98-001867BID Assessment Systems, Inc. vs. Department Of Business And Professional Regulation Status: Closed Recommended Order on Tuesday, July 14, 1998.

Summary: Bid award failed to follow propsed specifications. Consequently, protest sustained and recommended protester be awarded the bid.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ASSESSMENT SYSTEMS, INC., )

)

Petitioner, )

)

vs. ) Case No. 98-1867BID

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

)

Respondent, )

)

and )

)

PSYCHOLOGICAL SERVICES, INC., )

)

Intervenor. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings,

by its duly designated Administrative Law Judge, William J.

Kendrick, held a formal hearing in the above-styled case on

May 20 and 21, 1998, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Paul R. Ezatoff, Esquire

Katz, Kutter, Haigler, Alderman,

Bryant & Yon, P.A.

Highpoint Center, Suite 1200

106 East College Avenue

Tallahassee, Florida 32301

For Respondent: R. Beth Atchison, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

For Intervenor: Martha Harrell Chumbler, Esquire

Carlton, Fields, Ward, Emmanuel,

Smith & Cutler, P.A.

Post Office Drawer 190

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

At issue in this proceeding is whether the decision of

Respondent, Department of Business and Professional Regulation

(Department), to award the subject bid to Intervenor,

Psychological Services, Inc. (PSI), comported with the essential

requirements of law.

PRELIMINARY STATEMENT

This case arose as a result of a request for proposal (RFP)

issued by the Department for the provision of computer based

testing services.

Following the Department's review of the responses to the

RFP, it proposed to award the contract to PSI. Petitioner,

Assessment Systems, Inc. (ASI), as the second ranked bidder,

timely protested that decision, and charged, inter alia , that the

Department (in rating the vendors) improperly imposed a format

penalty against its proposal, which deprived it of the award.

The Department referred the matter to the Division of

Administrative Hearings for the assignment of an administrative

law judge to conduct a formal hearing pursuant to Section 120.57,

Florida Statutes. By order of April 27, 1998, PSI, as the

apparent successful bidder, was granted leave to intervene.

On May 18, 1998, consistent with a prehearing order rendered

April 23, 1998, the parties filed a prehearing stipulation. That

stipulation included, inter alia , certain factual stipulations,

which have been included in this recommended order.

At hearing, ASI called Jeannie Evans, Fae Hartsfield

Millichamp, Faye Mayberry, Connie Shivers, and Anne Pombrekas, as

witnesses, and its Exhibits 1 through 3, 4A, 4B, 5, 8 through 9,

10A through 10F, 11 through 17, 20, 21, and 31 were received into

evidence. The Department called Alex Girst, Mary Stimmel, Hans

Meyer, Edward Broyles, and Fae Hartsfield Mellichamp, as

witnesses, but offered no additional proof. PSI called Jeannie

Evans as a witness, but offered no additional proof.

The transcript of hearing was filed June 8, 1998, and the

parties were accorded ten days from that date to file proposed

recommended orders. The parties elected to file such proposals,

and they have been duly considered.

FINDINGS OF FACT

The bid process

1. On October 3, 1997, Respondent, Department of Business

and Professional Regulation (Department), issued a request for

proposal (RFP), proposal number RFP 97/98-002, for computer based

testing services for various professional examinations

administered by the Department. The RFP was amended December 18,

1997, by Addendum 1 to the RFP, and January 15, 1998, by

Addendum 2 to the RFP. Assessment Systems, Inc. (ASI),

Psychological Services, Inc. (PST), Computer Adaptive

Technologies, Inc. (CAT), and Sylvan Learning Systems, Inc.

(Sylvan), filed timely responses to the RFP.

2. Pertinent to this case, the RFP as amended (hereinafter

the "RFP"), provided that proposals be evaluated as follows:

VII. EVALUATION OF PROPOSALS

A. Evaluation of Proposals : The proposals

shall be evaluated using the evaluation

criteria in Appendix 6 by at least six (6)

individuals of whom one shall be designated

as the lead evaluator.

1. The evaluators shall be appointed

by the Department. The evaluators shall

attend an evaluator standardization

session conducted by the Department. The

purpose of the standardization session is

to discuss the evaluation process.

2. After the standardization session,

the proposals shall be evaluated by each

evaluator independently, except for the

criteria pertaining to the costs and the

Vendor's past performance. In awarding

points for each evaluation criterion, the

evaluators shall compare the materials

presented in the proposals pertaining to

that criterion and award points for each

proposal before moving on to another

criterion. Thus the evaluators shall use

a "comparative" evaluation process in

awarding points. Each evaluator will

submit his/her completed evaluations to

the lead evaluator.

3. The evaluation criteria under

"Vendor Qualifications - References"

shall be evaluated by two Department

employees who are not also serving as

proposal evaluators. A sample of at

least five (5) of the Vendor's

examination clients, during the past

three (3) years, shall be contacted by

telephone for evaluating the clients'

satisfaction with the Vendor's services.

If the Vendor had five or less

examination clients within the last three

(3) years, all clients shall be

interviewed. The areas to be covered in

the interview will be security,

timeliness, accuracy, responsiveness,

fiscal responsibility, and whether or not

the client would use the Vendor again.

If the Vendor had any examination

contracts with any state agencies within

the last three (3) years, these agencies

may be given preference in the selection

of clients to be interviewed. Based upon

the telephone interviews with the

Vendor's clients, the Department shall

award points for the Vendor for its past

performance.

4. The cost proposals will be opened

by the purchasing officer or designee,

who will calculate the points to be

awarded to each proposal. The proposal

with lowest cost per category shall be

awarded the maximum points per category.

