Category Archives: Public Contracts

Local Bid Protests – You Can Fight City Hall: Protesting Your County, Municipality, or District, Procurement Decisions

Introduction

This article provides a brief overview of local government bid protest procedures. Unlike the state bid protest process, which is primarily governed by Florida state statutes and rules1, and is discussed at length in our previous article, “Bid Protests: Know Your Rights – the Clock is Ticking” at http://smithlawtlh.com/bid-protests-know-your-rights-the-clock-is-ticking/ (“State Bid Protest article”), the bid protest procedures for local government entities (counties; municipalities — cities, towns, villages; special districts) vary with each particular local authority.

In Florida, there are 67 counties, 282 cities, 109 towns, 19 villages, and over 1600 Special Districts2, and there is no uniform process or procedure for challenging the procurement decisions of each local entity. While the same substantive arguments typically raised in state agency bid protests (e.g., non-responsive bids, non-responsible bidder issues, bias/favoritism, arbitrary scoring, ex-parte communications)3, can often be raised when challenging local government entity decisions, the procedural process and timing for local government entity bid protests is not controlled by state statutes.4 Instead, the process varies for each county, municipality, and special district, depending on their individual authorizing charters, ordinances, procurement codes, and policies.

Some local government entities expressly adopt or follow, in whole or in part, the state procurement process and state procedures for challenging bid awards5, but more often the local government entities create their own procurement process and procedures, which are governed by their individual charters, ordinances, rules, as well as by their specific bid proposals (e.g., ITB, RFP specifications). In addition, judicial precedents and Florida’s strong public policy in favor of fair competition (discussed briefly below, and in more detail in our State Bid Protest article) provide avenues for challengers to contest unfair and arbitrary bid award decisions.

No Uniformity: Examples of Various Local Government Entity’s Bid Protest Procedures

As discussed at length in our prior State Bid Protest article, there is a uniform and rather straightforward bid protest process for challenging state agencies: the timeframe for bringing a notice of protest challenging a state agency’s bid solicitation specifications is 72 hours from date of posting of award, and the protester then has an additional 10 days after the notice of protest to file its formal written protest. The timeframes for challenging intended state agency awards are consistent with the timeframes for challenging solicitation specifications: 72 hours from the posting of the contract award to file a notice of intent to protest, and 10 days thereafter to file the formal written protest of intended award.

After receipt of a bid protest, the process thereafter is also relatively straightforward and uniform with regard to state agency bid protests: upon receipt of the formal written protest, the agency shall attempt to resolve the protest by mutual agreement within 7 days. If there is no mutual resolution of the protest within the 7 days after receipt of written protest, and there are disputed issues of material fact, the agency shall refer the protest to the Division of Administrative Hearings for assignment of an Administrative Law Judge to conduct a hearing within 30 days, and shall issue a Recommended Order (RO) within 30 days after the hearing (or within 30 days from receipt of the hearing transcript, whichever is later). Each party shall have 10 days to file written exceptions to the RO, and a Final Order (FO) shall be entered by the agency within 30 days after entry of the RO. See 120.57(3), Florida Statutes.

In contrast, the bid protest process for challenging local government entities is far from uniform and simple, as it varies within each specific local entity. In other words, each county, city, township, district has its own bid protest process.

Below are just a few examples from various county, village, city, and district governing procurement documents in order to demonstrate the complexity and lack of uniformity in local bid protest procedures, and the need for experienced legal counsel to represent vendor interests in any challenge to a local government entity’s competitive bidding process.6

County Example: Miami-Dade County

The primary governing procurement document for Miami-Dade County is Implementing Order 3-21, entitled Bid Protest Procedures. See http://www.miamidade.gov/aopdfdoc/aopdf/pdffiles/IO3-21.pdf.

Protests of Solicitation Specifications: Pursuant to Implementing Order 3-21, written protests of solicitation specifications must be brought at least two days prior to the hour of bid opening or will be deemed waived. (“Any question, issue, objection or disagreement concerning, generated by, or arising from the published requirements, terms, conditions or processes contained in the solicitation document shall be deemed waived by the protestor and shall be rejected as a basis for a bid protest, unless it was brought by that bidder or proposer to the attention, in writing, of the procurement agent, buyer, contracting officer or other contact person of the County department that issued the solicitation document, at least two work days (not less than 48 hours) prior to the hour of bid opening or proposal submission.”). Compare to Florida Statutes governing state agency protests, which provides that a “notice of protest” of state agency solicitation specifications shall be made within 72 hours of the posting of the solicitation, and the “formal written protest” shall be filed 10 days after the “notice of protest.”

Protest of Intended Contract Award: With respect to formal (concerning contract award amounts over $250,000) and informal (concerning contract award amounts between $25,000 and $250,000) bid protests of intended contract awards, bidders/proposers may protest an award recommendation by filing a written intent to protest within three work days of the filing of the award recommendation. The bidder/proposer must then file its formal written protest (including all pertinent documents and supporting evidence) within three work days after the filing of the intent to protest. (Compare section 120.57(3)(b), Florida Statutes, regarding protest deadlines for challenging state agency awards, which provides that the notice of protest must be filed 72 hours from the posting of the notice of intent, and the formal written protest must be filed within 10 days after the date the notice of protest is filed).7 Thus, Miami-Dade County’s timeframes for filing a written protest significantly differ from those outlined in Florida Statutes regarding challenging state agency decisions, and failure to adhere to the more stringent timeframes in the local administrative order may result in waiver of the right to protest.

The protest shall be filed with the Clerk of the Board of the County Commission, and, depending on the intended contract award amount, may thereafter be referred to a hearing examiner appointed by the Clerk of the Board within 5 days after the filing of the written protest, and, if so referred, a hearing will be conducted within 10 days thereafter. The hearing examiner will issue a Recommended Order (RO) within 5 days of the hearing.

Hearing Process Dependent on Contract Award Amount: Depending on the contract amount in question, the hearing process proceeds differently. Intended contract award bid protests concerning expenditures over $250,000 and that exceed the county manager’s delegated authority, proceed as follows: the hearing examiner’s findings and recommendation shall be presented to the Commission by the County Manager together with the recommendation of the County Manager. If the hearing examiner’s recommendation concurs with the County Manager’s recommendation, the Commission shall not allow presentations by participants at the time the matter is presented to the Commission, and a 2/3 vote of the Commission shall be required to take action other than that which was recommended. If the hearing examiner does not concur in the County Manager’s recommendation, the participants in the competitive process and their representatives may make presentations to the Commission and the Commission shall decide the matter by majority vote.

In contrast, protests where the amount in question is over $250,000 but does not exceed the County Manager’s delegated authority, proceed as follows: if the hearing examiner concurs in the award recommendation of the Department of Procurement or other issuing department, the department shall be bound thereby and shall implement such recommendation within 5 days. If the hearing examiner does not concur in the award recommendation, the Director of the Department of Procurement Management or of the issuing department shall either accept the hearing examiner’s recommendation and implement such recommendation with 5 days, or shall submit a written recommendation to the County Manager with 5 days stating the reasons why the County Manager should approve the department’s recommendation, despite the hearing officer’s recommendation, and the County Manager shall, within 5 days, choose either the department’s or the hearing examiner’s recommendation and instruct the department to implement such recommendation.

For intended contract awards under $250,000 but over $25,000, the procedure is as follows: the issuing Department Director shall review the protest, and after consultation with the County Attorney, shall issue a report and recommendation within 20 days of the filing of the protest stating the Department’s recommendation. The Department Director’s findings shall be forwarded to the County Manager for final determination and disposition of the protest. There will be an opportunity to settle the protest within 5 days of the filing of the protest.

In addition to Implementing Order 3-21, Miami-Dade County’s procurement process is governed by its Charter and County Code, specifically section 2-8.4 of the Code of Miami-Dade County, entitled “Protest Procedures.” (See http://miamidade.fl.eregulations.us/code/cid10620/2-8.4/) Moreover, all county vendor contracts in Miami-Dade County are subject to the General Terms and Conditions found at: http://www.miamidade.gov/procurement/library/boilerplate/general-terms-and-conditions.pdf.

Municipality Example: The Village of Wellington’s (“Wellington”)

The Village of Wellington’s procurement process is governed primarily by its Purchasing Manual, as well as by the requirements outlined in the specific ITB/RFP at issue. The Purchasing Manual establishes specific directions, guidelines and requirements for purchasing, and states that all purchases “shall be in accordance with this Manual…” (See Purchasing Manual at http://wellingtonfl.gov/images/stories/departments/Purchasing/docs/Code_and_policy/Final%20Purchasing%20Manual%202014.pdf.)

With regard to ranking bids, Wellington’s Purchasing Manual specifies the criteria to be used to decide a tie if two or more bids are tied. One factor that may be considered is the date and time that the bid was received by Wellington. In other words, if there’s a tie, and if other specified criteria do not resolve the tie, Wellington will consider which bid was received first in awarding the contract. These types of details and nuances specific to each locale are very important for vendors to be aware of prior to submitting their bids, as they may very well impact the outcome of the award.

Protests of Solicitation Specifications: With regard to protesting solicitation specifications, Wellington’s purchasing manual provides that prospective bidders must file its written protest to the solicitation within three days after the advertising/posting of the competitive solicitation. (“A prospective bidder, proposer or offeror may submit a protest in writing to the Purchasing Manager challenging the terms, conditions, or specifications of a competitive solicitation, including any provision governing the methods for ranking bids, proposals, or replies, awarding contracts, reserving rights of further negotiation, or modifying or amending any contract…. The protest must be filed in three (3) days . . . after the public posting… Failure to file a protest as to the terms, conditions, or specifications of a competitive solicitation shall be deemed a waiver of the right to protest on those grounds.”). Compare Florida Statutes, which provides that only a “notice of protest” to a solicitation specification must be filed within three days, and that the formal written protest may be filed ten days thereafter.

Protest of Intended Contract Award: Similarly, Wellington’s procedure for challenging an intended award of a bid contract also requires that the formal written protest be made within three days of the notice of intended award. Again compare Florida Statutes, which provides that only a “notice of protest” must be filed within three days, and that the formal written protest may be filed ten days thereafter.

Thus, Wellington’s truncated timeframes vary significantly from those required pursuant to Florida Statutes governing challenges to state agency solicitation and intended awards. It is crucial that bid proposers are aware of the local government entity’s timeframes, which often vary greatly from those specified in Florida Statutes, in order to ensure that no rights are waived.8

Bid Protest Process: The process for Wellington’s bid protests is as follows: the written protest must be submitted to the Purchasing Manager of the Purchasing Division within three days of the notice of intended award. Within 7 days of receipt of the written protest, the Purchasing Manager shall attempt to settle or resolve the dispute, with or without a hearing and within his/her sole discretion, and shall render a written decision. Any person aggrieved by the decision of the Purchasing Manager may appeal to the Village Manager within 7 days from the date of the Purchasing Manager’s decision. The Manager shall attempt to resolve the matter, with or without a hearing and within his/her sole discretion, and shall render a decision within 7 days following receipt of the appeal.

Discretionary Hearing: In the event that either the Purchasing Manager or Manager decides to conduct a hearing, such hearings shall be informal and Florida Rules of Evidence shall not apply. All evidence of a type commonly relied upon by reasonably prudent persons may be considered, and other bidders or proposers who have standing to intervene may be permitted to participate in the hearing.

Appeal to Council: The Manager’s decision shall be final and conclusive unless the protestor files a written appeal directly with Wellington’s Council within 3 days of the Manager’s decision. The Council shall consider the appeal within 30 days, and shall hold a quasi-judicial evidentiary hearing on the appeal. Failure to follow these protest procedures shall nullify any protest.

Special District Example: The Canaveral Harbor Port District (Canaveral Port District).

The Canaveral Harbor Port District (Canaveral Port District), created by the Florida Legislature and encompassing approximately one-half of Brevard County, Florida, is primarily governed by its Charter (Chapter No. 2014-241, Laws of Florida Special Acts of 1953, as amended). (See http://www.portcanaveral.com/PortCanaveral/media/Publications/2014Charter.pdf). The procurement process for the Canaveral Port District is addressed in Article XVII of its Charter, entitled, “Contracts; Competition.” While the Charter briefly discusses the bid proposal process and specifies that competitive bidding shall be enforced when contracts exceed $100,000, it is silent with regard to any procedure or process for challenging bid awards. Thus, those wishing to challenge are left with little guidance regarding the procedure for doing so. Florida Statutes, case law, public policy, the specific ITB or RFP criteria and instructions, and resort to Circuit Court will thus be instrumental in any protest.

Other Non-State Agency Protest Example9 – University of North Florida (“UNF”)

In Florida, there are 12 state universities, and 28 community and state colleges10, and each has its own procurement process. For example, University of North Florida’s procurement process is governed by its Purchasing Regulations, specifically 13.0020R, entitled “Notice and Protest Procedures Related to a University Contract Procurement Process” (See https://www.unf.edu/president/policies_regulations/13-Procurement_Services/13_0020R.aspx), as well as the Board of Governors’ Regulations 18.002 and 18.003.

Protests of Solicitation Specifications: Similar to the bid protest process for state agencies, UNF’s regulations provide that the Notice of Intent to protest a solicitation specification must be filed within 72 hours of the posting of the specification. Failure to timely file within the 72 hours shall constitute waiver of the right to protest proceedings related to the specification. A Formal Protest must be filed within 10 days after filing the Notice of Protest.

Protest of Intended Contract Award: Also similar to the bid protest process for state agencies, UNF regulations provide that a Notice of Protest of an intended contract award must be filed within 72 hours of the posting of the University’s notice of decision or intended decision, and that the Formal Protest must be filed within 10 days after filing the Notice of Protest.

Pursuant to UNF Regulations, the UNF President/President’s Designee may, in response to a Protest of a specification or intended award, terminate the contract procurement process, terminate the solicitation process, and/or reject all bids. If any such action is taken, the Protest shall be automatically dismissed, and the University may, if desired, reinitiate the contract procurement process.

Bid Protest Process: According to UNF Regulations, within 7 days of the filing of the Formal Protest, the University may hold informal discussions with the protester to attempt to resolve the protest by mutual agreement. If no resolution is reached, the protest shall proceed to a summary proceeding presided upon by a University official if there are no disputed issues of material fact, or to a quasi-judicial hearing if there are disputed issues of material fact.

Quasi-Judicial Hearing: If the Formal Protest contains issues of material fact, the President/President’s Designee shall either refer the Formal Protest to an appointed quasi-judicial officer for a quasi-judicial hearing or may forward a request for hearing to DOAH for assignment of an Administrative Law Judge (“ALJ”) to conduct the quasi-judicial hearing (in the same fashion as state agency bid protests). The hearing shall be conducted within forty (40) days after the date the Formal Protest was filed. The quasi-judicial hearing shall be a de novo proceeding to determine whether the University’s decision or intended decision is contrary to the statutes, regulations, or policies governing the University, or contrary to the Specifications. The standard of proof for the proceedings shall be whether the proposed University action was clearly erroneous, contrary to competition, arbitrary, or capricious.

All parties have an opportunity to present evidence; to respond to all issues involved; to conduct cross-examination and submit rebuttal evidence; and to submit proposed findings of fact and proposed orders. The hearing shall be conducted in conformity with the Florida Rules of Civil Procedure and the Florida Rules of Evidence. The Quasi-Judicial Officer will issue a written Recommended Order, and the University President shall thereafter issue a Preliminary Order, to which the parties may file objections, after which the President will review any timely filed objections and render a Final Order.

Judicial review of the University’s final decision shall be in accordance with Florida Rules of Appellate Procedure Rule 9.190(b)(3), applicable to review of quasi-judicial decisions of an administrative body not subject to the Administrative Procedure Act. A request for review may be made by filing a petition for certiorari review with the appropriate circuit court within thirty (30) days after the University’s final decision. Failure to seek timely review shall constitute a waiver of the right to appeal the University’s final decision.

