94-005628BID Gulf Real Properties, Inc. vs. Department Of Health And Rehabilitative Services Status: Closed Recommended Order on Tuesday, August 15, 1995.

Summary: Agency failed to follow DMS rule on turnkey leases. Bids should be rejected.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GULF REAL PROPERTIES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-5628BID

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

_____________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, Susan B. Kirkland, held a formal hearing in this

case on January 12, 1995, in Fort Lauderdale, Florida, and on June 19, 1995, in

Tallahassee, Florida.

APPEARANCES

For Petitioner: Wilbur E. Brewton, Esquire

I. Ed Pantaleon, Esquire

Taylor, Brion, Buker & Greene

225 South Adams Street, Suite 250

Tallahassee, Florida 32301

For Respondent: William A. Frieder, Esquire

Assistant General Counsel

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32300-0700

Kimberley Tendrich, Esquire

Assistant General Counsel

Department of Health and

Rehabilitative Services, District X

201 West Broward Boulevard

Ft. Lauderdale, Florida 33301

STATEMENT OF THE ISSUES

Whether Respondent's determination to reject all bids for Lease No.

590:2490 was appropriate.

PRELIMINARY STATEMENT

Petitioner, Gulf Real Properties, Inc. (Gulf) responded to Respondent's,

Department of Health and Rehabilitative Services, District 10 (HRS), Invitation

to Bid for Lease No. 590:2490, to lease space to HRS for the Children's Medical

Services facility.

HRS issued a notice of award letter to Gulf. A bid protest was filed by an

unsuccessful bidder, who subsequently voluntarily withdrew the protest.

After the withdrawal of the protest, HRS issued a letter to Gulf stating

that HRS was rejecting all bids. Gulf filed a petition for formal hearing.

The matter was referred to the Division of Administrative Hearings for

assignment to a Hearing Officer.

At the final hearing, Gulf presented the testimony of Mary V. Goodman and

James F. Antonucci. Petitioner's Exhibits 1-7 were admitted into evidence. HRS

presented the testimony of Randall Baker, Christopher A. Edghill, and Dr. Joni

Letterman.

At the final hearing the parties agreed to file their proposed recommended

orders withing 21 days of the filing of the transcript. The transcript was

filed on February 6, 1995. The parties requested that the date for filing

proposed recommended orders be extended to March 13, 1995. Petitioner filed a

Motion for Rehearing and/or in the Alternative Motion to File Newly Discovered

Evidence. The motion was heard by telephonic conference. The motion was denied

and the time for filing proposed recommended orders was extended to March 20,

1995. The parties timely filed their proposed recommended orders.

On April 12, 1995, the Hearing Officer entered an order requesting that the

parties submit additional argument in reference to the applicability of Rule

60H-1.015, Florida Administrative Code. Both Gulf and HRS filed a response on

April 21, 1995.

Subsequent to April 21, 1995, the Hearing Officer scheduled a conference

call with the attorneys for Gulf and HRS. During the conference call, the

Hearing Officer advised both parties that she had intended to request the

parties to discuss in her April 12, 1995, Order, Rule 60H-1.017, not Rule 60H-

1.015.

After consideration of the Motions and Responses filed by both HRS and

Gulf, the Hearing Officer reopened the hearing in regard to past policies and

practices in reference to the application of Rule 60H-1.017, and scheduled the

hearing for June 5, 1995. The hearing was rescheduled to June 19, 1995.

At the hearing on June 19, 1995, Gulf presented the testimony of Jim

Antonucci, Randall Baker, Mary Goodman, and Linda Treml, and introduced the

deposition of George Smith. Gulf Exhibits A-F were admitted in evidence.

At the hearing on June 19, 1995, HRS did not call any witnesses. HRS

Exhibits A, B-1, B-2, B-3, and C-Y were admitted in evidence.

HRS filed a supplement to its proposed recommended order on July 7, 1995,

and Gulf filed a supplement to its proposed recommended order on July 10, 1995.

The parties' proposed findings of fact are addressed in the Appendix to

this Recommended Order.

FINDINGS OF FACT

1. Children's Medical Services (CMS) is a statewide program of the

Department of Health and Rehabilitative Services which provides services for

children who are suffering from medically debilitating or potentially medically

debilitating conditions of a chronic nature. In Broward County, Respondent,

District X of the Department of Health and Rehabilitative Services (District X),

provides CMS services to approximately 4,000 children.

2. The CMS Broward County Clinic is currently located in a leased

facility. The lease expires in August, 1995.

3. In the fall of 1994, District X determined that it would seek to lease

a larger facility in the private sector to replace the existing leased facility.

In November, 1993, Christopher Edghill, who was then the Facilities Manager for

District X, prepared a Request for Prior Approval of Space (RNS), seeking

approval from the Department of Management Services (DMS) for a new lease to

house the CMS program in District X.

4. The RNS stated that District X desired to enter into a ten-year turnkey

lease for 19,233 square feet. District X desired to acquire the facility in the

private sector through a competitive bidding process. The RNS also included a

Letter of Agency Staffing as justification for the space requested and a

certification that the district had sufficient funds available to pay for the

leased space.

5. Prior to submitting the RNS to DMS, Mr. Edghill did not inquire whether

there was public space available in Broward County which would be suitable for

housing the CMS program, and no evidence was presented to show that public space

was available at that time.

6. After submission of the RNS, District X amended the RNS to include an

option to renew.

7. The RNS was approved by DMS on December 3, 1993.

8. In January, 1994, District X issued the solicitation document for bids

for lease for CMS facility. The lease number assigned was 590:2490.

9. A pre-bid conference was held on February 10, 1994.

10. James F. Antonucci, a representative for Petitioner, Gulf Properties,

Inc. (Gulf), attended the pre-bid conference.

11. On April 4, 1994, Dr. Joni Letterman, who is the Medical Director of

CMS for District X, was approached by Linda Bouffard and Rita Frantz concerning

a needs assessment for a children's medical center in conjunction with North

Broward Hospital District (NBHD). At that time the children's center was in its

very early planning stages. The children's center was envisioned to be a

combined maternal, obstetrical, pediatric, neonatal and full service children's

hospital center with inpatient and outpatient services.

12. On April 6, 1994, Gulf entered into an option agreement to purchase

land for space to be utilized for Lease No. 590:2490 should Gulf be awarded the

contract.

