96-001335F Mid America Governmental Group vs. Daytona Beach Community College Status: Closed DOAH Final Order on Friday, October 18, 1996.

Summary: Petitioner not prevailing small business party after respondent rejected all Bids; Respondent substantially justified; Petition denied.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MID AMERICA GOVERNMENTAL GROUP, )

)

Petitioner, )

)

vs. ) CASE NO. 96-1335F

)

DAYTONA BEACH COMMUNITY COLLEGE, )

)

Respondent. )

___________________________________)

FINAL ORDER

On July 30, 1996, a formal administrative hearing was held via video

teleconference to Orlando, Florida before Administrative Law Judge, Daniel M.

Kilbride, Division of Administrative Hearings.

APPEARANCES

For Petitioner: John L. Wendel, Esquire

Post Office Box 5378

Lakeland, Florida 33807

For Respondent: Judson I. Woods, Jr., Esquire

Post Office Drawer 9670

Daytona Beach, Florida 32120

STATEMENT OF THE ISSUE

Whether Petitioner is a prevailing small business party entitled to

attorney's fees pursuant to Section 57.111, Florida Statutes, and Rule 60Q-

2.035, Florida Administrative Code, in connection with the bid protest

proceeding styled Mid-America Governmental Group, Inc. v. Daytona Beach

Community College, Division of Administrative Hearings Case Number 95-4043BID.

PRELIMINARY STATEMENT

Petitioner requested that the Administrative Law Judge take official notice

of all of the depositions, pleadings and exhibits in Case Number 95-4043BID and

the Prehearing Stipulation. Petitioner offered one exhibit in evidence, the

contract of employment regarding the Petitioner and the law office of Wendel,

Chritton and Parks, dated August 15, 1995.

Respondent presented the testimony of Dr. Charles Mojock, Vice President of

Administration, Daytona Beach Community College. Respondent also requested all

of the exhibits in Case No. 95-4043BID be considered by the Judge.

A transcript of the proceeding was filed on August 12, 1996. The parties

requested additional time in which to file Proposed Findings of Fact and

Conclusions of Law. Petitioner filed its proposals and argument on September 3,

1996, Respondent filed its proposals on August 30, 1996. On September 11, 1996,

Petitioner filed an Objection to Post-Hearing Procedure and Respondent filed its

Response on September 13, 1996.

Petitioner's Objection to Post-Hearing Procedure is DENIED. Petitioner's

reliance on Hanson v. Hanson, ___ So.2d ___, 21 FLW D1939 (Fla. 5th DCA, August

30, 1996) is misplaced. Post-hearing procedure in administrative hearings is

controlled by the Subsections 120.57(1)(b)4. and (1)(b)6.e, Florida Statutes

(1995) [Subsections 120.57(1)(b) and (1)(f)5. as amended by the 1996 Session]

and pursuant to Rules 28-5.402 and 60Q-2.031, Florida Administrative Code.

Based on the stipulations and the evidence, the following finding of facts

are determined:

FINDINGS OF FACT

1. Petitioner is a "small business party" within the meaning of Section

57.111(3)(d)1.b., Florida Statutes (1995).

2. In April 1995, the Respondent prepared and circulated a Request for

Proposal, RFP 96-001, Alternative Social Security Plan.

3. The RFP was sent to various companies thought to be qualified by

Respondent to submit responses to the RFP.

4. The purpose of the RFP was to solicit competitive proposals from

qualified companies to provide an alternative plan to the Federal Social

Security Program for part time and temporary employees of the college subject to

Internal Revenue Code, Section 3121(b)(7)(f).

5. The RFP specifically provided that:

Scope - The plan selected must be a govern-

mental plan whose contributions are tax

qualified under the Internal Revenue Code

and can be made on both a mandatory and pre-

tax basis. The organization selected must

demonstrate that the proposed plan has been

implemented by an employer and obtained a

favorable determination letter(s) from the

Internal Revenue Service as a governmental

plan under section 414(d) and 3121(b)(7)(F)

of the code. Any contracts will be cont-

ingent upon Daytona Beach Community College

(and each other cooperating Institution)

receiving a favorable determination letter

from their IRS key district office.

The plan selected will be trusteed and

provide complete administration, marketing,

employee enrollment and communication,

investment management, plan compliance and

record keeping.

