued one addendum to the ITN on

September 1, 2017, deleting a requirement that the space be

contiguous within a single building.

3. There were no challenges to the terms, conditions, or

specifications contained in either the ITN or the amendment

thereto. 4/

4. Both TCC and TRV are potential lessors which submitted

replies to the ITN.

5. The I TN includes a provision expressly reserving the

DepartmentÓs Ðright to negotiate with all responsive and

responsible Proposers, serially or concurrently, to determine the

best - suited solution.Ñ (emphasis added) . The term Ð ProposerÑ is

defined in the ITN to mean Ðthe individual submitting a Reply to

this [ITN], such person being the owner of the proposed facility

or an individual duly authorized to bind the owner of the

facility.Ñ This reservation of rights placed interested lessors

on notice that only re sponsive proposers could be invited to

negotiations.

6. The Department seeks to lease space in either an

existing building or a building to be constructed in the future.

In the Introduction, the ITN describes the proposals requested as

follows:

The [Dep artment] is seeking detailed and

competitive replies to provide built - out

office facilities and related infrastructure

for occupancy by the [Department]. As

relates to any space that is required to be

built - out pursuant to this [ITN], see

Attachment ÐAÑ w hich includes the

[Department] Specifications detailing the

build - out requirements. The proposed

facility may be within an existing building

or a non - existing building designed as a

Build - to - Suit to meet the [Department]

Specifications.

7. The specifica tions in Attachment A provide the basic

requirements for the potential leased space, including the

required type, number, and square feet of each space (i.e.,

office, workstation, conference room, storage), as well as the

voice and data requirements for ea ch space.

8. The ITN provides that Attachment A Ðis an integral part

of this ITN.Ñ

9. Section III.A. of the ITN details the requirements for

responsive replies, including documentation demonstrating control

of the property, a floor plan to scale, and re t urn of each ITN

page with the p roposerÓs initials. In addition, for Build - to -

Suit proposals, responsive replies must include the proposed site

plan, and may include building renderings. 5/

10. Section IV. provides the Lease Terms and Conditions,

and req uires replies to indicate whether the proposer will meet

each term and condition by marking either a ÐYesÑ or ÐNoÑ option

with an ÐX .Ñ

11. Section IV.B. provides that the space must be made

available for occupancy on September 1, 2019. This section

empha sizes the importance of timely occupancy, requiring

submission from the Lessor to the Tenant Broker of items to

assure same, such as the sample construction project schedule,

documentation of construction inspections, a performance bond,

and proposed and f inal floor plans. Section IV.B. is not limited

in applicability to Build - to - Suit leases. In fact, Section IV.B.

provides that, for build - to - suit leases, the lessor must also

provide architectural design and construction plans to the

Department of Managem ent Services for prior approval.

12. Section IV.G. is titled ÐSpace Availability Î Turn - Key

Build Out,Ñ and requires as follows:

The State requires a Ðturn - keyÑ build - out by

the Lessor. Therefore, Proposer shall

assume all cost risks associated with

del ivery in accordance with the required

space program specifications detailed in

Attachment A .

Proposer agrees to provide a Ðturn ȃ keyÑ

build ȃ out in accordance with the space

program specifications detailed in

Attachment ÐAÑ following the [Department]Ós

approval of an architectural layout provided

by the Proposer:

YES ______ or NO______

13. ÐTurn - keyÑ is a term of art in the comme rcial leasing

industry meaning to deliver a space to the lessee which can be

occupied immediately. The turn - key requirem ent is applicable to

both build - out of an existing facility and build - to - suit new

construction.

14. By the terms of the ITN, the requi rement for a tur n -

key build - out applies to all p ropo sers, and is not restricted to

p roposers offering a build - to - suit option.

TCCÓs Reply

15. TCC submitted a proposal for an existing building, the

very building in which the Department currently leases spa ce for

the functions described in the ITN.

Item IV.G

16. In its reply, TCC responded ÐNOÑ to the statement

ÐProposer agrees to provide a Ò turn - key Ó build - out in accordance

with the space program specifications detailed in this

Attachment A following the [ Department]Ós approval of an

architectural layout provided by the Proposer.Ñ

17. In the space between Item s IV.G. and IV.H., TCC

added the following typewritten language:

10 Year Term Î TI Allowance capped at $7 psf

($3.50 psf beginning year 1/$3.50 ps f after

year 5) 15 Year Term Î TI Allowance capped

at $10 psf ($5 psf beginning year 1/ $5 psf

after yr. 5).