13. Gulf and ANF Real Estate Group, Inc. (ANF) timely submitted responses

to the solicitation by District X. The bids were opened on April 7, 1994. Gulf

submitted one bid and ANF submitted two bids.

14. Gulf's bid offered a full service lease at $16.79 per square foot for

the first year for 19,800 square feet, plus or minus three percent.

15. A bid evaluation committee of five (5) members was selected by

District X. One of the evaluation committee members was Dr. Letterman. On

April 20, 1994, the evaluation committee visited the sites proposed by the

bidders.

16. By letter dated April 22, 1994, Dr. Letterman notified Ms. Frantz and

Ms. Bouffard that CMS was in the process of selecting a bidder for a ten year

lease and that relocation of CMS as part of the children's center would not be

possible.

17. Sometime in late April or early May, 1994, Dr. Letterman was asked to

join the Children's Initiative Committee, which was formed to expand on the

concept of the children's center. Dr. Letterman attended her first committee

meeting in early May, 1994. At that meeting the committee asked Dr. Letterman

where CMS could fit into the children's center concept. Dr. Letterman explained

that District X was in the midst of a competitive procurement process for a new

CMS facility and did not know whether CMS could commit to relocating on the

campus of Broward General Medical Center (BGMC). Mr. Will Trower, Chief Officer

of BGMC, was present during the meeting but did not offer any space at that time

relating to CMS for use while the children's center was being developed.

18. By memorandum dated May 27, 1994, the evaluation committee notified

the acting district administrator that Gulf received the highest rating and

recommended that the lease be awarded to Gulf.

19. By letter dated June 9, 1994, Dr. Letterman wrote to Mrower,

stating:

For CMS to move forward toward the Children's Center concept and reject

bids already submitted, the Department requires a written letter of commitment

assuring CMS space and related needs will be met as well as a provision for an

interim CMS site as of September 1, 1995, the date our current lease expires.

Due to constraints related to the bid process, I must have this written

confirmation by the close of business, Thursday, July 16, 1994.

20. By letter dated June 13, 1994, Dr. Letterman advised Mrower that

the deadline for response was incorrect in her June 9, 1994 letter and should

have read June 16, 1994.

21. Mrower responded by letter dated June 16, 1994, wherein he

advised:

As it relates to interim space for CMS, I

can at this time commit to offering to meet

with you to have you consider space that

will be available this spring in our medical

office tower adjacent to the hospital. Based

on our previous discussion, I believe this

space will be adequate in size and capability

for an interim location of the CMS services.

A lease agreement could be established which

would meet your needs for relocation and provide

an interim location until such time as the

Children's Center is completed.

22. BGMC offered a full service lease of 16,950 square feet for $14.50 per

square foot.

23. By memorandum dated June 20, 1994, Mr. Edghill recommended that the

best decision would be to award the lease to Gulf. This recommendation was

based on Trower's letter which indicated that the Board of Commissioners would

have to approve the initiative to develop the children's center, on the effect

that a delay could have regarding the bidders' options on the proposed sites,

and on the likelihood of a protest by the bidders.

24. By letter dated June 24, 1994, District X advised the bidders that

authorization had been granted to award the lease to Gulf.

25. A letter of intent to protest the award was timely filed by ANF on

June 27, 1994, followed by a timely filed formal protest on July 9, 1994.

26. On June 30, 1994, Gulf entered into an Agreement for Purchase and Sale

of the property which was the subject of the April 6, 1994, option agreement.

27. By memorandum dated August 17, 1994, the District X administrator

advised James Towey, the Secretary of HRS, of possible options for resolving the

CMS lease problem. Option I was to proceed with the competitive bid process

through resolution of the ANF protest and sign a contract with Gulf Real

Properties. Option 2 was to terminate the competitive bid process, request

proposals from the North and South Broward Hospital Districts and award CMS

lease space according to revised criteria. Option 3 was to award the lease to

Gulf but alter the occupancy plan by replacing clinic-specific space with

general office space and relocating other District programs to the site. The

District would then award the clinic-specific space to a hospital entity.

28. On August 26, 1994, ANF filed a Notice of Withdrawal of Formal Written

Protest, advising District X that ANF was abandoning its requests for agency

action regarding Lease No. 590:2490.

29. On August 26, 1994, Gulf entered into an addendum to the purchase and

sale agreement, whereby it was acknowledged that a protest had been filed by ANF

concerning the bid award for the lease of the facility which Gulf intended to

construct on the property and it was agreed that Gulf had until September 30,

1994, to resolve the protest and that if the protest was not resolved in favor

of Gulf that Gulf could cancel the contract.

30. By memorandum dated August 29, 1994, Secretary Towey advised the

District X administrator to follow Option 2. His decision was based on his

understanding that the District had incorrectly considered North Broward

Hospital ("BGMC") not to be a governmental entity when it made its initial

decision to award to Gulf and the move to North Broward Hospital would be in the

best interests of their clients.

31. By letter dated August 31, 1994, District X advised Gulf that ANF had

withdrawn its protest and that District X was rejecting all bids because

suitable space had been made available by governmental entities. The letter

advised Gulf that it could request an administrative hearing within 30 days of

receipt of the letter.

32. The governmental entities referred to in the August 31, 1994 letter

were North Broward Hospital and South Broward Hospital.

33. At the end of June, 1994, Dr. Letterman toured the BGMC office space.

She determined that the space offered by BGMC was adequate to meet the needs of

the District for the CMS clinic. A large number of CMS' clients are located

near the hospital. Co-location of CMS at BGMC would allow the sharing of

certain areas such as the employee lounge, the medical library, and medical

record storage, thus reducing the space that would be required for the CMS

program. Additionally, CMS employees, such as economic eligibility employees

could be outposted at the hospital, thereby eliminating office space at CMS.

34. Currently BGMC provides services to the CMS clinic such as x-ray,

laboratory, diagnostic, hearing testing, and sleep studies. Co-location of CMS

and BGMC would eliminate the need to shuttle clients back and forth between the

clinic and the hospital and thereby reduce the stress on the childrens' families

and provide more efficient services. For example, co-location would eliminate

the need for a child who was going to have outpatient surgery of having to go to

the clinic for a pre-op exam, travel to another location for laboratory work,

and then go to a different location for the surgery. Through co-location the

services could be provided in one visit at one location.

