LTC 359-2023 Update Relative to Request for Proposals (RFP) 2023-479-KB for the Management and Operation of a High-End Beach EstablishmentDocuSign Envelope 1D: 5884E607-9897-4965-4208-4EFC8F709277
OFFICE OF THE CITY MANAGER
LrC #
TO:
FROM:
DATE:
359-2023 LETTER TO COMMISSION
Honorable Mayor Dan Gelber and Members of the City Commission
a • outs, or were4@f}
August 8, 2023 l/ '
SUBJECT: Update Relative to Request for Proposals (RFP) 2023-479-KB for the Management
and Operation of a High-End Beach Establishment
The purpose of this Letter to Commission is to update the Mayor and City Commission on the
status of RFP 2023-479-KB, which seeks proposals from firms interested in being considered for
the management and operation of a high-end beach establishment on the property located at One
Ocean Drive and the adjacent concession area.
On July 31, 2023, the City received a protest to the RFP specifications and requirements from
Penrod Brothers, Inc. d/b/a Nikki Beach ("Penrod") (see Attachment A). Section 2-371(h) of the
City Code requires, upon receipt of a protest to a competitive solicitation, that the solicitation
process not proceed until the protest is resolved.
After considering the particulars upon which the protest was filed, on August 7, 2023, the City
Manager and the City Attorney denied the protest but agreed that a minor portion of the RFP
regarding negotiations should be clarified to address any potential concerns (see Attachment B).
As a result, Addendum 5 to the RFP was issued on August 7, 2023, clarifying portions of the RFP
as noted in the City's response to the protest and extending the deadline for the submittal of
proposals to August 29, 2023, which is equal to the time period from the date of receipt of Penrod's
protest through the date of the City's response plus, to show good faith, an additional ten (10)
days, for a total of fourteen (14) additional calendar days. Proposals had originally been due
August 15, 2023.
As a reminder, the RFP remains under the cone of silence.
ATTACHMENTS:
A- Protest Filed by Penrod
B- City Response to Protest Filed by Penrod
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STEARNS WEAVER MILLER
WEISSLER ALHADEFF & SITTERSON. PA.
Moric A Fohretdinov
150 West Flogler Street, Suite 2200
Miami, FL 33130
Dre1. (305) 789-3237
Fox. (305) 789-2675
moil: mfehre:dinov@steorsweaver.com
July 31, 2023
Vio Fed-Ex and E-Mail
Alina T. Hudak
City Manager
City of Miami Beach
1700 Convention Center Drive
Miami Beach, FL 33139
CityManager@migmibgochi]_goy
Alex Denis
Director, Procurement Department
City of Miami Beach
1755 Meridian Avenue, 3rd Floor
Miami Beach, Florido 33139
procurement@rigmibegchfl_gov r
Rafael A Paz
City Attorney
City of Miami Beach Attorney's Office
1 700 Convention Center Dr Fl 4
Miami Beach, FL 33139-1819
rgfaelpoz@migmibeach~l._gov
Rafael E. Granado
City Clerk
City of Miami Beach
1700 Convention Center Drive
Miami Beach, FL 33139
gaelgranado@miamibeach!l_gov
RE: Specifications Protest:
Protesting Bidder:
Request for Proposals (RFP) 2023-479-KB Management
and Operation of a High-End Beach Establishment
Penrod Brothers, Inc. d/b/o Nikki Beach
c/o LH. Steve Savola, Esq.
Penrod Management Group & Nikki Beach
One Ocean Drive
Miami Beach, FL 33139
Dear Ms. Hudok or Designee:
Thank you for your time and consideration in respect of these matters.