It is clear from just the few examples highlighted above that there are no uniform timeframes or procedures for challenging local government entity procurement solicitation specifications and intended decisions, and that the procedures for challenging a local government entity’s procurement process are often extremely complex, and entirely dependent upon the local government entity’s governing procurement documents.

In addition to the different timeframes for bringing protests, each local entity’s governing purchasing documents may vary in terms of the contract amount that is subject to competitive bidding11, and the specific steps for protesting – the who, what, where, and how of protesting solicitations and intended awards (e.g., who does it need to be submitted to, who reviews the challenge, who do you appeal your challenge to; what information is required to be included, what information are you entitled to include; where should it be submitted, where do you appeal; and how do you ensure you exhaust your administrative remedies).

Typical Process in Local Government Bid Protests Despite Lack of Uniform Procedures

Overview

Despite the many procedural differences in each locale, the typical protest process pursuant to most local government procurement codes involves submitting a written protest to the local government’s administrative procurement staff (e.g., the Purchasing Department, the Purchasing Division, Procurement Office), and then appealing up the chain of command if unsuccessful below. Typically, there will be informal attempts to negotiate a settlement once a protest has been filed. Ultimately, most counties, municipalities, and districts will allow for an informal hearing (quasi-judicial hearing) before their Board or Commission. (See below re: quasi-judicial hearing).

Vendors will need to make several strategic decisions along with way. First, they will need to decide if they should challenge the solicitation specification. If they don’t timely object to the solicitation specifications, then they will waive the right to raise such issues later after the intended contract award has been made. However, if they do timely object, they run the risk of possibly offending or ultimately being disfavored by the local entity that they are protesting, and thus putting themselves in a vulnerable position vis-à-vis ultimately being awarded the contract.

Additionally, vendors will need to decide if and when to file suit in circuit court. Depending on the facts and the local government procurement procedures, it may be prudent to file in circuit court prior to any final decision by the Commission. See Wood-Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So. 2d 446, 448 (Fla. 1st DCA 1978). Conversely, depending on the facts and the likelihood of being successfully awarded the contract, it may be more beneficial to wait until after the Commission renders its final decision, and then if adverse, to seek a circuit court injunction or petition for writ of certiorari. (Silver Exp. Co. v. Dist. Bd. of Lower Tribunal Trustees of Miami-Dade Cmty. Coll., 691 So. 2d 1099, 1102 (Fla. Dist. Ct. App. 1997) (holding that unsuccessful bidder’s circuit court action to enjoin College’s contract award to another contractor should have been granted due to the irreparable injury caused by College’s violation of sunshine laws).

What to do – Step by Step

The first step in determining whether to protest is to be sure to familiarize yourself with the local authority’s governing purchasing documents, ordinances, charters, etc., as well state statutes and relevant case law, in case the documents are silent on various procedures.

Next, once you are notified of a solicitation/intended award that you think is improper, it is crucial to act quickly and submit your protest so as not to miss any deadlines and waive any rights. It is imperative to follow the specific protest procedures outlined by the local entity’s governing documents.

Challenge to Bid Solicitation Specifications: Most local government procurement documents specify the timeframes and procedures for challenging bid solicitation specifications, and provide that the failure to timely file a protest to the specifications of a bid solicitation shall preclude the protester from raising those issues in a bid protest after the contract has been awarded. (For example, Miami-Dade County provides that a protest to solicitation specifications must be made 2 days prior to bid opening or are waived, at IO 3-21; The Village of Wellington provides that a protest to solicitation specifications must be filed within 3 days of the posting of the competitive solicitation, and that failure to do so shall be deemed a waiver of the right to protest on those grounds.).

Thus, if a bidder wishes to challenge the terms, conditions, or specifications contained in the solicitation (including any provision governing the methods for ranking bids, awarding contracts, reserving rights for further negotiation, or modifying or amending any contract) the protest to the solicitation must be timely filed in accordance with the local governing procurement documents, typically within a few days of the posting of the solicitation.

While it is illegal in competitive bidding for a local government entity to tailor bid criteria or specifications in favor of a preferred vendor, it is a fairly frequent problem in public procurement.12 If a vendor believes that any part of the solicitation is suspect, it must timely file the required protest pursuant to the local governing procurement documents or the issue is forever waived.

One of the most common problems in public procurement – whether local or state procurement – is that a vendor fails to timely challenge the bid specifications or criteria although the vendor believes that a particular criteria or specification is unfair, unnecessary, or one that the vendor simply cannot meet. A vendor might forego challenging a specification in an effort to remain on good terms with the local authority out of fear that an action may potentially bias the contracting entity against the vendor.

Failure to timely file a protest to the solicitation specification within the timeframe outlined in the local entity’s governing procurement documents will result in waiver of the right to challenge such specifications. In other words, if they wait until after the notice of intended award, and then file a protest attempting to raise bid specification irregularities, those allegations will be excluded from consideration.

This results in several procedural and tactical questions for the vendor to consider and weigh in consultation with its attorney. Often vendors are concerned that if they protest the solicitation specifications, regardless of the outcome of that protest, that the local entity may harbor resentment or ill will toward them, and fear that the local entity may become biased against them, and that ultimately they will fair less well in any final decision regarding awarding them the contract. These considerations should be discussed and weighed with experienced bid protest counsel.

Challenge to Intended Contract Awards: If the local entity improperly awards the contract to another bidder, vendors shall timely file a protest to the intended contract award in accordance with the local government entity’s procurement code/ordinances. Depending on the local procurement process, the vendor may be required to first file a Notice of Protest and then to follow up with a formal Written Protest. In other locales, the vendor may be required to file the formal Written Protest without any initial Notice of Protest. Intervening holidays and weekends are typically excluded in computing the Notice of Protest due dates and typically included in computing the formal Written Protest due dates, but again, this will depend entirely on the governing local procurement documents.

As discussed above, challenges will typically be filed with procurement administrative staff (Purchasing Department, Procurement Office, etc.), and will be appealed up the chain of command, ultimately concluding in a quasi-judicial hearing before the Commission. Additionally, there will typically be opportunities to informally resolve the protest through settlement negotiations.

Bid Protest Bond: Local government procurement documents typically require, similar to the state agency bid protests, that the protestor file a bond payable to the local government. The amount of the bid protest bond will depend on the local government’s procurement documents. (For example, Miami-Dade County has an escalating bond fee schedule that increases the fee amount based on the contract award amount, ranging from a $500 filing fee for contract award under $250,000 to a $5,000 filing fee for contracts awards over $5 million). Failure to timely file the bond in accordance with the local government procurement process shall typically constitute waiver of the protestor’s right to protest and/or the denial and dismissal of the protest.

Quasi-Judicial Hearing: Unresolved bid protests are typically set for quasi-judicial hearing before the Board or Commission. Depending on the local entity’s procurement process, these hearings may range from informal presentations by the parties and/or their representatives to full-fledged quasi-judicial hearings involving witness testimony, cross-examination, presentation of evidence, and written submissions. Typically the rules of evidence do not apply. Participating parties shall be afforded notice and the opportunity to be heard. Additionally, in a quasi-judicial proceeding certain standards of fairness and due process are afforded to the parties.

Seeking Relief in Circuit Court: Unsuccessful bidders may seek a temporary injunction in circuit court prohibiting the local authority from awarding the contract to the successful bidder. In order to prevail on an injunction in circuit court, the complaining party generally must establish: (1) a likelihood of irreparable harm; (2) the unavailability of an adequate remedy at law; (3) a substantial likelihood of success on the merits; and (4) public interest considerations. See Wood-Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So. 2d 446, 448 (Fla. 1st DCA 1978) (affirming temporary injunction and stating that “trial court was correct in taking action to preserve the status quo and secure the rights of the parties to equitable relief”); Miami-Dade Cnty. v. Church & Tower, Inc., 715 So. 2d 1084, 1087 (Fla. 3d DCA 1998) (affirming denial of temporary injunction and holding that protestor did not have a substantial likelihood of success on the merits); Charlotte County v. Grant Medical Transp., Inc., 68 So. 3d 920 (Fla. 2nd DCA 2011); Silver Exp. Co. v. Dist. Bd. of Lower Tribunal Trustees of Miami-Dade Cmty. Coll., 691 So. 2d 1099, 1102 (Fla. Dist. Ct. App. 1997). See also Naegele Outdoor Adver. Co. v. City of Jacksonville, 659 So. 2d 1046, 1047 (Fla.1995); Smith Barney Shearson, Inc. v. Berman, 678 So. 2d 376, 377 (Fla. 3d DCA 1996).

While there is strong judicial deference afforded to a local authority’s discretion to competitively award contracts, such discretion must not be arbitrary or capricious, illegal, or fraudulent. Emerald Corr. Mgmt. v. Bay Cnty. Bd. of Cnty. Comm’rs, 955 So. 2d 647, 652 (Fla. 1st DCA 2007) (holding county to arbitrary and capricious competitive bidding standard); Hotel China & Glassware Co. v. Bd. of Public Constr. of Alachua Cnty., 130 So. 2d 78, 81 (Fla. 1st DCA 1961) (public authority may not arbitrarily or capriciously discriminate between bidders, or make award on basis of personal preference). However, a local authority’s honest exercise of discretion in awarding a contract will not be overturned even if it appears erroneous or if reasonable persons could disagree. See Miami-Dade Cnty. v. Church & Tower, Inc., 715 So. 2d 1084, 1087 (Fla. 3d DCA 1998) (disappointed bidder’s protest did not show arbitrary or capricious action; thus, bidder failed to demonstrate a substantial likelihood of success in its challenge to the commission decision, and temporary injunction barring further proceeding on the contact was not warranted).

Circuit Court Remedies: It is important to obtain an injunction in circuit court to stop the contract award before the contract is executed and relied upon. While section 120.57(3)(c), Florida Statutes, expressly provides that any intended contract awards shall be stayed pending resolution of a timely filed bid protest13, there is no similar uniform requirement for a stay of intended contract awards for local government bid protests. Accordingly, it is very possible that the contract will be awarded and relied upon prior to your “winning” your appeal.

So what happens if the contract has already been executed and then you “win” your appeal? Some courts have held that you are only entitled to the cost of preparing the bid, while other courts have held that the government entity shall provide a comparable contract at a later point in time. To date, no Florida courts have held that an unsuccessful bidder is entitled to lost profits. See Miami Dade Cnty. Sch. Bd. v. J. Ruiz Sch. Bus Serv., Inc., 874 So. 2d 59, 62-65 (Fla. 3d DCA 2004) (reversing award of lost profits and remanding with directions that appellees be awarded equitable relief in the form of future comparable contracts, if possible, or, in the alternative, that their damages be limited to their bid preparation and/or bid protest costs.). See also City of Cape Coral v. Water Servs. of Am., Inc., 567 So. 2d 510, 512 (Fla. 2d DCA 1990) (holding that (1) unsuccessful bidder was entitled to recover bid preparation costs and prejudgment interest thereon when city failed to adhere to its representation that bid would not be rejected on ground that bidder was not licensed general contractor; (2) unsuccessful bidder had no cause of action against public entity for lost profits; and (3) bidder was not entitled to award of attorney fees.); City of Tallahassee v. Blankenship & Lee, 736 So. 2d 29 (Fla. 1st DCA 1999) (disappointed bidder on natural gas line construction project that sued city for disqualification of bid was not entitled to award of attorney fees, despite award of bid preparation costs; there was no contractual or statutory authority for recovery of attorney fees from city and litigation was against city and not third party).14

Florida’s Public Policy and Case Law in Support of Fair Competition

In addition to the specific protest procedures for each local government entity, government contracting in Florida is guided by strong public policy considerations aimed at the protection of the public against collusive contracts, fraud, bias, and favoritism. While public bodies have discretion in contracting for goods and services, they cannot act illegally, arbitrarily, capriciously, or fraudulently. See, e.g., Wester v. Belote, 103 Fla. 976, 138 So. 721 (Fla. 1931) (laws of this kind requiring contracts to be let to the lowest bidder are based upon public economy, are of great importance to the taxpayers, and ought not to be frittered away by exceptions; they serve the object of protecting the public against collusive contracts and prevent favoritism toward contractors by public officials and tend to secure fair competition upon equal terms to all bidders, they remove temptation on the part of public officers to seek private gain at the taxpayers’ expense, are of highly remedial character, and should receive a construction always which will fully effectuate and advance their true intent and purpose and which will avoid the likelihood of same being circumvented, evaded, or defeated) (emphasis added); Emerald Corr. Mgmt. v. Bay Cnty. Bd. of Cnty. Comm’rs, 955 So. 2d 647, 652 (Fla. 1st DCA 2007) (holding county to arbitrary and capricious competitive bidding standard); Hotel China & Glassware Co. v. Bd. of Public Constr. of Alachua Cnty., 130 So. 2d 78, 81 (Fla. 1st DCA 1961) (public authority may not arbitrarily or capriciously discriminate between bidders, or make award on basis of personal preference); City of Sweetwater v. Solo Constr. Corp., 823 So. 2d 798 (Fla. 3d DCA 2002) (applying arbitrary and capricious standard to RFPs as well as bids). Florida’s public policy, case law, and statutes dictate that competitive procurement, regardless of the local government entity’s bid protest process, is designed to secure fair competition on equal terms to all bidders, to secure the best values at the lowest possible expense, to provide an opportunity for an exact comparison of bids, and to assure that the most responsive bid is accepted. Additionally, government entities must afford fundamental due process rights to its citizens and must allow for a clear point of entry to challenge its decisions. See, e.g., Capeletti Brothers, Inc. v. Dep’t of Transp., 362 So. 2d 346, 348 (Fla. 1st DCA 1978) (holding that agency must afford due process right of clear point of entry to challenge agency decision).

Finally, regardless of the type of local government (county, municipality, district), all local government entities must adhere to the terms of their RFP/ITB, and can be challenged for deviating from the specifications of their RFP/ITB. See, e.g., City of Sweetwater v. Solo Constr. Corp., 823 So. 2d 798, 800, 802 (Fla. 3rd DCA 2002) (City’s award based upon categories and criteria not included in the bid documents was arbitrary, capricious, and contrary to Florida’s competitive bid statutes); Hemophilia Health Services, Inc., v. AHCA, No. 05-2804BID, 2005 WL 3733800, ¶¶ 38-40, 44-46, 75 (DOAH Dec. 2, 2005; AHCA FO Jan. 26, 2005) (evaluation sheets used by evaluators did not correspond to the RFP evaluation criteria); Syslogic Tech. Servs., Inc. v. South Florida Water Mgmt. Vill., No. 01-4385BID, 2002 WL 76312 at ¶¶ 24, 36, 104-05, 108-110 (DOAH Jan. 18, 2002; AHCA FO March 6, 2002 104-111) (scoring was contrary to the RFP and contrary to competition).

Conclusion

Local government bid protest procedures and requirements are often quite confusing and may vary greatly depending on the local government’s ordinances, codes, charters, etc. Because there are no uniform procedures for challenging local government procurement decisions, and because the bid protest process proceeds on an extremely fast track, important rights can be waived if not immediately asserted. For these and other reasons, it is crucial that you know your rights whenever you or your company becomes involved in any local government procurement, and that you involve experienced bid protest counsel as early as possible. Experienced bid protest counsel can assist in compliance with local government bid procedures, ensure that your rights are protected throughout the bid process, timely protest any unfavorable decisions, and advocate for your interests at the local government level, as well as in circuit and appellate court proceedings.

Geoffrey D. Smith is a shareholder in the law firm of Smith & Associates, and has practiced federal, state, and local bid protest law for over 20 years.

