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IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
CASE NO. 1D06-2754
Opinion filed May 4, 2007.
An appeal from the Circuit Court for Bay County.
Glenn L. Hess, Judge.
Obed Dorceus, Tallahassee, for Appellant.
William C. Henry, Panama City, for Appellee Bay County; and Clifford C. Higby,
Panama City, for Appellee Corrections Corporation of America.
WOLF, J.
Emerald Correctional Management (Emerald) challenges a final order
dismissing appellant’s complaint with prejudice for failing to state a cause of action
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concerning appellee Bay County Board of County Commissioners’ (the Board)
decision to award a contract to Corrections Corporation of America (CCA) pursuant
to a request for proposals. The issues before the court are: (1) whether the trial court
erroneously relied on the broad discretion retained by the county in the request for
proposal process in denying appellant’s complaint alleging improper manipulation of
the request for proposal process by the county, and (2) whether appellant sufficiently
stated a cause of action premised on the county’s alleged violation of Florida’s
“Sunshine Law.”
We find no merit in the Sunshine Law complaint and, because there is no
allegation of improper communication between two members of the same public
board, uphold the trial court’s dismissal as to that issue without further comment. We
find, however, that the trial court erred in dismissing appellant’s complaints regarding
improper favoritism in the award of the contract regarding the Bay County Jail.
On June 21, 2005, appellee, Bay County (the County) issued a Request for
Proposals (RFP) asking potential contractors to submit proposals to design, build, and
finance an expansion of Bay County’s existing correctional facility. The RFP further
required that the winning contractor manage the existing facility, the expanded
facility, a court holding, and a vehicle sally port facility proximal to the Bay County
Courthouse. Pursuant to the RFP, a bidder was required to provide detailed
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breakdowns of said costs on two forms that were also provided by the County. The
RFP included the following clause:
The Board of County Commissioners reserves the right to accept or
reject any and all proposals in whole or in part, to waive informalities in
the process, to obtain new proposals, or to postpone the opening pursuant
to the Board’s purchasing policies. Bids shall be valid to Bay County for
a period of one hundred and twenty days after the opening.
In addition, the RFP expressly stated:
3.0 PROPOSAL INFORMATION
. . . .
3.5 The County reserves the right to accept or reject in part or in
whole any or all proposals submitted.
3.6 The County shall accept all proposals properly submitted.
However, the County reserves the right to request clarifications or
corrections to proposals. Requests for clarifications or corrections
by the County shall be in writing.
. . . .
4.0 BASIS FOR AWARD
4.1 The Contract will generally be awarded to the respondent that has
the highest score on a structured evaluation tool approved by the
Bay County Board of County Commissioners. The intent is to
select the respondent considered to offer the best overall total
value to the County.
4.2 There is no obligation on the part of the County to award the
proposal to the lowest priced respondent, and the County reserves
the right to award the proposal to the respondent submitting the
best overall responsive proposal with a resulting negotiated
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agreement which is most advantageous and in the best interest of
Bay County, and to waive any irregularity or technicality in the
proposals received. Bay County shall be the sole judge of the
proposal and the resulting negotiating agreement that is in its best
interest and its decision shall be final.
Sealed proposals were due on September 15, 2005. Two bidders, Emerald and
Intervener CCA, submitted proposals in response to the County’s request for
proposals and both proposals were determined by the County to be responsive.
In its response to the RFP, appellant submitted a construction only cost of
$35,404,000 to Bay County on the County’s own required proposal cost form, for the
construction of the project. A breakdown of appellant’s construction cost was also
provided by appellant on the County’s cost breakdown form as required. CCA, in its
response to the RFP, submitted a construction only cost of $41,598,836 on the
proposal cost form provided by the County. Upon receipt of the proposals, the County
issued a “Request for Clarifications” by submitting separate questions to appellant and
to CCA regarding their individual proposals.
On December 20, 2005, relying on new numbers submitted by CCA in response
to the County’s Request for Clarifications, the County created a “New Jail Analysis”
and presented the analysis to the Board. Based on CCA’s new submission, in the New
Jail Analysis presented to the Board before the vote on the two proposals, the County
restructured CCA’s cost proposal and reduced the original construction price by
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$5,109,859 to $36,488,977. This resulted in a presentation to the Board of an
estimated total price for the project of $117,164,000.00 for appellant and
$114,254,417 for CCA. Following the presentation, the Board directed the County
to begin negotiating a contract with CCA.
