87-001162BID Vision Care, Inc., D/B/A Vision Service Plan vs. Broward County School Board Status: Closed Recommended Order on Tuesday, April 21, 1987.

Summary: School board decision to reject all bids and relet contract sustained where specifications contained an ambiguity.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

VISION CARE, INC., d/b/ a )

VISION SERVICE PLAN, )

)

Petitioner, )

)

vs. ) CASE NO. 87-1162BID

)

THE SCHOOL BOARD OF BROWARD )

COUNTY, )

)

Respondent, )

and )

)

FEA/UNITED VISION CARE PLAN, )

)

Intervenor-Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of

Administrative Hearings by its duly designated Hearing Officer, Donald R.

Alexander, on April 15, 1987 in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Edward O. Savitz, Esquire

220 South Franklin Street

Tampa, Florida 33602

For Respondent: Edward J. Marko, Esquire

Post Office Box 4369

Fort Lauderdale, Florida 33338

For Intervenor: William S. Bischoff, Esquire

Suite 100, 2424 Allen Road

Tallahassee, Florida 32312

BACKGROUND

On September 23, 1986, respondent, The School Board of Broward County, gave

notice to qualified vendors that it would receive bids on Request for Proposal

(RFP) 87-269A which involved vision care for covered school employees. Bids

were thereafter filed by petitioner, Vision Care, Inc. d/b/a Vision Service

Plan, and intervenor-respondent, FEA/United Vision Care Plan. On January 22,

1987 the Board's purchasing agent advised intervenor that she would recommend to

the Board that petitioner be awarded the contract. This prompted a protest by

intervenor-respondent. In response to the protest, on February 3, 1987 the

Board staff recommended the original recommendation be reversed and that both

bids be rejected and the item rebid. This recommendation was approved at a

Board meeting on February 5, 1987. Petitioner then filed its formal protest on

February 11, 1987. The matter was reconsidered by the Board and its earlier

action reaffirmed by a 4-2 vote on February 18, 1987. Proposed agency action in

the form of a Final Order was entered by the Board on March 17, 1987 wherein it

proposed to reject all bids and rebid the contract on the ground an ambiguity in

the specifications existed.

The matter was referred to the Division of Administrative Hearings by

respondent on March 20, 1987, with a request that a Hearing Officer be assigned

to conduct a hearing. Thereafter, a final hearing was scheduled for April 13,

1987 in Fort Lauderdale, Florida. At the request of the parties the matter was

rescheduled to April 17 and then to April 15 at the same location.

At final hearing the parties stipulated to the admission of joint exhibits

1-19. The undersigned also took official notice of Section 112.00, Florida

Statutes (1985), and Rule 6A-1.012(5), Florida Administrative Code.

In an effort to expedite this matter, this Recommended Order was prepared

without the benefit of a transcript of hearing. In addition, the parties waived

their right to file proposed findings of fact and conclusions of law.

The issue is whether respondent acted arbitrarily and capriciously when it

rejected all bids filed in response to RFP 87-269A.

Based upon all of the evidence, the following findings of fact are

determined:

FINDINGS OF FACT

1. On September 23, 1986 respondent, The School Board of Broward County

(Board), through its purchasing department, issued a notice of release of

Request for Proposal (RFP) 87-269A. This notice was sent to three hundred

seventy-seven vendors and contained instructions on how to receive a copy of the

RFP. Ultimately, some forty vendors did so. The RFP invited vendors to submit

bids for vision care for covered employees of the Board for the period from

March 1, 1987 through December 31, 1988. Such bids were to be submitted to the

Board on or before 2:00 p.m. on October 29, 1986. In general terms, and as

stated in section 1.1 of the RFP, the objective of the proposal gas to "solicit

proposals for a closed panel vision plan and an indemnity vision plan."

According to section 2.0 of the RFP, the Board desired the following services:

The School Board of Broward County wishes

to offer its employee [sic] (and their

eligible dependent family members) in add-

ition to its present closed panel vision

plan, an indemnity vision plan.

This RFP is soliciting quotations for two

types of plans:

1. The currently offered closed panel type

with the current level of benefits shown in

Exhibit #1, entitled "FEA/United Vision Care

Plan" and

2. A "freedom of choice" indemnity

arrangement as an alternative arrangement to

the closed panel, as all other SBBC health

benefits also offer a choice between self-

selected providers or closed panels.