1 Florida Statutes and rules governing state bid protests include, but are not limited to: Chapter 120, Florida Statutes (Florida’s Administrative Procedure Act); Chapter 287, Florida Statutes (state procurement); and Chapter 28-110, Florida Administrative Code (state bid protests).
2 http://en.wikipedia.org/wiki/List_of_municipalities_in_Florida; https://dca.deo.myflorida.com/fhcd/sdip/OfficialListdeo/index.cfm.
3 For a detailed overview of the bid protest process for challenging state agency procurement decisions, including a discussion of common grounds for protesting state agency procurement decisions, please see “Bid Protests: Know Your Rights – the Clock is Ticking” at http://smithlawtlh.com/bid-protests-know-your-rights-the-clock-is-ticking/ (“State Bid Protest article”).
4 Chapter 120 (the Administrative Procedures Act), Florida Statutes, provides uniform procedures applicable to state agencies, which by definition, do not include local government entities, and section 120.57(3), Florida Statutes, specifically governs bid protests against Florida state agencies. While section 255.20, Florida Statutes, addresses local government competitive bidding for public construction projects, it does not address bid protest procedures. Moreover, there is no Florida Statute governing bid protest procedures for local government procurement of goods or other services.
5 See Palm Beach County School Board, Policy 6.14, for an example of a local government entity that explicitly implements the bid protest procedures of the Administrative Procedures Act, section 120.57 (3), Florida Statutes, and Chapter 28-110, Florida Administrative Code.
6 Several of the representative examples outlined in this article were taken from recent bid protest cases litigated and resolved by Smith & Associates.
7 See §120.57(3)(b), Fla. Stat., and State Bid Protest article, cited infra note 2.
8 Such variations from Florida Statutes’ timeframes, are also seen in larger municipalities, such as the City of Miami, whose purchasing process is outlined in its municipal code, Section 18-104, entitled “Resolution of protested solicitations and awards.” (See http://www.miamigov.com/procurement/docs/BidProtest.pdf). Section 18-104 provides that aggrieved proposers must file a notice of protest within two days after receipt of the notice of proposed award, and then must file its written protest within five days after the date the notice of protest was filed. Once again, we see the truncated timeframe for filing a protest at the local level, as compared to protesting state agency procurement decisions. See also Orange County Bid Protest Procedures (Orange County Florida Code of Ordinances, Sec. 17-313), which requires that a notice of protest to a bid solicitation or intended award be filed within five days of the date of posting, and that the formal written protest be filed within five days after the date of the filing of the notice of protest.
9 There are competing arguments as to whether Florida state universities and colleges are considered “state agencies” for purposes of Chapter 120 bid protest rights. Section 120.57(3), Florida Statutes, governing state agency bid protest procedures, specifically provides in subsection 120.57(3)(g), Florida Statues, that “the definitions in s. 287.012 apply.” Section 287.012, Florida Statutes, expressly states that the definition of Agency “does not include the university and college boards of trustees or the state universities and colleges.” However, this definition appears to conflict with the definition of “Agency” in section 120.52, Florida Statutes, which provides that “Agency” includes educational units, including state universities when the university is acting pursuant to statutory authority.” Further confusing the issue, bid protests of state universities are routinely referred to DOAH for hearing. See e.g., Schlage Lock Company, LLC v. State University System, University of North Florida, Case No. 14-1559BID (DOAH April 10, 2014). For purposes of this bid protest article, universities and colleges are classified as non-state agencies.
10 http://en.wikipedia.org/wiki/List_of_colleges_and_universities_in_Florida
11 While Florida State Statutes provides for competitive solicitation for state agencies for all contract awards in excess of $35,000 (hereinafter “competitive solicitation threshold”), the threshold amount requiring competitive bidding varies dramatically for each local government entity depending on its specific local charter, ordinances, code, etc. For example, Miami-Dade County’s competitive solicitation threshold is $25,000 (Miami-Dade County Implementing Order 3-21) (check); University of North Florida Board’s competitive solicitation threshold is $75,000 (UNF Purchasing Regulation 13.0010R); Village of Wellington’s competitive solicitation threshold is $25,000 (Wellington Purchasing Manual, Ch. 2, A, at p. 3); and Canaveral Port Harbor District’s competitive solicitation threshold is $100,000.
12 One exception to this is that many local governments provide in their governing procurement documents that a preference be given to local businesses. (For example, Miami-Dade County’s governing procurement document provides in its preference for local businesses, that “If the Low Bidder is not a Local Business, then any and all responsive and responsible Local Businesses submitting a price within ten percent of the Low Bid…shall have an opportunity to submit a best and final bid equal to or lower than the Low Bid.” See Miami-Dade County, Section 1.10, General Terms and Conditions). The preference criteria should be outlined in the local government documents and any deviations from the specified criteria can be subject to challenge. Miami-Dade County, Section 1.10, General Terms and Conditions.
13 Section 120.57(3) provides:
Upon receipt of the formal written protest that has been timely filed, the agency shall stop the solicitation or contract award process until the subject of the protest is resolved by final agency action, unless the agency head sets forth in writing particular facts and circumstances which require the continuance of the solicitation or contract award process without delay in order to avoid an immediate and serious danger to the public health, safety, or welfare. § 120.57(3), Fla. Stat. See also Cianbro Corp. v. Jacksonville Transp. Auth., 473 So. 2d 209, 212 (Fla. 1st DCA 1985) (statutory scheme providing for stay of intended contract award “should be upset in only the most compelling circumstances.”).
14 While beyond the scope of this article, for a detailed discussion of potential legal remedies after you have been awarded a contract, see http://smithlawtlh.com/unfairness-or-public-corruption-in-government-contracting/.

With Bid Protests, Deadlines are Essential

Recently, the GAO denied the bid protest of Bridges System Integration, LLC (“Bridge”) (decision here). This bid protest involved an RFP for a standing solicitation for the provision of professional audio/video, telemetry/tracking, recording, reproducing and signal data solutions. Bridge’s bid was rejected for not complying with the RFP. While there were multiple issues involved in this decision, this article focuses on Bridge’s challenge to the terms of the solicitation as they related to its already submitted and rejected bid.

The GAO held that “[t]o be timely, a challenge to the terms of this solicitation had to be raised prior to submitting a proposal under the terms of that solicitation.” It further held that for standing orders, which do not have a set time for submissions, “challenges to the terms of a standing FSS solicitation are untimely, with respect to the application of these terms to the evaluation of an offeror’s proposal, if the protest is filed after the protester has submitted a proposal under that solicitation.” For this, and other reasons enumerated in the decision, the bid protest was denied.

Timelines are key to bid protest cases. Failure to timely file a bid protest can forfeit your rights to even bring the protest. If you believe that the specifications for an RFP are biased or unfair, contact the experienced bid protest attorneys at Smith & Associates for a free consultation.

Government Must Look at Bidder’s Unique Approach When Evaluating Bids

Last week the GAO issued a recommendation in the Matter of: Alcazar Trades, Inc.; Sparkle Warner JV, LLC. The Government issued an RFP for a fixed-price contract, with a 1-year base period and four option years, to furnish custodial services for 23 buildings and 7 guard shacks at the Denver Federal Center. The award was to be made to the bidder whose proposal was the “most advantageous to the government,” considering price and the following non-price evaluation factors: management plan (30 percent of the non-price factors), past performance (30 percent), and experience (40 percent). Alcazar Trades, Inc. (“ATI”) submitted the bid with the lowest price. The government found that ATI’s bid was unrealistic such as to “put the government at risk if the Offeror tried to perform the services with inadequate funding.” ATI then filed this bid protest.

The GAO found that as a general matter “[p]rice realism need not necessarily be considered in evaluating proposals for the award of a fixed-price contract, because these contracts place the risk of loss upon the contractor rather than the government.” The GAO further held that “[w]here offerors take a similar approach to meeting the solicitation requirements, our Office has generally not objected to a price realism analysis that focuses on a comparison of an offeror’s price to the government estimate and the prices of other offerors… Our Office has recognized, however, that a price realism evaluation must consider the unique technical approaches proposed by each offeror.” ATI argued that its staffing approach was unique and was not comparable to the other bidders, as such, it was able to offer a much lower price. The GAO agreed and concluded that the government “unreasonably evaluated the realism of ATI’s low price, failing to account for ATI’s unique staffing approach.” It then recommended that the government reevaluate the proposals and reimburse ATI its attorney’s fees and costs.

If you believe that your bid response has been improperly evaluated, contact the experienced bid protest attorneys at Smith & Associates for a free consultation.

GAO’s Bid Protest Decision Breathes New Life Into Protester’s Bids

Last week, the GAO issued a decision in The Matter of Al Raha Group for Technical Services,Inc.; Logistics Management International, Inc. The Air Force issued an RFP for F-15 fighter jet transportation support services. In response, it received 7 proposals. These proposals would be evaluated based upon three factors: technical; past performance; and cost/price. All seven bidders received “Acceptable” scores with regards to the technical factor. Logistics Management International, Inc (“LMI”) and Al Raha Group for Technical Services, Inc. (“RGTS”) submitted the two lowest bids respectively with regards to price, with SupplyCore coming in third. However, both LMI and RGTS recieved a “Limited” score on the Past Performance Confidence factor. Due to this, the Air Force awarded the bid to SupplyCore and LMI and RGTS filed a bid protest.

The GAO held that the Air Force failed to evaluate SupplyCore’s past performance in accordance with RFP requirements. It further held that the Air Force failed to meaningfully consider available agency information regarding LMI’s past performance of similar requirements for the Air Force, and therefore sustained LMI’s bid protest. However, the GAO held that the Air Force did not unreasonably ignore or contradict RGTS’s CPARs, rely on adverse past performance information, or ignore relevant past performance information not yet captured in a final, formal CPAR.

Based upon these holdings, the GOA recommended that the Air Force reevaluate offerors’ past performance information and, based on that reevaluation, it recommended that the agency make a new source selection determination. Finally, it recommended that the agency reimburse the protesters their respective costs associated with filing and pursuing their protests, including reasonable attorneys’ fees.

If you believe that your bid has been improperly scored, contact the experienced bid protest attorneys at Smith & Associates for a free consultation.

Bid Protest Are Not Only for the Lowest Bidder

Orange County recently requested bids for its trash collection service. FCC Infrastructure responded with the lowest bid across the board. Now, two other bidders, Waste Pro and Florida Republic, are protesting the award of the contract to FCC. While the details of the case are still forthcoming, this news article contains some details of the issue and statements from each of the bidders.

According to Waste Pro and Florida Republic, FCC was able to get the lowest bid because they did not properly bid the project. According to a Waste Pro representative, FCC’s bid would require it to do with one truck what Waste Pro would need ten trucks to do. In essence, Waste Pro is arguing that, while FCC was the lowest bidder, it was not the lowest responsible bidder.

Public authorities are required to award bids to the “lowest responsible bidder.” Wester v. Belote, 103 Fla. 976, 138 So. 721 (1931). “A responsible, or qualified, bidder is one who has the capability in all respects to fully perform the contract requirements and the integrity and reliability that will assure good faith performance.” Am. Eng’g & Dev. Corp. v. Town of Highland Beach, 20 So. 3d 1000, 1000-01 (Fla. Dist. Ct. App. 2009) internal quotes omitted. Thus, simply submitting the lowest bid is not enough. A bidder must also be qualified to perform the work.

Therefore, a bidder who does not submit the lowest bid can still file a bid protest if the lowest bidder is not a responsible bidder. If you have been denied an award of a public contract due to the lowest bidder not being a responsible bidder, contact the experienced bid protest attorneys here at Smith & Associates for a free consultation. Be aware that bid protest cases have very strict, short deadlines, so you must act quickly to preserve your rights.

Recent Bid Protest Decisions

Optimum Technology, Inc. v. Department of Health, DOAH Case No. 11-0275BID; Judge Robert E. Meale:

DOH issued an RFP for a prescription drug monitoring system.

Arguments raised and holdings:

Petitioner argued that the process was flawed because it did not include any meeting to “normalize” the scores of the evaluators to eliminate bias or arbitrary scoring. Held: Such argument could only be raised within 72 hours of issuing RFP, and was therefore waived.

Petitioner argued to disregard scoring of one evaluator as either biased or arbitrary and irrational. Held: The scoring was not show to be arbitrary, capricious, dishonest, or illegal. However on one item, the ALJ did find the scoring to be “outside the range of reasonable” and determined by how many points it deviated from a reasonable score. “The ALJ may not revise fraudulent or random scores” … but the ALJ may revise scores that are merely outside the range of reasonable, if sufficient evidence exists….”

Petitioner argued that failure to include a detailed and itemized cost proposal rendered the proposal Non Responsive to RFP.

Held: Failure to include a detailed written narrative was a minor irregularity that could be waived, because failure to include was not shown to provide any type of competitive advantage.

American Lighting and Signalization v. Florida Department of Transportation, DOAH Case No. 10-7669BID; Judge Suzanne F. Hood:

Case involved a design build RFP for an “intelligent transportation system.” Agency issued intent to award to low bidder and second lowest bidder appealed.

Arguments raised and holdings:

Petitioner argued that low bid was not responsive to mandatory items in the RFP and should have been disqualified, but instead FDOT asked for additional clarifying information from the low bidder after the proposals were opened.

Held: It was error to award to low bidder when mandatory items were missing from bid. A clarification process cannot be used to amend a bid and include missing mandatory information.

The Weitz Company, LLC v. Broward County School Board, DOAH Case No. 10-8182BID; Judge Stuart Lerner:

This case involved a “Request for Qualifications” for a construction management at risk at a local high school. The Petitioner was selected as the party for negotiating a contract after a solicitation and evaluation process. After two years of negotiations, the School Board announced its intention to reject all responses and to “hard bid” the project.

Arguments raised and holdings:

The Petitioner argued that it was arbitrary and capricious and contrary to competition to withdraw the RFQ and re-bid after investment of nearly two year in the process.

Held: The withdrawal was not shown to be arbitrary or capricious, but was instead a well reasoned decision based on changed economic circumstances, including the opportunity to save substantial taxpayer dollars in a re-bid. Cites long line of decisions as to public interest in saving tax dollars.

Southern Atlantic Company LLC v. Orange County School Board, DOAH Case No. 10-9684BID: Judge Susan B. Harrell:

School Board awarded a contract to a construction contractor, Wharton-Smith, Inc. which required use of competitive procurement of subcontractors. An electrical subcontractor filed a Petition against the School Board when Wharton-Smith selected another vendor for the subcontract work.

Arguments raised and holdings:

Petitioner argued that School Board had elected to retain complete control over the construction work and expenditures by its contractor, and therefore a challenge to the decision of the Contractor to award work to another sub-contractor was proper. Held: The Contractor was not an agent of the School Board, and was a private company that took the action which Petitioner sought to challenge. The fact that School Board retained oversight of the process, and ability to review, did not render it an Agency decision subject to challenge in a 120.57 hearing. Case dismissed.

Humana Dental Insurance Company v. Lee County School Board, DOAH Case No. 10-9846BID; Judge Susan B. Harrell:

Lee County School Board issued an RFP for a dental insurance carrier. After receiving and reviewing proposals, and posting the intent to award to Humana, the School Board decided to reject all proposals. Humana appealed.

Arguments and holdings:
Petitioner argued that the decision to reject all bids was arbitrary.

Held:

  1. Procedural errors in the bid process were fatal including:
    1. Allowing the proposers to supply missing information after the proposals were opened.
    2. Requesting information from various vendors after the proposals were opened.
    3. Allowing the top three proposals to amend their proposals by submitting different type of product not specified in the RFP.
    4. Direct lobbying by representatives of one vendor during the evaluation process.

Keystone Peer Review Organization, Inc. v. AHCA, DOAH Case No. 10-9969BID; Judge John Newton II:

AHCA issued an Invitation to Negotiate (ITN) for Medicaid utilization and peer review services. The incumbent vendor lost in the evaluation process even though it was a lower price proposal by over $12 million.

Arguments raised and holdings:

Petitioner argued that the selection of the higher priced vendor was arbitrary and illogical and that the scoring of the evaluators could not be justified. Held: Selection of the higher priced bidder was justified. AHCA believed that the incumbent was “low balling” its bid, and this finding was not shown to be clearly erroneous, and evidence supported that some the price components did not appear reasonable.

Petitioner argued that the proposed award did not include a specific written finding of why the selected vendor provided the best value to the state. Held: Issue was premature as AHCA had not yet awarded the contract, and ALJ implied finding could be made upon the award, rather than intent to award. Further, ALJ noted that statutory amendments made after the ITN was issued did not apply to the procurement.

