DEP05-0322 & DEP05-0323
STATE OF FLORIDA
DEPARTMENT OF ENVIRONMENTAL PROTECTION
COMPASS ENVIRONMENTAL, INC.,
and SHAW ENVIRONMENTAL, INC.,
)
)
)
Petitioners,
)
)
vs.
)
)
DEPARTMENT OF ENVIRONMENTAL )
PROTECTION,
)
)
Respondent,
)
)
and
)
)
CDM CONSTRUCTORS, INC.,
)
)
Intervenor.
)
/
OGC CASE NOs.:
DOAH CASE NOs.:
04-1997
05-0004
05-0007
05-0008
FINAL ORDER
On March 21, 2005, an Administrative Law Judge with the Division of
Administrative Hearings (“DOAH”) submitted his Recommended Order (“RO”) to the
Florida Department of Environmental Protection (“DEP”) in this administrative
proceeding. Copies of the RO were served upon counsel for the Petitioners, Compass
Environmental, Inc. (“Compass”), Shaw Environmental, Inc. (“Shaw”), and the
Intervenor, CDM Constructors, Inc. (“CDM”). A copy of the RO is attached hereto as
Exhibit A. Exceptions to the RO were filed on behalf of each of the parties on March 31,
2005. CDM and DEP then filed timely Responses to the Exceptions of Compass and
Shaw, and Compass and Shaw filed timely Responses to the Exceptions of CDM and
DEP. The matter is now before the Secretary of DEP for final agency action.
BACKGROUND
This proceeding arose out of actions taken by DEP pursuant to § 403.4154(3),
F. S., to abate an imminent hazard. The imminent hazard involved two abandoned
phosphogypsum stack systems at the former Piney Point fertilizer plant adjacent to Port
Manatee in Manatee County (“Piney Point”). Piney Point is located about one mile
inland from Bishops Harbor, a portion of Tampa Bay.
“Phosphogypsum” is a by-product of the process of converting raw phosphate
rock into phosphoric acid; and “stack systems” are large impoundments containing
water, which has been contaminated by coming into contact with the phosphogypsum.
Federal and state regulations require that the phosphogypsum be managed in stack
systems. This process is accomplished by using process water to “slurry” the
phosphogypsum into the stacks. This process water becomes extremely polluted as a
result of the manufacturing activities and is typically very acidic. The process water
contains heavy metals, such as arsenic, cadmium, chromium, and fluoride, in addition to
high levels of nutrients, nitrogen, and total dissolved solids. It is also slightly
radioactive. The process water is stored in impoundments surrounded by the
phosphogypsum stacks, in cooling ponds, and in surrounding seepage ditches. There
are two phosphogypsum stacks at the Piney Point site, and it is estimated that there are
currently 500 to 550 million gallons of contaminated process water in and surrounding
the two stacks.
2
Until early 2001, the Piney Point fertilizer plant was owned and operated by
Piney Point Phosphates, Inc., a subsidiary of Mulberry Phosphate Company
(“Mulberry”). In February of 2001, Mulberry filed a petition for protection from creditors
in the United States Bankruptcy Court in Tampa, Florida. At the same time, Mulberry
notified the Department that it did not have the resources to maintain the Piney Point
site. Because of the potential for release of the contaminated waters from Piney Point
into Tampa Bay, DEP immediately assumed financial responsibility for Piney Point.
In May of 2001, a state court appointed a Receiver for Piney Point to take "all
reasonable steps and action to preserve the Property's environmental integrity and its
compliance with environmental regulations." To execute these duties, the Receiver
entered into a contract with DEP. DEP then retained the services of Ardaman and
Associates (“Ardaman”), an international engineering consulting firm in Orlando, Florida,
as its engineer of record to design a plan to close Piney Point and to ensure that the
plan was properly implemented. At about the same time, the Receiver contracted with
IT Corporation, the predecessor to Shaw, to begin some of the site closure work on an
emergency basis. Since that time, the Department has spent approximately $63 million
at Piney Point, with Shaw receiving a majority of that amount.
DEP then issued an Invitation to Negotiate (“ITN”) in July of 2004, entitled
“Closure of the Piney Point Phosphogypsum Stack System."1 This ITN called for
contractors to submit responses for services at the Piney Point site in three primary
areas: continued operation and maintenance of the site; water consumption; and
closure of the phosphogypsum stack system. Water consumption consists of treating
Subsection 403.4154(3)(e), F.S., authorizes DEP to contract with various entities, including “thirdparty contractors,” to perform all or part of the work in order to “abate or substantially reduce an imminent
hazard.”
1
3
the process water and removing it from the site by evaporation, irrigation, discharge, or
other methods. Closure of the stacks includes draining water from the stacks, grading
the banks, and installing liners, clean soil, and sod. The proposed Piney Point contract
is estimated to be worth approximately $51.2 million to the successful vendor. DEP’s
ultimate goal is to convert the Piney Point site into a freshwater reservoir for Manatee
County residents.
DEP then selected a seven-member team to serve as evaluators for the Piney
Point ITN, one of whom ultimately did not participate in the evaluation process. CDM,
Compass, Coburn Construction, and Shaw submitted responses to the ITN in
September of 2004.2 The remaining six members of the evaluation teamed
subsequently reviewed the proposals of CDM, Compass, and Shaw, independently.
The final average rankings were very close. Shaw was ranked first, followed by
Compass and CDM, who were tied.
In October of 2004, DEP gave notice of its rankings, and informed CDM,
Compass, and Shaw that it intended to exercise its right to conduct oral discussions
with all three vendors. The three vendors would then be asked to submit Best and Final
Offers (“BAFOs”), which would be scored anew. This process was consistent with the
ITN, which provided that DEP "reserves the right to short list respondents deemed to be
in the competitive range to conduct oral discussions prior to the final determination of
contract award." DEP had determined that oral discussions with representatives of
CDM, Compass, and Shaw would be helpful in formulating BAFO Instructions.