We represent Penrod Brothers, Inc. d/b/a Nikki Beach ("Penrod" or "Nikki Beach"), on
applicant for the City of Miami Beach's {the "Ci/") RFP 2023-479-KB, Management and
Operation of a High-End Beach Establishment (the "RFP"). Pursuant to the City's Code of
Ordinances ("Code"), Article VI-- Procurement, Sec. 2-371(0)(l) ond applicable low, this letter
constitutes Nikki Beach's protest of the specifications of the RFP (the "Specifications
Challenge"). Specifically, Nikki Beach protests the material alteration, solicitation, timing ond
competitiveness procedures in the RFP that ore contrary to low, as well as RFP Section 0100,
MIAMI· TAMPA • FORT LAUDERDALE • TALLAHASSEE • CORAL GABLES
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Sub-Sections 3.1, 5, 13, the related Section 0300, Tab Sections 111, 1.4,2.1.2, and 6.1,
and Appendix A, Section A-l. In accordance with Sec. 2-371(h), the timely submission of this
Specifications Challenge precludes the City from proceeding further with the solicitation of the
RFP until resolution of same, including related appeals.
I. INTRODUCTION
The RFP contains fatal substantive and procedural defects requiring rescission and/or
amendment of the RFP to comply with governing law. Specifically, as detailed below, the RFP
improperly allows alteration to material bid terms post-award, contains impermissibly anti-
competitive timelines, incorporates anti-competitive communications, contains vague criteria
preventing on exact comparison of bids, and contains arbitrary criteria that create anti-
competitive advantages. In addition, this procurement process has unfortunately been marred
by inappropriate political influence and preferential treatment of prospective bidders.
The primary relief sought is correction of the improper selection criteria identified and, perhaps
most important, an extension of the bid submission timeline for an additional ninety (90) day
period to allow all potential bidders a fair opportunity to compete.
We trust that you, your staff, and counsel, upon review of these materials and application of
your professionalism, strict adherence to administrative procedures, and the City's goals of
enhancing our community and promoting its development through robustly competitive public
procurement, will afford Nikki each its requested relief.
II. FACTUAL & PROCEDURAL BACKGROUND
Nikki Beach's world-renown is a testament to Penrod's longstanding and proud public-private
partnership with the City of Miami Beach and the City's stewardship of responsible and
revitalized development. Penrod and its related entities were on early and instrumental force in
steering the City's South of Fifth Neighborhood {"Sofi") to the global tourist destination it is
today, while also enhancing the area as o livable and dynamic place for our residents. The
relationship hos been remarkably beneficial to both parties and to our citizens and neighbors.
The relationship between Penrod and the City started with the execution of a lease agreement
("Lease") entered into on November 7, 1985, and approved by the City through Resolution
No. 85-18223. At that time, before first-movers like Penrod made largescole investments to
reshape and create the current SoFi, South Beach was associated with crime, drugs, resident
flight, ond economic decline.
The Lease required Penrod to develop, construct, manage and operate o restaurant and
beachfront facility at ] Ocean Drive. The Lease had an initial term of twenty {20) years, with
two (2) ten-year renewal terms (both ultimately exercised). In addition to rent payments
(including a percentage of revenue), the Lease required a minimum $l.5 million investment by
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Penrod in the leasehold "Property." Penrod exceeded its obligations, spending millions of
dollars over 37 years in terms of facility construction, maintenance, and upgrades as the Lease
required large-scale development of the area. In total, Penrod invested over $4 million on
construction and improvements.
Penrod has operated a beach club and restaurant at the Property for the past 37 years with
exponentially increased success, first as Penrod's, then as Caf~ Nikki and finally as Nikki Beach.
Nikki Beach provides the City hundreds of thousands of dollars in rent each year and an
exponential advertising value for the City's tourism industry locally and internationally.
Because Penrod is invested in this City and not just itself, Nikki Beach has always
accommodated the City and its neighbors when addressing issues that come with owning and
operating a high-end beach establishment off one of the most famous streets in the world. Nikki
Beach, a good partner and good neighbor, often modified its business plan and use of the
Property over the years to adopt to the changing landscape of the neighborhood. As salient
examples, Nikki Beach discontinued playing loud music at the request of neighbors, and more
consequently, Nikki Beach embraced an entirely new business model to accommodate SoFi's
shift in recent needs, transforming its operations into a daytime beach club, and closing at 7
p.m. every night. Despite reducing income to Nikki Beach from operations, Penrod welcomed
these changes to make the neighborhood even better for local residents. This stands in sharp
contrast to the vast majority of business owners in South Beach, who chase their bottom line,
and lobby and fight against community-enhancing and crime-reducing measures supported by
our residents and their representatives.