18. In an apparent effort to explain the i nterlineated

text in its reply, TCC also submitted an ÐAdditional ResponseÑ

sheet with its ITN reply, which reads as follows:

ITN:640:0400

Additional Response

Attachment A/[Department] Specification

As the current Landlord for the

[Department], our response proposes a ÐStay

In PlaceÑ option. Under this option, we

propose a Tenant Improvement Allowance in

order for the [Department] to address any

Tenant Improvements necessary. With

[Department] currently occupying the space,

it would be impossible to ask them to move

out of its existing office space in order to

meet the requested [Department]

Specifica tions in Attachment A.

19. A Ðstay - in - p laceÑ offer is also a term of art in the

commercial leasing industry which references ne gotiations

between an existing l essee and l essor for a new lease of the

space currently occupied by the l essee.

20. The term s of the ITN are clear: the Department is

seeking to negotiate with all p roposer s which agree to meet its

space program specifications.

21. TCCÓs representative, Todd Hakimi, testified ( both in

his deposition and at final hearing ) , that TCCÓs reply offer ed a

stay - in - place option, rather than a turn - key or build - to - suit

lease. Mr. Hakimi further testified that he formulated the

response to the ITN on his understanding that the space

currently leased to the Department by TCC was satisfactory to

the Departm ent, thus no buildout of the space was necessary to

comply with the ITN.

22. Mr. HakimiÓs testimony is belied by TCCÓs supplemental

response explaining that it would be impossible to ask the

Department to Ðmove out of its existing office space to meet th e

requested Agency Specifications in Attachment A.Ñ In the

supplemental response, TCC admits that the Department is seeking

space which meets specifications not met by the existing office

space.

23. TCCÓs reply was nonresponsive. By responding ÐNoÑ to

Item IV.G., TCC indicated it would not comply with the

DepartmentÓs space program specifications in Attachment A, which

is an integral and material component of the ITN.

Tenant Improvement Allowance

24. Instead, TCCÓs reply offered a Tenant Improvement

Allowance (ÐTIAÑ), shifting the burden to the Department to meet

its space program requirements, rather than providing a Ðturn -

keyÑ space on September 1, 2019.

25. Moreover, TCCÓs reply ÐcappedÑ the TIA at a per -

square - foot amount, essentially limiting the amount TCC would

pay toward the space program requirements set forth in

Attachment A. In doing so, TCC refused to Ðassume all cost risk

associated with delivery in accordance with the space program

specificationsÑ as required by Item IV.G. 6/

26. If a ccepted, PetitionerÓs response would give TCC a

competitive advantage over other responders who agreed to

Ðassume all cost risk associated with delivery in accordance

with the space program requirements.Ñ

Broker Commission

27. Item IV.J., another mandato ry lease condition, requires

lessors to agree to execute a Commission Agreement, which was

attached to the ITN as Attachment G, another integral and

material component of the ITN:

Proposer acknowledges review of the

Commission Agreement (Attachment G).

Pr oposer agrees to execute and be bound by

the Agreement should the Proposed Space be

selected by the [Department].

YES ______ or NO______

28. The Commission Agreement includes a schedule for the

commission rate based on the total aggregate gross base re nt that

could be paid ranging from 3.50 percent on the first $500,000 of

base rent to 2.50 percent on the base amount of $8.5 million and

over.

29. TCC checked ÐYESÑ in response to Item IV.J., but

contradicted that reply by adding ÐAgree to 2% commission. Ñ

30. Mr. Hakimi testified that he offered a two - percent

commission because he viewed his reply to the ITN as a renewal

of the current lease, and it is customary to give a lower broker

commission for renewal than for a new lease.

31. The Department wa s not seeking a renewal lease. The

ITN sought proposals to meet the agency space program

specifications either within an existing building or at a build -

to - suit location .

32. TCC refused to be bound by this material term of the

ITN, thus TCCÓs reply w as nonresponsive.

33. If accepted by Respondent, TCCÓs lower broker

commission rate would have given TCC a competitive advantage

over other proposers.

Control of Property

34. The ITN also provided that to be responsive, each

lessor was required to submit documentation demonstrating the

lessorÓs control of the property proposed for the leased space:

1. Replies must completely and accurately

respond to all requested information,

including the following :

(A) Control of Property (Applicable for

Rep lies for Existing and/or Non ȃ Existing

Buildings).

For a Reply to be responsive, it must be

submitted by one of the entities listed

below, and the proposal must include

supporting documentation proving control of

the property proposed.

