APA: legislative reform of disputed competitive procurement decisions.

• Author: Williams, William E.
• Position: Florida

After almost eight years of dispute and confusion, the 1996 Florida Legislature acted to clarify the appropriate scope of administrative hearings involving contested competitive procurement decisions and the role of administrative law judges in those proceedings.(1) The confusion and uncertainty in this area of administrative law arose from the 1988 decision of the Florida Supreme Court in Department of Transportation v. Groves-Watkins Constructors, 530 So. 2d 912 (Fla. 1988).

The court's decision in Groves-Watkins fundamentally altered the manner in which formal administrative hearings under F.S. [subsections] 120.57(1) and 120.53(5) had previously been conducted. The primary authority relied upon by the court in reaching its decision was a case that predated the adoption of F.S. [sections] 120.53(5) that related exclusively to the contract bidding process, and that involved principles of judicial review of actions taken by governmental entities not subject to the disciplines imposed upon state agencies by F.S. Ch. 120.

The Governor's APA Commission heard testimony concerning procedural problems resulting from the Groves-Watkins decision, and recommended to the Governor that legislation be proposed to overrule Groves-Watkins to establish a standard appropriate for administrative hearings involving competitive procurement protests.(2) This article explores the case law and statutory history of competitive procurement decisions in Florida and the reasons for the enactment of what is now F.S. [sections] 120.57(3) in response to Groves-Watkins.

Competitive Procurement Protests Prior to Adoption of the APA

There is no common law rule requiring public agencies to let contracts through a competitive procurement process. Volume Services Division v. Canteen Corp., 369 So. 2d 391, 395 (Fla. 2d DCA 1979). Thus, the only limitation upon the action of a public agency procuring goods or services through competitive submissions, absent specific constitutional or statutory constraints, is that the agency may not act in an arbitrary or capricious manner. William A. Berbusse, Jr., Inc. v. North Broward Hospital District, 117 So. 2d 550 (Fla. 2d DCA 1960). A public agency has wide discretion in awarding publicly let contracts, and the exercise of that discretion will not be interfered with by the courts "unless exercised arbitrarily or capriciously, or unless based upon a misconception of law, or upon ignorance through lack of inquiry, or in violation of law, or as the result of improper influence. Id. at 551.

Hotel China & Glassware Co. v. Alachua County, 130 So. 2d 78, 81 (Fla. 1st DCA 1961), described the purposes of the competitive bidding statute, including protection of the public, the creation of a system for the public to afford goods and services, and protection of the bidder. Wester v. Belote, 138 So. 721, 724 (Fla. 1931), discussed the origins of the competitive bidding requirements in the "distrust of public officers" and in the need to provide business and taxpayers "fair opportunity" to participate in the government contract process.

Culpepper v. Moore, 40 So. 2d 366 (Fla. 1949), held that an agency procuring goods or services under a competitive procurement statute must base its judgments "upon facts reasonably tending to support its conclusions," and that "so long as such a public agency acts in, good faith, even though they may reach a conclusion on facts upon which reasonable men may differ, the courts will not generally interfere with their judgment, even though the decision reached may appear to some persons to be erroneous." Id. at 370.

These early cases established the standard for judicial review of executive branch procurement decisions made pursuant to statutory mandates. At the time of these decisions, a disappointed bidder's only forum for review of an agency procurement decision was in circuit court. The judicial branch in these cases appropriately afforded a high degree of deference to decisions made by executive branch agencies in the exercise of delegated legislative authority. Each of these decisions, however, predated the enactment of F.S. Ch. 120, the APA, which had far reaching ramifications on executive branch decisionmaking in Florida.

The Florida APA

In 1961, the Florida Legislature enacted the "APA,"(3) which created an adjudicatory process for persons aggrieved by actions of state agencies.(4) Because counties and municipalities were not included within the reach of the APA, disappointed bidders on county and municipal contracts were still required to seek relief in circuit court. Disappointed bidders on state agency contracts, however, could obtain a hearing under the 1961 APA, conducted either by the agency head, a member of the agency, or a hearing examiner supplied by the agency.(5) Upon the entry of a final order, a disappointed bidder could seek certiorari review in a district court of appeal, or when appropriate, contest an adverse order by mandamus, prohibition, or injunction by petition to the circuit court.(6)

In 1974, the APA was extensively amended. The amendments greatly extended the scope of the act and created the Division of Administrative Hearings (DOAH).(7) DOAH was created to provide independent, impartial hearing officers to preside over formal administrative hearings involving agencies and parties whose "substantial interests" are affected by agency action.(8)

One of the purposes of the 1974 amendments to the APA was the expansion of public access to the activities of governmental agencies. Florida Home Builders Association v. Department of Labor, 417 So. 2d 351, 352 (Fla. 1982). Thus, "the general purpose of the Administrative Procedure Act [was] to provide a means by which state agencies charged with regulatory duties involving the supervision of persons or activities operating under their particular jurisdiction [might] efficiently, economically and expeditiously adjudicate in accordance with procedural due process . . . legal rights, duties, privileges or immunities arising under the law ... which the agency ... [has the] duty to administer." State Road Department v. Cone Brothers Contracting Company, 207 So. 2d 489, 491 (Fla. 1st DCA 1968).

The 1974 APA affected the scope and manner of the exercise of agency discretion in three important respects: 1) The APA established a method for resolving issues of disputed fact; 2) it required that an agency adopt in rule form its policy statements of general applicability, and further required agency proof of...