The Lease is set to expire on Moy 6, 2026. As such, beginning in the fall of 2022, Penrod
engaged with City officials to begin negotiations for go-forward investment in the Property.
Penrod's engagement was necessary standard and ongoing landlord-tenant relations. These
conversations occurred with complete transparency. Penrod approached this process
recognizing competing views in City leadership and the surrounding community for the direction
of the City-owned Property As in the post, Penrod was more than willing to accommodate and
enhance those views through the appropriate process. Nikki Beach wonted to be proactive in
its engagement to ensure both it and the City had ample time to negotiate in good faith for
whatever direction the communily and City envision for the Property.
City leadership took a different approach. Record evidence demonstrates that by the summer
or early foll of 2022, the City hod determined to not continue under the current Lease structure,
but rather, to pursue a new tenancy, development framework, and services agreement for the
Properly. This is, of course, the City's right. But, City Code procurement provisions mandate
that interactions towards competitive bidding be done within o "cone of silence." And Florida
Statutes required that government business occur in the Sunshine. Instead, representatives for
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prospective bidders, Boucher Brothers ("Boucher") and Major Food Group, began secretly
meeting with City commissioners about leasing and developing the Property Meetings, calls,
texts and planning increased and deepened between Boucher and City commissioners over the
next months. These closed-door conversations took place while City staff and the City's
administration were openly working to find o resolution tor an ucoming Lease expiration.
With that time, planning, and effort, Boucher and their supporting commissioners arrived at a
fully developed proposal to circumvent the City's normal procurement process, first with a form
of no-bid contract for Boucher to lease and develop the Property, then with a exclusively-
negotiated LOI with Boucher on those some terms, and ultimately with the current RFP, designed
to advantage the pre-negotiated Boucher proposal. We synopsize those events here.
On October 26, 2022, more than three years prior to the expiration of the Lease, the City
Commission approved a referral to the City's Finance and Economic Resilience Committee
"FERC") to discuss the upcoming exoiration dote of Penrod's Lease ond Concession
Agreement. At the January 27, 2023 FERC meeting, an agenda item was introduced to fast
track a process to find a new operator for the Property. The Lease expiration was reset for the
April 21, 2023 FERC meeting. However, just days before, Boucher and members of the City
Administration met to discuss implementing Boucher's plan for a no-bid takeover of the Property
premises. City staff again counseled against an expedited timeline and the procedure proposed
by FERC. However, the Commissioners again ignored City staff's recommendations, and
rushed the item to vote to approve the City seeking a term sheet from Boucher, instead of
opening the process up to all qualified entities. This, despite that Commissioners and staff
openly admitting that the City had not developed or decided for iiself on the future use of the
Property. FERC then recommended a resolution to authorize City administration to negotiate a
proposed, non-binding term sheet with Boucher with respect to the potential management or
operation of the Property.
The proposed resolution was initially set for the Commission's consent agenda with no public
discussion or debote. Subsequently, on April 28, 2023, the City passed Resolution No. 2023-
32586 {the "April 28 Resolution"), whereby the City's administration was authorized, absent
bid procedures or procurement requirements, to negotiate a proposed non-binding term sheet,
exclusively with Boucher, with respect to the potential management or operation of the Property,
to be effective after the expiration of the Lease.
Boucher and its supporting Commissioners were in constant and iterative contact throughout,
even during active public meetings. Following the City's approval of the no-bid operation,
Boucher provided certain City officials approximately $21,000 worth of tickets to a Carbone
Miami Beach event at Miami's Fl Grand Pr. Certain Commissioners took to social media 1o
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vilify Nikki Beach's request for o fair and transparent process regarding the future of the
Property.
Penrod was forced to file suit against the City and Boucher in May 2023. Penrod highlighted
that the no-bid contract and exclusive LOI violated City Code procurement requirements, shut
out interested parties, and eliminated competitive bidding. This echoed the City Manager's
April 2023 letter to FERC recognizing the requirements of a formal competitive solicitation
process, issuance of a Request for Proposals, conducting a facility conditions assessment, and
substantial engagement with community partners and neighborhood associations none of
which the City had done (nor ultimately properly or completely did do).