* * *

¤ The owner of record of the facility(s )

and parking area(s) Î Submit a copy of the

deed(s) evidencing clear title to the

property proposed .

* * *

¤ The authorized agent, broker or legal

representative of the owner(s) Î Submit a

copy of the Special Power of Attorney

authorizing submission of the proposal.

35. The Special Power of Attorney form was attached to the

ITN as Attachment H, another integral part of the ITN.

Section K of the ITN clearly states, ÐAttachment H . . . is

required if submitting on behalf of owners.Ñ

36. Attachment D to the ITN was a Disclosure Statement

which solicited from proposers information about the ownership

of the property, including the name of the titleholder, as well

as the titleholderÓs social security number or federal employer

identification number, as a pplicable.

37. TCCÓs reply contained a blank Attachment D.

38. TCCÓs reply included a deed identifying

DRA CRT Tallahassee Center, LLC (ÐDRA CRTÑ), as the owner of the

property offered for lease.

39. TCCÓs reply was executed by TCC President, Lyda

Hakim i.

40. TCC did not execute Attachment K or include an

executed power of attorney to demonstrate that TCC has control

of the property on behalf of DRA CRT.

41. TCC owns DRA CRT, but the two are different legal

entities. In order to demonstrate control of the property owned

by DRA CRT, TCC was required to execute Attachment K or

otherwise provide a power of attorney to demonstrate authority

to bind the owner to TCCÓs proposal.

42. TCCÓs reply did not demonstrate control of the

property as required by th e ITN. TCCÓs reply was not responsive

on this issue.

Waivable Minor Irregularity

43. TCC contends that its failure to include an executed

power of attorney was a minor irregularity which should have

been waived by the Department.

44. TCCÓs argument is twofold. First, TCC maintains that

the Department had actual knowledge that TCC was DRA CRTÓs agent

because the Department was currently leasing the property from

TCC.

45. Second, TCC maintains that proposals by other

responders failed to establish con trol of the property, but were

nevertheless deemed responsive by the Department. 7/

46. TCCÓs first argument is not persuasive. As discussed

in the Conclusions of Law, the undersignedÓs role is not to make

independent findings based on the evidence of re cord, but to

determine whether the DepartmentÓs failure to waive the minor

irregularity was arbitrary, capricious, or clearly erroneous.

47. In support of its argument that the Department acted

arbitrarily in its determination that TCC was nonresponsive on

the issue of control of the property, TCC introduced, over

strenuous objection, the ITN response from TRV and two separate

responses from OAG Investment 3, LLC (ÐOAGÑ).

48. TRVÓs reply reveals TRV is the owner of the property.

TRVÓs proposal is execu ted by John McNeill as ÐAdvisorÑ to TRV,

and includes an executed Attachment H, Special Power of

Attorney, from John Abernathy granting power of attorney to

Mr. McNeill to act on his behalf regarding the ITN.

49. TCC complains that TRVÓs proposal does no t demonstrate

the relationship between TRV and Mr. Abernathy or establish

Mr. AbernathyÓs authority to grant a power of attorney on behalf

of TRV. Thus, TCC argues, TRVÓs reply suffers from the same

defect as its own -- failure to demonstrate control of the

prop erty -- so the Department acted arbitrarily in failing to

waive that nonconformity for TCC.

50. PetitionerÓs argument is not well - taken because the

facts are distinguishable.

51. First, as to TRVÓs response, TRV is both the owner of

the property and the proposer for the ITN. In contrast, TCC is

the proposer, but not the owner of the property.

52. Second, TRVÓs reply documents, on Attachment D,

establishes Mr. AbernathyÓs authority Ðto conduct business as a

representative ofÑ TRV.

53. TRVÓs repl y included the required deed evidencing

ownership, as well as a completed Attachment D Disclosure, and

Attachment H Special Power of Attorney. By contrast, in TCCÓs

reply, it neglected to complete either Attachment D or

Attachment H. TCC made no effort t o document the proposerÓs

authority to bind the property owner to the terms of the ITN.

54. The facts relating to TRVÓs reply are not sufficiently

similar to TCCÓs for the undersigned to conclude that the

Department acted arbitrarily in failing to waive TCCÓs

nonconformity relating to control of the property.

55. The same applies to the proposals from OAG. OAGÓs

reply for property on Barcelona Lane shows ownership of the

property by the Townsend Mary D. Trust (ÐTrustÑ) and a purchase

and sale agreement between the Trust and OAG executed by Mary

Townsend on behalf of the Trust. TCC first complains that the

Trust holds the property by a Quit Claim Deed, which Ðdoes not

prove title or control.Ñ Second TCC alleges that the reply does

not establish Mary To wnsendÓs authority to execute the purchase

and sale agreement on behalf of the Trust.