DEP subsequently determined that Coburn Construction ‘s reply to the ITN was “nonresponsive,”
and Coburn did not contest this determination.
2
4
Before drafting the BAFO Instructions, a Department of Revenue attorney and
Purchasing Analyst having substantial experience with procurements were added to the
evaluation team. As finally formed, the evaluation team consisted of two attorneys, four
engineers, and two persons with significant procurement experience. CDM, Compass,
and Shaw each made oral presentations on November 3, 2004. All of the evaluators
attended the oral presentation. As part of this process, the three vendors were able to
ask questions of the evaluators, and the evaluators were able to ask questions of the
vendors.
Following these oral discussions, another round of discussions was held with
each vendor by three members of the evaluation team. These later discussions,
referred to as "negotiation sessions," were conducted for the purpose of better
understanding the cost elements and facts of each vendor’s initial proposal in order to
develop the BAFO Instructions. The BAFO Instructions were ultimately issued by DEP
in November of 2004, and responses were timely filed by CDM, Compass, and Shaw on
December 1, 2004. The BAFO instructions also notified the three vendors that DEP
would begin negotiations with the top-ranked vendor immediately after the BAFO
rankings were posted. None of the three vendors have challenged this oral discussion
and BAFO Instruction process conducted by DEP in this case.
Each of the eight evaluators conducted an individual review of the three
responses to the BAFO Instructions, without any discussions with the other evaluators
about their respective evaluations. It is undisputed that, other than one phone call from
one evaluator to clarify what information the three vendors had received with the
Instructions, the evaluators had no contact with one another during the process of
5
evaluation of the BAFOs. After the evaluators submitted their score sheets to DEP, the
rankings were totaled, added up and averaged to obtain a final ranking for each vendor
in order to determine the “best value” for the state.3 The final rankings were: CDM was
ranked first with an average rank of 1.688; Compass was ranked second with an
average rank of 1.813; and Shaw was ranked third with an average rank of 2.500. On
December 7, 2004, the Department posted a recommended award of the Piney Point
contract to CDM. Compass and Shaw then filed timely petitions protesting the
proposed contract award to CDM.
Compass contended that the Piney Point ITN negotiation process was flawed
due to the involvement of a member of DEP's evaluation committee, Dr. Nadim Fuleihan
(“Fuleihan”), a senior vice-president and principal engineer of Ardaman. Compass
alleged that Dr. Fuleihan had an actual or apparent conflict of interest because one of
Ardaman’s clients (Mosaic Company) was a listed subcontractor in CDM's proposal.
Shaw raised this same purported conflict of interest issue in its petition. Shaw further
contended that the proposals of CDM and Compass were non-responsive, the
evaluations were not conducted in the "sunshine" as required by Florida law, and the
scoring of the responses was arbitrary, capricious, and contrary to competition.
DEP then referred the matter to DOAH for a formal administrative hearing.
Compass's petition was assigned DOAH Case No. 05-0007BID, and Shaw's petition
was assigned DOAH Case No. 05-0008BID. Administrative Law Judge, Donald R.
Alexander (“ALJ”), was assigned to preside over the cases. CDM subsequently filed a
3
The averaging of ranks was utilized by DEP in order to normalize the evaluations so that an
especially generous or especially hard grader would not skew the outcome. (RO, para. 30).
6
Petition to Intervene, which was granted by the ALJ. A DOAH final hearing was held in
the consolidated cases on February 2, 3, 4 and 7, 2005, in Tallahassee, Florida.
Prior to the final hearing, Shaw also filed a Petition for Review of Non-Final
Agency Action and Motion to Stay with the First District Court of Appeal seeking to stay
DEP’s decision to continue contract negotiations with CDM until this protest is resolved.
Shaw’s Motion to Stay was denied, and a decision on the merits of the case remains
pending before the court. See Shaw Environmental, Inc. v. State, Department of
Environmental Protection, Case No. 1D05-407 (Fla. 1st DCA March 2, 2005).
The ALJ issued his RO in this case on March 21, 2005. The only problem
identified by the ALJ with the entire Piney Point ITN and BAFO process in his 44-page
RO was with the alleged conflict of interest on the part of Dr. Fuleihan. The ALJ found
that Fuleihan’s firm, Ardaman, had a contractual relationship with one of CDM’s listed
subcontractors, Mosaic. Fuleihan did not consider this relationship to be a conflict of
interest and did not therefore disclose it to DEP when asked before both the initial
review round and the BAFO round to disclose conflicts of interest. The ALJ also found
that Fuleihan learned (during discovery in this case and after the BAFO evaluation
process was over) that Ardaman also had a contract valued at $57,000 dollars with
CDM’s parent company in St. Louis, Missouri for work done in Idaho.
Notwithstanding these contractual relationships between Ardaman and Mosaic
and CDM’s parent company, the ALJ concluded that there was no record evidence that
Fuelihan would “be enriched in any way,” or “exhibited bias or favoritism during the
solicitation process,” or “acted improperly in evaluating the proposals.” (RO, paragraphs
46, 48, 49). Nevertheless, in his summary paragraph 52, the ALJ concluded that:
7
In summary, while there is no evidence that Ardaman’s professional
relationship with both a prime contractor and a subcontractor caused
the evaluator [Fuleihan] to exhibit bias or favoritism towards any
particular vendor, the relationships give rise to an appearance of
impropriety so that a reasonable person might question the impartiality
of Dr. Fuleihan. By not having those relationships disclosed, the
Department’s governing statutes, policies, and instructions were
contravened.
STANDARD OF REVIEW
Subsection 120.57(1)(l), Florida Statutes (“F. S.”), provides that an agency final
order “may reject or modify an administrative law judge’s conclusions of law and
interpretations of administrative rules over which it has substantive jurisdiction.”
Subsection 120.57(1)(l) also prescribes that an agency reviewing a DOAH
recommended order may not reject or modify the findings of fact of an administrative
law judge, “unless the agency first determines from a review of the entire record, and
states with particularity in the order, that the findings of fact were not based upon
competent substantial evidence or that the proceedings on which the findings were
based did not comply with essential requirements of law.”