Conceding the unlawfulness of the no-bid and exclusive-LOl routes, the City rescinded the April
28 Resolution.
Thereafter, on May 17, 2023, the City passed Resolution No. 2023-32612 {the "Moy 17
Resolution"). Pursuant to the May l7 Resolution, the City directed the City Administration to
prepare and issue a Reauest for Proposals, purposed to seek proposals for the managemenl
or operation of a high-end beach establishment and ancillary uses on the Property and adjacent
concession area, in accordance with all requirements set forth in the Moy l7 Resolution, which
included all procurement-related requirements of the City Code, City Charter, and other
applicable law. Therein, the Commission directed the City Administration to issue the Request
for Proposals no later than June l5, 2023, with a deadline for submission of proposals not
later than August ?5, 2023, in order to make a recommendation for award of the Request for
Proposals at the September 13, 2023 Cily Commission meeting.
On June l4, 2023, under the direction of the May 17 Resolution, the City issued RFP No.
2023-479-KB {the "RFP"). The RFP solicits proposals for the management or operolion of o
high-end beach establishment and ancillary uses on the Property and adjacent concession are0,
with any new agreements to toke effect after the Lease's expiration on May 6, 2026. The RFP'g
response deadline is the expedited date of August 15, 2023.
Among other problematic provisions, the RFP includes: (i) a provision in Clouse l3 specifying
that "[following selection" of the winning bid, the City may renegotiate with the winning bidder
all material bid terms, such as "financial and other terms and conditions, including without
limitation scope of imorovements, concept, program and scope of services," (ii) an arbitrarily
expedited timeline, with a 60-day response process, absent any articuloled reason, and despite
the three-years to Lease expiration, making it near impossible for competing bidders to timely
prepare or submit a bid; and (iii) scoring criteria that will only lead to arbitrary results based on
subjective scoring, such as requiring both o lO year and 1O+ year proposal. Ultimately,
despite having almost three years to build public input regarding o complex and sensitive
project in a prime South Beach location, the City crafted on RFP to favor one bidder, while
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preserving the ability to renegotiate material terms with the winning bidder after selection of the
bid. Based on these and other provisions, the RFP is fatally problematic and cannot be fairly
awarded.
Ill. MANDATORY STAY ON BID SOLICITATION
Per Code Sec. 2-371(0)(l), any bidder who has a substantial interest in, and is aggrieved in
connection with, a City solicitation's specifications must submit a written protest at least ten
business days prior to bid opening stating the particular grounds on which the specifications
protest is based, including all pertinent documents and evidence.
Nikki Beach is a prospective bidder for the RFP, has a substantial interest in, and is oggrieved
by, the City's solicitation of the RFP affording Nikki Beach standing. Nikki Beach submitted its
protest on July 31, 2023, within ten days of the bid opening, of August 15, 2023.
Accordingly, this timely Specifications Challenge precludes the City from proceeding further
with the solicitation of the RFP until final resolution of this appeal, including any future certiorari
court review and attendant appeal process. See e.g., Code Sec. 2-371(h).
IV. GROUNDS FOR RELIEF & ARGUMENT
Summary of Argument
Core specifications within the City's RFP are fatally defective, requiring rescission or
amendment. First, the RFP impermissibly allows the City to first award the bid to an operator
and then alter all material terms of the bidder's submission after the termination of the RFP
process while excluding oll other bidders. Second, the City's expedited timeline is arbitrary
because no relevant factors were considered in setting it; it bears no connection to the actual
development lease and timeline for this project; it is anti-competitive due to the intentional
advantages it affords to Boucher; and it ultimately prevents any other bidders from being able
to prepare a complete and thorough response to the RFP. Third, the RFP resulted from anti-
competitive communications by a potential bidder violating the underpinnings of the "cone of
silence" that protects and ensures competitive solicitation and procurement. fourth, the City's
rush to develop this RFP produced multiple vague criteria preventing the required precise
comparison of bids and precluding bidders from properly responding to the RFP F;Hth, the RFP
criteria provide an anti-competitive advantage to a single bidder, Boucher, as evidenced by the
inclusion of arbitrary criteria tailored specifically to Boucher. These series of serious defects are
not surprising inasmuch as the RFP stems from unlawful no-bid and exclusive-LOI processes.