56. As to OAGÓs reply for the Mahan Drive property, TCC

complains that the warranty deed id entifies ownership of only a

30 - percent interest in the property, and the pur chase and sale

agreement to OAG is from six named individuals, one of whom is

noted as a trustee of an unidentified trust, and only three of

whom have an ownership interest in the property based on the

deed submitted.

57. It is beyond the undersignedÓs a uthority to determine

whether OAGÓs replies establish control of the property per the

ITN specifications. The only purpose for which the TRV and OAG

replies were admitted was to rebut the DepartmentÓs assertion

that TCCÓs reply was nonresponsive on the is sue of control of

the property.

58. The factual differences between TCCÓs documentation of

ownership and control and those of the OAG proposals, do not

support a finding that the Department acted arbitrarily in

failing to waive the nonconformity.

CONCL USIONS OF LAW

59. The Division has jurisdiction over the subject matter

and the parties to this action. §§ 120.569 and 120.57(3), Fla.

Stat.

60. Petitioner has the burden to prove , by a preponderance

of the evidence , that the DepartmentÓs determinatio n that TCCÓs

reply to the ITN was nonresponsive is contrary to the agency's

governing statutes, rules or policies, or the ITN

specifications. § 120.57(3)(f), Fla. Stat.

61. Although section 120.57(3) provides that this is a de

novo proceeding, it is not a Ðde novoÑ proceeding in the

traditional sense. See State Contracting & EngÓg Corp. v. DepÓt

of Transp. , 709 So. 2d 607, 609 (Fla. 1st DCA 1998). That is,

this is not a forward - looking proceeding to formulate agency

action, and the Division may not subs titute its judgment for

that of the Department. See IntercontÓl Props., Inc. v. State

DepÓt of HRS , 606 So. 2d 380, 386 (Fla. 3d DCA 1992); R.N.

Expertise, Inc. v. Miami Î Dade Cnty. Sch. Bd. , Case No. 01 -

2663BID (Fla. DOAH Feb. 4, 2002; MDCSB Mar. 13, 2002 )

(explaining the DivisionÓs role in procurement - protest

proceedings). Instead, the Division engages in a form of

Ðinter - agency reviewÑ in which the ALJ makes findings of fact

about the action already taken by the Department. See State

Contracting , 709 S o. 2d at 609. The Division does not evaluate

the DepartmentÓs decision anew; instead the Division looks to

see if the Department followed its governing statutes, its

rules, and the ITN specifications during the procurement

process. See R.N. Expertise , DO AH Case No. 01 - 2663BID.

62. Agencies enjoy wide discretion when it comes to

soliciting and accepting proposals, and an agency's decision,

when based upon an honest exercise of such discretion, will not

be set aside even where it may appear erroneous or if reasonable

persons may disagree. Baxter's Asphalt & Concrete, Inc. v.

DepÓt of Transp. , 475 So. 2d 1284, 1287 (Fla. 1st DCA 1985);

Capeletti Bros., Inc. v. State DepÓt of Gen. Servs. , 432 So. 2d

1359, 1363 (Fla. 1st DCA 1983). Section 120.57(3)(f)

estab lishes the standard of proof: whether the proposed action

is clearly erroneous, contrary to competition, arbitrary or

capricious.

63. A decision is considered to be clearly erroneous when,

although there is evidence to support it, after review of the

en tire record , the tribunal is left with the definite and firm

conviction that a mistake has been committed. U.S. v. U.S.

Gypsum Co. , 333 U.S. 354, 395 (1948). An agency action is

capricious if the agency takes the action without thought or

reason, or irra tionally. Agency action is arbitrary if it is

not supported by facts or logic. See Agrico Chem. Co. v. State

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

An agency decision is contrary to competition if it unreasonably

interferes with the objectives of competitive bidding. See

Wester v. Belote , 138 So. 721, 723 - 24 (1931).

64. The ITN was issued pursuant to section 255.25, Florida

Statutes, which applies to state agenciesÓ procurement of leased

building space.

65. Section 255.25(3)( a)3. provides, in pertinent part:

a. If the agency determines in writing that

the use of an invitation to bid or a request

for proposals will not result in the best

leasing value to the state, the agency may

procure leased space by competitive sealed

rep lies . . . .

b. The agency shall evaluate and rank

responsive replies against all evaluation

criteria set forth in the invitation to

negotiate and select, based on the ranking,

one or more lessors with which to commence

negotiations. After negotiations are

conducted, the agency shall award the

contract to the responsible and responsive

lessor that the agency determines will

provide the best leasing value to the state.