There is no contention in any of the Exceptions filed in this case that the DOAH
proceeding did not comply with essential requirements of law. Thus, the ALJ’s findings
of fact cannot be rejected unless it is demonstrated that they were not based on
competent substantial evidence of record. Also, I have no authority to reweigh the
evidence presented at the final hearing, attempt to resolve conflicts therein, or judge the
credibility of witnesses. These evidentiary matters are within the province of the ALJ, as
the trier of the facts in this administrative proceeding. Heifetz v. Dept. of Business
Regulation, 475 So.2d 1277, 1281 (Fla. 1st DCA 1985).
8
The standard of review in this proceeding where a DEP procurement decision is
being contested is also governed by established case law of Florida. The appellate
courts have repeatedly held that public agencies have wide discretion in soliciting and
accepting proposals through the competitive procurement process; and such decisions,
when based on honest exercises of discretion, will not be overturned by the courts even
if they may appear to be erroneous and even if reasonable persons may disagree.
Dept. of Transportation v. Groves-Watkins Constructors, 530 So.2d 912, 913 (Fla.
1988); Liberty County v. Baxter’s Asphalt and Concrete, 421 So.2d 505, 507 (Fla.
1982); Engineering Contractors v. Broward County, 789 So.2d 445, 450 (Fla. 4th DCA
2001); Scientific Games v. Dittler Brothers, 586 So.2d 1128, 1131 (Fla. 1st DCA 1991).
In addition, the 1996 revisions to the Administrative Procedure Act (“APA”)
included an amendment substantially rewriting subsection 120.57(3), F. S., now entitled
“ADDITIONAL PROCEDURES APPLICABLE TO PROTESTS TO CONTRACT
SOLICITATION OR AWARD.” Current subsection 120.57(3) reads, in pertinent part, as
follows:
(f) . . . Unless otherwise provided by statute, the burden of proof shall rest
with the party protesting the proposed agency action. In a competitiveprocurement protest, other than a rejection of all bids, proposals, or replies,
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 solicitation
specifications. The standard of proof for such proceedings shall be
whether the proposed agency action was clearly erroneous, contrary to
competition, arbitrary, or capricious.
If there are disputed issues of material fact, the de novo hearing under
§ 120.57(3)(f) is subject to the same procedural requirements as other formal hearings
held pursuant to § 120.57(1), F.S. See subsection 120.57(3)(d)3, F.S. It is the
9
responsibility of the administrative law judge under § 120.57(3)(f), to “determine whether
the agency's proposed [procurement] action is contrary to the agency's governing
statutes, the agency's rules or policies, or the solicitation specifications,” and the burden
of proof is on “the party protesting the proposed agency action.”
The Florida case law construing § 120.57(3)(f) concludes, however, that the
phrase “de novo proceeding” set forth therein is used to describe a somewhat different
administrative proceeding from that normally conducted pursuant to § 120.57(1), Florida
Statutes. See State Contracting v. Dept. of Transportation, 709 So.2d. 607 (Fla. 1st
DCA 1998). In a typical § 120.57(1) hearing, the administrative law judge essentially
sits in the place of the agency being challenged; and this de novo proceeding is
designed, not to review prior agency action, but to actually formulate final agency action
on the matter being contested. See, e.g., Hamilton County Commissioners v. Dept. of
Environmental Regulation, 587 So.2d. 1378, 1387 (Fla. 1st DCA 1991).
In contrast, the de novo proceeding described in § 120.57(3)(f) has been
construed by the First District Court of Appeal of Florida to be a “form of intra-agency
review” where the object of the proceeding is to “evaluate the [prior] action taken by the
agency,” rather than to formulate final agency action. State Contracting, 709 So.2d at
609. The State Contracting opinion cites with approval to Intercontinental Properties,
Inc. v. Dept. of Health & Rehab. Services, 606 So.2d. 380 (Fla. 3d DCA 1992),
interpreting the phrase “de novo hearing” as used in bid protest proceedings before the
1996 revision of the Administrative Procedure Act. State Contracting, 709 So.2d at 609.
On page 386 of its Intercontinental Properties opinion, the court concluded as follows:
Although the hearing before the hearing officer was a de novo proceeding,
that simply means that there was an evidentiary hearing during which
10
each party had a full opportunity to develop an evidentiary record for
administrative review purposes. It does not mean, as the hearing officer
apparently thought, that the hearing officer sits as a substitute for the
Department and makes a determination whether to award the bid de
novo.
DOAH Administrative Law Judge (“ALJ”), John G. Van Laningham, has observed
that the State Contracting “intra-agency review” interpretation of a § 120.57(3)(f) de
novo proceeding actually results in a proceeding having a “hybrid nature of an appellate
trial.” See Syslogic Technology Services v. South Forida Water Management District, 26
FALR 1368, 1382 (Fla. SFWMD 2002), appeal dismissed without a published opinion,
819 So.2d 771, Fla. App. LEXIS 8828 (Fla. 2d DCA 2002).
The Syslogic Technology Services Final Order adopts a detailed analysis by ALJ
Van Laningham of the “standard of review” issue under § 120.57(3)(f). ALJ Van
Laningham noted that, although designated as a “standard of proof” in § 120.57(3)(f),
the terms “clearly erroneous”, “arbitrary,” or “capricious” are actually recognized review
standards, rather than standards of proof normally applicable in evidentiary hearings.
26 FALR at 1380. The ALJ also concluded that it is highly unlikely that the Legislature
intended to change the standard of proof in bid protest cases from the recognized
preponderance of evidence standard applicable to all other administrative proceedings.
Id. at 1380. The ALJ further concluded that it is thus a reasonable interpretation of the
term “standard of proof” in § 120.57(3)(f) to mean “standard of review.” Id. at 1380.