An open, fair, and competitive RFP process is necessary to determine the future of One Ocean
Drive. In developing the RFP process for this iconic property, it is imperative to develop concrete
bid terms, allow a robust and competitive timeline, and engage the many Miami Beoch
stakeholders and residents affected by the future development. Indeed, os the City's Corporate
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Representative recently testified, the current RFP has "no vision" for One Ocean Drive, which
will result in submissions that force the City to make improper "apples versus oranges"
comparisons rather than permitting it to engage in an "exact comparison of bids" to select the
"lowest and best bidder" pursuant to a competitive process.
Legal Standard
The City's discretion in the competitive bidding context is "not unbridled." See generally Caber
Systems v. Deportment of General Services, 530 S0. 2d 325, 334 (Flo. 1st CA 1988); Wood-
Hopkins Contracting Compony v. Roger J Au ad Son, Inc., 354 So. 2d 446, 450 (Flo. 1st
DCA 1978). All bidders must be afforded an "exact comparison of bids" to "secure fair
competition on equal terms." Wester v. Belote, 138 So. 721, 723-24 {Flo. 1931). When on
the face of a RFP specification, the terms preclude an exact comparison of bids, a prospective
bidder may submit o specifications challenge to allow an agency to correct or clarify plans and
specifications prior to accepting bids in order to save expense to the bidders and to assure fair
competition among them. See Capeleti Bros., Inc. v. Deportment of Trans., 499 So. 2d 855,
857 {Fla. lst DCA 1986). Without "[]eosonably definite plans ond specifications," bids
"cannot in the nature of things be competitive." Advocacy Ctr. for Persons With Disabilities,
lnc., 721 S0. 2d 753, 755 (Fla. 1st DCA 1998) (citation omitted). Notably, "[u]ncertainty or
unreasonableness of the terms of the specifications will render the award of a contract void."
ld. (emphasis added) (citation omitted).
Thus, specifications must "be sufficiently certain and definite to secure a fair basis for
competitive bidding, and should contain nothing that would otherwise prevent or restrict full
and free competition." ld. (emphasis added) (citation omitted). Competitive bidding is
"designed to protect the oublic from collusive contracls and from the ill effects of official
favoritism in public procurement; and to ensure fair competition among bidders for the public
good." Hor«is v. Sch. Bd. of D0vol Cly., 921 So. 2d 725, 735 (Fla. 1st DCA 2006). Indeed,
specifications drawn in such a manner as to permit only one bidder to qualify are contrary to
the competitive bidding process. See Moyes Printing Co. v. Flowers, 154 So. 2d 859, 865 (Fla.
1st DCA 1963) (citing Robinson's, Inc. v. Short, 146 So. 2d l 08, 114 (Flo. l st DCA 1962).
Finally, specifications challenges may be lodged if the proposed specifications were
promulgated in a manner that has the effect of circumventing the competitive procurement
process. See Fairbanks, Inc. v. State De't of Transp., 635 So. 2d 58, 59 {Fla. 1st DCA 1994)
(granting an administrative hearing to assess whether the competitive bidding process was
subverted due to the State's specifying criteria that, without justification, only one supplier could
provide}.
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A The RFP' s Sui Gen eris Allowance of Material Bid Term Alteration
Post-Award is Contrary to Law.
The Negotiations Following Award of RFP and Agreement Approval Process {the "Negotiations
Criteria") in Section 0100, Sub-Section 13 of the RFP is contrary to law because it allows
material alterations to a bidder's proposal after_submission of the proposal and after award.