For the sane premiums as the current closed

panel plan, providers are requested to quote

their plan benefits, following the outline

provided, in Exhibit #1.

Any unusual and/or special benefits are

encouraged and should be included in your

offering.

The availability of services and supplies for

a population distributed throughout Broward

County, North Dade County, and South Palm

Beach County, Florida, will be very

important.

School Board employees need services

available to them after 3:00 p.m. daily

(Monday through Friday) and also weekend and

evening hours (at least one or two nights a

week) if possible, so as not to interfere

with their school schedules and

responsibilities.

Providers must submit along with their

proposals a list of current clients and a

list of names and locations of participating

optometrists.

2. Section 1.11 of the RFP is also relevant and provided that "the School

Board of Broward County, Florida, expressly reserves the right to waive any

formality in any proposal and to reject any and all proposals."

3. Only three bids were filed in response to RFP 87-269A. Of those, only

two were complete. Those were by petitioner, Vision Care, Inc., d/b/a Vision

Service Plan (Vision Care or petitioner), and intervenor-respondent, FEA/United

Vision Care Plan (FEA/United or intervenor).

4. Intervenor is the existing supplier of vision care to the covered

employees of the Board. Until this dispute is resolved, it continues to provide

vision care services for the Board's employees. Under intervenor's existing

contract, employees are referred to a closed plan of specific doctors. This

means they have no option to see any physician except those listed on the

"panel." The new proposal requested bidders to provide not only a closed panel

plan but to also provide for a freedom of choice plan whereby employees could

utilize a doctor of their own choice (not on the panel) and receive

indemnification for all or a part of the costs. Bidders were also instructed to

use the premium charged under intervenor's existing contract ($3.00 per employee

per month). Therefore, the RFP called for a $3.00 per month premium and a

composite closed plan/freedom of choice proposal.

5. Prior to bids being submitted, a "bidder's conference" was held on

October 8, 1986 at which time potential bidders asked questions of Board

representatives concerning the PFP. Representatives of only four potential

bidders attended the conference. Among other things, a representative of

intervenor asked the following questions:

Mr. Brown: Regarding 2.0, I have four questions.

Can a provider quote both plans, closed panel

and indemnity, in one composite plan?

Question two: Must a provider quote both

plans, closed panel and indemnity, in one

composite plan? Question three: Can a

provider quote only the indemnity selection

with the indemnity play and, four, can a

provider quote only the closed panel plan?

Mr. Thomas (Board director of fringe benefits):

Thank you. Good questions. I think they will

serve to clarify that particular section.

6. Later on, the Board's purchasing department prepared written answers to

all questions asked at the conference. With regard to the four questions asked

by Brown, the following answers were given:

Q. Must a provider quote both plans, closed panel and

indemnity, in one composite plan?

A. A provider may quote both plans in a composite

plan or quote them separately.

Q. May a provider quote both a closed plan

and indemnity plan.

A. Yes, they may.

Q. Must a provider quote both plans, closed

panel and indemnity, in one composite plan?

A. A provider may quote both plans in a

composite plan or quote them separately.

Q. May a provider quote just one plan or

the other, closed panel and/or indemnity?

A. Yes, a provider may select the way he wants to

submit his quotation and may quote either a

closed panel or an indemnity plan, or both.

7. The above questions and answers, and others, were reduced to writing,

incorporated as an Addendum No. 1 to the RFP, and mailed to all bidders on

October 17, 1986.

8. Other than the inquiry made above, there is no evidence that any bidder

asked for clarification regarding the specifications in RFP 87-269A. According

to sections 1.5 and 1.6 of the RFP, written questions or objections relating to

the specifications were to be filed by October 3, 1986. None were filed.

9. The Board engaged the services of a consulting firm, Fringe Benefit

Consultants, Inc. (FBC), to assist it in reviewing the bids and to make a

recommendation. In addition, a vision care insurance committee made up of

various Board employees was created to consider FBC's recommendation and to

advise the Board. On January 8, 1987 FBC and the committee met to evaluate the

two bids. After a "blind" evaluation, the committee selected petitioner by a 3-

0 vote. This advice was conveyed to the superintendent by memorandum dated

January 9, 1987. The superintendent concurred with this recommendation and

recommended that petitioner's bid in the amount of $924,000 be accepted at the

next Board meeting.