Points will be awarded for all other

proposals as a proportion of the maximum

points. As the cost proposals increase,

the points awarded would decrease. For

example, if three (3) Vendors were to

submit bids of $10, $12, and $14 cost per

hour to provide basic services, the

Vendor who submitted a proposed cost of

$10 per hour would receive the maximum

points allowed for that category which is

44 points. The Vendor who submitted $12

per hour would receive a portion of the

maximum points which in this case would

be 36.7 points. The Vendor who submitted

$14 per hour would receive 31.4 points.

See formula below. (Please note that no

points will be awarded for the

contingency allowance category because it

is a set amount required by the RFP.)

(Lowest Vendor cost per

category)(Total points

available for category) = Points Awarded

(Vendor cost per category)

5. The results from the past

performance evaluation and the points

from the cost proposal worksheets will be

given to the lead evaluator only after

all other criteria have been evaluated.

The points awarded from the past

performance and cost proposal worksheets

shall be added to each evaluator's total

points for the proposal. The points

awarded to each Vendor will then be

averaged to arrive at the total points

for that Vendor. If applicable, CMBE

preference points will then be calculated

and added to each proposal's total. The

results will be combined into a report

showing the total points received by each

Vendor. The report will recommended that

the Vendor with the most points be

awarded the contract.

B. Evaluation Criteria : Proposals shall be

evaluated based on the criteria shown in

Appendix 6. Meeting the minimum

qualifications specified in the RFP does not

assure that the bidder will receive the

maximum number of points for any of the

evaluation criteria. The major evaluation

categories and weights are listed below:

1. Scope of services ......200 points (40%)

2. Documents required

a. Scope of Services Plan ....5 points (1%)

b. Proposed Schedule of

Activities ..............5 points (1%)

c. Plan of Assurances to Protect

Candidate Fees ............5 points (1%)

d. Electronic Data Processing

Capabilities ..............5 points (1%)

e. Security Procedures ......10 points (2%)

f. Ownership of Items ........5 points (1%)

g. Vendor qualifications ...90 points (18%)

h. Cost Proposal ..........175 points (35%)

TOTAL POINTS (excluding

CMBE preference points) ....500 points (100%)

3. CMBE preference points .....up to 15% of

total points awarded

(as shown above)

* * *

c. If a non-CMBE primary Vendor

subcontracts to one Certified Minority

Business Enterprise an amount equal to

20% of the contract value, the Department

will add points equal to 10% of the total

points awarded to the primary Vendor

provided that the Vendor also submits a

CMBE Subcontract Plan (Section VI,

paragraph P).

3. The Department appointed six employees to serve as

proposal evaluators, to-wit: Fae Hartsfield (now Fae Hartsfield

Mellichamp), Hans Meyer, Faye Mayberry, Alex Grist, Mary Stimmel,

and Edward Broyles. Fae Hartsfield was appointed as lead

evaluator. Two other Department employees, Ken Chambers and

Roger Auger, were appointed to evaluate proposer references.

Jeannie Evans, the Department's purchasing director, was selected

to evaluate the cost proposals, and was also designated to

evaluate CMBE proposals.

4. On January 30, 1998, the Department conducted the

standardization session contemplated by the RFP. Those present

included all of the evaluators, as well as Jeannie Evans. Among

the directions given during the course of the session were the

following:

a. The only part of the RFP the evaluators

had to be concerned with was the evaluation

criteria in Appendix 6 beginning on Page 67

of the coded RFP they were given.

b. Each evaluator was to work

independently of the others, rate the

proposals independently, and not discuss

their ratings with other evaluators. Any

questions the evaluators may have had about

the process or proposals were to be asked of

Beth Atchison of the Office of General

Counsel. Fae Hartsfield's duty as lead

evaluator was only to make uniform mail or

fax transmissions to evaluators to answer

questions on technical issues so they would

each get identical communications.

Evaluators were not supposed to speak with

Fae Hartsfield directly.

5. Following the standardization session, the technical

proposals submitted by the four vendors were distributed to the

evaluators for review. Their analysis was completed and their

evaluation guides (score sheets) were submitted to Fae Hartsfield

by March 13, 1998. The evaluators awarded the following points

for each proposal:

Fae Hansel Faye Edward Alex Mary Average

Hartsfield Meyer Mayberry Broyles Grist Stimmel

ASI 199.00 237.0 229.0 220.0 172.10 251.95 218.175

PSI 277.0 259.0 252.0 275.0 259.0 280.0 267.0

CAT 147.0 213.0 168.5 165.0 93.25 163.5 158.375

Sylvan 212.5 252.0 215.0 252.0 149.0 264.0 224.08

6. By March 13, 1998, the evaluation of proposer references

had also been completed, and the score sheets of Roger Auger and

Ken Chambers had been submitted to Fae Hartsfield. These

evaluators awarded the following points for each proposal:

Roger Auger Ken Chambers Average

ASI 40.1 39.5 39.8

PSI 39.2 40.0 39.6

CAT 41.6 41.5 41.55

Sylvan 40.2 39.5 39.85

7. On March 16, 1998, the cost proposals were opened and

the price bid of each vendor was announced by the Department's

purchasing director, Jeannie Evans. Lead evaluator, Fae

Hartsfield, as well as evaluators Faye Mayberry, Hans Meyer, and

Mary Stimmel, attended the opening and announcement. ASI

proposed the lowest cost ($13.00 per hour), followed by PSI

($14.50 per hour), CAT ($20.00 per hour), and Sylvan ($22.00 per

hour).

8. Immediately following the opening, Ms. Evans and Fae

Hartsfield, although it was not her function, calculated the

scores for each vendor's cost proposal in accordance with the

mathematical formula set forth in the RFP. ASI, as the lowest

proposer, received the maximum score of 175 points, followed by

PSI with 156.91 points, CAT with 113.75 points, and Sylvan with

103.41 points.