ALJ Van Laningham’s “standard of review” interpretation of § 120.57(3)(f) was
adopted without any modifications by the South Florida Water Management District in
its Final Order. Id. at 1368. I view this interpretation of § 120.57(3)(f) in the Syslogic
Technology Services case to be reasonable and persuasive. Accordingly, in preparing
11
this Final Order, the standard of review applied in determining the propriety of DEP’s
proposed award of the Piney Point contract to CDM was whether this action was
“clearly erroneous, contrary to competition, arbitrary, or capricious.” (emphasis added).
RULINGS ON EXCEPTIONS OF DEP AND CDM
Preface
Upon review of the Exceptions to the RO filed on behalf of DEP and CDM, I
conclude they raise many similar issues and objections to the ALJ’s findings,
conclusions, and ultimate recommendation. These Exceptions will thus be consolidated
for purposes of this Final Order, except for CDM’s request for an award of attorney’s
fees, which will be addressed separately.
DEP’s Exception No. 1 and CDM’s Exception E
These Exceptions both contend that the DEP Final Order should contain a ruling
that Shaw lacks standing in this administrative proceeding because of its position as the
third-ranked vendor in the BAFOs evaluation process. Cf. Preston Carroll Co. v. Florida
Keys Aqueduct Authority, 400 So.2d 524 (Fla. 3d DCA 1981). Both DEP and CDM
correctly note that the ALJ did not make any ruling on this standing issue.
DEP and CDM assert that DEP’s final order should find that Shaw failed to
establish standing. I decline, however, to supplement the ALJ’s conclusions of law by
making a de novo ruling in this Final Order on the issue of Shaw’s standing, which was
not addressed in the RO on review.
Even if this Final Order contained a ruling dismissing Shaw’s petition for lack of
standing due to its third-ranked vendor position, I am not convinced that I would have
authority to reject the ALJ’s findings and conclusions addressing the merits of Shaw’s
12
claims. Cf. Hamilton County v. Dept. of Environmental Regulation, 587 So.2d 1378,
1383 (Fla. 1st DCA 1991) (concluding that the issue of Hamilton County’s standing was
“moot,” since the [remaining] issues had been fully litigated in the administrative
proceeding). And, of course, in an ITN procurement, any vendor could receive the
contract if negotiations with competing vendors did not result in an award.
DEP Exception No. 1 and CDM Exception E are denied.
DEP Exception No. 10 and CDM Exception C.14
These two Exceptions both object to the third sentence of paragraph 33 of the
RO where the ALJ finds: “if Dr. Fuleihan’s scores were removed from the final
tabulation, as requested by Compass, then Compass would be the highest ranked
vendor.” (emphasis added). CDM and DEP contend that this crucial finding is not
supported by competent substantial evidence of record, but is based solely on a pure
mathematical miscalculation by the ALJ.
The uncontested findings of the ALJ concerning the scores and rankings of the
BAFO submittals of CDM, Compass, and Shaw by each of the eight evaluators are set
forth in paragraphs 32 and 33 of the RO, which read in pertinent part as follows:
32. Mr. Alden ranked CDM first with a score of 177, Compass second with
a score of 174, and Shaw third with a score of 172. Mr. Black ranked CDM
first with a score of 140, Compass second with a score of 137 and Shaw
third with a score of 106. Mr. Brown ranked CDM first with a score of 205,
Compass second with a score of 183 and Shaw third with a score of 182.
Mr. Coram ranked Compass first with a score of 180, Shaw second with a
score of 175 and CDM third with a score of 170. Dr. Fuleihan ranked
CDM first with a score of 192, while Compass and Shaw tied with scores
of 189. Ms. Phillips originally submitted her evaluations with Compass
ranked first with a score of 144, and Shaw and CDM tied with a score of
141. Due to an error when she transposed her scores from her notes
to her score sheet, she corrected her evaluations at the hearing. With
the corrected scores Compass was still ranked first [by Ms. Phillips]
4
Because these exceptions are dispositive, I address them out of sequence.
13
with a score of 144, but CDM was now second with a score of 143, and
Shaw third with a score of 139. However, this correction did not change
the final results of the evaluation process. Mr. Wright ranked Shaw first
with a score of 183, Compass second with a score of 181, and CDM
third with a score of 166. Mr. Zamani ranked CDM first with a score
of 218, Compass second with a score of 210, and Shaw third with a
score of 191. (emphasis added).
33. After the evaluators submitted their score sheets, the ranks were
added up and averaged to obtain a final ranking for each vendor.
The final ranking was as follows: CDM was ranked first with an
average rank of 1.688, Compass second with an average rank of
1.813, and Shaw third with an average rank of 2.500.
The ALJ’s related uncontested findings in paragraphs 29 and 30 of the RO
concerning DEP’s vendor-ranking process after receiving all the evaluators’ scores are:
29. . . .Each vendor was then assigned a ranking based on its weighted
total score. The vendor with the highest score received a rank of one,
the second highest score received a rank of two, and the third highest
score received a rank of three. If two or more vendors had identical
scores, the ranks were added together and divided by two.
30. After all the scores had been submitted, the ranks of each
vendor were averaged to determine the best proposal for the state.
Average ranks were used in order to normalize the evaluations so
that an especially generous or especially hard grader would not skew
the outcome.