To the extent there was any inherent challenge to the ITN suggested, ALJ noted that nobody challenged any terms of conditions of ITN and therefore any such issue was waived.

Juvenile Services Program, Inc. v. Department of Juvenile Justice, DOAH Case No. 10-6280BID; Judge J.D Parrish:

Department of Juvenile Justice issued an RFP for a contract to provide Intensive Delinquency Diversion Services. The RFP sought responses for different geographic areas (Circuits) in the state in one document, rather than issuing separate RFPs for each circuit.

Arguments and holdings:

Petitioner had argued that it was an error to issue the RFP for different circuits with different specific local conditions in one RFP. Held: This argument amounts to a challenge to the RFP specifications which was not made within 72 hours of the RFP being issued and was therefore waived.

Petitioner argued that one evaluator was not qualified because she had no specific experience with the type of service being sought.

Held: Although the one evaluator did not have specific experience with Intensive Delinquent Diversion Services, and had never served as an RFP evaluator previously, she was familiar with these services and was properly educated and trained to serve as an evaluator.

Petitioner challenged some scoring of evaluators as arbitrary, and provided evidence of evaluators changing their scores without written explanation as evidence of arbitrary scoring.

Held: Scoring was not shown to be arbitrary, and changes showed a thoughtful process even if no written explanation provided.

Psychotherapeutic Services of Florida, Inc. v. Department of Juvenile Justice, DOAH Case No. 10-6279; Judge Elizabeth MacArthur:

Department of Juvenile Justice issued an RFP for a contract to provide Intensive Delinquency Diversion Services. Petitioner brought challenge primarily based upon alleged lack of experience of one evaluator.

Held: Even though the evaluator lacked specific direct experience in the program area, she had enough experience and exposure to the program to serve as an evaluator.

Urban Building Systems, Inc. v. Martin County School Board, DOAH Case No. 10-1147BID; Judge Eleanor Hunter:

The School Board issued a Request for Qualifications on a construction manager at risk contract for renovation at two elementary schools.

Arguments raised and holdings:

Petitioner argued that the RFQ included a specific requirement that a Professional Services Advisory Committee of the School Board would evaluate certain performance data on file, and that this requirement was not met because the Committee did not maintain such data. Therefore, the Petitioner argued that the School Board deviated materially from the RFQ specifications.

Held: Lack of data was not shown to have any affect on the outcome, and therefore not fatal.

Petitioner also advanced theories for scoring irregularities, such as inconsistency in how long a period of prior work experience was examined for each vendor. Held: Petitioner did not show this to have any impact. “The few instances of arbitrary scoring were actually proved to be too few in number to have any material impact on the average scores.”
Petitioner argued that campaign contributions to various school board members resulted in biased evaluations by these members.

Held: Legal campaign contributions were not proven to have any affect on the scoring.

Petitioners argued that a Sunshine Act violation occurred because the meeting of the Public Service Advisory Committee was not properly noticed.

Held: It appeared that a Sunshine Act violation did in fact occur, but ALJ found that the Petitioner failed to prove any adverse impact from this violation. In fact, the Petitioner actually benefited by being one of the firms selected to advance to further round of evaluations. ALJ noted that enforcement of the Sunshine Act in circuit court is different than raising this issue in a bid protest. In the former case, action can be set aside merely because the violation occurred. But in an administrative hearing, the party alleging the violation must still show adverse impact.

Eckerd Youth Alternatives, Inc. v. Department of Juvenile Justice, DOAH Case No. 10-0535BID; Judge Susan B. Harrell:

Department of Juvenile Justice issued an RFP for Community Based Intervention Services in Brevard County. The RFP included a requirement for proposer to include a “recidivism rate” for past performance in similar contracts. The RFP did not specify the method of calculating the recidivism rate. The Department’s evaluators applied a long standing scoring method and calculation that used an Average recidivism rate when the proposer had experience in more than one county or judicial circuit.

Arguments raised and holdings:

Petitioner argued that the scoring was not proper because the Department used a calculation methodology that was not disclosed in the RFP. Held: Even though it was not stated in the RFP, the calculation using an “Average” recidivism rate had been the Department’s prior policy and proposer was aware of this, and did not challenge the lack of clear methodology within 72 hours of the RFP being issued. Therefore, issue of unclear specification was waived, and it was not arbitrary or capricious to use the long standing prior policy.
Petitioner argued that it was arbitrary to use the Averaging methodology because the Department had in subsequent RFP clarified that it would no longer use the Averaging methodology.

Held: Subsequent RFP terms did not apply. Not shown that using prior method, in accordance with long standing policy, was arbitrary or capricious or contrary to RFP Specifications or policy of the Department. It would have been error to apply the new policy without announcing it in the RFP. If proposer wanted clarification, then should have challenged the RFP. Same method was applied to all proposers, and therefore it was not shown to be anti-competitive.

Optimum Technology, Inc. v. Department of Health, DOAH Case No. 11-0275BID; Judge Robert E. Meale:

DOH issued an RFP for a prescription drug monitoring system.

Arguments raised and holdings:

Petitioner argued that the process was flawed because it did not include any meeting to “normalize” the scores of the evaluators to eliminate bias or arbitrary scoring.

Held: Such argument could only be raised within 72 hours of issuing RFP, and was therefore waived.

Petitioner argued to disregard scoring of one evaluator as either biased or arbitrary and irrational.

Held: The scoring was not show to be arbitrary, capricious, dishonest, or illegal. However on one item, the ALJ did find the scoring to be “outside the range of reasonable” and determined by how many points it deviated from a reasonable score. “The ALJ may not revise fraudulent or random scores” … but the ALJ may revise scores that are merely outside the range of reasonable, if sufficient evidence exists….”

Petitioner argued that failure to include a detailed and itemized cost proposal rendered the proposal Non Responsive to RFP.

Held: Failure to include a detailed written narrative was a minor irregularity that could be waived, because failure to include was not shown to provide any type of competitive advantage.

American Lighting and Signalization v. Florida Department of Transportation, DOAH Case No. 10-7669BID; Judge Suzanne F. Hood:

Case involved a design build RFP for an “intelligent transportation system.” Agency issued intent to award to low bidder and second lowest bidder appealed.

Arguments raised and holdings:

Petitioner argued that low bid was not responsive to mandatory items in the RFP and should have been disqualified, but instead FDOT asked for additional clarifying information from the low bidder after the proposals were opened.

Held: It was error to award to low bidder when mandatory items were missing from bid. A clarification process cannot be used to amend a bid and include missing mandatory information.

The Weitz Company, LLC v. Broward County School Board, DOAH Case No. 10-8182BID; Judge Stuart Lerner:

This case involved a “Request for Qualifications” for a construction management at risk at a local high school. The Petitioner was selected as the party for negotiating a contract after a solicitation and evaluation process. After two years of negotiations, the School Board announced its intention to reject all responses and to “hard bid” the project.

Arguments raised and holdings:

The Petitioner argued that it was arbitrary and capricious and contrary to competition to withdraw the RFQ and re-bid after investment of nearly two year in the process.

Held: The withdrawal was not shown to be arbitrary or capricious, but was instead a well reasoned decision based on changed economic circumstances, including the opportunity to save substantial taxpayer dollars in a re-bid. Cites long line of decisions as to public interest in saving tax dollars.

Southern Atlantic Company LLC v. Orange County School Board, DOAH Case No. 10-9684BID: Judge Susan B. Harrell:

School Board awarded a contract to a construction contractor, Wharton-Smith, Inc. which required use of competitive procurement of subcontractors. An electrical subcontractor filed a Petition against the School Board when Wharton-Smith selected another vendor for the subcontract work.

Arguments raised and holdings:

Petitioner argued that School Board had elected to retain complete control over the construction work and expenditures by its contractor, and therefore a challenge to the decision of the Contractor to award work to another sub-contractor was proper.

Held: The Contractor was not an agent of the School Board, and was a private company that took the action which Petitioner sought to challenge. The fact that School Board retained oversight of the process, and ability to review, did not render it an Agency decision subject to challenge in a 120.57 hearing. Case dismissed.

Humana Dental Insurance Company v. Lee County School Board, DOAH Case No. 10-9846BID; Judge Susan B. Harrell:

Lee County School Board issued an RFP for a dental insurance carrier. After receiving and reviewing proposals, and posting the intent to award to Humana, the School Board decided to reject all proposals. Humana appealed.

Arguments and holdings:

Petitioner argued that the decision to reject all bids was arbitrary.

Held:

  1. Procedural errors in the bid process were fatal including:
    1. Allowing the proposers to supply missing information after the proposals were opened.
    2. Requesting information from various vendors after the proposals were opened.
    3. Allowing the top three proposals to amend their proposals by submitting different type of product not specified in the RFP.
    4. Direct lobbying by representatives of one vendor during the evaluation process.

Keystone Peer Review Organization, Inc. v. AHCA, DOAH Case No. 10-9969BID; Judge John Newton II:

AHCA issued an Invitation to Negotiate (ITN) for Medicaid utilization and peer review services. The incumbent vendor lost in the evaluation process even though it was a lower price proposal by over $12 million.

Arguments raised and holdings:

Petitioner argued that the selection of the higher priced vendor was arbitrary and illogical and that the scoring of the evaluators could not be justified.

Held: Selection of the higher priced bidder was justified. AHCA believed that the incumbent was “low balling” its bid, and this finding was not shown to be clearly erroneous, and evidence supported that some the price components did not appear reasonable.

Petitioner argued that the proposed award did not include a specific written finding of why the selected vendor provided the best value to the state.

Held: Issue was premature as AHCA had not yet awarded the contract, and ALJ implied finding could be made upon the award, rather than intent to award. Further, ALJ noted that statutory amendments made after the ITN was issued did not apply to the procurement. To the extent there was any inherent challenge to the ITN suggested, ALJ noted that nobody challenged any terms of conditions of ITN and therefore any such issue was waived.

Juvenile Services Program, Inc. v. Department of Juvenile Justice, DOAH Case No. 10-6280BID; Judge J.D Parrish:

Department of Juvenile Justice issued an RFP for a contract to provide Intensive Delinquency Diversion Services. The RFP sought responses for different geographic areas (Circuits) in the state in one document, rather than issuing separate RFPs for each circuit.

Arguments and holdings:

Petitioner had argued that it was an error to issue the RFP for different circuits with different specific local conditions in one RFP.

Held: This argument amounts to a challenge to the RFP specifications which was not made within 72 hours of the RFP being issued and was therefore waived.

Petitioner argued that one evaluator was not qualified because she had no specific experience with the type of service being sought.

Held: Although the one evaluator did not have specific experience with Intensive Delinquent Diversion Services, and had never served as an RFP evaluator previously, she was familiar with these services and was properly educated and trained to serve as an evaluator.

Petitioner challenged some scoring of evaluators as arbitrary, and provided evidence of evaluators changing their scores without written explanation as evidence of arbitrary scoring.

Held: Scoring was not shown to be arbitrary, and changes showed a thoughtful process even if no written explanation provided.

Psychotherapeutic Services of Florida, Inc. v. Department of Juvenile Justice, DOAH Case No. 10-6279; Judge Elizabeth MacArthur:

Department of Juvenile Justice issued an RFP for a contract to provide Intensive Delinquency Diversion Services. Petitioner brought challenge primarily based upon alleged lack of experience of one evaluator.

Held: Even though the evaluator lacked specific direct experience in the program area, she had enough experience and exposure to the program to serve as an evaluator.

Urban Building Systems, Inc. v. Martin County School Board, DOAH Case No. 10-1147BID; Judge Eleanor Hunter:

The School Board issued a Request for Qualifications on a construction manager at risk contract for renovation at two elementary schools.

Arguments raised and holdings:

Petitioner argued that the RFQ included a specific requirement that a Professional Services Advisory Committee of the School Board would evaluate certain performance data on file, and that this requirement was not met because the Committee did not maintain such data. Therefore, the Petitioner argued that the School Board deviated materially from the RFQ specifications. Held: Lack of data was not shown to have any affect on the outcome, and therefore not fatal.Petitioner also advanced theories for scoring irregularities, such as inconsistency in how long a period of prior work experience was examined for each vendor.

Held: Petitioner did not show this to have any impact. “The few instances of arbitrary scoring were actually proved to be too few in number to have any material impact on the average scores.”

Petitioner argued that campaign contributions to various school board members resulted in biased evaluations by these members.

Held: Legal campaign contributions were not proven to have any affect on the scoring. Petitioners argued that a Sunshine Act violation occurred because the meeting of the Public Service Advisory Committee was not properly noticed.

Held: It appeared that a Sunshine Act violation did in fact occur, but ALJ found that the Petitioner failed to prove any adverse impact from this violation. In fact, the Petitioner actually benefited by being one of the firms selected to advance to further round of evaluations. ALJ noted that enforcement of the Sunshine Act in circuit court is different than raising this issue in a bid protest. In the former case, action can be set aside merely because the violation occurred. But in an administrative hearing, the party alleging the violation must still show adverse impact.

Eckerd Youth Alternatives, Inc. v. Department of Juvenile Justice, DOAH Case No. 10- 0535BID; Judge Susan B. Harrell:

Department of Juvenile Justice issued an RFP for Community Based Intervention Services in Brevard County. The RFP included a requirement for proposer to include a “recidivism rate” for past performance in similar contracts. The RFP did not specify the method of calculating the recidivism rate. The Department’s evaluators applied a long standing scoring method and calculation that used an Average recidivism rate when the proposer had experience in more than one county or judicial circuit.

Arguments raised and holdings:

Petitioner argued that the scoring was not proper because the Department used a calculation methodology that was not disclosed in the RFP.

Held: Even though it was not stated in the RFP, the calculation using an “Average” recidivism rate had been the Department’s prior policy and proposer was aware of this, and did not challenge the lack of clear methodology within 72 hours of the RFP being issued. Therefore, issue of unclear specification was waived, and it was not arbitrary or capricious to use the long standing prior policy.

Petitioner argued that it was arbitrary to use the Averaging methodology because the Department had in subsequent RFP clarified that it would no longer use the Averaging methodology.

Held: Subsequent RFP terms did not apply. Not shown that using prior method, in accordance with long standing policy, was arbitrary or capricious or contrary to RFP Specifications or policy of the Department. It would have been error to apply the new policy without announcing it in the RFP. If proposer wanted clarification, then should have challenged the RFP. Same method was applied to all proposers, and therefore it was not shown to be anti-competitive.

Troy Foundation, Inc. v. Department of Juvenile Justice, DOAH Case No. 10-0536BID; Judge Claude B. Arrington:

Department of Juvenile Justice issued an RFP for a contract to provide Adult Day Treatment Services in a facility setting. Two vendors responded. At issue was the scoring on past performance.

Arguments raised and held:

Petitioner argued that in scoring of the winning proposal, evaluators improperly awarded points to the competing vendor for a program that was not truly a “non residential” program.

Held: The RFP included a clear footnote that the specific type of program considered, would be considered in evaluation of past performance. Disappointed proposer failed to raise any challenge to this specification within 72 hours of the RFP being issued, and the issue was therefore waived.

Petitioner argued a Sunshine Act violation in that members of the Department met with the Petitioner after the notice of protest without public notice and without meeting minutes, and further met privately amongst themselves to discuss the protest.

Held: No decisions or recommendations were made by the staff members, and therefore this group of staff was not a Board or Commissioner subject to Sunshine Act.

Sun Art Painting Corporation v. Palm Beach County School Board, DOAH Case No. 10-0367; Judge Stuart Lerner:

School Board issued an Invitation to Bid on two painting project jobs. The ITB included a “Revised Bid Summary Sheet” which included spaces to state the bid price and bidder name and address, but did not include a specific signature line on the form. However, in the Instructions in the ITB there was indication that any revised bid summary sheet was to be “executed.” Only 1 bidder signed the form for one job and only 2 bidders signed for the other job. Upon review, the School Board proposed to reject all bids.