6. The RFP also contained the following paragraph:

1.5 PROPOSAL ACCEPTANCE/REJECTION

The College reserves the right to accept or

reject any or all proposals received as a

result of this RFP, or to negotiate

separately with competing proposers, and to

waive any informalities, defects or

irregularities in any proposal, which in the

judgment of the proper College officials, is

in the best interest of the College. This

RFP does not commit the college to award a

contract, nor shall the College be respons-

ible for any cost or expense incurred by

the Proposer in preparing or submitting a

proposal, or any cost incurred prior to the

execution of a contract agreement.

7. On April 25, 1995, the Respondent held a pre-proposal conference to

discuss the RFP which was attended by representatives of Petitioner Mid-America

as well as other interested parties. There were no questions or protests about

the terms and conditions of RFP 96-001. Neither the IRS favorable determination

letter specified under "Scope" on page 1 of the RFP, nor the Respondent's right

to reject any and all proposals, specified under 1.5 of the RFP, were

challenged.

8. Petitioner did not file a protest of Respondent's specifications in a

timely fashion as required by Section 120.53(5), Florida Statutes, referenced

under Section 1.4 of the RFP.

9. Upon receipt of the proposals from Mid-America and Poe and Brown, the

Respondent convened an evaluation committee composed of Dr. Charles Mojock, Vice

President of Administration of the Respondent; Clare Birkenmeyer, Director of

personnel of the Respondent and Yvonne Horner of Florida Community College of

Jacksonville, who was also in personnel. The purpose of the evaluation

committee was to select the best proposal to the Respondent's RFP.

10. On the scoring matrix, the committee noted that Poe and Brown, Inc.

"has fav. determin. letter." The letter actually tendered was not a

determination letter, but a volume submitter letter. The volume submitter

letter states that it "does not constitute reliance for an employer adopting the

approved plan. To obtain reliance, an adopting employer must apply to the key

district office for a favorable determination letter and must individually amend

its plan to remain in compliance."

11. Petitioner, in its response to the RFP, stated that it will obtain a

favorable determination letter upon the award of the bid.

12. A favorable determination letter may only be obtained upon adoption of

a plan and submittal of it to the Internal Revenue Service for review and

approval.

13. The members of the evaluation committee lacked detailed understanding

of the nuances of the IRS determination letter and did not know that a favorable

determination letter could not be obtained until after a plan had been adopted.

This caused a mistake which resulted in an "over award" in Poe and Brown's favor

of a maximum of 11.67 points (the difference between Mid-America's 8.33 points

and Poe and Brown's 20 points in the category "Plan Design"). The total point

difference was 81.67 minus 68.30 = 13.37 points. Poe and Brown was still the

highest rated proposal with a score of 70 to 68.33 for Mid-America.

14. On June 15, 1995, a presentation was made regarding RFP 96-001 by Dr.

Mojock to the Daytona Beach Community College Board of Trustees. It was

explained while both Mid-America and Poe and Brown could offer a 401(a) plan,

the Poe and Brown 401(a) plan had been implemented by five school boards,

whereas Mid-America did not have any 401(a) plans in place and only one

Alternative Social Security 403(b) Plan in place.

15. At the June 15th board meeting, the concerns primarily centered on the

"Investment" criteria. The return on investment for participants was the

biggest concern of the Board of Trustees.

16. The Mid-America formal written protest did not contest the evaluation

committee's scoring on the "Investment" criteria.

17. At the June 15, 1995 board meeting, the Board authorized the board

attorney and the president of the community college to draw up a contract with

Poe and Brown.

18. Before the contract with Poe and Brown could be formalized, Mid-

America filed its bid protest.

19. Respondent initiated the bid protest proceeding within the meaning of

the law by advising Mid-America that it could contest the decision to award the

contract.

20. On October 19, 1995, the Committee recommended to the Board that it

reject all bid proposals because: (1) the Board was unable to resolve the

Board's question concerning the rate of return on investments that participants

would receive under the plan proposed by Poe and Brown since the Respondent

could not communicate with Poe and Brown because of the bid protest; (2) other

providers had developed the 3121 alternate social security plan between April 9,

1995, when the Respondent requested proposals and October, 1995 when the

decision to reject all bids was made, and (3) the Board of Trustees had just

approved a contract for a new administrative computing system for the Respondent

and it was not known at that time whether the new system could accommodate the

alternate social security implementation as delivered or whether the Respondent

would need additional customization which would take additional time.