CDM and DEP assert that, based on the ALJ’s above-quoted findings, if
Fuleihan’s scores are removed and the average rankings of the three vendors are recalculated based on the scores of the remaining seven evaluators utilizing Ms. Phillips’
corrected scores then, as a matter of pure mathematics, CDM and Compass have an
identical “highest-ranking” of 1.714 and Shaw is third at 2.571, as reflected by the
following chart based on uncontested numerical data extracted from paragraphs 29, 30,
and 32 of the RO:
14
TABLE 1: Scores and Ranking using corrected scores for Barbara Phillips
Evaluator
Alden
Black
Brown
Coram
Phillips
Wright
Zamani
Total
Average
CDM
177
140
205
170
143
166
218
1219
174.14
1.0
1.0
1.0
3.0
2.0
3.0
1.0
12
1.714
Compass
174
2.0
137
2.0
183
2.0
180
1.0
144
1.0
181
2.0
210
2.0
1209
12
172.71
1.714
Shaw
172
106
182
175
139
183
191
1148
164.00
3.0
3.0
3.0
2.0
3.0
1.0
3.0
18
2.571
I agree with this contention of CDM and DEP and conclude that, utilizing only the
uncontested data found in paragraphs 29-30 and 32 of the RO, a correct mathematical
re-calculation of the scores and rankings of the remaining seven evaluators after
Fuleihan’s scores are removed inevitably results in CDM and Compass being tied as
the “highest-ranked” vendor. I find after a review of the entire record, that there is no
competent substantial evidence supporting the ALJ’s challenged finding in paragraph 33
that Compass would be the sole highest-ranked vendor if Dr. Fuleihan’s scores are
removed from the final BAFOs tabulations.
In its Responses to Exceptions, Shaw does not contest any portion of these
Exceptions of DEP and CDM. In addition, neither Compass nor Shaw filed an
Exception to paragraph 32 of the RO pertaining to the ALJ’s findings concerning Ms.
Phillips’ original and corrected evaluation scores. I also deem it significant that the
subsequent Responses to Exceptions filed by Compass did not dispute the basic fact
that, as a matter of pure mathematical calculation, CDM and Compass are tied as the
highest-ranked vendor when Ms. Phillips’ corrected scores are utilized and Fuleihan’s
scores are removed. Compass only contends in its Responses to Exceptions that Ms.
15
Phillips “cannot change her scores at the Final Hearing.” I reject this contention of
Compass for several reasons.
First, the DOAH record does not reflect that Compass made a timely objection at
the final hearing to this testimony of Ms. Phillips concerning the error in her original
BAFOs evaluation scores and her subsequent corrections. Thus, Compass has waived
its right to now object to this testimony of Ms. Phillips. See Tri-State Systems v. Dept.
of Transportation, 500 So.2d 212, 215 (Fla. 1st DCA 1986), rev. den., 506 So.2d 1041
(Fla. 1987) (concluding that hearsay testimony admitted into evidence without objection
at a DOAH final hearing becomes “usable as proof just as any other evidence”).
Second, the failure of Compass and Shaw to object to the ALJ’s Finding of Fact
32 in their Exceptions to the RO constitutes a waiver of any purported errors in these
factual findings. See Couch v. Commission on Ethics, 617 So.2d 1119, 1124 (Fla. 5th
DCA 1993) (concluding that Couch waived his right to challenge a DOAH hearing
officer’s findings of fact on appeal because of his failure to file exceptions to the
findings). To reject a crucial finding of the ALJ based on an objection first raised by
Compass in its Responses to Exceptions would also unfairly deny CDM the opportunity
to file a reply in opposition.
Third, even if Compass or Shaw had made a timely objection to this testimony of
Ms. Phillips and had also filed Exceptions to the ALJ’s Finding of Fact 32, I would not
have “substantive jurisdiction” under § 120.57(1)(l), F.S., to reject an evidentiary ruling
by the ALJ as to the admissibility of such testimony. See, Barfield v. Dept. of Health,
805 So.2d 1008, 1011-12 (Fla. 1st DCA 2001) (concluding that the Board of Dentistry
16
lacked substantive jurisdiction on review of a DOAH RO to reject an evidentiary ruling
by the ALJ that certain documents were inadmissible hearsay).
Finally, even if I set these concerns aside, I would be compelled to reject the
argument because it appears to suggest that Ms. Phillips should not have testified about
the error in her scoring after she noticed her mistake. I cannot accept a legal argument
that would require less than full candor from a witness.
Based on this mathematical correction that CDM and Compass are “co-highest
ranked” vendors, if Fuleihan’s scores are removed from the BAFOs evaluation process,
I conclude that DEP staff would have had the sound discretion to begin negotiations
with either CDM or Compass under the ITN process. See Baxter’s Asphalt, 421 So.2d
at 507 (stating that a governmental agency awarding a bid has “wide discretion” and is
not to be overturned “even if reasonable persons may disagree” about the proper
recipient of the award). Because DEP has wide discretion and may exercise that
discretion even in a manner with which reasonable people might disagree, it cannot be
“clearly erroneous, contrary to competition, arbitrary, or capricious” to award the
contract to one of the “co-highest ranked” vendors, namely, CDM.
In view of the above rulings, DEP’s Exception No. 10 and CDM’s Exception C.1
are granted.
DEP Exception Nos. 2 through 9 and CDM Exception C.2 and D1 through D.5.
These related Exceptions all object to portions of the RO where the ALJ
addresses the allegations of Compass and Shaw that Fuleihan’s role in the Piney Point
BAFO evaluation process created a conflict of interest warranting a determination that
DEP’s proposed award of the contract to CDM was arbitrary, capricious, and contrary to
17
competition. Having decided in the previous section of this Order that commencing ITN
discussions with CDM was permissible (even without Fuleihan’s scores) it is
unnecessary to decide whether including Fuleihan’s scores in the evaluation process
would have created an appearance of impropriety. Like courts, I am reluctant to decide
issues that have no practical significance. See, e.g., New Mexico Env’t Dep’t v. Foulson
(In re L.F. Jennings Oil Co.), 4 F.3d 887, 889 (10th Cir. 1993) (declining to address an
issue because resolution would have “no practical significance”). I therefore decline to
rule on these exceptions. If an appellate court disagrees with my ruling on DEP
Exception No. 10 and CDM Exception C.1, and it becomes necessary to rule on the
merits of DEP Exception Nos. 2 through 9 and CDM’s Exception C.2 and D1 through
D.5, DEP requests that the matter be remanded to this agency for substantive review
and final disposition.