Arguments raised and holdings:

Petitioner argued that it was lowest responsive bid, and that failure to include signatures was not a material variance warranting rejection of bids.

Held by ALJ: The ITB was not clear as to whether signature was required. “Execution” of the Revised Bid Summary Sheet could mean filling out the form as all the bidders did. Lack of a signature did not provide any material advantage to any bidder, and did not affect the prices that were bid. It would be contrary to competition to re-bid, and would unnecessarily expend and waste taxpayer dollars to re-bid when there was fair competition.

Ultimate Holding: School Board overturned the ALJ, and held that lack of signatures was a material variance from the ITB which required the sheets to be executed, and common understanding is that this means the sheets must be signed.

Sunshine Towing @ Broward, Inc. v. Department of Transportation, DOAH Case No. 10-0134BID; Judge John G. Van Laningham

FDOT issued an RFP for emergency towing services on I-95 in Martin, St. Lucie, and Indian River Counties. Sunshine Towing was lower priced — but Anchor Towing received slightly higher scoring, and proposed award to Anchor was made. The RFP specifically required that the proposer include “occupational licenses” for past three years.

Arguments made and holding:

Petitioner argued that the failure to include the required occupational licenses was a fatal error that rendered the proposal non-responsive, and the proposer was therefore not a responsible or qualified proposed.

Held: The ALJ noted the differences between a “minor irregularity” (those deviations from a requirement that provides no advantage in competition or in price) in a bid or proposal that can be waived, and a material variance that cannot be waived. The ALJ also noted that “gatekeeper” type of provisions that address the qualifications of the proposer should rarely if ever be waived — because these type of provisions are intended to winnow the field of possible bidders or proposer. However, under the specific facts, the ALJ found that the requirement was ambiguous because there was no longer an applicable “occupational license” when the proposals were submitted, because the local requirement was replaced with a simple “business tax receipt.” The ALJ concluded that the Agency’s determination that the requirement was “minor irregularity” was not a “clearly erroneous” decision. The decision indicates that the ALJ deferred to the Agency only on the basis of the strict standard of proof (“clearly erroneous”) required in bid protest cases, and that he otherwise agreed that the type of missing information should have been considered material.

TMS Joint Venture v. Commission for the Transportation Disadvantaged, DOAH Case Nos. 10-0030BID, 10-0051BID; Judge Susan B. Harrell:

The Commission issued an RFP for Non Emergency Medicaid Transportation (Medicaid NET) services in multiple counties. TMS challenged the proposed award to MV Contract Transportation, Inc. in Palm Beach and Duval Counties. Issue involved the scoring or proposal of the winning proposer (MV) by taking into consideration the Parent Company’s financial strength and resources. Evaluators testified during hearing that they had not reviewed the content of the RFP except for one Evaluator who had only skimmed the contents.

Arguments and holdings:

Petitioner TMS argued that MV should be disqualified because it did not clearly and properly spell out who was the prime vendor, and Evaluators improperly scored the proposal based on the financial strength, experience and resources of the parent company, rather than the entity that actually submitted the proposal.

Held: MV filed a faulty proposal by failing to clearly identify the prime contractor to be scored, and relied upon the experience and solvency of its parent organization; the RFP required that only the “prime vendor’s” experience and solvency should be considered and scored; the Evaluators failed to read the RFP and scored erroneously, not in accordance with the terms of the RFP; and that accordingly the MV proposal should be disqualified. Respondent MV argued that the TMS Joint Venture suffered the same defect as to not properly identifying a prime vendor but instead relying upon the experience and solvency of the two different legal entities that constituted the joint venture. However, the ALJ found that both the joint venturers would be fully liable under the contract, and they would in fact be the “prime vendor,” and therefore their combined experience could be considered. This was based on Florida law as to liability of parties to a joint venture. By contrast, MV parent company would not be liable for the acts of its subsidiary that submitted the proposal.

Epilogue: After the final hearing, the parties entered into a Settlement and agreed to split the contract awards with MV being awarded Palm Beach County and TMS Joint Venture being awarded the Duval contract.

Bid Protest Law: Know Your Rights – The Clock is Ticking

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Bid protests and bid protest law in Florida and challenges to competitive contract procurement and awards in Florida are controlled by a myriad of unique and complex statutes, rules, policies, and law. They proceed on an extremely fast track, and important rights can be waived if not immediately asserted. For example, challenges to final bid specifications, as well as any challenge to the final award, must be filed within only 72 hours of publication of the specifications or posting of the award. For these and other reasons, it is especially important to know your rights when your company becomes involved in any public procurement. Consideration should be given to retaining experienced Florida bid protest counsel early in the process to review bid specifications, assist in the Q&A process, analyze the proposal to assure responsiveness, and generally assure you a full and fair opportunity to prevail. At a minimum, if the need to file (or defend against) a bid protest arises, an experienced Florida bid protest counsel should be retained to fully protect your rights.

This memorandum provides an overview as to the process, rights, and key issues involved with state agency competitive procurements in Florida. However, similar timing issues, rules, and case law typically apply to federal agency purchasing, and local government and other publicly funded competitive procurements.

General Purpose of Competitive Procurement Requirements

Florida’s competitive procurement process is aimed at the protection of the public against collusive contracts, fraud, bias, and favoritism. Among other things, it is designed to secure fair competition on equal terms to all bidders, to secure the best values at the lowest possible expense, to provide an opportunity for an exact comparison of bids, and to assure that the most responsive bid is accepted. Wester v. Belote, 103 Fla. 976, 138 So. 721 (1931).

Florida Statutory Thresholds and Types of Procurement

Pursuant to Section 287.017 (purchasing threshold categories) and Section 287.057 (procurement methods) when a state agency wishes to contract for commodities or contractual services that cost in excess of $25,000, the agency must use one of several types of procurement methods. The three most common methods are: Invitation to Bid (ITB), Request for Proposal (RFP), and Invitation to Negotiate (ITN).

The ITB is used when the agency is capable of specifically defining the scope of work for which a contractual service is required or is capable of establishing the precise specifications defining the commodities sought. In an ITB process, price is king, and the lowest responsive and responsible bidder must be awarded the contract. Under Section 287.057, Florida Statutes, an ITB is the preferred method for state agencies to obtain goods and services. In order to use an RFP rather than an ITB, the agency must make a finding, in writing, that use of an ITB, where price is the deciding factor, is not practicable. If a company is concerned with a situation where an agency issues an RFP, rather than using an ITB where the lowest bidder is entitled to the contract award, then arguably a protest challenge must be filed within 72 hours of the issuance of the RFP or the ability to challenge the award is waived. This is a frequent problem in competitive procurements, as a disappointed party in responding to an RFP will argue that the state agency should have awarded the contract to the lowest price proposal.

In contrast to an ITB, the RFP is used when the agency determines, in writing, an ITB is not practicable including when the agency is seeking competitive offers for proposed commodities or contractual services to evaluate who best meets certain specifications and qualifications of the solicitation. Unlike the ITB process, under an RFP the agency is not required to award the contract to the lowest bidder, but instead it may be awarded to the most responsible offeror considering price as well as other criteria. Section 287.057(2)(a), Florida Statutes, mandates that price must be one of the criteria for evaluation, but it is not the controlling criteria.

An ITN is a written solicitation that calls for responses to select one or more persons or entities with which to commence negotiations and can only be used when the agency determines, in writing, that use of an ITB or RFP will not result in the best value to the state based on factors such as price, quality, design, and workmanship. Again, a party who believes that use of an ITN will not result in a competitive award, must assert a challenge within 72 hours of issuance of the ITN, or the ability to argue that the state should have used an RFP or ITB will likely be waived.

Other less common procurement methods are also available to agencies under specified conditions as defined in Chapter 287, including a request for quote (RFQ), emergency purchases, and single source purchases. In addition, there are special provisions that apply to the procurement of certain commodities and services such as insurance, architectural and engineering services, and information technology.

Timing of and Rights to Protest Specifications and Intended Awards

Florida’s Administrative Procedure Act at Section 120.57(3), Florida Statutes, and Rules found in Chapter 28-110, Florida Administrative Code, generally govern state agency competitive bidding disputes including notice requirements, the time frames for protests, and hearing procedures.

The 72-Hour and 10-Day Protest Deadlines. Vendors (bidders, proposers) should initially be aware of the distinction between challenges to the published bid specifications versus challenges to the ultimate award of the bid itself. As to each, a separate 72-hour deadline applies. If a bidder wishes to challenge the terms, conditions, or specifications contained in the solicitation (including any provisions governing the methods for ranking bids, awarding contracts, reserving rights for further negotiation, or modifying or amending any contract) the notice of protest must be filed within 72 hours after posting of the solicitation. This is extremely important for vendors responding to a solicitation to consider. One of the most common problems in public procurement is that a vendor fails to challenge the specifications or criteria in an ITB or RFP although the vendor believes that a particular criteria or specification is unfair, unnecessary, or one that the vendor simply cannot meet. (This is often rationalized by the vendor as an effort to remain on good terms with the contracting agency – i.e., seeking to avoid an action that would irritate the contracting agency.) The use of criteria or specifications that are biased towards an incumbent contractor, or towards a vendor preferred by the state agency in question, is illegal, but nevertheless is a historic and fairly frequent problem in the public procurement arena. If a vendor believes that any part of the RFP is suspect, they must file the required notice within 72 hours or the issue is forever waived.

If a bidder or proposer wishes to challenge any agency decision (an award) or intended decision (or intended award) a notice of protest must be filed with 72 hours of posting of the notice of decision or intended decision. § 120.57(3)(b), Fla. Stat. Intervening holidays and weekends are excluded in computing each of these 72-hour period. All parties who submitted a response to an ITB or RFP are entitled to a fair notice explaining their protest rights, and failure of the state agency to provide proper notice may extend the time for filing a notice of protest.

Subsequent to the filing of any protest, a formal written protest must be filed within 10 days after the notice of protest is filed. Intervening holidays and weekends are counted in computing this 10-day period. This formal written protest must state with particularity the facts and law upon which the protest is based, and is often an extensive legal document containing supporting arguments, authorities, and evidentiary exhibits. Per the statute, failure to timely file the 72-hour notice of protest or the 10-day formal written protest, will constitute a waiver of the right to protest. See also Capeletti Bros. v. DOT, 499 So. 2d 855 (Fla. 1st DCA 1986) (72-hour period); Xerox v. DPR, 489 So. 2d 1230 (Fla. 1st DCA 1986) (10-day period). Although the deadlines are not strictly “jurisdictional,” late filing will be excused only in extraordinary situations such as where the agency fails to disclose conditions in the solicitation specifications, or where agency action or inaction substantially contributed to or caused the late filing. Jacksonville Port Auth. v. Parkhill-Goodloe Co, 362 So. 2d 1009 (Fla. 1st DCA 1978).

Bid Protest Bond. Protestors must generally file a bond payable to the agency as required by Section 287.042(2)(c), Florida Statutes, and Rule 28-110.005 Florida Administrative Code, in an amount equal to 1 percent of the estimated contract amount. Failure to timely file a required bond within the time provided will also result in a waiver of the right to protest. The bond is to cover costs, since the losing party in a bid protest is responsible for paying the prevailing party’s costs and charges (but not attorney’s fees). Attorney’s fees are sometimes separately sought and awarded in cases where a protest is found to be “frivolous” or filed for “improper purposes” as defined by statutes and controlling case law.

Protest Stays the Bid Process. Filing of a timely formal protest stops the bid process and no final award of a contract may be made before entry of a final order after resolution of the protest, unless the agency head sets forth in writing particular circumstances which require the continuance of the process in order to avoid an immediate and serious danger to the public health, safety, or welfare. Fla. Stat. § 120.57(3)(c).

Settlement Period. Prior to forwarding a protest to DOAH for hearing, Florida’s APA requires that the agency must allow seven days, excluding weekends and holidays, to provide an opportunity for the parties to resolve the protest without hearing by mutual agreement of the parties. This is a prime opportunity to resolve any dispute early on and avoid the cost of continued litigation. Whether a vendor is the winning bidder, or a challenger to the proposed award of a contract, they should monitor the settlement process closely, and should demand that the state agency keep them advised of any and all meetings, discussions, correspondence, or contacts by other parties. It is probably best legal practice for an interested vendor to file a Notice of Appearance and Motion to Intervene with the state agency during the settlement period, so that there is no ambiguity as to the party asserting its rights to be part of all Settlement discussions.

Any decision of the agency to change its proposed award or to reject all bids or proposals as a result of the discussions in the settlement period must include a new Notice of rights, and opportunity for parties to file a challenge to the new agency action. Although there does not appear to be any reported cases, it is arguable that any Settlement entered by the state agency that does not include all parties who responded to the ITB or RFP is illegal – as Section 120.57(3)(c), Florida Statute, mandates that the contract award process be stopped once a bid protest is filed, unless there is a documented emergency situation – or unless there is a settlement – which implies a resolution among all interested parties.

Standing to Protest

Section 120.57(3) provides that any person who is “adversely affected” by the agency action may file a protest. While a second ranked low bidder has standing to challenge an award to the low bidder based on non-responsiveness and other factors, a third or lower ranked bidder generally does not have standing, since even if successful in the protest of the award to the low bidder, the award would then go to the second ranked low bidder. Preston Carroll v. Florida Keys Aqueduct Auth., 400 So. 2d 524 (Fla. 3d DCA 1981). Nevertheless, the third or even fourth low bidders can sometimes have standing such as where all higher ranked bidders are also challenged, or where the procurement process was fundamentally flawed requiring a full rebidding. See, e.g., NCS Pearson, Inc. v. Dept. of Education, Case No. 04-3976, 2005 WL 310776 at ¶¶ 85-87 (DOAH Feb. 8, 2005; F.O. Feb. 22, 2005) (third-lowest bidder had standing based on challenge to fundamental fairness of procurement process). Absent special and extraordinary circumstances, non-bidders do not have standing. Fairbanks v. DOT, 635 So. 2d 59 (Fla. 1st DCA 1994) (standing found because the bid specifications effectively limited the source of materials to one specific manufacturer).

Common Grounds for Protests

The grounds for a valid bid protest tend to be fact-specific and vary broadly with the circumstances and requirements of each particular procurement. But in general, the following is a listing of some of the more common categories of grounds for protest that commonly arise in bid protest cases.

Sunshine Act Violations. Pursuant to Florida’s “sunshine law,” all meetings of any state agency at which official acts may be taken must be conducted as open, public meetings. Absent that, any action taken during such meetings is improper. The result is that the agency’s action is void and can be given no effect. See § 286.011, Fla. Stat.; Silver Express Co. v. District Board of Lower Tribunal Trustees of Miami-Dade Community College, 691 So. 2d 1099, 1100-01 (Fla. 3rd DCA 1997) (determining that a committee which helped crystallize the ultimate decision to be made by a college as to the award of a contract must be conducted openly and publicly). Among other things, to comply with the Sunshine law, all general meetings of a procurement evaluation committee should be publically noticed, and open to the public. Discussions or communications between members of the evaluation committee with respect to the procurement should not occur in private (though there are certain exceptions as to ITNs). Thus, any situation that involves private discussions among two or more evaluation committee members about the scoring or evaluations that are held outside a properly noticed public meeting are prohibited and would be a basis to challenge a contract award. (This can include communications among the members of the evaluation committee or others involved in the ultimate contract award such as email correspondence or inter-office memoranda.)

Improper Ex Parte Communications. Per Chapter 287, Florida Statutes, communications between those responding to the solicitation and the procuring agency and staff are prohibited during a “black out” period (basically from the release of the solicitation to the end of the 72-hour protest period) from communicating with anyone at the agency other then in writing to the procurement officer. Violation of this requirement may be grounds for rejecting a response.