9. Given the foregoing information, by March 20, 1998, if

not sooner, Fae Hartsfield prepared draft spreadsheets for each

vendor which revealed (based on the scores awarded for the

proposal evaluation, proposer references, and cost proposal) the

total points awarded to each vendor, excepting Certified Minority

Business Enterprise (CMBE) preference points. Based on that

scoring, PSI had the most points (463.51), followed by ASI

(432.975), Sylvan (367.3433), and CAT (313.675).

10. The final step in the evaluation process, according to

the RFP, was to resolve whether CMBE preference points should be

awarded to any of the vendors. Here, ASI was the only vendor to

submit a CMBE subcontract plan as part of its proposal.

11. ASI's CMBE subcontract plan was evaluated by Jeannie

Evans, who consulted with the Office of General Counsel (R. Beth

Atchison), as well as Fae Hartsfield (although it was not her

function to resolve whether a vendor qualified for CMBE

preference points). Ms. Evans sought clarification of ASI's

proposal by letter of March 18, 1998, and received ASI's letter

of clarification on March 20, 1998.

12. As of Monday, March 23, 1998, the decision had been

made that ASI qualified for CMBE preference points.

Consequently, consistent with Section VII.B.3.c. of the RFP,

Fae Hartsfield calculated an award of 43.23 preference points for

ASI. 1

13. Under the provisions of Section VII.A.5. of the RFP,

the final step in the award process was for Fae Hartsfield, as

lead evaluator, to combine the results "into a report showing the

total points received by each Vendor . . . [and] recommend that

the Vendor with the most points be awarded the contract." Had

that step been taken, ASI, with 43.23 CMBE preference points,

would have been ranked first with 476.205 total points; however,

on March 25, 1998, Fae Hartsfield inexplicably urged the

imposition of a "format penalty" under the provisions of Section

I.F. of the RFP.

14. Pertinent to the format issue, Section I.F., of the RFP

provided:

Format of Response : The entire proposal

shall be bound into one document. The format

and the order of the response must match the

format and order of this RFP. If the above

requirements are not met, points may be

deducted up to 5% of total for non-compliance

during the evaluation of the proposal. . . .

Notably, by the time Fae Hartsfield urged the imposition of the

format penalty, the award process (which included evaluation of

the proposals, evaluation of proposer references, opening of the

cost proposals, and award of CMBE preference points) was

complete, she knew the ranking of the vendors, she knew that only

ASI and CAT (the only vendors who failed to follow the format)

would be affected by the penalty (and only ASI adversely), and

she knew the format penalty would reduce ASI to second place.

Nevertheless, she was allowed to proceed.

15. According to Fae Hartsfield, on March 25, 1998, "it

occurred to me that there was this format penalty clause that we

had not imposed and that they had clearly violated our format;

and I felt that since that clause was in there . . . it needed to

be looked at." 2 (Transcript, page 156). Consequently, according

to Fae Hartsfield, she brought the matter to the attention of the

Office of General Counsel (R. Beth Atchison), and they resolved

to poll the evaluators to see whether they had already penalized

ASI and CAT or, if not, whether they thought a penalty should be

imposed. Notably, at this time Fae Hartsfield knew she had not

penalized the vendors, and knew or suspected that it was unlikely

the other evaluators had penalized the vendors since the

evaluation guide did not include a provision for imposition of

such a penalty.

16. On March 25, 1998, following her conversation with

counsel, Fae Hartsfield spoke separately, either in person or by

telephone, with each of the other five evaluators and inquired

whether they had penalized any proposal during the evaluation

process for failing to follow the format requirement of

Section I.F. When they each replied in the negative, they were

asked if a penalty should be imposed on any vendor that failed to

follow the format. At the time, it was either stated or

understood that only two vendors, ASI and CAT, would be

penalized. Each vendor was of the opinion that a penalty should

be imposed and, when asked how much, suggested a maximum or

5 percent penalty. At the time they were surveyed, each

evaluator had already indicated their preference for PSI by

rating it as the superior vendor, and some had attended the cost

proposal opening and knew ASI was the lowest cost bidder. Based

on such information, and the timing of Fae Hartsfield's survey,

it is reasonable to presume most, if not all, evaluators knew or

suspected that imposing a format penalty on ASI could affect the

bid award.

17. Based on the responses received, Fae Hartsfield

calculated a format penalty of 5 percent of the maximum points

available (500), excluding CMBE preference points. As a

consequence, 25 points were deducted from ASI's score, leaving it

with an adjusted score of 451.205 and lowering it from first to

second place.

18. By memorandum of March 27, 1998, Fae Hartsfield advised

the Secretary and Deputy Secretary of the Department of Business

and Professional Regulation of the final scores and recommended

that PSI be awarded the contract. The final scores were as

follows:

Psychological Services, Inc. 463.51

Assessment Systems, Inc. 451.21

Sylvan Learning Systems, Inc. 367.34

Computer Adaptive Technologies, Inc. 288.68

19. Based on the foregoing, the Department posted its

Bid/Proposal Tabulation on Friday, April 3, 1998, in which it

indicated its intention to award the contract to PSI. ASI timely

protested the proposed award.

The protest

20. Here, ASI contends the imposition of a format penalty

was improper or, if proper, was miscalculated, and that were its

proposal properly considered it would have received the most

points and the contract award. 3 Not unexpectedly, PSI supports

the Department's decision and further contends that, even if the

penalty provision was improperly invoked or calculated, ASI's

proposal would still be the lower ranked because the Department

erred in awarding ASI preference points for CMBE participation.