35. Co-location of CMS with BGMC should result in more efficient use of

the physicians' time. For example the doctors would not have to travel back and

forth from the clinic to the hospital. Patient records would be more accessible

for use by the physicians because the records could be maintained in one

location.

36. In reviewing the proposals submitted by Gulf and ANF, Dr. Letterman

had been concerned about the location of an emergency room near the proposed

locations. The co-location of CMS and BGMC would result in an emergency room in

a CMS approved hospital being in close proximity to the clinic.

37. On August 31, 1994, Gulf sent a termination letter to the seller of

the property, advising that District X had rejected all bids. Gulf and the

seller of the property thereafter executed another addendum to the purchase

contract effective September 15, 1994, which allowed the withdrawal of the

termination letter and provided that the closing should take place no later than

May 31, 1995.

38. Gulf timely filed its Petition for Administrative Hearing on

September 30, 1994.

39. In 1975, DMS, formerly the Department of General Services, promulgated

what is now numbered as Rule 60H-1.017, Florida Administrative Code. This rule

deals with turnkey leases. The rule was amended once in 1986.

40. Sometime during 1976 or 1977, management at DMS, relying on advice

from legal counsel, determined that it did not have the authority to participate

in the evaluation of proposals for turnkey leases of user agencies and decided

to ignore Rule 60H-1.017, formerly Rule 13M-1.017. DMS did not repeal the rule

and amended the rule in 1986. The DMS real property leasing manual as revised

in 1986 contained the procedures for the procurement of turnkey leases as set

forth in Rule 60H-1.017.

41. In 1979, HRS promulgated Rule 10-8.007, Florida Administrative Code,

dealing with turnkey leases. The rule has not been amended since its adoption.

42. In 1993 or 1994, the Division of Facilities Management of DMS, loaned

a staff person to HRS to assist in the revision of HRS Manual, Facilities

Acquisition and Management, Procuring Leased Space. This manual provides that

for the procurement of turnkey lease construction the District should refer to

Section 60H-1.017, Florida Administrative Code, and the Department of Management

Services' Real Property Lease Manual and consult with the office of general

services of HRS.

43. District X has not made a recommendation to DMS for the proposed award

of the lease in issue. The Division of Facilities Management has not made an

evaluation of the proposals. There has been no joint approval by the Department

of Management Services and District X on the proposal submitted by Gulf

Properties.

44. Although Rules 60H-1.017 and 10.8.007 are still in existence, HRS has

been following the procedures set forth in Rule 60H-1.015 at least since 1983.

Essentially, HRS determines whether there is existing space available and

requests approval from DMS to seek a turnkey lease if there is no existing space

available. If DMS approves HRS to seek a turnkey lease, HRS advertises for

proposals, reviews the proposals submitted, gives notice of an intended award,

and sends documentation to DMS in order that DMS may review and approve the

lease. In turnkey lease procurements, DMS has followed a procedure similar to

that set forth in Rule 60H-1.015. DMS reviews the initial request from HRS to go

out for a turnkey lease. If approved HRS proceeds to solicit and award a lease.

DMS will give technical assistance to HRS during the procurment process if HRS

requests. After HRS notifies the bidders of the intended award, it sends

documentation to DMS for review and approval. DMS reviews the following things:

floor plans and specifications; price; compliance of design with the standards

of the Americans with Disabilities Act; appropriateness of the completion date

of the project; availability of public transportation; parking facilities; and

dining facilities as they relate to the turnkey lease location. If any of the

criteria reviewed by DMS is inappropriate or fails to comply with the

specifications or DMS standards, DMS will not let HRS go forward with the

project until the deficiency is corrected.

45. The bid solicitation document provides:

Notification of bid award is final when either

no protests are submitted or after all protests

are resolved by an administrative hearing

procedure. Subsequent protests at District

Court level will not be grounds for delaying

bid award.

46. The solicitation document also states that HRS has the right to reject

any and all bids.

CONCLUSIONS OF LAW

47. The Division of Administrative Hearings has jurisdiction over the

parties to and the subject matter of this proceeding. Section 120.57(1),

Florida Statutes.

48. The rules for the procurement and acceptance of proposals for leases

for existing space and for leases for turnkey construction differ. In the

procurement of leases for existing space, the user agency, in this case District

X, evaluates the proposals and makes the selection of the lowest and best bid.

Rule 60H-1.015 (5), Florida Administrative Code provides:

(5) Evaluation

(a) The user agency alone shall reserve the

right to accept or reject any or all bids

submitted and if necessary reinitiate proced-

ures for soliciting competitive proposals.

(b) The user agency, in conjunction with

preparing specifications, shall develop weighted

evaluation criteria. The criteria items most

significant to the user agency's needs should

bear the highest weight. Rental, using total

present value methodology for basic term of

lease applying the present value discount rate

pursuant to Rule 60H-1.029; the cost of relocation,

if any; consolidation of activities, if desireable;

and any other factor deemed necessary should be

weighted.

(c) The evaluation shall be made by the user

agency.

(d) Selection (deemed to be the lowest and

best bid) shall be made by the user agency.

* * *

(f) Selection shall be publicly announced

by the user agency at the time and place

designated at the bid opening. A copy of the

announcement shall be filed with the Bureau.

49. Rule 60H-1.017, Florida Administrative Code provides the criteria for

the solicitation of proposals for a turnkey lease. An agency may procure

proposals for a turnkey lease when it is determined that no existing space,

either State or private is available. Rule 60H-1.017(3) provides that "[t]he

State User Agency will perform the [turnkey lease construction] program to the

point of acceptance of proposals, as solicited, in accordance with the

Department of Management Services' guidelines, as presented herein." The rule

further outlines the responsibilities of the user agency through the evaluation

of the proposals.

50. Rule 60H-1.017(3)(f)8, Florida Administrative Code provides:

. . . Evaluation of proposals will be made

jointly by the Division of Facilities Manage-

ment and the User Agency on the basis of price,

design, characteristics of construction,

completion date, location (including environ-

mental or characteristics of surrounding

neighborhood), public transportation availa-

bility, availability of parking facilities,

and availability of satisfactory dining

facilities, and conformance to the User

Agency program, performance specifications,

and floor layout plan.