Accordingly, DEP Exception Nos. 2 through 9 and CDM’s Exception C.2 and D.1
through D.5 are deemed to be nonessential to the final disposition of this case and are
denied at this time on that procedural basis alone.
RULING ON CDM’S REQUEST FOR ATTORNEYS’ FEES
CDM concludes its Exceptions with a request that DEP issue a final order
“awarding attorney’s fees to CDM in an amount to be determined by separate order.”
However, a state agency has limited jurisdiction over the subject matter of allowable
attorney’s fees and costs in formal administrative proceedings. Under § 120.595(1),
F. S., an agency is only authorized to award attorney’s fees and costs to a prevailing
party where the ALJ has entered a RO determining that a nonprevailing adverse party
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has “participated in the proceeding for an improper purpose,” and the suggested
amount of the attorney’s fees and costs is designated in the RO.
The RO now on review does not address the issue of whether any party has
participated in this proceeding for an improper purpose. The RO also does not
designate the amount of attorney’s fees and costs to be awarded by DEP in its Final
Order as required by § 120.595(1). Unlike trial judges, agency heads do not have
authority to enter separate orders awarding or denying attorney’s fees and costs after
final orders have been entered in administrative cases. The award of attorney’s fees
and costs by an agency pursuant to § 120.595(1) must be made in “the final order in a
[s. 120.57(1)] proceeding.” See subsection 120.595(1)(b).
Sections 57.105(1) and 57.105(5), F.S., also require that the ALJ make a
determination that the losing party or the losing party’s attorney knew or should have
known that a claim or defense would not be supported by the material facts or by the
application of the existing law to the material facts. These determinations and any
related award of attorney’s fees must be made by the ALJ in a separate order, which is
directly reviewable by the appropriate district court of appeal.
CDM’s request for an award of attorney’s fees in a separate DEP order is denied.
RULINGS ON COMPASS’S EXCEPTIONS TO THE RECOMMENDED ORDER
Exceptions 1 through 4 to Findings of Fact
These related Exceptions object to portions of the ALJ’s Finding of Facts 43, 44,
45, and 47 dealing with an alleged conflict of interest on the part of Dr. Fuleihan.
Having decided earlier that commencing ITN discussions with CDM was permissible,
and for reasons discussed when denying DEP Exceptions Nos. 2 through 9 and CDM
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Exception C.2 and D.1 through D.5, these Exceptions are deemed to be moot and
nonessential to the final disposition of this case and are therefore denied on procedural
grounds.
Nevertheless, in the event an appellate court were to reverse the dispositive
ruling granting DEP Exception No. 10 and CDM Exception C.1, I also conclude that
these Exceptions of Compass are insufficient on their merits. Paragraphs 43-45 and 47
of the RO contain significant findings by the ALJ that: all three vendors knew of
Fuleihan’s participation in the ITN and BAFO process; Ardaman would not gain anything
due to Mosaic serving as a subcontractor to CDM; Mosaic would only have a limited
role on CDM’s team; and Fuleihan did not attempt to influence the BAFO process to the
advantage of any particular vendor.
The challenged factual findings appear to be reasonable interpretations of and/or
inferences drawn by the ALJ from competent substantial evidence of record which I
cannot reweigh here. See Heifitz v. Dept. of Business Regulation, 475 So.2d 1277,
1281-82 (Fla. 1st DCA 1985). This competent substantial evidence includes the final
hearing testimony of Dr. Fuleihan; DEP Contract Administrator, Gwenn Godfrey; Chief
of DEP’s Bureau of Mine Reclamation, Phil Coram; and CDM official, Michael Edgar.
(See, e.g., Tr. Vol. 2, pp. 214-16, 257-63; Tr. Vol. 3, pp. 257-63; Tr. Vol. 5, pp. 621-28,
631-49, 666-68; Tr. Vol. 7, pp. 827-31, 848-52; and Tr. Vol. 8, pp. 885-90 ).
Compass’s Exceptions to Findings of Fact 43, 44, 45, and 47 are thus denied on
both procedural and substantive grounds.
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EXCEPTIONS TO CONCLUSIONS OF LAW
A. Preliminary Statement
This portion of Compass’s Exceptions, consisting entirely of argument of counsel,
does not take Exception to any page or paragraph of the RO as required by subsection
120.57(1)(k), F.S. Consequently, no ruling on counsel’s Preliminary Statement is
required.
B. Exceptions
1. Conclusion of Law 77
This Exception of Compass does not find fault with the existing language of the
ALJ’s Conclusion of Law 77. Instead, Compass requests that the Secretary of DEP
supplement Conclusion of Law 77 with additional language. The suggested additional
language would consist of a statutory interpretation by the Secretary of DEP that the
role of Fuleihan in the evaluation process contravened the provisions of Sections
112.311, 112.312, and 112.313, Florida Statutes. These cited statutes are a part of the
statutory “Code of Ethics for Public Officers and Employees.” For reasons discussed
when denying DEP Exceptions Nos. 2 through 9 and CDM Exceptions C.2 and D.1
through D.5, I decline, as unnecessary, Compass’s request to supplement the ALJ’s
Conclusion of Law 77.
In view of the above, Compass’s Exception to Conclusion of Law 77 is denied.
2. Omitted Conclusion of Law - Standing
In this Exception, Compass does not object to any existing finding of fact or
conclusion of law in the ALJ’s Recommended Order. Instead, Compass correctly notes
that the ALJ did not make a ruling in his RO dealing with Shaw’s standing to file its
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petition protesting the subject contract award to CDM. Compass requests that this
agency Final Order supplement the RO on review by making a legal ruling dismissing
Shaw’s petition for lack of standing because it is undisputed that Shaw is the “thirdranked” responder to DEP’s BAFO solicitation.
The same Shaw lack of standing claim was raised in DEP’s Exception No. 1 and
CDM’s Exception E. Compass’s request that this Final Order dismiss Shaw’s petition
for lack of standing is denied for the reasons set forth in my above ruling denying DEP’s
Exception No. 1 and CDM’s Exception E, which are incorporated by reference herein.