Competitive bidding and non-arbitrary proposal selection is only possible where bidders craft
and submit proposals based on stated terms than cannot be altered post-bid or post-award. lf
bidders and government actors con negotiate-away material terms post-bid or post-award, the
bid terms themselves ore by definition meaningless; proposals con never be compared on static
and equal terms; bidders are incentivized to falsely inflate promises and understate costs to
undermine competition, win bids, and then negotiate under-performing and preferred
outcomes during post-award exclusivity; selection can be made on favoritism disguised as a
falsely inflated and only thus the highest-and-best proposal; and ultimate bid award is
necessarily arbitrary. for those reasons, City Code and Florida law prohibit post-bid alteration
of material bid terms. This RFP radically violates that foundational principle.
The Negotiations Criteria stotes in pertinent port:
13. NEGOTIATIONS FOLLOWING AWARD OF RFP AND AGREEMENT
APPROVAL PROCESS. Following selection, the Ciy may enter into negotiations
with the selected Bidder(s) to determine financial_and other terms and conditions,
including without limitation scope of improvements, concept, program and
scope ot services, insurance/bond requirements, indemnification and other
customary terms, as authorized by the City Commission.
(emphasis added). This provision allows the City to first select a bidder and then, post-selection,
negotiate and eliminate_the_most_material terms of the winning proposal in _contradiction to the
original submission those material terms being all financial terms and conditions, the scope
of any improvements and development, every asoect of the proposed business and operational
concepts, all programming, the entire scope of services, and, literally, any "other term and
condition" of the proposal.
To be clear, the scope of financial terms (RFP Tab 6), improvements (RFP Tab 4), concept (RFP
Tab 4), and program and scope of services (RFP Tab 3) are all material components of the
RFP, and each bidder is scored based on the Qualitative Criteria found in Section 0400 of 1he
RFP for those tabs.
Qualitative Criteria . .
(Points Assigned by Evaluation Committee) Maximum Points
Qualifications (Tab 2) 25
Programming and Scope of Services (Tab 3) 25
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Design & Timeline (Tab 4) 15
Public Benefit (Tab 5) 15
Financial Proposal (Tab 6) 20
Quantitative Criteria
{Points Assigned by Procurement Department) Maximum Points
TOTAL AVAILABLE POINTS for Qualitative and
Quantitative
The City's Code, Florida Statutes, and the Florida Supreme Court all expressly prohibit this very
type of specification.
The City Code expressly mandates a competitive "formal bid" process for the present
circumstances. See, e.g., Code Sec. 2-369; 2-366 (0) {b) (mandating a "formal bid," inter olio,
where the contract involves a request for services in excess of $100,000). Indeed, the City
Manager, from the start, aotly recognized the requirement "to follow the formal competitive
solicitation process and issue a Request for Proposals for the best possible use and viable
concepts for the operation and management of this City site." Thus, the City Commission's
initial attempt to no-bid this contract and simply negotiate informally and blindly with c single
provider Boucher- was patently unlawful.
Given that a competitive bid is required, the Code sets guardrails for what that entails. More
specifically, the Code requires that an award be issued to "the lowest and best bidder,"
expressly prohibits any waiver of the competitive bidding where otherwise "prohibited by law,"
and expressly prohibits a ranking system with post-award "negotia[tion]" in these circumstances.
See, eg., Code Sec. 2-369; see also Sec. 2-367{d), (e) {listing the narrow and exceptional
circumstances, none of which apply here, where the City has "the power to negotiate those
contracts" ofter a special "waiver of competitive bidding requirements" has been formally
approved).
The Florida Supreme Court is clear that this very type of specification is patently prohibited:
[l]t has been generally recognized and held by the courts that it is the duty of
public officers charged with the responsibility of letting contracts under the statute
to adopt, in advance of calling for bids, reasonably definite plans or
specifications, as a basis on which bids, may be received. Such officers, in view
of such requirement, are without power to reserve in the plans or specifications
See April 21, 2023 A. Hudak Memorandum to FEC.
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so prepared in advance of the letting the power to make exceptions, releases,
and modifications _in _the contract after it is let, which will _afford opportunities for
favoritism, whether any favoritism is actually practiced or not. Neither con they
include other reservations which by their necessary effect will render it impossible
to make an exact comparison of bids.