The User Agency then presents the entire

"project review package" (including the User

Agency's specific recommendation, justification

in support of the recommendation, and the

proposed lease contract) to the Division of

Facilities Management.

The project review package shall contain:

a. A letter of transmittal setting forth:

(i) the fact that "this is a lease-build

proposal," and

(ii) functional and staff justification as

to the facility's necessity.

b. Proof of Advertisement. Said advertise-

ment to set forth the particulars of the pre-

proposal conference (where, when time, attendees,

etc).

c. A list of the responses to the advertisements.

d. Set of the User Agency's program, any unique

planning information, performance specifications

(building and site). Site description and or

delineated area, floor layout plan, and property

appraisal.

e. All proposals submitted to the User Agency

must be in accordance to guidelines developed.

f. User Agency's recommendation with justification.

The Division of Facilities Management will

review the project, if it concurs with the User

Agency recommendation, it will give approval and

return to the User Agency for execution. The User

Agency and the Department of Management Services

must be in joint agreement on the proposal before

approval is granted. . . .

51. Rule 10-8.007, Florida Administrative Code, promulgated in 1979, deals

with HRS turnkey leases and provides:

(1) Purpose. The purpose of this program

is to provide the means of meeting State space

requirements, in a competitive area, where it

has been determined that existing space, either

State or privately owned is not available.

(2) The Department shall provide technical

assistance in the details of the endeavor.

(3) The Department and the Department of

General Services [now the Department of Management

Services] must be in joint agreement before turnkey

approval is granted.

A physical inspection of completed building

and sites will be made by the Department who will,

in turn, supply the Division of Building Construction

and Property Management with a Certification of

Acceptance, and a Certificate Citing the Date of

Occupancy. . . .

52. Section 255.25(3)(a), Florida Statutes, provides:

Except as provided in subsection (10), no state

agency shall enter into a lease as lessee for the

use of 3,000 square feet or more of space in a

privately owned building except upon advertisement

for and receipt of competitive bids and award to

the lowest and best bidder. The Division of Facil-

ities Management [ of the Department of Management

Services] shall have the authority to approve a

lease for 3,000 square feet or more of space that

covers more than 1 fiscal year subject to the pro-

vision of ss. 216.311, 255.2501, 255.2502, and

255.2503, if such lease is in the judgement of the

division, in the best interests of the state.

This paragraph does not apply to buildings or

facilities of any size leased for the purpose of

providing care and living space for persons.

53. It is apparent that District X was proceeding under the assumption

that Rule 60H-1.015 governed the procurement of the lease rather than 60H-1.017.

The procurement of space for the CMS facility is for turnkey construction.

Thus, the applicable administrative rule is Rule 60H-1.017 rather than Rule 60H-

1.015. However, the evidence established that both DMS and HRS have not been

following Rule 60H-1.017, which has been in existence since 1975. Although DMS

management determined they would not follow DMS' own rule around 1976, DMS chose

not to repeal the rule and continued to refer to the procedures set forth in the

rule in its leasing manual. DMS even amended the rule in 1986. DMS loaned a

staff person to assist HRS in revising the HRS leasing manual in 1993-94. The

HRS manual referred the districts to Rule 60H-1.017 and DMS' Real Property Lease

Manual for the procurement of turnkey leases.

54. HRS has not been following Rule 10-8.007, to the extent that the rule

is interpreted to mean that both DMS and HRS must be in joint agreement for the

award of a turnkey lease. This interpretation is the interpretation which is

set forth in HRS's current leasing manual when it refers the districts to Rule

60H-1.017 and to DMS's leasing manual, which sets forth the same procedures as

outlined in Rule 60H-1.017, for the procedures to be used in procuring turnkey

leases.

55. Valid rules of an administrative agency have the force and effect of

law. Florida Livestock Board v. Gladden, 76 So.2d 291 (Fla. 1954). The

validity of a rule is to be assumed by the public official who is to carry out

the rule. Graham v. Swift, 480 So.2d 124 (Fla. 3rd DCA 1985). Thus, HRS is

bound by Rule 60H-1.017 just as it would be bound by a statute. Rule 60H-1.017

has not been declared invalid by the courts or through a rule challenge. HRS is

also bound to follow its own Rule 10-8.007 which requires joint agreement by DMS

and HRS for approval of a turnkey lease.

56. Pursuant to Rule 60H-1.017, the acceptance of a turnkey lease proposal

required that there be joint evaluation and approval by District X and the

Department of Management Services. Rule 10-8.007, requires joint agreement

between HRS and DMS before turnkey approval is granted. There has been no joint

evaluation and approval of the proposals by District X and the Department of

Management Services, thus District X had no authority to award a lease to Gulf

when it advised Gulf of its intent to award on June 24, 1994.

57. Gulf's argument that the competitive bidding process was completed and

the award became final when ANF withdrew its protest is without merit based on

Rule 60H-1.017. Because there had been no recommendation to the Department of

Management Services by District X, no evaluation of the proposals by the

Department of Management Services and no joint approval of the proposal by

District X and DMS, the competitive solicitation process has not ended.

58. In Department of Transportation v. Groves-Watkins, 530 So. 2d 912

(Fla. 1988), the Florida Supreme Court set forth the role of a hearing officer

in the review of an agency's decision to award or reject all bids.

Thus, although the APA provides the procedural

mechanism for challenging an agency's decision

to award or reject all bids, the scope of the

inquiry is limited to whether the purpose of

the competitive bidding has been subverted. In

short, the hearing officer's sole responsibility

is to ascertain whether the agency acted fraud-

ulently, arbitrarily, illegally, or dishonestly.

Id. at 914.

59. In Liberty County v. Baxter's Asphalt and Concrete, 421 So. 2d 505,

507 (Fla. 1982), the court noted the strong judicial deference accorded an

agency's decision in competitive bidding situations:

[A] public body has wide discretion in soliciting

and accepting bids for public improvements and

its decision, when based on an honest exercise

of this discretion, will not be overturned by a

court even if it may appear erroneous and even if

reasonable persons may disagree.

60. Petitioner has failed to demonstrate that HRS acted fraudulently,

arbitrarily, illegally, or dishonestly when it advised Gulf that it was

rejecting all bids.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a final order be entered dismissing Gulf's bid protest and

rejecting all bids for lease number 580:2490.

