This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its February 2016 decision in Douglas Gardens V, Ltd. v. Florida Housing Finance Corporation, the Florida Division of Administrative Hearings found that the public institution had the right to waive minor irregularities and award a contract to the low bidder. The case dealt with the Request for Applications (RFA) process to award funding for the development of senior housing. The complainant challenged the award to a competing applicant, arguing that the competitor’s application contained irregularities that rendered its bid non-compliant and ineligible. The dispute revolved around the winning bidder’s submission of an outdated survey certification form. The complainant argued that submitting the outdated form should have rendered the winning bidder’s bid non-compliant and that, as the next best bidder, it should have been awarded the contract. The Court disagreed, noting that Florida Housing Finance Corporation adopted a more flexible approach to compliance when dealing with minor irregularities:
Several valid policy reasons were cited for the RFA’s requirement that applicants use only the current version of the Surveyor Identification form. Ken Reecy, Florida Housing’s Director of Multifamily Programs, testified that it is important to apply the rules and RFA criteria in a consistent manner because of the tremendous volume of applications the agency receives. Mr. Reecy stated, “For like criteria, yes, consistency. We live and die by consistency, frankly.” As to the Surveyor Certification form specifically, Mr. Reecy explained that over the years Florida Housing had used a number of different forms with different contents. Allowing applicants to submit different forms would add to the difficulty of scoring the hundreds of applications received from around the state. Uniformity and consistency as to applicant submissions allow Florida Housing to process all of these applications in a cost efficient manner.
Though he expressed his concern with consistency of review and ensuring that all applicants provide the same information as reasons for rejecting La Joya’s submission of the 2014 Surveyor Certification form, Mr. Reecy conceded that one of the reasons Florida Housing moved away from the previous rigid Universal Application Cycle allocation process was to allow for flexibility in determining that insignificant scoring errors need not be the basis for disqualifying an otherwise acceptable application. Florida Housing’s recent adoption in 2013 of the “Minor Irregularity” rule is further indication of its intent to employ more flexible evaluation criteria than it has in the past. See Findings of Fact 14 and 15, supra.
As the Court stated, generally courts should defer to a government body’s determination of compliance unless that determination is clearly erroneous:
The First District Court of Appeal has described the “clearly erroneous” standard as meaning that an agency’s interpretation of law will be upheld “if the agency’s construction falls within the permissible range of interpretations. If, however, the agency’s interpretation conflicts with the plain and ordinary intent of the law, judicial deference need not be given to it.” Colbert v. Dep’t of Health, 890 So. 2d 1165, 1166 (Fla. 1st DCA 2004)
The Court then stated that “agency action is capricious if the agency takes the action without thought or reason, or irrationally”, and that “agency action is arbitrary if it is not supported by facts or logic”. The Court elaborated as follows:
To determine whether an agency acted in an arbitrary or capricious manner, it must be determined “whether the agency: (1) has considered all relevant factors; (2) has given actual, good faith consideration to those factors; and (3) has used reason rather than whim to progress from consideration of these factors to its final decision.” Adam Smith Enterprises v. Dep’t of Envtl. Reg., 553 So. 2d 1260, 1273 (Fla. 1st DCA 1989). However, if a decision is justifiable under any analysis that a reasonable person would use to reach a decision of similar importance, the decision is neither arbitrary nor capricious.
Turning to the specific facts of the case, the Court determined that the outdated form constituted a minor irregularity that could be waived to allow the selection of the bidder for contract award:
A variance is material only when it gives the bidder a substantial advantage over other bidders and restricts or stifles competition. See Tropabest Foods, Inc. v. State of Florida, Department of General Services, supra. A bid containing a material variance is unacceptable. The courts have applied two criteria to determine whether a variance is substantial and hence cannot be waived. [F]irst, whether the effect of a waiver would be to deprive the municipality of its assurance that the contract would be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition. See Robinson Electrical Company, Inc. v. Dade County, 417 So. 2d 1032, 1034 (Fla. 3d DCA 1982) and Harry Pepper and Associates, Inc. v. City of Cape Coral, [352 So. 2d 1190 (Fla. 2nd DCA 1977)].
La Joya deviated from a mandatory provision of the RFA. However, under all the facts of the case, that deviation cannot be considered as anything but a minor irregularity. La Joya achieved no competitive advantage over the other applicants by virtue of its submission of a 2014 Surveyor Certification form that was in all relevant particulars identical to the mandated 2015 form. The information submitted by La Joya on the 2014 form was the same as that required by the 2015 form. The deviation was so slight that two experienced Florida Housing reviewers did not notice it until Douglas Gardens pointed it out in its Petition.
None of the policy considerations cited by Mr. Reecy would be transgressed by an award of funding to La Joya under the specific circumstances of this case. La Joya’s application was in all relevant respects consistent with the other RFA applications. While the Surveyor Certification form submitted by La Joya was not the one specified in the RFA, its contents were the same for purposes of scoring this RFA. Waiving the minor irregularity in this case would not be inconsistent with Florida Housing’s overall concern with maintaining consistency and predictability in the competitive procurement process. There is in this case no element of collusion, favoritism, fraud, or unfair competition. Florida Housing was able to make an exact comparison of the applications. An award of funding to La Joya in this case is a reasonable exercise of the agency’s authority to waive minor irregularities and is neither arbitrary nor capricious.
The Court therefore rejected the complaint and upheld Florida Housing’s decision to waive the minor irregularity and award the contract.
As this case illustrates, whenever bids contain irregularities, resulting contract awards can be legally challenged to determine whether those irregularities were minor or material.