On January 6, 2006, appellant filed a formal notice of protest challenging the
County’s decision to negotiate a contract with CCA and the County’s intended
decision to award the contract to CCA. Upon receipt of the formal request, the protest
was presented to the Board, which voted to continue the negotiations with CCA. No
findings were issued. On January 27, 2006, the county manager issued a letter
denying appellant’s protest based on the recommendation of the county purchasing
agent.
On February 8, 2006, appellant filed a six-count complaint challenging the
County’s award to CCA. We find that the trial court properly dismissed all of the
counts except Counts II and IV. Count II, in pertinent part, alleged that the County
permitted CCA to add a clause in their bid proposal forgoing the setting of an
established cost pursuant to fluctuating construction costs. As such, appellant alleged
CCA was allowed to tentatively estimate a cost that would later be inflated due to the
increasing construction inflation, while appellant was required to submit a set cost
estimate that would not be subject to change. Appellant asserts this action unfairly
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favored CCA in the bid process. Count IV, in pertinent part, alleged that the County’s
decision to allow CCA to make material changes to its non-responsive proposal was
improper.
The County moved to dismiss. The trial court dismissed Count II because “the
County is afforded significant discretion in the RFP process, the Court finds that ECM
has not shown the probability of success required . . . .” Count IV was dismissed even
though the trial court found that Emerald has alleged the County’s actions were
illegal, arbitrary, and capricious because the trial court reasoned that the County
retained its express right in the RFP to maintain sole discretion in rejecting any and
all proposals.
While we recognize the wider discretion afforded counties and cities in
exercising discretion in accepting or rejecting responses to RFPs, the decisions still
must be subject to review to determine whether the governing body acted arbitrarily
or capriciously. § 255.20, Fla. Stat. (2005).
Whether a complaint is sufficient to state a cause of action is an issue of law,
subject to de novo review. Warren ex. rel. Brassel v. K-Mart Corp., 765 So. 2d 235,
236 (Fla. 1st DCA 2000). In ruling on a motion to dismiss for failure to state a cause
of action, this court is confined to a consideration of the allegations made within the
four corners of the complaint. Meadows Cmty. Ass’n, Inc. v. Russel-Tutty, 928 So.
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2d 1276, 1280 (Fla. 2d DCA 2006). This court must assume that all allegations are
true and decide whether the complaint states a cause of action. Id. at 1279.
Furthermore, in a bid protest dispute where the petitioner alleges the County abused
its discretion and did not comply with the RFP in evaluating proposals and/or the
evaluators misinterpreted the RFP, proposal, statute or facts, the reviewing court need
not second guess the members of the evaluation committee to determine whether
reasonable persons might reach a contrary result. Scientific Games, Inc. v. Dittler
Bros., Inc., 586 So. 2d 1128, 1131 (Fla. 1st DCA 1991). Rather, a “public body has
wide discretion” in the bidding process and “its decision, when based on an honest
exercise” of the discretion, should not be overturned even if reasonable persons might
disagree. See Sutron Corp. v. Lake Co. Water Auth., 870 So. 2d 930, 932 (Fla. 5th
DCA 2004) (explaining that discretion of public entity to solicit, accept or reject
contract bids should not be interfered with by the courts absent a showing of
dishonesty, illegality, fraud, oppression or misconduct).
In the instant case, appellant asserts the County’s acceptance of CCA’s proposal
did not comply with the RFP because (1) the County unfairly amended and
manipulated CCA’s proposal to bring down the overall cost of the project; (2) the
County accepted CCA’s proposal even though the proposal materially altered the
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termination terms as set out in the RFP; and (3) the County accepted CCA’s proposal
even though the proposal did not set a construction cost as required by the RFP.
In contrast to bids, a RFP is used when the public authority is incapable of
completely defining the scope of work required, when the service may be provided in
several different ways, when the qualifications and quality of service are considered
the primary factors instead of price, or when responses contain varying levels of
service which may require subsequent negotiation and specificity. Sys. Dev. Corp.
v. Dep’t of Health & Rehabilitative Servs., 423 So. 2d 433, 434 (Fla. 1st DCA 1982).