Non-Responsive Bids: Material Variances vs. Minor Irregularities. Whether a mistake, deviation, or variance in a bid will be considered material (so as to deem the bid non-responsive) or a minor irregularity (that can be waived by the agency) is a highly technical question, and depends on the facts and circumstances of each case. To be responsive, a bid or proposal must conform in all “material” respects to the solicitation. § 287.012(25), Fla. Stat. There is a large body of case law as to what constitutes a minor irregularity versus a material variance from specifications, but generally, a material variation is one which: (1) affects the price of the bid; (2) gives the bidder an advantage or benefit not enjoyed by other bidders; or (3) adversely impacts the interests of the procuring agency. Intercontinental Properties, Inc. v. HRS, 606 So. 2d 380 (Fla. 3d DCA 1992). Material deviations or changes include those that involve fraud or misconduct, or that provide a bidder with an unacceptable or material competitive advantage. See Liberty City v. Asphalt & Concrete, 421 So. 2d 505 (Fla. 1982). In general, the test for measuring whether a deviation in a bid is sufficiently material to destroy its competitive character is whether it affects the amount of the bid by giving the bidder an advantage not enjoyed by other bidders. Harry Pepper and Associates, Inc. v. City of Cape Coral, 352 So. 2d 1190 (Fla. 2d DCA 1977). In contrast, minor irregularities have included such matters as the submission of a cashier’s check instead of a bid bond, the failure to submit written evidence that agent signing of the owner had authority, and the failure to include a form listing DBE subcontractors, at least where there is an allegation that the form was enclosed but later misplaced. See, e.g., Intercontinental Properties; Asphalt Pavers v. DOT, 602 So. 2d 558 (Fla. 1st DCA 1992). Often ITBs or RFPs will specifically list “Mandatory Criteria” or “Fatal Criteria” in the solicitation document. This listing is not exhaustive of required items. The bid or proposal may still be fatally defective if the bidder or proposer is otherwise not responsive to information and criteria specified anywhere in the RFP or ITB, and the omission meets the test of a material variance from the specification requirements as discussed above.

Improper “Conditional” Proposals. A proposal that is made conditional with respect to material matters such as price must be deemed non-responsive. See Sweeping Corporation of America, Inc. v. FDOT, Case No. 91-8203, 1992 WL 881039 (DOAH March 24, 1992; FDOT April 30, 1992) at ¶¶ 10-11 and 38-39 (holding that letters submitted that were conditional and equivocal with respect to a bond requirement required that the proposal be deemed non-responsive). This problem arises where a vendor includes a response that makes its proposal contingent upon some specification that is not expressly stated in the RFP or ITB.

Non-Responsiveness as to DBE or MBE of DBE Requirements. Many RFPs contain specified requirements as to Minority Business Enterprises (MBEs) or Disadvantaged Business Enterprises (DBEs). Failure to comply with such mandatory requirements is a material error that renders a bid non-responsive. See, e.g., City of Wildwood v. Gibbs & Register, Inc., 694 So. 2d 763 (Fla. 5th DCA 1997) (after bids were announced, mathematical errors were discovered showing that low bidder had not met the required MBE/WBE percentage); Vito’s Trucking and Excavating Co. v. Dept. of Transportation, No. 84-3436BID, 1984 WL 275479 at ¶ 6, 9, 14 (DOAH Dec. 14, 1984) (bid was non-responsive because bidder failed to meet DBE percentage requirements).

“Non-Responsible Bidder” Issues. A vendor’s bid or proposal must not only be responsive, but the vendor itself must also be a “responsible” bidder. Responsible bidder requirements are typically spelled out in the ITB or RFP or by controlling statute, rule or policy. Section 287.012(24) defines a “responsible vendor” as “a vendor who has the capability in all respects to fully perform the contract requirements and the integrity and reliability that will assure good faith performance.” Generally, a bidder can be disqualified as non-responsible for a variety of reasons including such matters as: lack of required qualifications, lack of necessary resources and experience, financial inability or insolvency, submitting false statements in bids, delinquencies on prior contracts, failure to meet applicable pre-qualification requirements, failure to possess required certifications, and the like. Typically these type requirements cannot be satisfied post-bid opening. City of Opa Locka v. Trustees of Plumbing Industry Promotion Fund, 193 So. 2d 29, 32 (Fla. 3d DCA 1966).

Pricing and Performance Issues Showing “Non-Responsible Bidders. In unusual cases, a low bid may be “too good to be true” and various factors may indicate that the bidder cannot perform. A public entity is not necessarily required to accept the lowest dollar bid, but instead may bypass the “lowest bid” if that bidder or the bid itself is not “responsible.” See, e.g., City of Pensacola v. Kirby, 47 So. 2d 533, 535 (Fla. 1950) (statute requiring award to “lowest responsible” bidder does not require agency to award contract to the “lowest dollars and cents” bidder); Couch Construction Co. v. State DOT, 361 So. 2d 184 (Fla. 1st DCA 1978); Mayes Print Co. v. Flowers, 154 So. 2d 859 (Fla. 1st DCA 1963). The “responsible bidder” requirement vests discretion in the public authority to determine whether the lowest bidder is in fact also the lowest responsible bidder by considering various performance related factors including such matters as facilities available, financial resources and ability, experience, quality of previous work, reputation for performance, judgment and skill, outstanding obligations, integrity and credit, pecuniary ability, and various other matters relating to the ability of the bidder to perform the contract. See, e.g., Duboise Const. Co. v. City of South Miami, 108 Fla. 362, 146 So. 833 (1933); Engineering Contractors Assoc. of South Florida, Inc., 789 So. 2d 445, 451 (Fla. 4th DCA 2001). Analogous federal authorities likewise illustrate that a public entity may consider performance, financial, and other factors, including whether a bid is abnormally low, unrealistic, or a “low-ball” offer, or otherwise made without adequate resources so as to create risk that the contractor will abandon or short-change performance. The federal decisions have termed this a “price realism analysis” and is used to make a “responsibility” determination, a performance risk assessment, or an analysis of whether the offeror understands the work. See, e.g., Information Sciences Corp. v. United States, 73 Fed. Cl. 70, 100-103 (U.S. Ct. Fed. Claims Sept. 19, 2006).

Non-Existing or Improperly Named Bidder as “Non-Responsible” Bidder. In general, a contract cannot be awarded to a nonexistent entity, since no entity would be bound to perform the work. Oklahoma County Newspapers, Inc., Comp. Gen. Dec. B-270849, 96-1 CPD 213, 1996 WL 225730 (May 6, 1996). Similarly, if a bidder’s corporate charter has been dissolved, it lacks legal capacity to contract, and so cannot be awarded the bid. Casper Const. Co., Inc., Comp. Gen. Dec. B-253887, 93-2 CPD 247, 1993 WL 437055 (Oct. 26, 1993). If a proposal is ambiguous on the identity of the offering entity, the offer will be unacceptable, since there is uncertainty as to exactly who is bound to perform the contract. B & L Services, Inc. v. Dept. HRS, No. 85-3294BID, 1986 WL 401534 at ¶ 9, 34, & 37 (DOAH June 4, 1986). Such ambiguous bids are nonresponsive because they do not exhibit an intent of the bidder to be bound by the terms of the contract and this directly impacts the price, quantity, quality and delivery of the solicited products. Honeywell, Inc. v. United States, 16 Cl. Ct. 173, 35 Cont. Cas. Fed. (CCH) ¶ 75,611 (U.S. Cl. Ct. 1989), rev. on other grounds, 870 F. 2d 644 (Fed. Cir. 1989); Griffin Const. Co., B-185790, 76-2 CPD ¶ 26, 1976 WL 13110 (July 9, 1976) (award of contract to an entity other than that named in the bid constitutes an improper substitution of bidders). Moreover, it is improper to substitute bidding entities after bids have been submitted. For example, in Mil-Tech Systems, Inc. v. United States, 6 Cl. Ct. 26, 28, 31-35 Cont. Cas. Fed. (CCH) 72,719 (U.S. Cl. Ct. 1984), the court held a bidder could not transfer all of its stock to another company where the only assets of the bidder’s company was the awarded bid because such transfer of stock under those circumstances was tantamount to an illegal substitution of the bidder and constitute improper “bid brokering.” Similarly, a bid is nonresponsive if the legal entity on the bid is different than the legal entity identified on the bid bond.

Bias, Improper Conduct, or Ethical Violations of Evaluation Committee. Bias, favoritism, or unethical conduct on the part of the evaluation committee is a frequent successful ground for protests. Even the potential appearance of a conflict of interest can qualify. See, e.g., Compass Environmental, Inc. v. Department of Environmental Protection, Case No. 05-0007, 2005 WL 678870 at ¶¶ 46-55, 77 (DOAH March 21, 2005) (holding evaluators properly removed due to potential appearance of conflict, and holding that it was unnecessary to show “hard fact” evidence of actual bias or favoritism) (DEP Apr. 19, 2005 reversing on other grounds); Transportation Management Servs. of Broward, Inc. v. Commission for the Transportation Disadvantaged, Case No. 05-0920, 2005 WL 1210021 (DOAH, May 20, 2005) (appearance of impropriety); Medco Behavioral Care Corporation v. State of Iowa Department of Human Services, 553 N.W. 2d 556 (Iowa 1996) (holding appearance of conflict of interest sufficient to nullify proposed contract award). There are also numerous Attorney General opinions and Ethics Commission opinions interpreting state ethics laws in procurement settings. See, e.g., Op. Att’y Gen. Fla. 74-159 (1974) (members of county aviation authority were public officers prohibited from being interested in public contracts in which they are party to the letting); Commission on Ethics Opinion (CEO) 01-4 (Mar. 20, 2001) (prohibited conflict of interest for City Commissioner to remain employee of tax-exempt community development corporation that contracts with the City).

Arbitrary Scoring and Evaluation Errors and Methodologies. So long as acting in good faith, public agencies have broad discretion in procurement matters. This is especially true when it comes to scoring and evaluation issues. Thus it is especially difficult to convince a court to re-score or re-evaluate. Nevertheless, some common examples of such challenges to consider include clear mathematical errors made by scorers, evidence that the scoring system itself is illogical or arbitrary, a clear statistical bias in a particular evaluator’s scoring when compared with other evaluators, failure of evaluator to sign conflict of interest forms, improper ex parte communications between evaluators as to scores, unqualified or inexperienced evaluators, and an evaluator’s failure to follow agency or bid document procedures. For example, if there are no weights assigned for the various criteria of an RFP, or the weights are applied inconsistently or irrationally, this can be a basis for challenge including on the basis that it prevents “an opportunity for an exact comparison of bids” as required by Wester v. Belote, 138 So. 721, 723-24 (Fla. 1938).

Consideration or Weighing of Criteria Beyond the Four Corners of the RFP. Evaluators are generally not to look outside the RFP criteria, or outside the proposals submitted, or base scoring on external information outside of the RFP and evaluation process when conducting their reviews of the submitted proposals. Aurora Pump v. Gould Pumps, Inc., 424 So. 2d 70 (Fla. 1st DCA 1982) (agency must evaluate the bids or proposals received solely on the criteria stated in the RFP); R. N. Expertise, Inc. v. Miami-Dade County School Board, et al., Case No. 01-2663, 2002 WL 185217 (DOAH: Feb. 4, 2002; F.O. Mar. 14, 2002).

Improper POST-Bid Submissions. No submissions made after the bid or proposal opening that amend or supplement are to be considered by the agency. Thus a bidder cannot change a bid after the bid has been opened, except to cure “minor” irregularities. Harry Pepper & Assoc. v. Cape Coral, 352 So. 2d 778 (Fla. 1st DCA 1981).

Post-Award Changes; Improper Bid Shopping. Solicitation documents often require that subcontractors be listed and identified at the time of proposal submission. Failure to identify all subcontractors as required by an RFP is grounds for challenging a proposal as invalid. See, e.g., E.M. Watkins & Company, Inc. v. Board of Regents, 414 So. 2d 583, 587 (Fla. 1st DCA 1982) (“dangers” of bid shopping); D. E. Wallace Construction Corp. v. Florida Board of Regents, No. 89-6844BID, 1990 WL 749710 at ¶¶ 24-29 (DOAH Feb. 26, 1990; F.O. March 30, 1990) (bidder failed to use correct list of subcontractors form and did not submit its proposed MBE participation plan until seven days after bid opening, thus bid was non-responsive). An RFP or ITB that allows a party to submit a bid or proposal for work that will be substantially conducted by subcontractors, without a requirement to identify the subcontractors, and provide proof of ability to perform at the bid price is certainly a situation making the RFP or ITB subject to a timely challenge. Again, the challenge must be brought within 72 hours of the issuance of such an RFP or ITB or the issue will likely be waived.

The Formal Hearing Process

Generally. Once the protest is filed, and assuming there are disputed issues of fact, the agency refers the matter to Florida’s Division of Administrative Hearings (DOAH) for an expedited formal hearing before an administrative law judge (ALJ) pursuant to the detailed provisions of Section 120.569 (decisions affecting substantial interests), Section 120.57 (additional procedures), and Section 120.57(3) (additional requirements as to hearings involving bid protests).

Right to a Hearing: Issues can sometimes arise as to whether a fair hearing under Section 120.57(1), Florida Statutes, is required. Examples would include solicitations by a local government that involve expenditure of state funds; solicitations by a state contractor for subcontractors that will be funded with state funds; or solicitations by other organizations or bodies that have accepted state or federal funding or grants, and have made themselves subject to the public procurement processes. Even in situations where a Section 120.57 hearing is not required, fundamental due process would demand that a hearing be made available that includes adequate notice and a right to be heard. The sufficiency of the process being offered by a local government agency is often the subject of legal challenge. An aggrieved party can always seek relief in circuit court if being denied the opportunity for a full and fair hearing.

Expedited Nature. Section 120.57 hearings are de novo and are expedited in the sense that: a final hearing must be conducted within 30 days of DOAH’s receipt of the formal protest; a recommended order is to be issued by the ALJ within 30 days after receipt of the hearing transcript; and a final order is to be issued by the agency within 30 days of the recommended order. However, these time periods can be waived by agreement of the parties and in complex cases this is often the case, although the prevailing vendor may insist on the statutory time periods.

Pre-Hearing Discovery and Other Procedures. Pre-hearing procedures and rights are similar to civil non-jury trials. The rules are found in Chapter 128-106 Fla. Admin. Code. Among other things, these rules incorporate the discovery rules and procedures from the Florida Rules of Civil Procedure. Accordingly, the broad arsenal of discovery including written discovery (interrogatories, requests for production, requests to admit) and depositions are commonly utilized.

Burden and Standard of Proof. In bid protests where an award has been made, the administrative law judge (ALJ) is required to conduct a de novo proceeding to determine whether the agency’s proposed action is clearly erroneous, contrary to competition, arbitrary or capricious, or contrary to the agency’s rules or policies, or the bid or proposal specifications. The standard of proof in these proceedings is whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious. However, a lower standard of review applies where the agency has rejected all bids – such a decision will be overturned only if the agency’s action is illegal, arbitrary, dishonest, or fraudulent. § 120.57(3)(f), Fla. Stat.

Hearing and Post-Hearing Process. The hearings are full evidentiary hearings that will typically take 1-3 days. In highly complex procurements the hearings can sometimes last for a week or more. Following the hearing, proposed recommended orders are submitted generally within 30 days. These PROs are lengthy detailed documents that outline proposed findings of fact based upon the evidence presented in the hearing, as well as proposed conclusions of law, and a recommendation. The ALJ then considers the PRO submitted by each party and issues a recommended order to the agency. The recommended order will include the ALJ’s findings of fact and conclusions of law and an ultimate recommendation on whether to award the contract to a particular vendor, to return all bids and proposals to the agency to be re-evaluated, or to reject all bids and proposals.

The parties then have 15 days to file exceptions to the recommended order with the agency. The agency is bound by the findings of fact, unless there is no competent substantial evidence in the record to support the ALJ’s findings. The agency can only change a conclusion of law if it is on a matter that is within the agency’s specialized knowledge or expertise, and the agency’s conclusion is as reasonable or more reasonable that the conclusions of the ALJ. The agency issues its final order either accepting in whole or part the ALJ’s recommended order. The agency’s FO is subject to judicial review via appeal to the District Court of Appeal.