3. Omitted Conclusions of Law - Disposition
Compass’s final Exception deals with the ALJ’s ultimate recommendation that
DEP enter a final order determining that its proposed award of the contract to CDM,
“which was based upon a review, grading, and ranking of the vendors by an evaluation
team that included Dr. Fuleihan, is contrary to its governing statutes, policies, and
specifications.” Compass suggests that the Secretary of DEP should supplement the
ALJ’s existing recommendation by adding the following language:
The Department shall award the contract to Compass
and enter into negotiations with Compass without delay.
Compass’s request that DEP supplement the ALJ’s recommendation as quoted above
is deemed to be moot because this Final Order does not adopt the ALJ’s existing
recommendation that DEP’s final order determine that the proposed award of the
contract to CDM is “contrary to its governing statutes, policies, and specifications.”
Even if the appellate courts were to subsequently agree with the ALJ’s
recommendation, I am of the view that the ALJ was correct in not recommending a
specific action to be taken by DEP. As note above, it is established case law that the
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remedy for a violation of contract procurement procedures is “within the sound
discretion of the agency.” GTECH Corporation, 737 So.2d at 619; Moore, 596 So.2d at
761.
In this contested procurement case, the ALJ did not act as a substitute for DEP
and did not have the authority to make a determination to award or reject the bids or
proposals de novo. Intercontinental Properties, 606 So.2d at 386; Moore, 596 So.2d at
761. Instead, the ALJ functioned in a review capacity only, and his responsibility did not
include a recommendation on how DEP should proceed. Id. at 761; § 120.57(3)(f).
I also reject Compass’s attempt to characterize the ALJ’s recommendation as an
“omitted Conclusion of Law.” Compass’s final Exception is thus denied.
RULINGS ON SHAW’S EXCEPTIONS TO THE RECOMMENDED ORDER
Exception Nos. 1 and 2
These Exceptions, dealing with factual findings of the ALJ on the Fuleihan
conflict of interest issue unfavorable to both Compass and Shaw, are deemed to be
moot for the reasons set forth in my above rulings denying Compass’s Exceptions to
Finding of Facts 43, 44, 45, and 47. However, in the event an appellate court were to
reverse the ruling granting DEP Exception 10 and CDM Exception C.1, I also conclude
these Exceptions of Shaw are insufficient on their merits. The challenged findings in
paragraphs 43, 47, and 52 appear to be reasonable interpretations and/or inferences
drawn by the ALJ from substantial competent evidence of record, including the
testimony of Dr. Fuleihan, Gwenn Godfrey, and Phil Coram
Shaw’s Exceptions Nos. 1 and 2 are thus denied on both procedural and
substantive grounds.
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Exception No. 3
Shaw’s third Exception objects to the ALJ’s Findings of Fact 55, 56, part of 72,
and part of related Conclusion of Law 78. In these portions of the RO, the ALJ rejects
Shaw’s claims that Compass’s proposed water consumption and treatment methods in
its BAFO submittal were not responsive to DEP’s Instructions. The ALJ found there
was no credible evidence that Compass’s proposed water treatment method would not
work. (RO. para. 56) The ALJ also concluded that the BAFOs submittals of CDM and
Compass conformed in all [material] respects to the solicitations; and to the extent there
were any minor deviations, they were immaterial and did not give Compass or CDM any
advantage over Shaw and could be waived by DEP. (RO, para. 72).
I conclude that the challenged factual findings and legal conclusions are
reasonable interpretations and/or inferences drawn by the ALJ from competent
substantial evidence of record. This competent substantial evidence includes the
cumulative expert testimony at the final hearing of Phil Coram, Dr. Vaughn Astley, and
Craig Kovach. See also Joint Exhibit 4, Attachments 2 and 3; and Joint Exhibit 26.
Shaw cites to certain documentary evidence and the testimony of one of its
witnesses and employees, John Nance, in support of its contention that the challenged
findings and conclusions of the ALJ are erroneous. However, if there is competent
substantial evidence to support the ALJ’s challenged findings of fact, it is irrelevant that
there may also be competent substantial evidence to support contrary findings. Arand
Construction Co. v. Dyer, 592 So.2d 276, 280 (Fla. 1st DCA 1991); Conshor, Inc. v.
Roberts, 498 So.2d 622, 623 (Fla. 1st DCA 1986).
Accordingly, Shaw’s Exception No. 3 is denied.
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Exception No. 4
Shaw’s fourth and final Exception objects to the ALJ’s Findings of Fact 67 and
part of Finding of Fact 72, and a part of his related Conclusion of Law 78. In these
portions of the RO, the ALJ addressed and rejected Shaw’s allegations that the BAFO
submittal of CDM was “non-responsive” because it purportedly failed to comply with the
portion of the BAFO Instructions pertaining to certain “milestones” in the closure
schedule at the Piney Point site.
The ALJ found that any omissions or deviations by CDM from the BAFO
Instructions dealing with its proposed closure schedule were minor and immaterial and
did not give CDM any advantage. (RO, paragraphs 67-72). The ALJ thus concluded
that “the evidence does not support a conclusion that the BAFOs submitted by
Compass and CDM were non-responsive.” (RO, para. 78). I find these challenged
facts and related legal conclusions of the ALJ to be based on competent substantial
evidence of record, including the testimony of Phil Coram and Michael Edgar. (See,
e.g., Tr. Vol. 1, p. 173; Vol. 8, pp. 902-04); see also CDM’s closure schedule in its
BAFO submittal admitted into evidence at the final hearing as the parties’ Joint Exhibit
26.
In view of the above, Shaw’s Exception No. 4 is denied.