The propriety of imposing a format penalty

21. Considering the provisions of the RFP regarding

evaluation procedure (RFP Section VII.A.), evaluation criteria

(RFP Section VII.B.), and the format penalty provision (RFP

Section I.F.), noted supra , it should not be subject to serious

debate that imposition of a format penalty, as well as imposition

of a penalty at the juncture of the award process it was imposed,

was contrary to the terms of the RFP and the essential

requirements of law.

22. In reaching such conclusion, it is first observed that

RFP Section VII.A. establishes the procedure for evaluation of

vendor's proposals. The procedure established contemplates that

(except for the criteria pertaining to a vendor's past

performance (references), the cost proposal, and CMBE preference)

the proposals would be evaluated by each evaluator independently

and the results of their evaluations submitted to the lead

evaluator. The results of the past performance evaluation and

the points from the cost proposal worksheet were to be given to

the lead evaluator "only after all other criteria have been

evaluated." At that point in the award process, the points

awarded for past performance and cost proposals were to be added

to each evaluators' total points for the proposal, and the points

averaged to arrive at the total points for each vendor. The

point award process concludes with the award, if applicable, of

CMBE preference points. Thereupon, the RFP prescribes that

"[t]he results will be combined into a report showing the total

points received by each [v]endor. . . [and] will recommend that

the [v]endor with the most points be awarded the contract."

Clearly, under the procedure established, the role of the

evaluators was complete when the results of their evaluation were

submitted to the lead evaluator, and consideration of or

assessment of a penalty, particularly at the juncture of the

award process it was imposed, offends the evaluation procedure

established by the RFP, which includes inherent safeguards to

discourage manipulation of the award process.

23. It is also observed that imposition of a format penalty

by the evaluators was also outside the scope of their duties, as

established by the evaluation criteria (RFP Section VII.B.). In

so concluding, it is observed that RFP Section VII.B. provides an

overview of the major evaluation categories and weights, and

directs that "[p]roposals shall be evaluated based on the

criteria shown in Appendix 6." Notably, the criteria and the

evaluation guides developed from it, do not include an

opportunity for an evaluator to consider or impose a format

penalty. To the contrary, the RFP, as well as the evaluation

guide, expressly provide that, with regard to RFP Section I (the

section which contains the format penalty provision), there are

"[n]o criteria to be evaluated." Consequently, consideration of

or assessment of a format penalty by the evaluators was beyond

the scope of the evaluators' authority and offensive to the terms

of the RFP. 4

24. It is further observed that, imposition of a penalty,

as imposed in this case, cannot be harmonized with the format

penalty provision (RFP Section I.F.) itself. In so concluding,

it is noted that the penalty provision provides that "points may

be deducted up to 5% of the total for non-compliance during the

evaluation of the proposal." Clearly, imposition of a penalty is

discretionary, and the provision contemplates that a penalty

would be considered and assessed, if at all, when the proposals

were evaluated; however, the RFP made no provision for an

evaluator to consider or impose a penalty. Consequently, under

the terms of the RFP, as written, it was not possible to impose a

format penalty consistent with the penalty provisions and it was

an abuse of the Department's discretion to do so.

25. Finally, it is observed that imposition of the penalty,

as imposed in this case, cannot be harmonized with the purpose

and object of the competitive bidding process, discussed infra ,

which is designed, inter alia , "to protect the public against

collusive contracts; to secure fair competition upon equal terms

to all bidders; to remove not only collusion but temptation for

collusion and opportunity for gain at public expenses; [and,] to

close all avenues to favoritism and fraud in various forms."

Wester v. Belote , 103 Fla. 976, 138 So. 721, 723-24 (Fla. 1931).

Here, imposition of a penalty, at the juncture it was imposed,

was a transparent manipulation of the competitive bidding

process, and was contrary to the fundamental requirements of law.

Calculation of the format penalty

26. In addition to improvidently imposing a format penalty,

the Department also erred in calculating the amount of the

penalty.

27. Pertinent to calculating the amount of the penalty, the

penalty provision provides that "points may be deducted up to 5%

of total for non-compliance during the evaluation of the

proposal;" however, "5% of total" is not further defined by the

RFP. Consequently, the penalty provision is ambiguous, and

requires interpretation to resolve what "total" was intended to

guide the assessment of the penalty.

28. Here, the Department chose to interpret "total" to mean

the maximum possible points (500), and calculated a format

penalty of 25 points. The Department's interpretation was not,

however, reasonable, and the penalty it derived was not

appropriate.

29. In considering the appropriate interpretation to be

accorded the word "total" in the penalty provision, it is first

observed that no proof was offered that anyone possessed any

special insight as to what was intended by the word choice, and

that resolution of the question must be found solely within the

four corners of the RFP.

30. In examining the terms of the RFP, it is noted that the

Department has adopted various "totals" on which to base other

penalties or awards. For example, RFP Section VI provides for a

penalty of "up to 5% of the maximum points possible," for a

failure to comply with the required documents provision of the

RFP. In RFP Section VII.B.3.C., CMBE preference points are

awarded in an amount "equal to 10% of the total points awarded to

the . . . [v]endor." Total points may also be considered in

relationship to the maximum points possible for the proposal

evaluation (280 points), for past performance evaluation

(45 points), and for the cost proposal (175 points), or the total

points awarded each vendor for such categories.