10. On January 22, 1987 the Board's purchasing agent prepared and mailed

to intervenor a "notice of intent to award proposal" to petitioner and giving

intervenor a 72-hour window after receipt of the notice in which to file a

protest. The next day intervenor submitted its notice of protest. A formal

protest was later filed on January 28, 1987. The protest, which has been

received in evidence as part of joint exhibit 10, suggested, inter alia, that

section 2.0 of the RFP called for bidders to submit three types of plans, and

stated that intervenor had submitted six proposals (A through E) in order to

meet that requirement.

11. On February 3, 1987 FBC sent the Board purchasing agent a letter

stating in part:

We have reviewed FEA/United Vision Care's

protest letter dated January 28, 1987, and we

recommend that all bids be rejected and the

vision plan be rebid.

We believe it was not made sufficiently clear

to all bidders that a single $3.00 quotation

level of benefits was being solicited for a

composite closed panel/indemnity option

vision plan.

12. The same date the acting superintendent (Dorothy Orr) prepared the

following written recommendation:

It is my recommendation that the

Superintendent's recommendation in the matter

of the award of the Vision-Care contract be

changed and that the new recommendation be to

reject all bids. If this suggestion is

accepted, it is further recommended that the

vision-care plan be rebid.

This action is predicated in part on the

recommendations of our consultants, Fringe

Benefit Consultants, Inc., who have advised

us as follows:

"We believe it was not made sufficiently

clear to all bidders that a single $3.00

quotation level of benefits was being

solicited for a composite closed panel/

indemnity option vision plan.

In further reviewing the section of the

vision-care RFP pertaining to the vision

services sought, I believe that there is

evidence to suggest that sufficient ambi-

guity exists in the wording which could lead

a Proposer to construe that the School Board

was seeking more than one plan containing a

closed panel and an indemnity option.

Our consultants, acting in good faith,

evaluated the responses from two finalists

and limited their evaluation to quotations

which met the one plan with closed panel and

indemnity criteria only.

It has been brought to our attention through

the filing of a formal protest by FEA United

Vision, the present contract holder, that

they did not understand that they were being

asked to bid on a single plan. Their

objection specifies: "the first three

paragraphs of Section 2.0 clearly indicate

that The School Board of Broward County is

requesting proposals for three types of

plans." Fringe Benefit Consultants, author

of the RFP, agrees with this contention.

In the considered opinion of both, Fringe

Benefit Consultants and myself, it appears

that there is sufficient merit in the

challenge to warrant a change in the

Superintendent's recommendation.

13. On February 5, 1987 the Board met and decided that "all bids received

be rejected and that the item be re-bid." This action was conveyed to

petitioner the same date in a letter prepared by the Board's purchasing agent.

Petitioner thereafter filed its notice of protest on February 6 and its formal

protest on February 11, 1987.

14. In response to petitioner's protest a second Board meeting was

conducted on February 18, 1987 at which time both petitioner and intervenor were

allowed to state their positions and answer any Board questions. In addition,

two FBC representatives and a Board employee voiced their reasons for

recommending that the Board find the RFP contained an ambiguity. At the

conclusion of the meeting, the Board voted 4-2 to reject all bids and rebid the

matter. Proposed agency action in the form of a Final Order was thereafter

entered on March 17, 1987. The order provided in relevant part:

THE SCHOOL BOARD finds that the ambiguity

existed in the bid specifications and that

said ambiguity was supported on Page 3 of 8,

Question 3 in the Bidders' Conference, as

well as Pages 11 and 12 on the R.F.P.

15. At the Board meeting on February 18, 1987 an FBC representative

(George Corkun) explained that the above ambiguity stemmed from an answer given

to a question raised by intervenor's representative at the bidders' conference

on October 8, 1986. The question and answer, which are referred to as "Question

3" in the Board's Final Order, were as follows:

Q. Must a provider quote both plans, closed

panel and indemnity, in one composite plan?

A. A provider may quote both plans in a

composite plan or quote them separately.

16. According to Corkum, he was concerned that a protest had been filed

and the "appeals process" could take as long as a year to be resolved. He felt

that in view of the answer to question three, "somebody could have felt that

there was an ambiguity there," and that with "the remote possibility of an

ambiguity," it was best to rebid the matter. Another FBC representative (Dr.

