This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its May 2005 decision in Transportation Management Services v. Commission for the Transportation Disadvantaged, the Florida Division of Administrative Hearings ordered the cancellation and retendering of a contract after finding that the initial evaluation was tainted by a conflict of interest. The case dealt with a Request for Proposals (RFP) for transportation services, where an unsuccessful bidder brought a legal challenge alleging that a member of the evaluation committee was in a conflict of interest due to an ongoing business relationship with a member of the winning bidding team.
As the Court summarized, the Commission for the Transportation Disadvantaged established a three-member evaluation team to evaluate the proposals:
Respondent established an evaluation committee to review and evaluate the proposals submitted in response to the RFP. This committee consisted of Lisa Bacot, executive director of Respondent; Karen Somerset, assistant director of Programs Evaluation and Oversight of Respondent; and Robert Siedlecki, chairman of the Medicaid Committee of Respondent. Bacot had been involved with one other evaluation of an RFP. Siedlecki had been an evaluator on hundreds of requests for proposals. Siedlecki has been trained by the federal government as an investigator and evaluator of requests for proposals and grants and is a trainer of evaluators on a federal level. He has served on Respondent as a commissioner for nine years. He has served as the chair of the Fraud Prevention Committee and the Insurance Committee and is currently the chair of the Medicaid Committee.
The Court summarized the apparent conflict of interest for one of the evaluation team members as follows:
Siedlecki has a long, close, extensive, and on-going relationship with Karen Caputo, the owner of AAA and one of the prospective subcontractors identified in Intervenor’s proposal at the time he evaluated the proposals. This relationship included:
a. A business association that extends back to 1978, and periods as manager/owner and contractor/subcontractor;
b. Siedlecki’s use of free-storage space in a building owned by Caputo at the time of his evaluation;
c. Siedlecki holding a promissory note and receiving payments from Caputo at the time of his evaluation;
d. Co-ownership of a closely-held transportation services corporation, from which both received substantial compensation at the time of his evaluation;
e. Jointly serving as directors for a non-profit corporation;
f. Caputo’s previous rentals and purchases of real property from Siedlecki worth hundreds of thousands of dollars; and
g. Siedlecki’s sharing office space and fax lines, free of any charge or expense, with AAA at the time of his evaluation.
Siedlecki saw and communicated with Caputo on an almost daily basis at the time of his evaluation. These communications included discussions about Caputo’s intended actions concerning the services requested in the RFP. Other than Siedlecki, no other evaluator had such information or based their evaluation on such information outside of that described in the proposals and at the Oral Presentations. As a result, Siedlecki knew that AAA was performing approximately 50 percent of the Medicaid NET Services in Broward County when he evaluated the proposals from Petitioner and Intervenor. Siedlecki actively considered these facts and information obtained outside of the RFP and the evaluation process when conducting his review of the submitted proposals. In view of Siedlecki’s relationship with Caputo and AAA, there was an appearance of a conflict of interest. He should have recused himself from the evaluation committee when this information became known to him.
The Court noted that the evaluator in question failed to recuse himself and instead participated in the evaluation process, notwithstanding this ongoing conflict of interest.
The Court found multiple flaws in how the evaluator conducted his evaluation, noting the variations in how he scored the complainant, mentioned below as the “Petitioner”, as compared to other evaluators. The Court also examined how he scored the proponent, named below as the “Intervenor”, with whom he had an ongoing business relationship:
Siedlecki improperly performed the evaluation of Petitioner’s and Intervenor’s proposals. This resulted in an inconsistent application of the evaluation criteria. Examples of his faulty evaluation include:
a. Failing to read the entire RFP before the evaluations;
b. Failing to read the entire Proposals while conducting his evaluation;
c. Incorrectly assuming Intervenor and Logisticare, Inc., were the same corporate entity;
d. Failing to inquire about the existing legal relationship between Logisticare, Inc., and Intervenor and, yet, granted Intervenor full credit for past work experience it did not actually possess;
e. Applying the same evaluation criteria differently to Petitioner and Intervenor as a result of his faulty assumptions and lack of inquiry; and
f. Failing to consistently apply the term “Proposer” as defined in the RFP, when evaluating the proposals submitted by Petitioner and Intervenor.
Siedlecki testified that because of the way that he evaluated Petitioner’s proposal, he arrived at a lower score than Petitioner actually deserved. At the conclusion of the flawed evaluation process and out of a possible 200 points to be awarded, the evaluation committee arrived at the following scores for Petitioner and Intervenor:
a. ….Ms. Bacot:
Petitioner – 184
Intervenor – 171
b. ….Ms. Somerset:
Petitioner – 170
Intervenor – 174
c. ….Mr. Siedlecki:
Petitioner – 111
Intervenor – 200
The Court determined that, at a minimum, there was an appearance of conflict of interest due to the evaluator’s ongoing business relationships with one of the bidding teams, which “prohibited him from serving as a fair, neutral, and unbiased evaluator”, and that his evaluation errors undermined the legal validity of the evaluation process:
…the evaluations conducted by Siedlecki were both arbitrary and capricious. First, he failed to even read the entire RFP or to properly apply the definition of “Proposer” contained in the RFP as it applied to Petitioner. As a result, he treated the two Proposers entirely different, while ostensibly applying the same evaluation criteria. Siedlecki gave full credit to Intervenor’s Proposer team, but did not do so for Petitioner. He further admitted that had he known the definition of “Proposer” in the RFP and applied it to Petitioner, it would have substantially increased Petitioner’s scores. This is true because he viewed Petitioner’s Proposer team as being “excellent.” A second major flaw in Siedlecki’s evaluation process was that he failed to read or understand the financial information provided by Intervenor. He assumed it only related to the Proposer, which it did not. These undisputed facts coupled with the findings of fact set out above, clearly demonstrate that the overall evaluation process and scoring was tainted by these deficiencies. Given the otherwise close scoring by the other two evaluators, it appears that the overall award of the proposed contract was significantly impacted by these improper actions. See The Wachenhut Corporation v. FDOT, Case No. 94-3160BID (DOAH January 31, 1995).
The Court also found that the evaluator based some of his scoring on unauthorized verbal discussions with the winning proponent. Given the above, the Court determined that the evaluation process was tainted with illegality and invalidity. It ordered the cancellation of the contract award and a retendering of the contract opportunity. As this case illustrates, conflicts of interest can have significant adverse impacts on the defensibility of government a contract evaluation and award decision and should therefore be avoided on evaluation panels.