66. Section 255.248 defines Ð responsive reply,Ñ as used in

255.25, as a reply Ðsubm itted by a responsive and responsible

lessor, which conforms in all material respects to the

solicitation.Ñ £ 225.248(7), Fla. Stat. Ð Responsive lessorÑ is

defined as Ða lessor that has submitted a bid, proposal, or

reply that conforms in all material re spects to the

solicitation.Ñ £ 225.248(8), Fla. Stat.

67. A lessor whose reply conforms in all material respects

to the ITN may be invited to negotiate.

68. TCCÓs reply was nonresponsive because it did not

conform with material portions of the ITN, n amely the

DepartmentÓs required space program specifications, turn - key

delivery, broker commission agreement, and demonstration of

control of the property.

69. TCCÓs failure to comply with the terms, conditions,

and specifications renders the vendor nonre sponsive and

ineligible for negotiations. As a nonresponsive respondent, TCC

was not eligible to participate in negotiations and was not

eligible for the ultimate award under the ITN process.

70. The determination that TCCÓs bid was nonresponsive does

no t end this analysis. Not all irregularities in bid submissions

or deviations from the terms of an invitation to bid are

considered material enough to require rejection of a bid

submittal. Tropabest Foods, Inc. v. DepÓt of Gen. Servs. , 493

So. 2d 50 (Fla. 1st DCA 1986); s ee also Fla. Admin. Code R. 60A -

1.002(13). A deviation from the requirements of an invitation to

bid Ðis only material if it gives the bidder a substantial

advantage over the other bidders and thereby restricts or stifles

competition.Ñ T ropabest Foods , 493 So. 2d at 52 ; s ee also

Robinson Elec. Co. v. Dade Cnty. , 417 So. 2d 1032, 1034 (Fla. 3d

DCA 1982).

71. In Florida, the following two criteria are applied to

determine whether a deviation is material:

[1] whether the effect of a wai ver would be

to deprive the [Department] of its assurance

that the contract will be entered into,

performed and guaranteed according to its

specified requirements, and [2] whether it

is of such a nature that its waiver would

adversely affect competitive b idding by

placing a bidder in a position of advantage

over other bidders or by otherwise

undermining the necessary common standard of

competition.

Robinson Electric , 417 So. 2d at 1034.

72. The First District Court of Appeal has found that, by

definitio n, anything affecting the price of a bid is not a minor

irregularity and may not be waived by the agency. Rather, a

deviation affecting price is material and may not be waived by

the agency. Mercedes Lighting & Elec. Supp., Inc. v. Fla. DepÓt

of Gen. Ser vs. , 560 So. 2d 272, 278 (Fla. 1st DCA 1990).

73. As set forth in the Findings of Fact, TCCÓs deviations

(offering a capped TIA, rather than complying with the

DepartmentÓs required space program specifications and providing

the space Ðturn - key,Ñ as well a s the two - percent broker

commission rate) affect the price of the contract to be awarded.

If accepted, TCCÓs reply would have given TCC a competitive

advantage over other responders who agreed to Ðassume all cost

risks associated with delivery in accorda nce with the space

program specificationsÑ of the ITN and to pay the specified

broker commission . As such, they are material aspects of the ITN

and may not be waived.

74. Whether TCCÓs failure to document control of the

property is an immaterial waivable term depends on whether waiver

would deprive the Department of assurance that the contract would

be entered into and performed.

75. Where a state agency receives a bid from a person

purportedly acting on behalf of the owner, when in fact the agent

has no authority to submit the bid, the state may be unable to

conclude the transaction because the property owner was not bound

by the bid. See Intercont Ó l Properties, Inc. v. DepÓt of HRS ,

supra . In the case at hand, Mr. Thornbury testified that it is

import ant for the Department to determine whether the individual

proposers actually have authority to deliver the property prior

to entering into negotiations with the proposers.

76. Petitioner is correct in citing Intercontinental

Properties for the propositio n that failure to attach proof of

the agentÓs authority to act on behalf of the owner is Ðplainly

the sort of deficiency which a public agency can, in its

discretion , allow a bidder to cure after the fact.Ñ

Intercontinental Properties , 606 So. 2d at 386 - 8 7 (emphasis

added).

