Public-private contracting in Florida survives.

• Author: Piscitelli, Mike
• Position: City, County and Local Government Law

When the ContractPoint Florida Parks, LLC, members entered a contract with the Florida Department of Environmental Protection in 2001, they simply wanted to build and operate cabins in Florida state parks--something the legislature specifically encouraged. Instead, they became enmeshed in protracted litigation that came one Florida Supreme Court vote short of nullifying Florida's ability to contract. This article examines how an obscure statute was wielded by a state agency, nearly erasing more than 20 years of law barring application of sovereign immunity to breach of contract claims.

Public-private Contracting in Florida: The King Abdicates the Throne

For years, Florida has been at the forefront of the trend for states to carry out government programs or services through public-private partnerships or even to fully privatize such activities. Contracting with private parties can bring advantages such as reduced overall costs, including lower start-up costs, and greater flexibility in meeting technological, regulatory, and personnel requirements. Even more frequently, the state turns to private parties to provide goods and services that are not traditionally governmental functions.

Critical to government functioning, then, is continued interest of private parties in performing these services. Florida procurement law, like federal and other states' laws, generally dictates that contracts be awarded on a competitive basis to a responsible, responsive vendor. (1) Vendors calculate their bids or proposals based not only on expected costs and profits, but on expected risks. Accordingly, prices are higher where the contract entails higher risk to the vendor. Perhaps the highest risk of all--yet one typically not a concern for vendors in Florida--is the risk that the winning vendor will not be paid for the contract it ultimately performs and have no legal recourse.

As absurd as it seems that a private party could be left out in the cold in this way, in many states, absent an express statutory waiver, sovereign immunity principles operate to bar breach of contract suits against the government. Florida courts, however, have recognized legislative intent to waive sovereign immunity for breach of contract and allow a private party to turn to the courts for recourse when necessary.

Most, if not all, practitioners of public contracting law in Florida thought the issue of state contract enforceability was put to rest in Pan-Am Tobacco Corp. v. Department of Corrections, 471 So. 2d 4 (Fla. 1984). There, the Supreme Court unequivocally held that state sovereign immunity does not apply in breach of contract actions, stating, "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." (2) The court reasoned that to hold otherwise would render legislative authorization for such contracting void and meaningless. The Pan-Am Tobacco rule has been reaffirmed and applied dozens of times since 1984, most recently by the Florida Supreme Court in American Home Assurance Co. v. National Railroad Passenger Corp., 908 So. 2d 459, 462 (Fla. 2005).

Judgments Against the State: Is Nonpayment an Option?

ContractPoint Florida Parks, LLC, (ContractPoint) accordingly had no reason to suspect that contracting with the Department of Environmental Protection was a risky enterprise. In this instance, the legislature not only authorized, but specifically encouraged DEP to enter contracts exactly like the one at issue: "The legislature finds it to be in the public interest to provide incentives for partnerships with private organizations with the intent of producing additional revenue to help enhance the use and potential of the state park system." (3) Therefore, when ContractPoint obtained a judgment against DEP for breach of contract, which was not appealed, one naturally would expect payment to follow. But, as Lee Corso likes to say, "Not so fast, my friend."

DEP refused to pay the judgment, relying upon a little-known Florida statute, [section] 11.066, which is hidden away in the portions of the statutes dealing with "Legislative Organizations, Procedures, and Staffing." DEP's argument: Despite the court's uncontested ruling that DEP breached the contract, the statute prohibited DEP from paying the judgment without express...