DONE AND ENTERED this 15th day of August, 1995, in Tallahassee, Leon

County, Florida.

___________________________________

SUSAN B. KIRKLAND

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 15th day of August, 1995.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-5628BID

To comply with the requirements of Section 120.59(2), Florida Statutes

(1993), the following rulings are made on the parties' proposed findings of

fact:

Petitioner's Proposed Findings of Fact.

1. Paragraph 1: Accepted in substance.

2. Paragraphs 2-5: Rejected as unnecessary detail.

3. Paragraph 6: Accepted in substance.

4. Paragraph 7: Rejected as unnecessary detail.

5. Paragraph 8: Accepted in substance.

6. Paragraph 9: Rejected as unnecessary detail.

7. Paragraphs 10-15: Accepted in substance.

8. Paragraphs 16-17: Rejected as unnecessary detail.

9. Paragraph 18: Accepted in substance.

10. Paragraph 19: The portion of the paragraph stating

that Gulf has maintained control of the subject

property since the time of initial option is rejected

as not supported by the greater weight of the evidence.

The remainder of the paragraph is accepted in

substance.

11. Paragraphs 20-21: Accepted in substance.

12. Paragraph 22: The first sentence is rejected as

unnecessary detail. The second sentence is accepted in

substance.

13. Paragraphs 23-25: Accepted in substance.

14. Paragraph 26: The portion of the sentence which states

the ITB required that the award letter be issued within

30 days is rejected as not supported by the greater

weight of the evidence. The remainder is accepted in

substance.

15. Paragraph 27: Rejected as immaterial.

16. Paragraph 28: Accepted in substance.

17. Paragraph 29: Rejected as immaterial.

18. Paragraphs 30-31: Accepted in substance.

19. Paragraphs 32-33: Rejected as immaterial.

20. Paragraph 34: The portion that states the notice of

withdrawal was filed on August 26 is accepted. The

remainder is rejected as unnecessary detail.

21. Paragraph 35: Accepted in substance.

22. Paragraph 36: Accepted in substance to the extent that

the manual refers to Rule 60H-1.017 F.A.C. for the

procedures for turnkey leases.

23. Paragraph 37: Rejected as immaterial.

24. Paragraph 38: Accepted in substance to the extent that

he did follow the manual but not to the extent that the

manual set forth the procedures for procuring a turnkey

lease.

25. Paragraph 39: Rejected as not supported by the greater

weight of the evidence and as contrary to law.

26. Paragraphs 40-41: Rejected as unnecessary.

27 Paragraph 42: Accepted in substance.

28. Paragraphs 43-44: Rejected as unnecessary.

25. Paragraph 45: Accepted in substance.

26. Paragraphs 46-47: Rejected as unnecessary detail.

27. Paragraph 48: Accepted in substance.

28. Paragraph 49: Rejected to the extent that the only

government entity interested in providing space was

Broward General.

29. Paragraphs 50-51: Rejected as unnecessary.

30. Paragraphs 52: Rejected as subordinate to the facts

found.

31. Paragraphs 53-59: Accepted in substance.

32. Paragraphs 60-68: Rejected as irrelevant.

33. Paragraph 69: Rejected as not supported by the greater

weight of the evidence.

34. Paragraphs 70-71: Accepted in substance.

35. Paragraphs 72: Rejected as irrelevant as to whether

she was qualified as an expert.

36. Paragraph 73: Rejected as unnecessary detail.

37. Paragraph 74: Accepted in substance.

38. Paragraphs 75-81: Rejected as subordinate to the facts

found.

39. Paragraph 82: The first half of the sentence is

rejected as unnecessary detail. The remainder of the

sentence is accepted in substance.

40. Paragraphs 83-90: Rejected as subordinate to the facts

found.

41. Paragraph 91: Rejected as constituting argument.

42. Paragraphs 92-96: Rejected as subordinate to the facts

found.

43. Paragraph 97: Accepted as that has been the practice

of HRS but rejected to the extent that it reflects what

is required by Rule 60H-1.017.

44. Paragraph 98: Rejected as not supported by the greater

weight of the evidence and by the law.

45. Paragraph 99: Rejected to the extent that it implies

that DMS approval only means that the lease is

effective for payment. Approval by DMS is required for

a turnkey lease before the lease can be executed by the

parties.

46. Paragraph 100: Accepted to the extent that it means

that DMS has not evaluated and given approval of the

award.

Supplement to Proposed Recommended Order

1. Paragraphs 1-2: Rejected as unnecessary.

2. Paragraph 3: Accepted in substance.

3. Paragraph 4: Accepted in substance to the extent that

HRS had the authority if it followed the procedures

under 60H-1.017, and to the extent that the leases were

eventually approved by DMS, HRS's premature notices of

award were ratified.

4. Paragraph 5: Accepted to the extent that it applies to

the time periods before HRS issued a notice of award.

5. Paragraph 6: Accepted in substance.

6. Paragraphs 7-8: Rejected as unnecessary.

7. Paragraph 9: The first sentence is accepted in

substance as it pertains prior to HRS issuing a notice

of award. It is clear that DMS did do some evaluation

of the proposed awardee's proposal prior to DMS

approving the lease. The second sentence is accepted in

substance as to what actually happened but rejected as

to what was stated in Rule 10-8.007 and HRS's

interpretation as set forth in its leasing manual.

8. Paragraphs 10-12: Accepted in substance.

9. Paragraph 13: Accepted in substance to the extent that

it refers to the time prior to an agency issuing a

notice of intended award.

10. Paragraphs 14-15: Accepted in substance.

11. Paragraph 16: Accepted in substance to the extent that

the procedures were consistent but that the procedures

repudiated the procedures set forth in DMS's duly

promulgated Rule 60H-1.017.

12. Paragraph 17: Accepted in substance.

13. Paragraph 18: Rejected as constituting a conclusion of law.

14. Paragraph 19: Rejected as not supported by the greater

weight of the evidence.

15. Paragraph 20: Rejected as constituting a conclusion of law.

16. Paragraph 21: Accepted to the extent that the District

Administrator has authority to award when the

appropriate rules have been followed.

17. Paragraphs 22-23: Accepted in substance.

18. Paragraph 24: Irrelevant since her current duties do

not include procurement of turnkey leases and in the

past she did not participate in the procurement of a

turnkey lease.