77. The question for the undersigned is whether the

Department abused its discretion in failing to waive the

irregularity. Petitioner argues the Department abused its

discretion by acting arbitrarily -- waiving the irregularity for

othe r responders, but not TCC.

78. As discussed in the Findings of Fact, the replies

introduced by Petitioner in support of its argument do not

support a finding that the Department acted arbitrarily. The

replies, assuming they were deficient, did not contai n the

identical deficiencies as noted by the Department in TCCÓs reply.

The undersigned cannot conclude, based on that evidence, that the

DepartmentÓs failure to waive the deficiency was arbitrary or an

abuse of the DepartmentÓs discretion.

79. Assuming, arguendo , the Department erred in not waiving

the irregularity in TCCÓs reply related to control of the

property, that determination would not affect the outcome of the

instant case. TCCÓs reply was nonresponsive in other aspects

which were material and nonwaivable.

80. In summary, TCC did not prove that the DepartmentÓs

proposed action regarding ITN No. 640 - 0400 contravenes the

DepartmentÓs governing statutes, rules, policies, or the

solicitation specifications, or is otherwise contrary to

competition, arbitrary, or capricious.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Health enter a

final order dismissing Tallahassee Corporate Center, LLCÓs

Petition.

DONE AND ENTERED this 31s t day of May , 2018 , in

Tallahassee, Leon County, Florida.

S

SUZANNE VAN WYK

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 48 8 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 31st day of May , 2018 .

ENDNOTE S

1/ Petitioner argued at final hearing that TRV was not properly

added as an Intervenor in these proceedings because TRV did not

file a Motion to Intervene. The undersigned entered an ore

tenus order at the final hearing, accepting TRVÓs Notice of

Intervention as a Motion to Intervene, and granted the Motion.

2/ In its pre - hearing st atement , Petiti oner argued only that, as

it to its own reply, missing documentation on ownership and

control was a minor irregularity that should have been waived.

Petitioner did not allege that other replies were deficient in

this respect.

3/ In the Order on Petition erÓs Motion for Reconsideration, the

undersigned extended the deadline for filing proposed

recommended orders to May 18, 2018.

4/ With respect to a protest of the specifications contained in

an invitation to bid or in a request for proposals, the notice

of protest shall be filed in writing within 72 hours after the

receipt of notice of the project plans and specifications or

intended project plans and specifications in an invitation to

bid or request for proposals. § 120.57(3)(b).

5/ Section III.B. con tains additional requirements specific to

Build - to - Suit replies.

6/ TCCÓs owner, Todd Hakimi, referred to the TIA as a

ÐsweetenerÑ to entice the Department to stay in its current

location. The undersigned does not doubt that a TIA is used as

an addition al enticement in negotiation of a Ðstay - in - placeÑ

option. In the case at hand, the Department was not soliciting

proposals for a Ðstay - in - placeÑ lease.

7/ TCC concludes the subject response s were deemed responsive

because the Department proceeded to neg otiation with those

entities following bid opening.

COPIES FURNISHED:

John F. Loar, Esquire

Broad and Cassel

215 South Monroe Street , Suite 400 (32301)

Post Office Drawer 11300

Tallahassee, Florida 3230 2 - 3300

(eServed)

David K. Miller, Esquire

Broad and Cassel

215 South Monroe Street , Suite 400 (32301)

Post Office Drawer 11300

Tallahassee, Florida 32302 - 3300

(eServed)

Susan P. Stephens, Esquire

Department of Health

Bin A - 02

4052 Bald Cypress Way

Tallahassee, Florida 32399

(eServed)

M. Stephen Tur ner, Esquire

Broad and Cassel

Suite 400

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

Eduardo S. Lombard, Esquire

Vezina, Lawrence and Piscitelli, P.A.

413 East Park Avenue

Tallahassee, Florida 32301

(eServed)

Megan S. Reynolds, Esquire

Vezina Lawrence & Piscitelli, P.A.

413 East Park Avenue

Tallahassee, Florida 32301

(eServed)

Brian A. Newman, Esquire

Pennington, P.A.

215 South Monroe Street, Suite 200

Post Office Box 10095

Tallahassee, Florida 32302

(eServed)

Shannon Revels, A gency Clerk

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399 - 1703

(eServed)

Celeste M. Philip, M.D., M.P.H.

State Surgeon General

Department of Health

4052 Bald Cypress Way, Bin A00

Tallahassee, Florida 32399 - 1701

(eServed)

Nichole C. Geary, General Counsel

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399 - 1701

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

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

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.