Wester, 103 Fla. ot 982; see also Harry Pepper & Associates, Inc. v. City of Cape Coral, 352
So. 2d 1190, 1192 (Fla. 2d DCA 1977) ({a bidder cannot be permitted to change his bid ofter
the bids have been opened, except to cure minor irregularities); State, Dep't of Lottery v. Gtech
Corp., 816So. 2 648 {Flo. 1st DCA 2001) {affirming the reversal of award of an RFP where
the public body allowed post-submission alterations to material components of o bidder's
submission as using "the RFP process for ranking purposes only would result in a disincentive
for responding vendors to submit accurate and responsible responses to RFPs" and thus thwarts
any "system of competitive bidding").
Thus, the City's Negotiation Criteria imoermissibly allows the City to negoliale material terms
post-bid. This RFP's allowance of complete material term renegotiation post-award is sui
generis we could not locate another example of it in any public procurement process in the
City of Miami Beach, ever' The fact that the City hos never before utilized this impermissible
specification until now and only did so ofter the City had previously indicated ii would award
the contract to Boucher as part of a "no-bid" further demonstrates that this defect is inherently
anti-competitive. In sum, the Negotiation Criteria transforms what must be a competitive RFP
into a false bid and an illusory ranking system, where prospective bidders con promise the sun,
moon, and stars, win the bid, but never deliver--and where the City can select a preferred
operator without holding it accountable to any of the material terms thereby fundamentally
destroying the competitive bid process.
? See RFP 2023-249-KB Redevelopment of the City-Owned Properly located ot 126? Collins Avenue,
REP 2023-259, Health, Phormacy, Medicare Advantage Plans, RFP 2021-173, Mixed-Use
Developments incorporating Class A OHice Space, RFP 2021-180, Design/Build Services or 72nd
Street Community Complex, RFP 2021-151,Management and Operation of Artisino! Market in Lummus
Pork, RP 2023-1 15, Redevelopment of the City-Owned Property 1940 Park Avenue (The Barcloy), RFP
2022-334, Professionol Tennis Management ond Oeration, RF 2021-188, Professional Tennis
Management and Ooera~ions Serices Flamingo Pork, RFP 2023-258, Employee Assistance Program,
RFP 2021-137, Management and Operation of Concession Facility, RFP 2021-187, Grounds
Mointenonce for Parks ond Athletic Fields, RFP 2023-073, Professional Tennis Management and
Operations Services Flamingo Pork, RFP 2022-450-K, Open-Source Intelligence (OSINT) Aggregotor
+ Processor Platform, RFP 2022-320, Vision Insurance Benefit Plo, RFP 2022-019, Emergency
Medical Transport Bill and Collection Services.
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B. The RFP's Expedited Time Constraints Is Internally and Externally
Arbitrary, and Renders the Submission of Competitive Bids
Unfeasible.
The City's imposition of an unprecedented expedited timeline for the submission of bids is
internally unjustified, arbitrarily untethered to the actual lease turnover timeline for this Property,
and unquestionably affords a single bidder, Boucher, an improper competitive advantage. The
RFP's twenty eight-doy issuance and sixty-day response window is independently fatal,
mandating rescission or similar corrective action.
"[A]n arbitrary decision is one not supported by facts or logic, or despotic[; and o] capricious
action is one which is taken without thought or reason or irrationally." Agrico Chem. Co. v.
De'1 of Ev't Regul., 365 So. 2d 759, 763 {Flo. 1st DCA 1978). In reviewing the RFP,
imposition of an expedited response deadline on a contract that is years from its expiration, the
City must ensure it: (l) 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 Enters. v. State Dep't of Ev't
Reg0l., 553 So. 2d 1260, 1273 (Fla. 1st DCA 1989)° Properly assessed, the expediency
demands of this RFP are arbitrary and unsupported by any rational policy directive.