19. Paragraph 25: Accepted in substance.

Respondent's Proposed Findings of Fact.

1. Paragraphs 1-4: Accepted in substance.

2. Paragraph 5: The first sentence is accepted in

substance. The remainder is rejected as unnecessary detail.

3. Paragraphs 6-9: Accepted in substance.

4. Paragraphs 10-11: Rejected as subordinate to the facts

found.

5. Paragraph 12: The paragraph is accepted in substance as

it relates to state-owned facilities but not as it

relates to other governmental facilities.

6. Paragraphs 13-14: Accepted in substance.

7. Paragraph 15: Rejected as unnecessary detail.

8. Paragraphs 16-17: Rejected as immaterial to the facts

actually found.

9. Paragraphs 18-19: Rejected as unnecessary detail.

10. Paragraphs 20-51: Accepted in substance.

12. Paragraph 52: Rejected to the extent that it implies

that for this particular case it was the sole

responsibility of District X to evaluate the proposals.

13. Paragraphs 53: Rejected as unnecessary detail.

14. Paragraphs 54-55: Accepted in substance.

15. Paragraph 56: Rejected as immaterial.

16. Paragraph 57: Accepted in substance.

17. Paragraphs 58-59: Rejected as immaterial.

18. Paragraph 60: Accepted in substance.

19. Paragraph 61: Accepted in substance except as to the

statement the pressure was passed on, which is rejected

as not supported by competent substantial evidence.

20. Paragraphs 62-66: Accepted in substance.

21. Paragraph 67: Accepted in substance except as to the

date. The notice was faxed to the District on August 26

and a hard copy was submitted on August 29.

22. Paragraph 68: Rejected as not supported by the evidence.

23 Paragraph 69: Accepted in substance.

24. Paragraph 70: Rejected as unnecessary.

25. Paragraph 71: Accepted in substance.

26. Paragraph 72: Rejected as constituting a conclusion of law.

27. Paragraph 73: Rejected as unnecessary.

Supplemental Proposed Findings of Fact

1. Paragraphs 1-2: Accepted in substance.

2. Paragraph 3: Accepted in substance to the extent that

the evaluation by DMS and the user agency is not done

simultaneously.

3. Paragraphs 4-9: Accepted in substance.

4. Paragraph 10: Accepted to the extent that in actual

practice DMS assists when requested by the user agency

prior to the issuance of the notice of award.

5. Paragraphs 11-19: Accepted in substance.

COPIES FURNISHED:

Kim Tendrich, Esquire

District 10 Legal Counsel

Department of Health and

Rehabilitative Services

201 West Broward Boulevard

Suite 513

Fort Lauderdale, Florida 33301

William A. Frieder, Esquire

Assistant General Counsel

Building E, Suite 200

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Wilbur E. Brewton, Esquire

I. Ed Pantaleon, Esquire

Taylor, Brion, Buker & Greene

225 South Adams, Suite 250

Tallahassee, Florida 32301

Robert L. Powell, Agency Clerk

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Kim Tucker

General Counsel

Department of Health and

Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended

order. All agencies allow each party at least ten days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this recommended order. Any exceptions to this recommended order should be

filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

GULF REAL PROPERTIES, INC.,

Petitioner,

vs. CASE NO. 94-5628BID

RENDITION NO. 96-017-FOF-BID

DEPARTMENT OF HEALTH

AND REHABILITATIVE SERVICES

Respondent.

______________________________/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency

order. The hearing officer assigned by the Division of Administrative Hearings

(DOAH) in the above- styled case submitted a Recommended Order to the Department

of Health and Rehabilitative Services (HRS). A copy of the Recommended Order of

Hearing Officer Susan B. Kirkland, dated August 15, 1995, is attached hereto and

incorporated.

RULINGS ON EXCEPTION

Petitioner Gulf Real Properties' (hereinafter "Gulf" or "Petitioner") first

exception is that finding of fact 33 should have found that a larger number of

Children's Medical Service's ("CMS") patients were located closer to the Gulf

location than to the Broward General Medical Center ("BGMC") location. The

exception is denied. Finding 33 that "[a] larger number of CMS' clients are

located near the hospital" is a permissible finding based on the evidence. Dr.

Letterman's testimony is consistent with the hearing officer's finding.

Petitioner also takes exception to the finding in paragraph 33 of the

Recommended Order that co-location would allow the sharing of certain areas,

thus reducing the space required for the CMS program. Petitioner characterizes

Dr. Letterman's testimony as "merely speculative" and as "absolute speculation".

However, the transcript of the hearing shows specific testimony by Dr. Letterman

regarding the numerous benefits of the proposed co-location. Finding 33 is

permissible, based upon competent substantial evidence in the record. The

exception is denied.

Petitioner's second exception is to the finding in paragraph 35 of the

Recommended Order that co-location would result in record sharing in the CMS

program. Petitioner asserts that this finding is mere speculation and, as such,

is not competent substantial evidence. The transcript of the hearing shows that

Dr. Letterman testified that location of the CMS program at Broward General

would simplify records. There is competent substantial evidence in the record

to support the hearing officer's finding. The exception is denied.

For its third exception, Petitioner asserts that as finding 36 states, Dr.

Letterman did testify that she was concerned about the lack of an emergency room

near the Petitioner's location. However, Petitioner adds that the hearing

officer should also have found that Dr. Letterman, as an evaluator, rated the

Petitioner's location a 9 out of a possible 10 points for location and that

Petitioner received the highest rating in the evaluation process. The weighing

of the evidence is reserved exclusively for the trier of fact. The exception is

denied.

Petitioner's fourth exception is that finding of fact 42 is not supported

by the evidence. The Hearing Officer found that the HRS Manual, Facilities

Acquisition and Management, Procuring Leased Space provides that in the

procurement of turnkey leases, the District should refer to Rule 60H-1.017,

F.A.C., and the Department of Management Services' (DMS) Real Property Lease

Manual, and should consult with Respondent's Office of General Services.