Benjamin Stevenson) stated that the specifications called for a $3.00 per month

premium and a composite closed panel/freedom of choice of plan, and alluded to a

perceived ambiguity since five of intervenor's six proposals did not meet both

requirements. Finally, a Board employee (Richard Thomas) pointed out that

intervenor's proposal contained "six different bids" (proposals A-E) when in

fact the RFP called for only one. To him, that "constituted...enough ambiguity

to warrant" a recommendation that the contract be rebid.

17. Petitioner had no difficulty in interpreting the specifications and

offered a bid proposal which was responsive to the Board's request. Although

five of intervenor's proposals were non-responsive, it did submit a composite

plan at a $3.00 premium (proposal E) which was responsive to section 2.0 of the

specifications. Indeed, Board and FBC representatives acknowledged at the

February 18 meeting that proposal E was responsive to the RFP.

18. Except for the submission of joint exhibits 1-19, there was no other

evidence concerning the ambiguity or lack thereof in the specifications.

Accordingly, no testimony was heard from the individuals who prepared the

specifications, who made the recommendation that the bids be rejected, or who

filled out the bid documents on behalf of petitioner and intervenor. There was

also no evidence to support the charge that the decision was based on "politics"

or that any other misconduct occurred during the bidding process.

CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has jurisdiction of the

subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida

Statutes (Supp. 1986).

20. At issue is the propriety of respondent's proposed agency action

entered on March 17, 1987 which rejected all bids on the ground an ambiguity

existed in the specifications. It also directed that RFP 87-269A be relet.

Since the agency had not yet proposed to award the bid to any party, the issue

of who submitted the lowest and most responsive bid is not before the

undersigned. Standing for petitioner and intervenor to participate in this

cause has been stipulated to by the parties.

21. Initially, a brief comment is necessary concerning the nature of a bid

proceeding arising under Subsection 120.57(1) and the burden placed upon the

challenging party. This proceeding arises because of proposed agency action

(the Board's vote of February 18 as memorialized in its order of March 17) which

affected petitioner's substantial interests. Even so, to trigger a request for

a Section 120.57(1) hearing, disputed facts must necessarily exist. This in

turn contemplates an evidentiary hearing in a de novo setting and not simply a

"review" of the agency's preliminary action. This is because "section 120.57

proceedings are intended to formulate final agency action, not to review action

taken earlier and preliminarily, McDonald v. Department of Banking and Finance,

346 So.2d 569, 584 (Fla. 1st DCA 1977); Capeletti Brothers, Inc. v. State,

Department of General Services, 432 So.2d 1359, 1363-64 (Fla. 1st DCA 1983).

Moreover, "a formal 120.57(1) hearing...commences a de novo proceeding."

Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778,

785 (Fla. 1st DCA 1981). However, a bid case differs in many respects from the

conventional regulatory proceeding, and certain constraints must necessarily

apply as to the type of evidence that may be presented by a party. That is, the

events surrounding the bid decision are "frozen" in time, and a party cannot

present evidence at final hearing to cure deficiencies that were present when

the bids were initially submitted. See, for example, Baxter's Asphalt and

Concrete, Inc. v. Department of Transportation, 475 So.2d 1284, 1287-88 (Fla.

1st DCA 1985). The reasons for this are obvious, for case law teaches us that

this would give an unfair advantage to a party submitting an otherwise deficient

bid proposal. However, a party is clearly entitled to look behind the reasons

underpinning the agency's decision and to question the underlying facts and

circumstances in a de novo setting. Within this framework, the issue here is

whether the agency's decision to reject all bids on the ground an ambiguity in

the specifications existed was correct. Stated differently, was the agency

arbitrary and capricious in its action? To answer this question in the

affirmative, a party must prove that the reason(s) given by the agency for

rejecting all bids were not based on facts which reasonably support its

conclusion, Mayer Printing Co. v. Flowers, 154 So.2d 859, 864 (Fla. 1st DCA

1963), and that the agency was not "proceeding rationally within the bounds of

discretion." Couch Construction Co., Inc. v. Department of Transportation, 361

So.2d 172, 175 (Fla. 1st DCA 1973). To do this, petitioner must present a prima

facie case that the purported ambiguity relied upon by the Board does not exist.