31. Having given the matter due consideration, it must be

concluded that the appropriate interpretation to be accorded the

word "total," as used in the penalty provision, is either the

maximum points possible for the proposal evaluation (280 points)

or the total points (averaged) awarded to the vendor for the

proposal evaluation (in this case 218.175 points for ASI). In so

concluding, it is observed that the purpose of the format penalty

is to offer a compelling reason for vendors to conform their

proposals to a common format and, therefore, simplify proposal

evaluation. A penalty based on the maximum points possible for

the proposal evaluation or the total points awarded the vendor

for the proposal evaluation are the only interpretations which

bear any reasonable relationship to the purpose of the penalty.

32. As between the two reasonable interpretations of the

word, there is nothing in the record which would distinguish or

prefer one choice over the other. Consequently, since the

language of the RFP was chosen by the Department, the term should

be construed against it or, stated differently, the term should

be interpreted to have the least impact on a vendor. 5 So

considered, "total" is construed to mean the total points awarded

the vendor for the proposal evaluation (here 218.175), which

calculates a format penalty, if appropriate, of 10.91 points.

Subtracting that penalty from ASI's total (476.205), leaves ASI

with a final score of 465.315 points and, as such, the vendor

with the most points.

The CMBE preference award

33. Pertinent to this case, the RFP provided for an award

of preference (bonus) points to vendors that proposed to

subcontract with a certified minority business enterprise (CMBE).

Where, as here, a vendor proposed such a subcontract, RFP

Section VI.P. required:

CMBE Subcontract Plan : If the Vendor decides

to subcontract with a CMBE, the Vendor must

submit a CMBE Subcontract Plan that specifies

the procedures to be used to subcontract a

specified percentage of the contract value.

The CMBE Subcontract Plan must show how the

Vendor determined the percentage of the

contract value to subcontract to CMBE(s) and

how the Vendor plans to maintain the

percentage. Bonus points will be awarded to

Vendors that subcontract to CMBE(s) based on

the percentage of contract value that is

subcontracted only if the Vendors submit a

CMBE Subcontract Plan. If the Vendor does

not submit a CMBE Subcontract Plan, no bonus

points will be awarded even if the Vendor

subcontracts a CMBE. . . .

34. Of all the vendors, only ASI submitted a CMBE

Subcontract Plan with its proposal. ASI's plan proposed:

ASI has a deep commitment to the active

participation of minority owned businesses in

the day-to-day operational functions required

to meet our clients' needs. The benefits of

this commitment are twofold: it not only

provides the minority business with the

opportunity for growth but it also provides

ASI with a local experience base in our

client state.

ASI will subcontract with Temporary Jobs,

Inc. of Crystal River, Florida, a minority

business enterprise (F592939174 001) to

provide the staff for the five additional

assessment centers in Florida which will be

opened under the contract. A copy of the

Letter of Commitment signed by Ms. Kathleen

Warrington, the business owner, along with a

copy of the Certified Minority Business

Enterprise certificate are included directly

following this section.

Temporary Jobs, Inc., will hire a minimum

of 10 individuals to staff the five new

assessment centers planned to expand our

current network in Florida. The staff at

each center will include a full-time

supervisor and an assistant/proctor. Upon

contract implementation, the facilities will

operate Tuesday through Saturday with two

sessions per day. ASI will provide the staff

with the training and tools necessary to

ensure that the high quality test

administration and security standards for

which we are noted are maintained at the new

assessment centers. ASI's Regional

Assessment Center Manager based in Tampa will

conduct oversight of all the assessment

centers.

ASI has determined that the percentage of

the contract value to subcontract to

Temporary Jobs, Inc., is 20% of the contract

cost. The number of staff needed to support

the assessment center operations dictated the

subcontract value. Temporary Jobs, Inc.,

will receive an estimated $365,000 over the

life of the contract to staff the five

assessment centers. The estimated total

contract value for ASI is $1.4 million.

Therefore, the subcontract value is

conservatively estimated at 20% of the

contract value. ASI will maintain the

contract percentage by maintaining the five

assessment centers to be staffed by Temporary

Jobs, Inc., over the life of the contract.

(Emphasis in original.)

35. When, during the award process, Jeannie Evans

considered ASI's CMBE Subcontract Plan, she was unsure how ASI

had calculated the dollar value of its CMBE participation.

Ms. Evans' uncertainty arose when she derived a $2.4 million

value for the life of the contract (2 years) based on an assumed

(estimated) number of real estate applicants (27,000), 3.5 hours

for the real estate examination, and ASI's cost proposal of $13

per hour. See RFP Section VI.N. and Appendix 2 (Computer Based

Test Time Line). Consequently, by letter of March 18, 1998,

Ms. Evans requested clarification from ASI. That letter

provided, as follows:

In reference to your company's proposal

submitted on Request for Proposal (RFP)

97/98-002, Computer Based Testing Services,

the following written clarification is

required:

Page 74, Section 6.17, CMBE Subcontract Plan

Under this section of your company's

proposal, it states that "Temporary Jobs,

Inc. will receive an estimated $365,000 over

the life of the contract." Please provide

detailed clarification on the calculation of

this estimated value and the time period

covered by this estimated amount.

Under this section of your company's

proposal, it states that the "estimated total

contract value for ASI is $1.4 million."

Please provide detailed clarification on the

calculation of this estimated total contract

value and the time period covered by this

estimated amount.

This information must be faxed to the

Purchasing Office at [phone] or

delivered/mailed to: Department of Business

and Professional Regulation, Purchasing

Office, 1940 North Monroe Street,

Tallahassee, Florida 32399-0796 no later

than March 20, 1998, 5:00 p.m. eastern

standard time.

36. Despite the tight time-line, ASI filed a timely

response to the Department's request for clarification on

March 20, 1998. That response prov ided, as follows:

On behalf of . . . Assessment Systems,

Inc., I am replying to your letter of

March 18, 1998 requesting written

clarification of our proposal of January 29,

1998. I have repeated your requirements and

provided the information requested following

each requirement:

Page 74, Section 6.17, CMBE Subcontract Plan

Florida Requirement 1:

Under this section of your company's

proposal, it states that "Temporary Jobs,

Inc., will receive an estimated $365,000.