Specifically, Petitioner argues that the HRS Manual has not been promulgated as

a rule and that the District is only "directed" to refer to Rule 60H-1.01,

F.A.C., "for preliminary informational purposes only". In citing Appendix G of

the HRS Manual in support of its argument, Petitioner refers to the statement

"Preliminary information can be found in Section 60H-1.01, F.A.C., and in the

Department of Management Services' Real Property Lease Manual". Petitioner

failed to provide any legal authority to support its argument that this

statement in any way limits or restricts Respondent to referring to Section 60H-

1.01, F.A.C., for the sole purpose of obtaining preliminary information. On the

contrary, there is competent substantial evidence to support the hearing

officer's findings of fact that in the procurement of turnkey leases, the

District must comply with all the requirements of Rule 60H-1.01, F.A.C., and

DMS' Real Property Lease Manual. The exception is denied.

Petitioner's fifth exception is to finding of fact 44 in the Recommended

Order. In finding 44, the Recommended Order provides, "Although Rules 60H-1.01

and 10.8.00 [sic] are still in existence, HRS has been following the procedures

set forth in Rule 60H-1.1015 at least since 1983". Petitioner argues that,

regardless of the requirements of Rules 60H-1.01 and 10-8.00, F.A.C.,

Respondent's past practice has been to first issue a Notice of Award and to then

seek "joint approval" between HRS and DMS for a turnkey lease. Petitioner

argues that, contrary to the hearing officer's reference to the above-listed

rules, the evidence shows that "joint approval" by HRS and DMS occurs in the

initial stages when HRS requests and DMS approves the decision to seek

competitive bids for a turnkey lease and that this initial "joint approval" is

the only joint approval required by statute or rule. Such an argument is

contradictory to the clear language of Rule 60H- 1.01, F.A.C., which provides

that the agency must submit a project review package to DMS and the review

package must contain specific documents, including proof of advertisement, a

list of the responses to the advertisement, and the User Agency's recommendation

with justification. These documents would not be available for inclusion in the

package in the initial stage suggested by Petitioner. In regard to the project

review package, Rule 6OH-1.017, F.A.C., provides:

The Division of Facilities Management will

review the project, if it concurs with the

User Agency's recommendation it will give

approval and return to the User Agency for

execution. The User Agency and the

Department of Management Services must be in

joint [agreement] on the proposal [before

approval is granted]. [emphasis added]

Petitioner also argues in regard to finding of fact number 44 that the

record evidence does not support the hearing officer's determination that HRS

interprets the procedures set forth in Rule 10-8.007, F.A.C., to be identical to

the procedures set forth in DMS's Rule 60H-1.017, F.A.C., or as requiring "joint

approval" between HRS and DMS of an award of a bid for a turnkey lease, and

Petitioner states it "demonstrates that the agency's interpretation, based on

its past practices, is that joint approval of the award of a bid is not

required". Any interpretation of Rule 10-8.007, F.A.C., which would directly

conflict with the provisions of Rule 60H-1.017, F.A.C., would be erroneous. In

addition, Respondent is statutorily prohibited from promulgating a rule which

would be contrary to the clear requirements of Rule 60H-1.017, F.A.C.

Respondent's authority to promulgate a rule (Rule 10-8.007, F.A.C.) is provided

in s. 255.25(2)(c), F. S., which clearly states:

Each state agency shall develop procedures

and adopt rules to ensure that the leasing

practices of the agency are in [substantial

compliance] with the rules adopted pursuant

to this section as ss. 255.249, 255.2502,

and 255.2503. [emphasis added]

There is substantial competent evidence in the record to support the hearing

officer's findings of fact, and the exception is denied.

Exception number six filed by Petitioner is that the hearing officer failed

to find as a fact that Respondent did not obtain DMS approval to reject all bids

in order to negotiate with BGMC. The weighing of the evidence is the sole

responsibility of the hearing officer. The agency head may not make findings of

fact in the Final Order. The exception stating that certain facts were not

found is denied. Petitioner also did not provide to the undersigned, along with

its exceptions, a copy of proposed findings of fact to be reviewed prior to the

entry of this Final Order to assure that explicit rulings have been made by the

hearing officer on proposed findings of fact where required. Presumably,

Petitioner is not alleging the lack of explicit rulings on its proposed findings

of fact.

In its seventh exception, Petitioner argues that the hearing officer failed

to consider and completely ignored Petitioner's argument that upon the Notice of

Award of the bid by Respondent, there existed a binding contract. In support of

his argument, Petitioner cites to the holding in Carl M. Napolitano v.

Department of Health and Rehabilitative Services, 12 FALR 409 (1990). This case

is distinguishable from Napolitano, however, because in the latter case the

requirements of the applicable statutes and rules, which mandate that certain

procedures occur prior to the issuance of a Notice of Award, were properly

followed and, therefore, it was determined that a contract existed. In the

instant case, however, the requirement of Rule 60H-1.017, F.A.C., which mandates

joint agreement between DMS and HRS before approval is granted and only after

DMS reviews the project review package which must be submitted by HRS, had not

yet been met. As Respondent rejected all bids on August 31, 1994, this case

never reached the point of the mandatory DMS review. Therefore, the Notice of

Award which was issued in this case was not issued pursuant to the requirements

of Rule 60H-1.017, F.A.C., and is clearly distinguishable from Napolitano.

In its eighth and final exception, Petitioner alleges that finding of fact

number 46 overlooks and fails to consider that Respondent's right to reject all

bids is limited by the Invitation to Bid which Petitioner states was relied on

by Respondent in its August 31, 1994, letter and that no authority exists to

"reject" a Notice of Award, which became final before the purported rejection of

all bids. The evidence does not support Petitioner's argument that Respondent

relied solely on the Invitation to Bid in rejecting all bids. On the contrary,

the August 31, 1994, letter clearly states that Respondent rejected all bids

"pursuant to Section 255.25, Florida Statutes; Chapter 10-13, F.A.C., and the

provisions of the Invitation to Bid, Lease No. 590:2490". In addition, the

provisions of s. 255.25, F. S., Rule 60H-1.017, F.A.C., and Rule 10-8.007.

F.A.C., do not support Petitioner's argument that the Notice of Award became

"final". The exception is denied.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of

fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The Department hereby adopts and incorporates by reference the conclusions

of law set forth in the Recommended Order.

Based upon the foregoing, it is

ADJUDGED, that the bid protest of Petitioner Gulf Properties, Inc., be and

the same is hereby DISMISSED.

