This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its August 1996 decision in Delad Security, Inc. v. Department of Health and Rehabilitative Services, the Florida Division of Administrative Hearings struck down the Department of Health and Rehabilitative Services’ decision to rescind a contract award. The case dealt with an Invitation to Bid (ITB) for armed security guard services. The Court found that the Department’s decision to reverse the contract award was based on an inappropriate reconsideration of the initial evaluation decision prompted by a complaint of a competing bidder. The Court found the rescission to be unlawful because the Department should have allowed the complaint to proceed to the Division of Administrative hearings, as set out in the applicable statutory framework, rather than improvising its own bid protest resolution:
The preponderance of the record evidence establishes that, as Petitioner claimed in its formal protest, the Department acted illegally, in violation of the procedural requirements mandated by Section 120.53(5)(d), Florida Statutes, and incorporated in Rule 10-13.008(3), Florida Administrative Code, in overturning its initial decision to award Petitioner the contract advertised in the ITB and awarding the contract instead to Intervenor. The Department took such action in response to a formal protest that Intervenor had filed challenging the Department’s initial determination to award the contract to Petitioner as the lowest responsive bidder. Intervenor’s formal protest was not “resolved by mutual agreement between the parties within 7 days, excluding Saturdays, Sundays, and legal holidays,” of the Department’s receipt of the formal protest. Consequently, in accordance with Rule 10-13.008(3), Florida Administrative Code, the Department was obligated to proceed pursuant to Section 120.57, Florida Statutes. The Department, however, in derogation of the provisions of the rule, sustained Intervenor’s protest without first either referring the matter to the Division of Administrative Hearings for a formal proceeding pursuant to Section 120.57(1), Florida Statutes, or conducting an informal proceeding pursuant to Section 120.57(2), Florida Statutes.
The Court ruled that the Department’s failure to follow the appropriate bid dispute procedures was prejudicial to the initial awardee, whose award would have been upheld had the other bidder’s complaint proceeded to a formal hearing:
The Department’s failure to have complied with Rule 10-13.008(3), Florida Administrative Code, in resolving Intervenor’s formal protest cannot be said to have been harmless. It appears, based upon the record evidence in this case, that had an administrative proceeding on Intervenor’s formal protest been conducted as required by the rule, and the decision challenged in the protest (to wit: the determination initially made by the Department, through its evaluation team, that Petitioner’s bid submission was responsive to the ITB) been subjected to review under the Groves- Watkins standard (as opposed to having been the subject of Hill’s de novo consideration), the Department, if it had faithfully followed the principles announced in Groves- Watkins and its progeny, would not have sustained the protest and overturned its initial determination to award the contract advertised in the ITB to Petitioner as the lowest responsive bidder. A careful review of all of the component parts of the ITB and of Petitioner’s bid submission, as well as the remainder of the record evidence, reveals that the Department’s evaluation team acted within the bounds of reason and logic, and not fraudulently, arbitrarily, illegally, or dishonestly, in finding that Petitioner’s bid submission was responsive to the ITB, including the provisions of Special Condition XII which required each bidder to “furnish the department with justification supportive of [its] ability to meet th[e contractual] obligation[s]” prescribed in the ITB by “briefly identify[ing] the company’s personnel and equipment resources” and providing information concerning its “management experience.” By all appearances, the evaluation team was simply engaging in an honest exercise of its discretion, in accordance with a reasonable interpretation of the provisions of the ITB, when it made this finding.
Therefore, the Court overruled the award reversal and ordered the Department to reinstate the contract to the original winner:
In as much as it has been shown, as alleged by Petitioner, that the Department’s decision to sustain Intervenor’s protest and to award the contract advertised in the ITB to Intervenor instead of Petitioner was the product of a material and harmful violation of the procedural requirements prescribed by Rule 10-13.008(3), Florida Administrative Code, the Department should now take action to rescind that decision, return the parties to the positions they occupied before such decision was made and proceed once again to resolve Intervenor’s protest, but this time in accordance with Rule 10-13.008(3), Florida Administrative Code, and the principles announced in Groves- Watkins and its progeny. See Moore v. Department of Health and Rehabilitative Services, 596So.2d 759, 761 (Fla. 1st DCA 1992).
As this case illustrates, government bodies should be careful to properly follow established bid protest procedures in the face of a complaint and they should further avoid improvised bid dispute resolutions that prejudice the rights of a bidder who was rightfully awarded a contract.