Over the life of the contract." Please

provide detailed clarification on the

calculation of this estimated value and the

time period covered by this estimated amount.

Response:

ASI proposed to add five new assessment

centers. We will use Temporary Jobs, Inc. to

staff those new centers. The $365,000.00

figure is for salaries for 10 staff members

and represents an annual amount to be paid

over the life of the contract.

Florida Requirement 2:

Under this section of your company's

proposal, it states that the "estimated total

contract value for ASI is $1.4 million."

Please provide detailed clarification on the

calculation of this estimated total contract

value and the time period covered by this

estimated amount.

Response:

Since participation by the regulatory

agencies is strictly voluntary we could only

estimate the value. Therefore, we calculated

our pricing proforma based on the candidate

volumes based on the two largest programs -

the Florida Real Estate and Florida

Cosmetology programs. We assumed the

following:

Real Estate: 27,000 annual candidates

Average test time 3.5 hours

Therefore: 27,000 x 3.5 hours = 94,500

testing hours for Real Estate

Cosmetology: 5,500 annual candidates

Average test time: 2.5 hours

Therefore: 5,500 x 2.5 = 13,750 testing hours

for Cosmetology

Total number of Real Estate and Cosmetology

Candidates = 32,500

Total number of Real Estate and Cosmetology

Testing Hours = 108,250

Therefore: 108,250 hours x $13.00/testing

hour = $1,407,250.00

This figure represents ASI's minimum annual

contract amount if these programs choose to

participate.

We hope that this information clarifies how

we arrived at the subcontractor value and

ASI's estimated total annual contract value.

37. Based on ASI's response, Ms. Evans was satisfied that

ASI's CMBE Subcontract Proposal would amount to at least 20

percent of the contract value and, consequently, ASI was awarded

43.23 CMBE preference points.

38. Here, PSI contends that: 6

33. Through the March 20 letter . . . ASI

effectively amended its proposal by changing

what were purported to be "total contract" or

"term of the contract" figures to annual

figures. The letter also supplemented the

information in ASI's original proposal, by

including calculations that showed how ASI

had determined the percentage of the contract

value that it intends to subcontract to

Temporary Jobs, Inc.

34. Based on the information included in

ASI's March 20 letter, Ms. Evans determined

that ASI should be awarded CMBE bonus points.

Without the information contained in the

March 20 letter, ASI would not have received

any CMBE points, since the information

contained in their CMBE Subcontract Plan did

not establish twenty percent (20%)

utilization of a CMBE subcontractor.

(PSI's Proposed Recommended Order, at pages 14 and 15).

Consequently, PSI concludes, the Department's award of CMBE

preference points to ASI was contrary to the terms of the RFP,

and was "clearly erroneous, arbitrary and capricious." PSI's

argument is rejected as unpersuasive.

39. In reaching such conclusion, it is first observed that

pursuant to RFP Section VII.D., the Department reserved the right

to contact vendors in order to request written clarification of

proposal contents. The RFP also reserved the right to waive any

minor irregularity or technicality in proposals received.

40. Here, the RFP required that a CMBE Subcontract Plan

address three items, to-wit: (1) "the procedure to be used to

subcontract a specified percentage of the contract value"; (2)

"how the Vendor determined the percentage of the contract value

to subcontract to CMBE(s)"; and (3) "how the Vendor plans to

maintain the percentage."

41. ASI's CMBE Subcontract plan was responsive to the RFP

in that it proposed a procedure (to subcontract with a minority

business enterprise to provide the staff for five additional

assessment centers in Florida) which would be used to subcontract

20% of the contract value (Item 1); it detailed the method (the

staffing cost needed to support the assessment center operations)

used to determine the percentage of the contract value to be

subcontracted (Item 2); and it described how (by contracting with

the minority business enterprise to staff the centers over the

life of the contract) it planned to maintain the percentage

(Item 3). That the number values ASI used in its plan were

inadvertently stated as "life of the contract," as opposed to

annual, does not (as contended by PSI) detract from the

conclusion that ASI's proposal was responsive. Moreover, there

was no showing that ASI's response to the request for

clarification materially altered its proposal or accorded it an

advantage not enjoyed by similarly situated vendors, or that the

Department's request for clarification and acceptance of ASI's

CMBE Subcontract Plan was anything other than an honest exercise

of its discretion. 7

CONCLUSIONS OF LAW

42. The Division of Administrative Hearings has

jurisdiction over the parties to, and the subject matter of,

these proceedings. Sections 120.57(3), Florida Statutes.

43. Pertinent to this case, Section 120.57(3), Florida

Statutes, provides:

. . . in a competitive-procurement protest,

other than a rejection of all bids, the

administrative law judge shall conduct a de

novo proceeding to determine whether the

agency's proposed action is contrary to the

agency's governing statutes, the agency's

rules or policies, or the bid or proposal

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency action was clearly erroneous,

contrary to competition, arbitrary, or

capricious. . . .

44. "A capricious action is one which is taken without

thought or reason or irrationally. An arbitrary decision is one

not supported by facts or logic." Agrico Chemical Co. v.

Department of Environmental Regulation , 365 So. 2d 759, 763

(Fla. 1st DCA 1978).

45. A decision is "clearly erroneous" when unsupported by

substantial evidence, or contrary to the clear weight of the

evidence, or induced by an erroneous view of the law. Black's

Law Dictionary , Fifth Edition (1979).