DONE and ORDERED this 26th day of January,1996 at Tallahassee, Leon County,

Florida.

EDWARD A. FEAVER, Secretary

Department of Health and

Rehabilitative Services

By:___________________________

Lowell Clary

Assistant Secretary for

Administration

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL

REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH

THE AGENCY CLERK OF HRS, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED

BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE

AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS

SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE

OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

COPIES FURNISHED:

Susan B. Kirkland, Hearing Officer

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Fl. 32399-1550

Wilbur E. Brewton, Esquire

& I. Ed Pantaleon, Esquire

Taylor, Brion, Buker & Greene

225 South Mams St. Ste. 250

Tallahassee, Fl. 32301

Kimberley Tendrich, Esquire

Department of Health and

Rehabilitative Services

201 W. Broward Blvd.

Ft. Lauderdale Fl. 33301

William Frieder, Esquire

Department of Health and

Rehabilitative Services

1323 Winewood Blvd.

Tallahassee, Fl. 32300-0700

=================================================================

DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL

FIRST DISTRICT, STATE OF FLORIDA

GULF REAL PROPERTIES, INC., NOT FINAL UNTIL TIME EXPIRES TO

FILE MOTION FOR REHEARING AND

DISPOSITION THEREOF IF FILED.

Appellant,

CASE NO. 96-471

vs. DOAH CASE NO. 94-5628BID

DEPARTMENT OF HEALTH AND

REHABILITATIVE SERVICES, an

agency of the State of

Florida,

Appellee.

______________________________/

Opinion filed February 4, 1997.

An appeal from an order of the Department of Health and Rehabilitative Services.

Wilbur E. Brewton and Kelly Brewton Plante of Gray, Harris & Robinson, P.A.,

Tallahassee, for Appellant.

William A. Frieder, Assistant General Counsel for the Department of Health and

Rehabilitative Services, Tallahassee, for Appellee.

BENTON, J.

Gulf Real Properties, Inc. (Gulf) asks us to overturn a final order entered

by the former Department of Health and Rehabilitative Services (HRS) which had

the effect of rejecting all bids HRS received in response to an invitation to

bid. We affirm.

HRS needed space to house a clinic run by Children's Medical Services, then

an HRS program. In response to an invitation for bids to furnish a "turnkey"

facility in Broward County that HRS could lease with an option to purchase, Gulf

submitted one and ANF Real Estate Group, Inc. (ANF) submitted two bids. The

invitation to bid stated: "The department reserves the right to reject any and

all bids when such rejection is in the interest of the State of Florida."

(Underlined in the original.)

On June 24, 1994, HRS notified both Gulf and ANF that "authorization ha[d]

been granted to award subject lease to" Gulfeating this letter as notice of

the agency's intended decision, ANF filed first a timely notice of protest, then

a timely formal written protest, alleging that Gulf's bid was not responsive.

While the protest was pending, agency personnel reconsidered the merits of

locating the clinic on the campus of Broward General Hospital, particularly in

light of section 255.25(4)(b), Florida Statutes (1995), which provides: "State

agencies shall cooperate with local governmental units by using suitable,

existing publicly owned facilities . . . ." The North Broward Hospital District,

which owns and operates Broward General Hospital, is a local governmental unit.

On August 26, 1994, ANF filed a notice of withdrawal of formal written

protest which requested "[t]hat this proceeding be closed." On August 31, 1994,

HRS wrote Gulf "the Agency is exercising its right to reject all bids . . .

[because] suitable space has been made available by governmental entities with

which HRS is obligated by statute to cooperate." The letter also advised Gulf

that it could request an administrative hearing.

Gulf did request a hearing, and the matter was referred to the Division of

Administrative Hearings. On the basis of an administrative rule promulgated by

the Department of Management Services (and since amended), the recommended order

concluded that "District X had no authority to award a lease to Gulf when it

advised Gulf of its intent to award," and recommended--on that and other

grounds--entry of an order "dismissing Gulf's bid protest" and rejecting all

bids. HRS's final order, which we now review, overruled exceptions taken by

Gulf, and followed the recommendation to dismiss Gulf's "bid protest" or

petition for administrative hearing.

Acceptance of a bid solicited under the Administrative Procedure Act

differs from acceptance by local governmental bodies. Gulf's reliance on cases

like City of Homestead v. Raney Construction, Inc., 357 So.2d 749 (Fla. 3d DCA

1978), Berry v. Okaloosa County, 334 So.2d 349 (Fla. 1st DCA 1976), and Dedmond

v. Escambia County, 244 So.2d 758 (Fla. 1st DCA 1971) is therefore misplaced.

The invitation to bid provided that "5120.53(5), Florida Statutes" would govern

protest procedures. Like section 120.57(3), Florida Statutes (Supp. 1996),

which has now replaced it, section 120.53(5)(c), Florida Statutes (1995),

provided:

Upon receipt of the formal written protest

which has been timely filed the agency shall

stop the bid solicitation process or the

contract award process [until the subject of

the protest is resolved by final agency

action], unless the agency head sets forth in

writing particular facts and circumstances

which require the continuance of the bid

solicitation process or the contract award

process without delay in order to avoid an

immediate and serious danger to the public

health, safety, or welfare.

s 120.53(5)(c), Fla. Stat. (1995) [emphasis supplied]. Once ANF filed its

formal protest, the bid solicitation and contract award process stopped.

Cianbro Corp. v. Jacksonville Trans. Auth., 473 So.2d 209 (Fla. 1st DCA 1985).

Even though ANF subsequently withdrew its protest the requisite final agency

action only occurred when HRS entered the final order, in the wake of the formal

administrative hearing Gulf requested. No contract between HRS and Gulf ever

came into existence.

Our decision does not turn on a construction of the administrative rule the

Department of Management Services has now amended. We affirm because an

agency's rejection of all bids must stand, absent a showing that the "purpose or

effect of the rejection is to defeat the object and integrity of competitive

bidding." Department of Transp. v. Groves-Watkins Constructors, 530 So.2d 912,

913 (Fla. 1988). A disappointed bidder seeking to overturn an agency's decision

to reject all bids must show that "the agency acted fraudulently, arbitrarily,

illegally, or dishonestly." Id. at 914. Appellant did not meet this burden

here.

Affirmed.

ERVIN and KAHN, JJ., CONCUR.