In addition, the consideration of a response to a request for bid is controlled by the
estimated costs, whereas, the response for a request for a proposal is controlled by
estimated cost and technical excellence in the field. Id. Awards of contracts are
generally based not solely on price, but on the results of an extensive evaluation which
includes criteria, qualifications, experience, methodology, management, approach, and
responsiveness to the RFP, etc. Id. Further, at the conclusion of the RFP process, the
procurement officer will seek authorization from the governing body to begin
negotiating the terms of the contract with the highest ranking bidder. H. Gore Enters.,
Inc. v. City of W. Palm Beach, 617 So. 2d 1160, 1161 (Fla. 4th DCA 1993) (holding
that no binding contract had been formed upon the first commission vote, because the
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award of the proposal was simply a selection of a vendor to negotiate a contract with).
The contract is, thus, not formed until after the negotiation process. Id.
Section 255.20, Florida Statutes (2006), provides in pertinent part:
(1) A county, municipality, special district as defined in chapter 189, or
other political subdivision of the state seeking to construct or improve a
public building, structure, or other public construction works must
competitively award to an appropriately licensed contractor each
project that is estimated in accordance with generally accepted costaccounting
principles to have total construction project costs of more
than $200,000. . . . As used in this section, the term "competitively
award" means to award contracts based on the submission of sealed
bids, proposals submitted in response to a request for proposal,
proposals submitted in response to a request for qualifications, or
proposals submitted for competitive negotiation. This subsection
expressly allows contracts for construction management services,
design/build contracts, continuation contracts based on unit prices, and
any other contract arrangement with a private sector contractor permitted
by any applicable municipal or county ordinance, by district resolution,
or by state law. For purposes of this section, construction costs include
the cost of all labor, except inmate labor, and include the cost of
equipment and materials to be used in the construction of the project.
Subject to the provisions of subsection (3), the county, municipality,
special district, or other political subdivision may establish, by
municipal or county ordinance or special district resolution,
procedures for conducting the bidding process.
(Emphasis added).
Section 255.20 expressly requires counties to engage in a competitive bidding
or proposal process when undertaking new projects estimated at over $200,000. The
statute further affords counties discretion in adopting express procedures for
conducting the proposal process through the use of their county or municipal
1 Bay County has listed on its website the procedures for
entering RFPs and the steps taken in the proposal process;
however, this website does not amount to an ordinance as required
by the statute, and thus, this court may not consider the
criteria listed on the website.
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ordinances. However, Bay County has not adopted any ordinances dealing with the
competitive bidding or proposal process for a public service facility such as the one
involved in this dispute.1 However, based on the statute’s wording and relevant case
law, absent the adoption of an express ordinance, the County should be held to an
arbitrary and capricious competitive bidding standard:
Competitive bidding statutes are enacted for the protection of the public.
They create a system by which goods or services required by public
authorities may be acquired at the lowest possible cost. The system
confers upon both the contractor and the public authority reciprocal
benefits, and exacts from each them reciprocal obligations. The bidder
is assured fair consideration of his offer, and is guaranteed the contract
if his is the lowest and best bid received. The principal benefit flowing
to the public authority is the opportunity of purchasing the goods and
services required by it at the best price obtainable. Under this system, the
public authority may not arbitrarily or capriciously discriminate
between bidders, or make the award on the basis of personal preference.
Hotel China & Glassware Co., v. Bd. of Pub. Admin., 130 So. 2d 78, 81 (Fla. 1st DCA
1961) (emphasis added). See also City of Sweetwater v. Solo Constr. Corp., 823 So.
2d 798 (Fla. 3d DCA 2002) (applying this arbitrary and capricious standard to RFPs
as well as bids). Whether the Board acted arbitrarily is generally controlled by a
determination of whether the Board complied with its own proposal criteria as
outlined in the RFP. Id. at 802 (holding that the criteria espoused in the published
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invitation to bidders controlled the analysis of whether the city acted in an arbitrary
manner). However, because section 255.20, Florida Statutes, specifically requires
counties to “competitively award” contracts based on a fair review of the proposals,
the Board cannot be allowed to write out this competitive requirement by affording
itself overly broad discretion to capriciously and arbitrarily award contracts without
established criteria.