46. An act is "contrary to competition" when it offends the

purpose of competitive bidding. That purpose has been stated on

more than one occasion to be, as follows:

[T]o protect the public against collusive

contracts; to secure fair competition upon

equal terms to all bidders; to remove not

only collusion but temptation for collusion

and opportunity for gain at public expense;

to close all avenues to favoritism and fraud

in various forms; to secure the best values

for the [public] at the lowest possible

expense; and to afford an equal advantage to

all desiring to do business with the

[government], by affording an opportunity for

an exact comparison of bids.

Wester v. Belote , 103 Fla. 976, 138 So. 721, 723-24, (Fla. 1931);

Harry Pepper & Associates, Inc. v. City of Cape Coral , 352 So. 2d

1190-92 (Fla. 2d DCA 1977). See also , Section 287.001, Florida

Statutes. "A public body may not arbitrarily discriminate

between bidders, or make the award on the basis of personal

preference. The award must be made to the one submitting the

lowest and best bid. . . ." Hotel China & Glass Co. v. Board of

Public Instruction , 130 So. 2d 78, 81 (Fla. 1st DCA 1961).

47. Here, ASI contends the Department's decision to impose

a format penalty, as well as the method it adopted to calculate

the format penalty, departed from the essential requirements of

law and deprived it of the contract award. Conversely, PSI

supports the Department's imposition of the penalty and further

contends that, if the penalty provision was improperly invoked or

calculated, ASI's proposal would still be the lower ranked

because the Department erred in awarding ASI preference points

for CMBE participation. ASI, as the protestant regarding the

format penalty issues, has the burden of establishing, by a

preponderance of the evidence, that the Department's actions or

decisions regarding those issues departed from the essential

requirements of law. In turn, PSI, as the challenger, bears the

burden of establishing that the Department's decision to award

CMBE preference points departed from the essential requirements

of law. Department of Transportation v. J.W.C., Co., Inc. , 396

So. 2d 778 (Fla. 1st DCA 1981); and Balino v. Department of

Health and Rehabilitative Services , 348 So. 2d 349, 350 (Fla. 1st

DCA 1977), ("[T]he burden of proof, apart from statute, is on the

party asserting the affirmative issue before an administrative

tribunal.")

48. Here, ASI has demonstrated, with the requisite degree

of certainty, that the Department's imposition of a format

penalty was contrary to the proposal specifications, and that its

decision was an abuse of discretion or, stated differently,

clearly erroneous, contrary to competition, arbitrary, and

capricious. 8

49. Although given the foregoing conclusion it is

unnecessary to the result reached, ASI has also demonstrated that

were a penalty appropriate, the Department erred in its

calculation. Here, as noted in the findings of fact, were a

penalty appropriate, it should be calculated as 5 percent of the

total points awarded ASI for the proposal evaluation, and not

5 percent of the maximum possible points (500) that could be

awarded. Vienneau v. Metropolitan Life Insurance Co. , 548 So. 2d

856 (Fla. 4th DCA 1989) (Where language of contract is ambiguous

or doubtful, it should be construed against the party who drew

the contract.) Accord, Mayflower Corp. v. Davis , 655 So. 2d 1134

(Fla. 1st DCA 1994), and Finberg v. Herald Fire Insurance Co. ,

455 So. 2d 462 (Fla. 3d DCA 1984).

50. Finally, as noted in the Findings of Fact, PSI failed

to sustain its burden to demonstrate that the Department departed

from the essential requirements of law when it awarded ASI CMBE

preference points. In so concluding, the provisions of

Section 120.57(3)(e), Florida Statutes, which provide that "[i]n

a competitive-procurement protest, no submissions made after the

bid or proposal opening amending or supplementing the bid or

proposal shall be considered," have not been overlooked.

However, not all post-opening submittals or clarifications fall

within the prohibition of Section 120.57(3)(e). Rather, such

prohibition prohibits the agency from accepting late submissions

which would otherwise cure an unresponsive proposal, but does not

prohibit the agency from seeking clarification on matters that do

not affect the price of the proposal, give the vendor an

advantage or benefit not enjoyed by similarly situated vendors,

or adversely impact the interests of the agency. Here, there was

no such irregularity and no sound reason shown why the

Department's judgment, in this regard, should be disturbed.

Indeed, "[t]here is no public interest, much less a substantial

public interest, in disqualifying low bidders for technical

deficiencies in form, where the low bidder did not derive any

unfair competitive advantage by reason of the technical

omission." Intercontinental Properties, Inc. v. Department of

Health and Rehabilitative Services , 606 So. 2d 380, 386 (Fla. 3d

DCA 1992).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a Final Order be entered which sustains the

bid protest filed by Petitioner, Assessment Systems, Inc., and

which awards the subject contract to Assessment Systems, Inc.

DONE AND ENTERED this 14th day of July, 1998, in

Tallahassee, Leon County, Florida.

___________________________________

WILLIAM J. KENDRICK

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 14th day of July, 1998.

ENDNOTES

1/ Under the provisions of Section VII.B.3.c. of the RFP, ASI was

entitled to preference points calculated as "10% of the total

points awarded to [ASI]." ASI had been awarded 432.975 points

and, therefore, was entitled to 43.30 preference points; however,

inadvertently, ASI was only accorded 43.23 points. Such error

was, however, de minimus , and of no relevance to these

proceedings.

2/ What Fae Hartsfield's motive was to manipulate the bid award

cannot be distilled from the record in this case. It may,

however, be concluded that her motive in urging the format penalty

was for reasons other than a strict application of the RFP

provisions or a sense of fair play. Notably, the only penalty

provision she urged was one that affected ASI. Further bias

against ASI (or preference for PSI) may be found in Fae

Hartsfield's advocacy for a penalty based on 5 percent of the

maximum points available (500), excluding CMBE preference points,

which, as discussed infra , had no rational support.