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Geoffrey D. Smith is a shareholder in the law firm of Smith & Associates, and has practiced in the area of bid protest and public procurement for over 20 years.

Unfairness or Public Corruption in Government Contracting

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So you have been through the public procurement bid process and were awarded a contract, but the government has not acted in good faith to implement the contract. Commonly, disputes over government contracts occur where multiple parties have been awarded contracts in response to a public procurement bid offering. Typically, there are disputes over whether one of the awarded bidders is receiving preferential treatment in the allocation of work under the contracts. Sometimes there is public corruption in the process.

What are the legal remedies where the material fairness of the public bid process has been compromised after the contracts have been awarded? Depending on the specific facts, there are potential remedies under Florida law, including but not limited to: (1) breach of contract; (2) breach of covenant of good faith and fair dealing; (3) fraud in the inducement; (4) deceptive and unfair trade practices; (5) public corruption; (6) tortuous interference with a business relationship; and (7) The Florida Whistleblower Act. This article will address some of the potential causes of action, remedies, and statute of limitations for the various causes of action that might be brought where the fundamental fairness of a public procurement contract has been compromised. While outside the scope of this article, there are also several potential federal law claims that might be applicable as well.

BREACH OF CONTRACT

A contract is “a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.” Restatement (Second) of Contracts § 1 (1981); see also 1 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 1:1 (4th ed. 2007). In order to prevail on a breach of contract claim, a plaintiff must prove: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.

There are two distinct categories of remedies available for a breach of contract: general damages and special damages. General damages flow naturally from a breach of contract. See 24 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 64:12 (4th ed. 2002). Special damages compensate a plaintiff for additional losses that are incurred as a result of a defendant’s breach, but that do not include the value of the promised performance. The classic example of a special damage is lost profits because lost profits do not necessarily result from a breach of a contract, but may be recoverable if the lost profits were both proximately caused by the alleged breach and reasonably foreseeable at the time the parties entered into the contract. Id. Whether or not damages exist is a question of fact for a jury. See 23 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 63:5 (4th ed. 2002).

If damages are difficult to establish, the amount of damages does not need to be established with absolute certainty. Reasonable certainty will suffice where a plaintiff provides a basis upon which damages may be estimated. See Mercer Mgmt. Consulting, Inc. v. Wilde, 920 F. Supp. 219, 238 (D.D.C. 1996)(citing Garcia v. Llerena, 599 A.2d 1138, 1142 (D.C. Cir. 1991)); see also Restatement (Second) of Contracts § 352 (1981)(stating “[d]amages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty”). Permissible methods of estimating lost profits in connection with a breach of contract claim include evidence of past performance or demonstrating profits earned by others. See Schonfeld v. Hilliard, 218 F.3d 164, 175-76 (2d Cir. 2000).

Because damages for breach of contract are generally limited to the pecuniary loss sustained, punitive or exemplary damages are not ordinarily recoverable in actions for breach of contract, even where the breach is willful and flagrant or oppressive. However, where the breach of contract is accompanied by an independent tort, such as fraud, for which exemplary damages may be recovered, punitive damages can be awarded. Grupo Televisa, S.A. v. Telemundo Communications Group, Inc., 485 F.3d 1233 (11th Cir. 2007); Lewis v. Guthartz, 428 So. 2d 222 (Fla. 1982); Grossman Holdings Ltd. v. Hourihan, 414 So. 2d 1037, 41 A.L.R.4th 125 (Fla. 1982); Ghodrati v. Miami Paneling Corp., 770 So. 2d 181 (Fla. Dist. Ct. App. 3d Dist. 2000); U.S. Resico, Inc. v. Henry, 590 So. 2d 1107 (Fla. Dist. Ct. App. 2d Dist. 1991); Floyd v. Video Barn, Inc., 538 So. 2d 1322 (Fla. Dist. Ct. App. 1st Dist. 1989), cause dismissed, 542 So. 2d 1335 (Fla. 1989); Aero Intern. Corp. v. Florida Nat. Bank of Miami, 437 So. 2d 156 (Fla. Dist. Ct. App. 3d Dist. 1983). Pleading punitive damages requires court permission after a showing that there is a reasonable basis for an award of punitive damages. Fla. Stat. § 768.72 (2013).

Sovereign immunity is waived by entering into a contract. See Pan-Am Tobacco Corp. v. Department of Corrections, 471 So. 2d 4 (Fla. 1984)(holding state sovereign immunity does not apply in breach of contract actions: “where the legislature has, by general law, authorized entities of the state to enter into contract or to undertake those activities which, as a matter of practicality, require entering into contract, the legislature has clearly intended that such contracts be valid and binding on both parties.”). However, sovereign immunity is only partially waived by the government for tort actions and does not include waiver for punitive damages. Generally, punitive damages can only be brought against government officials in their individual capacity and not against the sovereign. See Fla. § 768.28(9) (2013); see also Everton v. Willard, 468 So. 2d 936, fn 6 (Fla. 1985).

The statute of limitations for bringing a claim for breach of contract is five years. Fla. Stat. § 95.11(2)(b) (2013). However, there are factual issues that can toll the statutes of limitations in particular circumstances. See Morsani v. Major League Baseball, 739 So. 2d 610 (Fla. 2d DCA 1999).

BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING

Florida contract law recognizes the implied covenant of good faith and fair dealing in every contract. See Burger King Corp. v. Weaver, 169 F.3d 1310, 1315 (11th Cir.1999)(cert. denied, 528 U.S. 948, 120 S.Ct. 370, 145 L.Ed.2d 287 (1999)); Barnes v. Burger King Corp., 932 F.Supp. 1420, 1438 (S.D.Fla.1996); County of Brevard v. Miorelli Eng’g, Inc., 703 So. 2d 1049, 1050 (Fla.1997); Fernandez v. Vazquez, 397 So. 2d 1171, 1174 (Fla. 3d DCA 1981). This covenant is intended to protect “the reasonable expectations of the contracting parties in light of their express agreement.” Barnes, 932 F.Supp. at 1438.

However, there are two important restrictions on causes of action for the breach of good faith and fair dealing. First, the implied covenant of good faith and fair dealing should not be invoked to override the express terms of the agreement between the parties. See, e.g., Burger King Corp. v. Weaver, 169 F.3d 1310, 1317–18; Barnes, 932 F.Supp. at 1438; City of Riviera Beach v. John’s Towing, 691 So. 2d 519, 521 (Fla. 4th DCA 1997). Second, there must be an allegation that an express term of the contract has been breached. See, e.g., Burger King Corp. v. Weaver, 169 F.3d 1310, 1317–18; Nautica Int’l, Inc. v. Intermarine USA, L.P., 5 F.Supp.2d 1333, 1340 (S.D.Fla. 1998); Anthony Distrib., Inc. v. Miller Brewing Co., 941 F.Supp. 1567, 1574 (M.D.Fla. 1996); Barnes, 932 F.Supp. at 1438–39; Burger King Corp. v. Holder, 844 F.Supp., 1528, 1530 (S.D. Fla. 1993). The duty of good faith and fair dealing must relate to express term of the contract and is not an independent term of a contract which may be asserted as a breach when all other terms have been performed pursuant to the contract. Id.; see also Hospital Corp. of America v. Florida Med. Ctr., Inc., 710 So. 2d 573, 575 (Fla. 4th DCA 1998); Johnson Enter. of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1314 (11th Cir.1998)(“[G]ood faith requirement does not exist ‘in the air’. Rather, it attaches only to the performance of a specific contractual obligation.”). Allowing a claim for breach of the implied covenant of good faith and fair dealing “where no enforceable executory contractual obligation” remains would add an obligation to the contract that was not negotiated by the parties. Hospital Corp., 710 So. 2d at 575.

That said, Florida courts have inconsistently applied these caveats. For example, in Cox v. CSX Intermodal, Inc., 732 So. 2d 1092 (Fla. 1st DCA 1999), CSX had exclusive rights to the plaintiffs’ trucking services. CSX also had contracts with other trucking companies. Under the terms of the agreement, CSX was not required to furnish any specific amount of freight or number of loads for transport at any particular time or to any particular place. The plaintiffs sued alleging that CSX’s employee was exercising its discretion in allocating the loads to the various companies, in an arbitrary, fanciful and unreasonable manner. Although the appellate court found no breach of the express terms of the contract, it determined that issues of fact existed as to whether the manner in which CSX exercised its discretion violated the implied duty of good faith. Id. at 1098. However, that case was distinguished by the Fourth District Court of Appeal in Insurance Concepts and Design, Inc. v. Healthplan Services, Inc.,785 So. 2d 1232 (4th DCA 2001), holding: “Unlike the case at bar, in Cox there was an express provision in the contract, the allocation of loads between Cox and other carriers, that was allegedly not performed in good faith. The plaintiff here can point to no such provision in the contract.”

In Ernie Haire Ford, Inc. v. Ford Motor Co. 260 F.3d 1285 (11th C.A. Fla. 2001), the court distinguished the Cox case granting summary judgment precluding the contract claims holding:

With the implied covenant, one party cannot capriciously exercise discretion accorded it under a contract so as to thwart the contracting parties’ reasonable expectations. See Sepe v. City of Safety Harbor, 761 So.2d 1182, 1185 (Fla. 2d DCA 2000)(holding that, even where one party has “sole discretion” under a contract, that party, in exercising its discretion, must act in good-faith and in accordance with the contracting parties’ expectations); Cox v. CSX Intermodal, Inc., 732 So.2d 1092, 1097–98 (Fla. 1st DCA 1999)(stating “where the terms of the contract afford a party substantial discretion …, the duty to act in good faith … limits that party’s ability to act capriciously to contravene the reasonable contractual expectations of the other party”). Yet, the limit placed on a party’s discretion is not great. As the Florida Second District Court of Appeal has stated, “Unless no reasonable party … would have made the same discretionary decision …, it seems unlikely that [the party’s] decision would violate the covenant of good faith….” Sepe, 761 So.2d at 1185.
Appellants’ reliance on Cox is misplaced. The central purpose of the contract in Cox was the hauling of freight. By failing to assign freight, CSX frustrated that purpose and the reasonable expectations of the parties. Here, however, the central purpose of the Dealership Agreement was to sell cars, not to relocate the dealership. In disapproving the relocation, Appellee did not preclude Appellants from selling cars. Instead, based on “its best judgment,” Appellee forbid the relocation of the dealership to a site where, granted, Appellants would have financially benefitted. Although Appellee’s decision was not in Appellants’ best interests, it was neither capricious nor in contravention of the parties’ reasonable expectations. Therefore, the district court properly granted summary judgment on Appellants’ breach of contract claims.

In 2012, in Burger King Corp. v. Broad Street Licensing Group, LLC 469 Fed. Appx. 819 (11 Cir. C.A. Fla. 2012), the Eleventh Circuit addressed the Cox decision and the implied duty of good faith holding where discretion is a part of a contract and no methodology is supplied for applying the discretion, the implied covenant of good faith and fair dealing will be imposed as a gap-filling to determine how the discretion should be applied:

Broad Street also alleges that BKC’s repudiation of the licensing agreement breached the implied duty of good faith and fair dealing under Florida law. Where a contract vests a party with discretion, but provides no standards for exercising that discretion, Florida courts have held that the implied duty of good faith and fair dealing attaches as a gap-filling default rule. Speedway SuperAmerica, LLC v. Tropic Enter., Inc., 966 So. 2d 1, 3 (Fla.Dist.Ct.App. 2007); Publix Super Markets, Inc. v. Wilder Corp. of Del., 876 So.2d 652, 654–55 (Fla.Dist.Ct.App. 2004). This standard imposes a duty upon the party vested with discretion to act in a commercially reasonable manner, or a manner that satisfies the reasonable expectations of the other party. See, e.g., Publix Super Markets, 876 So. 2d at 655 (holding that exercise of discretion was reasonable based upon evidence of the commercial needs of the party vested with discretion); Cox v. CSX Intermodal, Inc., 732 So. 2d 1092, 1098 (Fla.Dist.Ct.App.1999)(considering whether exercise of discretion would unreasonably deprive other party of meeting its “costs of operation”).
We agree with Broad Street that paragraph 4(G) of the contract is governed by the implied duty of good faith and fair dealing. This paragraph vests BKC with discretion to terminate any licensing agreement without Broad Street’s approval. But, it contains no standards for BKC’s exercise of that discretion. See Cox, 732 So. 2d at 1098. Further, Broad Street has alleged an expectation that compensation for its services would consist of, in part, a percentage of any revenue collected and paid to BKC for any license agreement secured by Broad Street.

BKC argues in response that the implied duty of good faith and fair dealing “may not be imposed to override express terms in a contract.” Burger King Corp. v. Weaver, 169 F.3d 1310, 1316 (11th Cir.1999)(quotation marks and alterations omitted)(applying Florida law). While we agree with this generic statement of law, we do not believe that imposing a duty of good faith and fair dealing in this case would vary the terms of paragraph 4(G). As Florida courts have recognized, where a discretionary clause is “silent with regard to the methodology or standards to be used” in exercising that discretion, imposing a reasonableness standard of good faith and fair dealing does not vary any express contractual terms. Cox, 732 So. 2d at 1098. Therefore, insofar as Broad Street alleges that BKC breached the implied duty of good faith and fair dealing, we hold that it has successfully stated a claim, notwithstanding BKC’s rights under paragraph 4(G).

However, in that case in a footnote the court pointed out that paragraph 4(G) did not expressly vest BKC with absolute discretion to terminate a licensing agreement, and implied that if it had done so there could be a different result. Also, in that case, the court ultimately relied upon another provision in the contract to determine there were no damages for terminating the license because the implied duty of good faith could not overrule an express term of the contract.

In summary, the determination of whether there is a breach in the duty of good faith and fair dealing will be a factually specific determination. The issue will most likely turn on how necessary the implied duty of good faith and fair dealing is to purpose of the contract.

FRAUD IN THE INDUCEMENT

One of the essential elements of a contract is that parties to the contract enter into it freely without fraud, mistake, duress, or undue influence. Fla. Jur. 2d Contracts § 35 (1995). Fraud in the inducement in Florida is a tort independent of breach of contract. See, e.g., Burton v. Linotype Co., 556 So. 2d 1126, 1126 (Fla. 2d Dist. Ct. App. 1989); Johnson v. Bokor, 548 So. 2d 1185, 1186 (Fla. 2d Dist. Ct. App. 1989)(holding that a party fraudulently induced into a contract may sue for fraud in the inducement or breach of contract).

Fraud is a particularly difficult claim to prove because its elements require proof of intent to defraud and reasonable reliance on the misrepresentation. See Pettinelli v. Danzig, 722 F.2d 706, 709 (11th Cir. 1984). The elements of fraud are: (1) misrepresentation of material fact; (2) the representor of the misrepresentation knew or should have known of the statement’s falsity; (3) intent by the representor that the representation will induce another to rely and act on it; and (4) resulting injury to the party acting in justifiable reliance on the representation. See Lou Bachrodt Chevrolet, Inc. v. Savage, 570 So. 2d 306, 308 (Fla. 4th Dist. Ct. App. 1990).

To be actionable, the false representation must relate to an existing fact, as opposed to a prediction about a future event, and it must be known to be false at the time the statement is made. See Cavic v. Grand Bahama Development Co., 701 F.2d 879 (11th Cir.1983); Finney v. Frost, 228 So. 2d 617 (Fla. 4th Dist. Ct. App. 1969), cert. dismissed, 239 So. 2d 101 (Fla. 1970)(set aside a jury verdict based on insufficient evidence that defendant knowingly provided false information which was intended to induce the plaintiff to act); see also American Eagle Credit Corp. v. Select Holding, Inc., 865 F.Supp. 800 (S.D. Fla. 1994). In the seminal case of Besett v. Basnett, 389 So. 2d 995 (Fla. 1980), the Supreme Court of Florida held that a “recipient of a fraudulent misrepresentation is not justified in relying upon its truth if he knows that it is false or its falsity is obvious to him.” However, a plaintiff is not precluded from recovery in tort for failing to make an independent investigation of the statement. Id.; see also Johnson v. Davis, 480 So. 2d 625 (Fla. 1985)(holding the doctrine of caveat emptor does not exempt a seller from false statements that induced the buyer to purchase).