CONCLUSION
As noted in the Standard of Review, the Florida courts have historically given
special deference to decisions of public agencies involving the solicitation and
acceptance of proposals through the competitive procurement process. See, e.g.,
Culpepper v. Moore, 40 So.2d 366, 370 (Fla. 1949); Baxter’s Asphalt, 421 So.2d at 507;
25
Scientific Games, 586 So.2d at 1131. Thus, the Florida Supreme Court observed over
50 years ago that:
So long as a public agency acts in good faith, even though they may
reach a conclusion on facts upon which reasonable men may differ,
the courts will not generally interfere with their judgment, even though
the decision reached may appear to some persons to be erroneous.
Culpepper, 40 So.2d at 370.
This special deference accorded to public agency decisions should be even
greater in this case involving DEP actions arising out of its phosphogypsum
“ABATEMENT OF IMMINENT HAZARD” powers under § 403.4154(3), F. S. Under
§ 403.4154(3), if DEP determines that the physical condition or maintenance of a
phosphogypsum stack system “poses an immediate hazard” to the public and/or the
environment, DEP is authorized to take prompt action to abate or substantially reduce
the imminent hazard, including assuming financial responsibility for remedial action.
DEP determined in 2001 that the two Piney Point phosphogypsum stacks posed an
imminent hazard under § 403.4154(3) due to the bankruptcy of the owner of the Piney
Point fertilizer plant and the bankrupt owner’s notification that it did not have the
resources to maintain the site. (RO, paragraphs 6-7).
It is undisputed that there are 500 to 550 million gallons of contaminated
“process water” estimated to be at the Piney Point site, located only one mile inland
from Tampa Bay. (RO, para. 4). It is also undisputed that this process water is very
acidic (containing various heavy metals and high levels of nutrients and total dissolved
solids), and is even slightly radioactive. (RO, para. 3). Thus, even further deference
should be accorded to DEP’s decision to recommend the award of the Piney Point
26
contract to CDM because time is of the essence in this “ABATEMENT OF IMMINENT
HAZARD” matter under § 403.4154(3).
It is therefore ORDERED:
A. The ALJ’s finding in paragraph 33 of the RO that, “if Dr. Fuleihan’s scores
were removed from the final tabulation, as requested by Compass, then Compass
would be the highest ranked vendor,” is rejected for lack of any supporting competent
substantial evidence of record. When Barbara Phillips’ undisputed corrected scores are
utilized without including Dr. Fuleihan’s scores, and the ALJ’s unchallenged Findings of
Fact 29-32 are applied, CDM and Compass are tied as the highest-ranked vendor and
Shaw is third.
B. Because it is unnecessary to consider Dr. Fuleihan’s scores to reach the
holding of this Final Order, the portions of paragraphs 16-18, 48 through 51, 76-77 of
the RO, and endnote 3, construing DEP Directives 202 and 315, a written opinion of
DEP attorney, Teresa Mussetto, DEP’s BAFO Instructions, and §§ 287.001 and
287.057(30), F.S., are not adopted in this Final Order.
C. The ALJ’s related recommendation that DEP’s final order determine that its
proposed award of the contract to CDM, based upon the review, grading, and ranking of
the vendors by an evaluation team including Dr. Fuleihan, is “contrary to its governing
statutes, policies, and specifications” is also deemed to be dictum and is not adopted.
D. As modified and limited in paragraphs A, B, and C above, the Recommended
Order (Ex. A) is otherwise adopted by reference herein.
E. The petitions of Compass and Shaw are denied.
27
F. The action of DEP staff recommending the award of the Piney Point
Phosphogypsum Stack System Management and Closure Contract to CDM, the cohighest ranked vendor, is not “clearly erroneous, contrary to competition, arbitrary, or
capricious,” and is hereby AFFIRMED.
Any party to this proceeding has the right to seek judicial review of the Final
Order pursuant to Section 120.68, Florida Statutes, by the filing of a Notice of Appeal
pursuant to Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the
Department in the Office of General Counsel, 3900 Commonwealth Boulevard, M.S. 35,
Tallahassee, Florida 32399-3000; and by filing a copy of the Notice of Appeal
accompanied by the applicable filing fees with the appropriate District Court of Appeal.
The Notice of Appeal must be filed within 30 days from the date this Final Order is filed
with the clerk of the Department.
DONE AND ORDERED this
day of April, 2005, in Tallahassee, Florida.
STATE OF FLORIDA DEPARTMENT
OF ENVIRONMENTAL PROTECTION
COLLEEN M. CASTILLE
Secretary
Marjory Stoneman Douglas Building
3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
FILED ON THIS DATE PURSUANT TO § 120.52,
FLORIDA STATUTES, WITH THE DESIGNATED
DEPARTMENT CLERK, RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED.
CLERK
DATE
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing Final Order has been sent by
United States Postal Service to:
Jere Earlywine, Esquire
Tew Cardenas LLP
215 South Monroe Street, Suite 702
Tallahassee, FL 32301-1839
J. Andrew Bertron, Jr., Esquire
Huey Guilday, Tucker, Schwartz
& Williams, P.A.
Post Office Box 12500
Tallahassee, FL 32317-2500
Seann M. Frazier, Esquire
Greenberg Traurig, P.A.
Post Office Drawer 1838
Tallahassee, FL 32302-1838
Dorn C. McGrath, III, Esquire
Greenberg, Traurig, P.A.
1750 Tysons Boulevard, Suite 1200
McLean, VA 22102-4208
Ann Cole, Clerk and
Donald R. Alexander, Administrative Law Judge
Division of Administrative Hearings
The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
and by hand delivery to:
Thomas M. Beason, Esquire
Marshall G. Wiseheart, Esquire
Francine M. Ffolkes, Esquire
Brian J. Cross, Esquire
Department of Environmental Protection
3900 Commonwealth Blvd., M.S. 35
Tallahassee, FL 32399-3000
this
day of April, 2005.
STATE OF FLORIDA DEPARTMENT
OF ENVIRONMENTAL PROTECTION
J. TERRELL WILLIAMS
Assistant General Counsel
3900 Commonwealth Blvd., M.S. 35
Tallahassee, FL 32399-3000
Telephone 850/245-2242
29