Having done so, the burden then shifts to the agency (and intervenor) to show

that, notwithstanding those indicia of clarity in the specifications, other

facts or circumstances lend support to the Board's action. Assuming this

showing is met, the burden then shifts back to petitioner to counter the

agency's proof, and to demonstrate that the reasons asserted by the agency lack

a factual basis or are irrational and unreasonable.

22. At the same time deference must be accorded to the fact that under

Rule 6A-1.012, Florida Administrative Code, and the specifications themselves,

the agency reserved the right to reject all bids. This is important since

decisional law holds that `where an agency reserves the right to reject all bids

and to call for new bids, it has wide discretion to do so. See, for example,

Couch Construction Co., Inc. v. Department of Transportation, 361 So.2d 172, 175

(Fla. 1st DCA 1978). Further, in exercising the power to reject any and all

bids, and proceeding anew with the awarding of the contract,

the (agency) cannot act arbitrarily or

capriciously, but must observe good faith and

accord to all bidders just consideration,

thus avoiding favoritism, abuse of

discretion, or corruption.

23. Wood-Hopkins Contract Co. v. Roger J. Au & Son, Inc., 354 So.2d 446,

450 (Fla. 1st DCA 1978).

24. Applying the above principles to the evidence herein, it is initially

observed that, although the parties were entitled to an evidentiary hearing,

they opted only to offer certain documentation received as joint exhibits 1-19.

To satisfy its burden, petitioner, by way of argument, referred to certain

portions of the documentation to demonstrate that there was no ambiguity in

section 2.0 of the specifications. It relied primarily upon the clarification

given at the bidders' conference, the lack of a request for clarification by any

bidder, the responsive bid by intervenor (proposal E), the fact that no

ambiguity was noted by the committee or FBC when the two bids were initially

screened and evaluated, and statements by an FBC representative on February 18

that suggest the reletting of bids was the quickest way to resolve the pending

protest. Collectively, these facts and circumstances present a prima facie case

that no actual or real ambiguity existed. In response, respondent and

intervenor pointed to the fact that six proposals were filed by intervenor when

in fact the RFP called for only one, and that intervenor's initial protest

reflected some confusion on its part as to the number of plans that should have

been submitted. This showing was not controverted by petitioner. These latter

facts and circumstances tend to reasonably support the Board's decision, and to

show that it was acting rationally within the bounds of discretion. Therefore,

it cannot be concluded that respondent's action was arbitrary or capricious.

This is especially true since there was no evidence to show that the reasons

cited by the Board were simply a pretext for not awarding the bid to petitioner.

This being so, petitioner's claim for relief must be DENIED.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that a Final Order be entered rejecting all bids on RFP 87-269A

and that the contract be relet.

DONE AND ORDERED this 21st day of April, 1987, in Tallahassee, Leon County,

Florida.

_________________________________

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 21st day of April, 1987.

ENDNOTES

1/ Although the Board has cited Section 120.53, Florida Statutes (1985), in

several documents that relate to this matter, and has apparently utilized some

of the procedures set out therein, this case arises under Subsection 120.57(1).

This is because Subsection 120.53(5) relates to bidding procedures for contracts

entered into under specified statutory provisions, none of which are relevant or

applicable to this case. Whether by local rule the Board has adopted similar

procedures to those codified in Subsection 120.53(5) was not disclosed.

2/ A notice by the Board's purchasing agent on January 22, 1987 that she

intended to make a staff recommendation in favor of petitioner is not proposed

agency action requiring a protest (as the agent requested), but rather is one

step in the "free-form" process leading up to the proposed agency action of

February 13, as formalized by the order of March 17.

COPIES FURNISHED:

Edward O. Savitz, Esquire

220 South Franklin Street

Tampa, Florida 33602

813/224-9255

Edward J. Marko, Esquire

Post Office Box 4369

Fort Lauderdale, Florida 33338

305/563-3401

William S. Bischoff, Esquire

Suite 100, 2424 Allen Road

Tallahassee, Florida 32312

904/385-0055

Dr. William J. Leary, Superintendent

School Board of Broward County

1320 Southwest Fourth Street

Fort Lauderdale, Florida 33312