21. At the Daytona Beach Community College Board of Trustees' meeting on

October 19, 1995, the Board voted unanimously to reject all bids regarding RFP

96-001.

22. The services rendered for attorney's fees and costs incurred by

counsel for Petitioner were reasonable and necessary and the fees and costs

incurred exceeded the statutory limit of $15,000.

23. The Respondent's initial decision to award the bid to Poe and Brown

was substantially justified.

CONCLUSIONS OF LAW

24. The Division of Administrative Hearings has jurisdiction over the

subject matter of this proceeding, and the parties thereto, pursuant to

subsections 57.111(4)(b)1. and 120.57(1), Florida Statutes (1995).

25. The Florida Equal Access to Justice Act (FEAJA), Section 57.111,

Florida Statutes, provides in pertinent part:

(4)(a) Unless otherwise provided by law,

an award of attorney's fees and costs shall

be made to a prevailing small business party

in any adjudicatory proceeding or admin-

istrative proceeding pursuant to Chapter 120

initiated by a state agency, unless the

actions of the agency were substantially

justified or special circumstances exist

which would make the award unjust.

26. The FEAJA, enacted by the Florida Legislature in 1984, is patterned

after a federal law on the same subject - The Federal Equal Access to Justice

Act (the Federal Act), 5 U. S. C., Section 504 Enacted in 1981, the Federal

Act provides in pertinent part:

(a)(1) An agency that conducts an adversary

adjudication shall award, to a prevailing

party other than the United States, fees and

expenses incurred by that party in connection

with that proceeding, unless the adjudicative

officer of the agency finds that the position

of the agency was substantially justified or

that special circumstances make an award

unjust . . .

27. The federal and state statutes use similar language, and the

legislative history of the Florida Act shows that legislators were aware of the

federal prototype. Gentele v. Department of Professional Regulation, 9 FALR

311, (DOAH, June 20, 1986) citing Senate Staff Analysis and Economic Input

Statements CS/SB 438 (5-2-84); and the record of the 5-2-84 meeting of the

Senate Governmental Operations Committee, sponsor of the bill.

28. When, as in this case, a Florida statute is patterned after a federal

law on the same subject, it will take the same construction in the Florida

courts as its prototype has been given in federal courts insofar as such

construction is harmonious with the spirit and policy of Florida legislation on

the subject. Gentele v. Department of Professional Regulation, 513 So.2d 672,

673 (Fla. 1st DCA 1987).

I

29. Section 57.111, Florida Statutes, provides for an award of attorney's

fees from the state to a "small business party" under certain circumstances in

order to diminish the detrimental effect of seeking review of, or defending

against governmental action. This section states in part:

(3)(d) The term "small business party"

means:

1.b. A partnership or corporation,

including a professional practice, which

has its principal office in this state and

has at the time the action is initiated by

a state agency, not more than 25 full-time

employees or a net worth of not more than

$2 million . . .

30. In order to recover attorney's fees and costs under FEAJA, Petitioner

must establish that it is a corporation with its principal office in this state

and has not more than 25 full-time employees. The parties stipulated that

Petitioner is a small business party.

II

31. Since Petitioner qualifies as a small business party under the Florida

Equal Access to Justice Act, a state agency must have initiated some action

against a small business party.

32. Respondent is a state agency pursuant to Part III, Chapter 240,

Florida Statutes. See: ESP Security and Satellite Engineering, Inc. v.

University of Florida, DOAH Case No. 96-3753F (November 20, 1995).

33. Section 57.111(3)(b) provides as follows:

The term "initiated by a state agency" means

that the state agency: . . . (3) was

required by law or rule to advise a small

business party of a clear point of entry

after some recognizable event in the investi-

gatory or other free-form proceeding of the

agency.

34. In the instant case, after going through the bid proposal process, the

Petitioner requested a review of the Respondent's decision to award a contract

to provide an alternate social security plan for temporary employees to Poe &

Brown rather than the Petitioner. The recognizable event in the Respondent's

proceeding was the Respondent's decision to award a contract to Poe & Brown,

another insurance carrier, and the Respondent was required by law to advise

Petitioner of a clear point of entry into the adjudicatory process.

35. The Legislature intended that awards available under the Act (Section

57.111) apply both when a small business party is defending itself against

actions by the agency and when it is seeking review of some free-form agency

action, such as the bid award process. See generally: Home Health Care of Bay

County v. Department of Health and Rehabilitative Services, 10 FALR 5167 (1988);

Miller v. Department of Health and Rehabilitative Services, 10 FALR 5160 (1987).