Punitive damages are available in judicial proceedings where there is a fraud claim. See Hialeah Automotive, LLC v. Basulto, App. 3 Dist., 22 So. 3d 586 (2009), rehearing denied, review granted 116 So.3d 1259. In HGI Associates, Inc., v. Wetmore Printing Company, 427 F.3d 867, (11th Cir. C.A. 2005) the court held punitive damage, lost profits, and future lost profits were all appropriate damages for fraud in the inducement:

punitive damages are awardable for sufficient fraudulent inducement claims, even when those claims involve facts related to a collateral breach of contract claim. The general rule in Florida states that punitive damages are not awarded for breach of contract claims. See, e.g., Griffith v. Shamrock Vill., Inc., 94 So. 2d 854, 858 (Fla. 1957). However, “where the acts constituting a breach of contract also amount to a cause of action in tort there may be a recovery of exemplary damages upon proper allegations and proof.” Id.; accord Ferguson Transp., Inc. v. North Am. Van Lines, Inc., 687 So. 2d 821, 822–23 (Fla. 1996) (per curiam); Southern Bell Tel. & Tel. Co. v. Hanft, 436 So. 2d 40, 42 (Fla.1983); see also Kee, 918 F.2d at 1543. The underlying tort cause of action must be based on some sort of “intentional wrong, willful or wanton misconduct, or culpable negligence, the extent of which amounts to an independent tort.” Hanft, 436 So.2d at 42.
Wetmore relies on our decision in Kee to assert that punitive damages are not recoverable when the compensatory damages for the breach of contract and fraudulent inducement are the same. That reasoning, however, has been rejected in fraudulent inducement cases. In Kee, we based much of our decision on the Florida Supreme Court’s holding in AFM Corp. v. Southern Bell Telephone & Telegraph Co. that stated, “without some conduct resulting in personal injury or property damage, there can be no independent tort flowing from a contractual breach which would justify a tort claim solely for economic losses.” 515 So.2d 180, 181–82 (Fla.1987); accord Kee, 918 F.2d at 1543. The Florida Supreme Court, however, has subsequently rejected the use of this language to eliminate a legitimate fraudulent inducement cause of action on the sole basis that breach-of-contract claims recover for the same alleged economic injuries. See HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So. 2d 1238, 1239 (Fla.1996).

In HTP, the court resolved a conflict between the Florida Courts of Appeal regarding whether a claim of fraudulent inducement is barred in a breach of contract action. See id. at 1238. The court held that a fraudulent inducement is a separate and independent tort when compared to breach of contract. See id. at 1239. The facts concerning fraud committed during the formation of a contract can be distinguished from the facts resulting in the breach of that contract. See id. Thus, an “action on a contract and for fraud in inducing plaintiff to enter into such a contract may exist at the same time, and a recovery on one of the causes will not bar a subsequent action on the other.” Id. (citations and quotations omitted).

Florida courts have further explained that the decision in HTP allows an award of punitive damages for fraudulent inducement despite additional claims for breach of contract. See Connecticut Gen. Life Ins. Co. v. Jones, 764 So. 2d 677, 680–82 (Fla.Dist.Ct.App. 2000). Indeed, even we have recognized the ability of a party to seek punitive damages for fraud and compensatory damages for breach of contract under Florida law, despite both claims arising from the same facts. See Palm Beach Atl. Coll., Inc. v. First United Fund, Ltd., 928 F.2d 1538, 1547 (11th Cir.1991). Thus, we conclude that the district court properly granted punitive damages for the acts of fraud perpetuated by Wetmore.

However, sovereign immunity is not waived under Florida law for tort claims so punitive damages can only be brought against the individual government officials in their individual capacity and not against the sovereign. Fla. § 768.28(9) (2013).

The statute of limitations for bringing a claim for fraud in the inducement is four years. Fla. Stat. § 95.11(3)(j) (2013).

DECEPTIVE AND UNFAIR TRADE PRACTICES

The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) makes unlawful “[u]nfair methods of competition or deceptive acts or practices in the conduct of any trade or commerce.” There are three elements to establish a claim pursuant to FDUTPA: (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages. Generally, FDUTPA is an attractive claim for plaintiffs because it provides for statutory damages, which are additive to other damages, and has a prevailing party attorneys’ fees provision.

Outside of Florida, some courts have held that similar laws only protect “consumers.” Thus, where the party filing the claim was the “seller” in the transaction, the claim cannot be actionable. See e.g. Channel Companies, Inc. v. Britton, 167 N.J. Super. 417, 400 A.2d 1221 (App. Div. 1979)(holding a seller is not a “consumer” under the New Jersey Consumer Fraud Act); Tex. Bus. & Com. Code §§ 17.41 et seq., (A seller of metering devices is not a “consumer” under the Texas Deceptive Trade Practices Consumer Protection Act); Bostwick v. Liquor Control Systems, Inc., 599 S.W.2d 129 (Tex. Civ. App. Waco 1980)(the Texas Deceptive Trade Practices Consumer Protection Act defines a “consumer” as an “individual, partnership, corporation, or governmental entity who seeks or acquires by purchase or lease any goods or services.” “Goods” are defined as “tangible chattels or real property purchased or leased for use.” Applying these definitions to the facts, the court reversed the trial court’s decision and rendered judgment for the individual, reasoning that the mere act of receiving a check in exchange for a purchase by the individual does not make the supplier a “consumer” under the law). While the issue has not been squarely decided in Florida, the precedent from other states and the overall intention of the federal consumer protection act raises concerns for an awarded bidder to bring this cause of action.

Sovereign immunity could also be a concern. There is only one reported Florida case where FDUTPA was raised against a government entity. See State, Dept. of Lottery v. Curcio, 71 So. 3d 931 (Fla. 1st DCA 2011). The reported case law shows the FDUTPA claim survived an interlocutory appeal. However, on remand the trial court entered an order of summary judgment on the FDUTPA claim based upon sovereign immunity. The issue is likely to be subject to an appeal.

The risk to bringing this cause of action is that FDTPA has a prevailing party attorneys’ fees provision. Thus, if the plaintiff wins on all other claims, but lose on this particular legal theory, the plaintiff could still end up paying the other parties’ attorneys’ fees.

No action may be brought by the enforcing authority under this section more than 4 years after the occurrence of a violation of this part or more than 2 years after the last payment in a transaction involved in a violation of this part, whichever is later. Fla. Stat. § 501.207 (5) (2013).

PUBLIC CORRUPTION

In certain instances there could be facts that amount to public corruption and might be actionable against the government employee that committed the acts. Article 2 §8 (c) of the Florida Constitution provides:

Any public officer or employee who breaches the public trust for private gain and any person or entity inducing such breach shall be liable to the state for all financial benefits obtained by such actions. The manner of recovery and additional damages may be provided by law.

However,. in St. John Medical Plans, Inc., St. John Clinic Medical Center, Inc., and Miguel Angel Cruz Peraza, on behalf of The State of Florida, v. Alberto Gutman, 721 So. 2d 717(Fla. 1998) Supreme Court of Florida held this constitutional provision was not self executing, meaning there must be a separate statutory cause of action to give an individual standing. There are tax payer standing cases where specific injury to a plaintiff has allowed these types of claims to survive. See e.g. Lainhart v. Burr, 438 So. 711 (Fla. 1905)(holding a violation of the public trust does not require a violation of a specific statute); Lovejoy v. Grubbs, 432 So. 2d 678 (5th DCA 1983)(holding one cannot serve two masters and that actions against public policy do not require a statute to enforce them as the statute would merely be a declaration of public policy). In Lovejoy, the court also held taxpayers have the right to bring suit against officials that squander public funds. Id.

TORTUOUS INTERFERENCE WITH A BUSINESS RELATIONSHIP

Depending on the specific facts, in some instances there may be a claim for tortuous interference with a business relationship. Florida law defines tortuous interference with a business relationship as the unjustified and intentional interference with a contract or advantageous business relationship between two other parties where injury occurs as a result of the interference. See Symon v. J. Rolfe Davis, 245 So. 2d 278, 280 (Fla. 4th DCA 1971); see also Restatement (Second) Torts § 766. Tortuous interference has five elements: (1) existence of a contract; (2) the defendant’s knowledge of a contract; (3) intentional interference with the contract; (4) interference with lack of justification or privilege; and (5) damage resulting from the breach. See Special Purpose Accounts Receivable Co-op Corp. v. Prime One Capital Co., 125 F. Supp. 2d 1093, 1103 (S.D. Fla. 2000); McKinney-Green, Inc. v. Davis, 606 So. 2d 393(Fla. 1st DCA 1992).
To maintain a claim for tortuous interference the defendant’s interference must be intentional and direct. See McCurdy v. Collis, 508 So. 2d at 383; Rosa v. Florida Coast Bank, 484 So. 2d 57, 58 (Fla. 4th DCA 1986); Lawler v. Eugene Wuesthoff Memorial Hospital Association, 497 So. 2d 1261, 1263 (Fla. 5th DCA 1986). The party claiming tortuous interference has the initial burden of proving it. See Ahern v. Boeing, 701 F.2d 142, 144 (11th Cir. 1983)(citing Unistar Corp. v. Child, 415 So. 2d 733, 734 (Fla. 3d DCA 1982). Once all of the elements are proven, the burden shifts to the defending party to prove that the interference was justified or privileged, or to establish any other possible defenses. See United Yacht Brokers v. Gillespie, 377 So. 2d 668, 672 (Fla. 1979).
Damages for tortuous interference with a business relationship must reasonably flow from the defendant’s interference. See Ethan Allen, 647 So. 2d 812, 815 (Fla. 1994). The interference of the contract must be the legal or direct cause of the injury suffered. See Tietig v. Southeast Regional Const. Corp., 557 So. 2d 98, 98 (Fla. 3d DCA 1990). In Ethan Allen, the furniture dealer told the manufacture that it was no longer selling its furniture. Id. at 814. So, the manufacturer placed an ad announcing the business split and noting that the dealer still had outstanding debt owed to the manufacturer. Id. The dealer claimed that the ad interfered with the prospective relationship with the previous people who shopped at its store. Id. However, the court disagreed with the claim and held the dealer did not suffer any injury from the interference because dealer had no identifiable agreement with the past customers. Id. at 815. Similarly, if no contractual rights are violated, then no damage from the interference occurs. See International Expositions, Inc. v. City of Miami Beach, 274 So. 2d 29, 31 (Fla. 3d DCA 1973).

The main defenses against a claim for tortuous interference of a contract are justification, privilege, and sovereign immunity. To determine if the defendant was justified in interfering, the court will balance the importance of the objective obtained through the interference with the importance of the plaintiff’s interest that was interfered with. See Heavener, Ogier Services, Inc. v. R.W. Florida Region, Inc., 418 So. 2d 1074, 1076 (Fla. 5th DCA 1982). Additionally, Restatement (second) of Torts § 767 looks at other factors to determine if an actor’s conduct was proper or justified. The Restatement looks at: (1) the nature of the actor’s conduct; (2) the actor’s motive; (3) the interests of the other with which the actor’s conduct interferes; (4) the interests sought to be advanced by the actor; (5) the social interests in protecting the freedom of action of the actor and the contractual interests of the other; (6) the proximity or remoteness of the actor’s conduct to the interference; and (7) relations between the parties.

Florida law also recognizes that interference with a contract is privileged or justified if the defendant is acting to protect or promote one’s own financial interest. See Metzler v. Bear Auto Service Co., SPX, 19 F. Supp. 2d 1345, 1364 (S. D. Fla. 1998). If a defendant interferes with a contract to protect his or her financial interest, it is generally determined that the defendant’s right to protect that interest outweighs the plaintiff’s right to be free from interference. See Heavener, Ogier Services, Inc., 418 So. 2d at 1076. Some cases require the financial interest to be an investment. See Yoder v. Shell Oil Co., 405 So. 2d 743, 744 (Fla. 2d DCA 1981).

Additionally, interference may be justified or privileged if the action constitutes legitimate competition for business. See Royal Typewriter Co., a Division of Litton Business Systems, Inc. v. Xerographic Supplies Corp., 719 F.2d 1091, 1105 (11th Cir. 1983); see also Ahern, 401 F.2d at 144 (holding that claim will not be actionable when lawful competition is present, even though a prima facie case of tortuous interference is established). In Royal Typewriter, Royal sold copy machines to Xerographic that they in turn sold to customers. Royal brought suit to recover unpaid amounts and Xerographic countersued claiming that Royal’s solicitations in another area interfered with Xerographic’s business. The court held that there was no tortuous interference of contract because Royal was only competing for customers. Id.; see also Lake Gateway Motor Inn, Inc. v. Matt’s Sunshine Gift Shops, 361 So. 2d 769, 771 (Fla. 4th DCA 1978)(holding landlord could negotiate with a potential new tenant even though an existing tenant was leasing the space).

Although lawful competition usually justifies interference, competition for business by a competitor may be actionable if the competitor is attempting to induce a customer to breach a contract that is not terminable at will. See Advantage Digital Systems, Inc. v. Digital Images Services, Inc., 870 So. 2d 111, 116 (Fla. 2d DCA 2003). The issue usually turns on whether the conduct is considered to be unfair according to contemporary business standards. See Azar v. Lehigh Corp., 364 So. 2d 860, 862 (Fla. 2d DCA 1978). Further, an action will not be privileged if undertaken out of malice. See Wagner v. Nottingham Associates, 464 So. 2d 166, 167(Fla. 3d DCA 1985).

THE FLORIDA TORT CLAIMS ACT

The Florida Tort Claims Act, sometime referred to as the Florida Whistle Blower Act, is intended to “prevent agencies or independent contractors from taking retaliatory action against any person who discloses information to an appropriate agency alleging improper use of governmental office, gross waste of funds, or any other abuse or gross neglect of duty on the part of an agency, public officer, or employee.” Fla. Stat. §112.3187 (2013). The disclosure of this information must be made to the appropriate person. For violations involving a “local governmental entity, including any regional, county, or municipal entity, special district, community college district, or school district or any political subdivision of any of the foregoing, the information must be disclosed to a chief executive officer… or other appropriate local official.” Id. Courts have found that a person is an “appropriate local official” when they are empowered to investigate complaints and make reports or recommend corrective action. See e.g. Quintini v. Panama City Hous. Auth., 102 So. 3d 688, 690 (Fla. 1st DCA 2012) review denied, 116 So. 3d 383 (Fla. 2013) and Burden v. City of Opa Locka, 54 Employee Benefits Cas. 2108 (S.D. Fla. 2012).

In general this act includes remedies to reinstate employees or independent contractors and to make them as whole as they were before the retaliation occurred. However, there are several procedural steps that need to be taken in order to successfully proceed with a claim under this statute. These procedural steps vary based on the type of relationship the person disclosing the information has with the government or state agency. In the context of someone who has been awarded a government contract that is being corruptly administered, the person must make an attempt to resolve the situation by using all available administrative and contractual remedies. If those fail, the person must file an action in civil court within 180 days of the retaliatory act. Further, there is an attorneys’ fees provision for successfully bringing this claim. See id.

The specific facts of a particular case will control how sovereign immunity impacts this cause of action. While this statute evinces the intent of the legislature to waive sovereign immunity on a broad basis, it must be strictly construed. Fla. Jur. 2d, Government Tort Liability § 9. There are two broad exceptions to the statutory waiver of governmental tort immunity under this statute: (1) discretionary, planning-level governmental functions remain immune from tort liability; and (2) the governmental entity is not liable in tort for breaching a duty which the government owes to the public generally, as opposed to a special tort duty owed to a particular individual. If either exception to the waiver of sovereign tort immunity is applicable, the governmental entity sued is immune from tort liability. Fla. Jur. 2d, Government Tort Liability § 13

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