If appellant’s complaint is taken as true, the County’s actions – i.e., requesting
modifications of figures from one bidding party but not the other and then relying on
those modifications and accepting non-compliant termination and price setting clauses
– amounted to impermissible favoritism. City of Sweetwater, 823 So. 2d at 798
(holding that a public body’s actions affording one party an unfair advantage violates
public policy and statutory law). As such, appellant has stated a cause of action based
on its assertions of favoritism, and reversal for consideration of the merits of the claim
is warranted.
Furthermore, a public body is not entitled to omit or alter material provisions
required by the RFP because in doing so the public body fails to “inspire public
confidence in the fairness of the [RFP] process.” State, Dep’t of Lottery v. Gtech
Corp., 816 So. 2d 648 (Fla. 1st DCA 2001). In Gtech, this court reviewed a trial
court’s grant of summary judgment in favor of an unsuccessful RFP respondent. Id.
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at 649. The underlying action, like the action in the instant case, sought declaratory
relief and requested the trial court nullify a contract between the chosen competitor
and the State. Id. Appellant in Gtech asserted that the State had improperly accepted
a proposal from the competition that materially altered or omitted material provisions
of the RFP. Id. at 650-51. This court affirmed the trial court’s grant of summary
judgment in favor of Gtech and noted:
Common sense alone suggests that . . . the Lottery must be free to
determine that RFP proposals either are or are not responsive to its
current needs. However, rather than relying on proposals being no longer
responsive in its decision to negotiate a new contract with AWI, the
Lottery should have rejected both responses . . . and started anew. To
countenance the Lottery's entry into a contract that was materially
different than AWI's proposal would encourage responders to RFPs to
submit non-competitive, unrealistic proposals solely for the purpose of
receiving the highest ranking for subsequent negotiations. It seems to us
that such a procedure is at odds with the proscriptions of Chapter 287
and is not likely to inspire public confidence in the fairness of the
process or that the Lottery has entered into the most beneficial
agreement.
. . . .
To summarize the above, it seems clear to us that the pivotal issue before
the trial court and in this appeal is whether the Lottery can treat the RFP
process as little more than a ranking tool to determine a preferred
provider and then negotiate a contract with that provider with little or no
concern for the original proposal of that preferred provider. . . . [W]hat
was at issue here was whether the Lottery and AWI were free to
negotiate a contract without limitation once the competitive responder
Gtech was eliminated by virtue of its less-competitive response to the
RFP.
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Further, it seems to us that to hold otherwise would be to approve the use
by the Lottery of the RFP process for ranking purposes only and would
result in a disincentive for responding vendors to submit accurate and
responsible responses to RFPs. We hold that Gtech was entitled to rely
on the RFP process in submitting a responsive proposal under Florida's
system of competitive bidding and that the Lottery now cannot ignore
those laws in reaching a new agreement which may in the final analysis
bear little resemblance to the proposal that earned AWI preferred
provider status in the first instance.
Id. at 652-53.
The RFP in this case attempted to provide the County the right to accept or
reject any portion of the proposals, and thus, the County asserts they were entitled to
accept the proposal and then later reject the termination portion of the proposal.
According to this court’s reasoning in Gtech, this presumption is incorrect. The
County’s actions in this regard violate the statutory protection afforded the
competitive award process.
If, as alleged in the complaint, the county accepted terms from one party which
were not contemplated by the RFP, the County would have engaged in favoritism
2We do note, however, that in a hearing on the motion to
dismiss, the County presented compelling evidence of its nonarbitrary
action in choosing CCA’s proposal over appellant’s
proposal. Namely, CCA had apparently proposed building onto the
existing jail and utilizing the services that already existed
while appellant had suggested building a stand alone facility
with no connection to the current facilities. Further, CCA had
apparently proposed building a holding zone for prisoners
attached to the courthouse, while appellant had not. However,
this court is confined to the four corners of the complaint and
may not consider this evidence in its analysis. Meadows Cmty.
Ass’n, Inc., 928 So. 2d at 1279.
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