In Union Trucking, Inc. v. Department of Transportation, 10 FALR 6039 (1988), a

denial of Petitioner's request for certification as a minority business

enterprise was sufficient to be considered agency initiated action.

36. An agency action in the form of awarding a bid is sufficient to

constitute agency-initiated action for the purposes of recovering attorney's

fees and costs. The Petitioner's request for a review of the agency's action

when it did not award it the contract to provide an alternate social security

plan is among the protected class of review that the Legislature has

specifically set forth. Therefore, the challenge to the bid award can be

considered action "initiated by a state agency." ESP Security and Satellite

Engineering, Inc. v. University of Florida, supra.

III

37. Section 57.111(3)(e) of the Act states: A proceeding is

"substantially justified" if it had a reasonable basis in law and fact at the

time it was initiated by a state agency. It is instructive to look to the

decisions of federal courts which have construed the meaning of the language of

the Federal Act. Structured Shelters Financial Management Inc. v. Department of

Banking, 10 FALR 389, (DOAH 1987); Gentele v. Department of Professional

Regulation, Board of Optometry, 513 So.2d 572 (Fla. 1st DCA 1987); Department of

Professional Regulation, Division of Real Estate v. Toledo Realty, Inc., 549

So.2d 715 (Fla. 2d DCA 1989).

38. In discussing the meaning of the term "substantially justified," the

court in Ashburn v. U. S., 740 F.2d 843 (11th Cir. 1984), said:

The government bears the burden of showing

that its position was substantially

justified. (citation omitted) The standard

is one of reasonableness; the government

must show "that its case had a reasonable

basis both in law and fact." (citations

omitted)

39. Ashburn went on to say that the fact that the government lost its case

does not raise a presumption that the government's position was not

substantially justified. Neither is the government required to establish that

the decision to litigate was based on a substantial probability of prevailing.

White v. U. S., 740 F.2d 836 (11th Cir. 1984).

40. In this case, Respondent rejected all bids pursuant to the authority

contained in paragraph 1.5 of the RFP. The Board had the authority to do so at

any time prior to the signing of a contract. Although Petitioner alleged that

the board rejected all bids due to its efforts, the testimony was persuasive

that the bids were rejected on other grounds, as well. Therefore, Petitioner

was not a "prevailing small business party" as defined by the Act. Section

57.111(3)(e), Florida Statutes.

41. Further, the evaluation committee reviewed the bid submittals in good

faith. Although the committee's review was flawed, there was no evidence that

the committee's recommendation was arbitrary, illegal, fraudulent or dishonest.

See: Department of Transportation v. Groves-Watkins Construction, 530 So.2d 912

(Fla. 1988).

42. Therefore, when the Board followed the Committee's recommendation, it

had reason to believe that its selection was proper. Accordingly, at the time

the selection was made, the Respondent had a reasonable basis in both law and

fact for its selection and was, therefore, substantially justified when it made

the selection. Gentele v. Department of Professional Regulation, Board of

Optomtery, 513 So.2d 672, 673 (Fla. 1st DCA 1987).

CONCLUSION

For purposes of the Act, the Respondent initiated the action and Petitioner

is a "small business party" within the meaning of the Florida Equal Access to

Justice Act. In addition, the Respondent had a reasonable basis in both law and

fact for its selection and was substantially justified in its position.

Therefore, it is

ORDERED that the Petition for Attorney's Fees and Costs is DENIED.

DONE and ORDERED this 18th day of October, 1996, in Tallahassee, Florida.

___________________________________

DANIEL M. KILBRIDE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 18th day of October, 1996.

COPIES FURNISHED:

John L. Wendel, Esquire

Post Office Box 5378

Lakeland, Florida 33807

Judson I. Woods, Jr., Esquire

Post Office Drawer 9670

Daytona Beach, Florida 32120

Charles Lichtigman, President

Daytona Beach Community College

1030 West International Speedway Boulevard

Daytona Beach, Florida 32114

Dr. Charles Mojock

Vice President

Daytona Beach Community College

1200 West International Speedway Boulevard

Daytona Beach, Florida 32114

NOTICE OF RIGHT TO JUDICIAL REVIEW

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

REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE

GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE

COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE

DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING

FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR

WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY

RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE

ORDER TO BE REVIEWED.