3/ ASI also argued that application of the penalty was

fundamentally improper, and that its proposal did not fail to

follow the proposed format or, if it did, such failure should be

waived as a minor irregularity since it did not accord ASI an

advantage over other bidders. As for ASI's argument regarding

fundamental impropriety (i.e., the provision was vague, arbitrary,

etc.), it must be concluded that since ASI did not protest the RFP

provisions that it may not now complain as to the RFP's content.

As for ASI's assertion that its bid did not deviate from the

recommended format, that argument is rejected. As to whether the

variation was material, that issue has already been resolved by

the Department in ASI's favor, since it elected to accept ASI's

bid for evaluation; however, whether the Department should

exercise its discretion (as provided by the RFP) and impose a

format penalty is a different issue.

4/ Fae Hartsfield testified that in her opinion the failure to

include a penalty provision in the evaluation guide was merely an

"oversight," and not a reflection that a penalty was not to be

imposed. Ms. Hartsfield's opinion was, however, not shown to be

based on any unique insight into the formulation of the RFP and is

rejected. As importantly, if an "oversight," unilaterally

modifying the scoring criteria at this juncture was not an

acceptable or proper approach. Rather, such changes should be

prospective in operation and apply only to future RFPs.

5/ Adopting the interpretation with the least impact is also

attractive in this case because there was not a consensus among

the evaluations as to what "total" meant and, therefore, what

penalty (amount) they intended to impose. For example, some

thought the 5 percent penalty was against the score they had give

the vendor, while others thought it was against the possible

total. Here, it was Fae Hartsfield who resolved that "5% of

total" should be of the maximum (500 points) and, consequently, it

was Fae Hartsfield, and not the evaluators, who decided the number

of points to deduct. Such result was contrary to the terms of the

FRP format penalty provision, which contemplated that points, if

they were to be deducted, would be deducted during evaluation of

the proposal (by the evaluators).

6/ PSI also contended:

36. The propriety of awarding CMBE bonus

points to ASI is further undermined by

statements in ASI's proposal itself.

Contrary to ASI's Subcontract Plan,

section 2.5.5 of ASI's proposal states, in

its description of its assessment center

staff, that

[a]ll of ASI's assessment center staff

are employees of ASI who are trained in

operating procedures for only ASI

programs. Unlike other vendors, ASI is

the single point of contract and control

for all programs operations including

test administration . We do not

subcontract or franchise the very essence

of the service we are contracted to

provide.

Joint 5 at 24 ([emphasis] in original). This

statement is directly contrary to the

assertion in ASI's CMBE Subcontract Plan that

it plans to subcontract out the staffing of

five assessment centers to Temporary Jobs,

Inc. . . .

PSI's contention is not relevant since the provisions of the CMBE

Subcontract proposal are independent of the technical proposal and

are, as provided by the RFP, evaluated independently. Moreover,

the issue was not reasonably raised by PSI's petition to intervene

or the prehearing stipulation. Finally, the terms of the CMBE

Subcontract Plan and the description contained in the technical

proposal are not necessarily repugnant or, stated differently,

irreconcilable.

7/ Projecting dollar values for CMBE participation is, under the

RFP, at best an exercise in estimating, since participation by

regulatory agencies is strictly voluntary and, therefore, the

actual number of candidates is subject to debate. Moreover, and

further complicating the subcontracting of services, the RFP

restricts subcontracting to not more than 25% of contract value.

Therefore, periodic monitoring and, if necessary, adjustment of

CMBE subcontract dollar participation over the course of the

contract is likely. Consequently, the key ingredient to a CMBE

Subcontract Plan would appear to be the commitment to at least 20

percent participation, and describing how that percentage will be

accomplished and maintained; not its dollar value over the life of

the contract.

8/ In soliciting and accepting competitive bids, an agency has

wide discretion, and its decision, if based on an honest exercise

of this discretion, will not be overturned. See D.O.T. v. Groves-

Watkins Constructors , 530 So. 2d 912 (Fla. 1988); Liberty County

v. Baxter's Asphalt & Concrete, Inc. , 421 So. 2d 505 (Fla. 1982).

Its discretion, while broad, is not, however, unbridled. It must

exercise its discretion in a manner that is not illegal,

dishonest, fraudulent, arbitrary, or in any other way that would

subvert the purpose of competitive bidding. See D.O.T. v. Groves-

Watkins Constructors , supra ; Caber Systems v. Department of

General Services , 530 So. 2d 325 (Fla. 1st DCA 1988); Couch

Construction Company, Inc. v. Department of Transportation , 361

So. 2d 172 (Fla. 1st DCA 1978); and Wood-Hopkins Contracting

Company v. Roger J. Au & Sons, Inc. , 354 So. 2d 446 (Fla. 1st DCA

1978).

COPIES FURNISHED:

Paul R. Ezatoff, Esquire

Katz, Kutter, Haigler, Alderman,

Bryant & Yon, P.A.

Highpoint Center, Suite 1200

106 East College Avenue

Tallahassee, Florida 32301

R. Beth Atchison, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Martha Harrell Chumbler, Esquire

Carlton, Fields, Ward, Emmanuel,

Smith & Cutler, P.A.

Post Office Drawer 190

Tallahassee, Florida 32302

Mary M. Piccard, Esquire

Vezina, Lawrence & Piscitelli, P.A.

318 North Calhoun Street

Tallahassee, Florida 32301

Lynda L. Goodgame, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this Recommended Order. Any exceptions to

this Recommended Order should be filed with the agency that will

issue the Final Order in this case.