First, the record reflects that neither the sponsoring Commissioners nor the Commission itself
considered gny relevant factors in determining the timelines for this process. Rather, the
Commission appears to hove imposed arbitrary deadlines. The most prominent record reason
for the Commission's expedited timeline is one sponsoring Commissioner's denigration of "the
reality of our Cil/'s RFP and procurement process," which he characterized as "heavily
bureaucratic and time-consuming." There is no support for the Commission's criticism of the
City's administration, stall, or professional procurement process as overly bureaucratic or
improperly time consuming. The sponsoring Commissioner also argued (first, in favor of pre-
negotiation and a no-bid award to Boucher, and then for expedited timelines) that the City
often gets "no responses" for RFPs. Of course, the City well-knew thot this Property and project
has intense interest and multiple interested parties. Another Commissioner suggested that
rushed timelines were necessary to allow a decision before the upcoming mayoral and
Commission elections, and to ovoid the public procurement process involving intensive
planning, expensive lobbying, and decision-making. Manipulating deadlines for political
purposes and to avoid public scrutiny is, obviously, not a legitimate supporting factor for public
Adom Smith, applying the standard to agency informal rule making, is consistently applied in the
context of reviewing municipal and agency decision making in the bid protest context. See Quoil Roost
Irosit Villoge, LTD «. Fla. Housing Fin. Cop., Cose No. 23-06748ID, 2023 WL 3486176 10 /Flo
Di. Admin. Hrgs. May 10, 2023); WSP USA, Inc. v. Miami Dode Cly. Pub. Schools, Case No. 23-
0287810, 2023 WL 2977024 ·9 {Fla. Di. Admin. Hrgs. April 11, 2023)
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procurement. For those reasons, the City administration and staff aptly pointed out that the
supposed need to expedite the RFP process was unfounded and certainly without the requisite
"good faith consideration." The RFP's timeline is inherently arbitrary, and thus unlawful, as it
was not based on any sound timing factors.
Second, the RFP's rushed deadlines ore irrationally disconnected from the actual on-the-ground
timeline here for lease turnover, development, and services replacement for this specific
Property. The Nikki Beach Lease is not set to expire until May 2026, three years from_now. We
laud the City for proactively considering future development. But a mere 28 day RFP
preparation period, and a 60 day bid proposal window, all toking place three years before any
new proposal could be effectuated, is so untethered from the timing needs of the actual project,
that they ore necessarily arbitrary. Indeed, prior to implementing the schedule, the City Manager
warned the Commission of her "concerns" with an expedited "schedule" to prepare the RFP,
as the staff was already "stretched very thin" on other projects.' Neither do the RFP's timelines
reflect the effort and complexity of this project. The Mayor hos repeatedly described this as
"prime city property," and it is one of if not the most prominent of the City's public-private
ventures. The RFP calls for multi-million dollar investments, mixed-use property development,
and high-end services, over a multi-year timeline all within a world-leading tourist destination
and sensitive residential neighborhood. Those factors support detailed consideration and
planning, careful input from community groups, and thus an appropriate timeline for
workshopping, solicitation, and bid preparation not the headlong rush of this RFP. In practice,
the expedited timeframe simply hamstrings bidders' efforts to vet potential joint venture partners,
prepare development renderings, prepare proposed programming and scope of services under
Section 0300, Tab 3, and to prepare any design options under Section 0300, Tab 4. Token
together-no need for expediency with three years until lease turnover, and a need for detailed
and complex bidding the RFP's timeline is unsupported and arbitrary.
Third, the rushed timeline creates an inescapably anti-competitive environment favoring the
one bidder who pre-negotiated terms with the City forcing the conclusion that the timeline
was set not because of objective factors associated with this project, but, impermissibly, to allow
a favored outcome. That independently renders the RFP's rushed timeline arbitrary and
capricious. Despite that the City must create a level playing field with a competitive RFP, pre-
RFP actions by City leaders afforded Boucher and Major food Group o protected opportunity
to work with the City to develop their vision for One Ocean Drive. More than nine months ago,
Boucher approached City Commissioners to push for a no-bid takeover of the Property.
oucher and its supporting Commissioners had months of meetings and planning to construct
Boucher's proposal. This resulted in the series of City Resolutions favoring the Boucher
' Moy 7,2023 E-moil from A. Hudak to D. Richardson, et al.
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proposal a no-bid contract, exclusive LOI negotiation, and ultimately an expedited RFP. This,
notwithstanding that the City itself hod not developed or promoted, by solicitation, public input,
etc., a vision for what it wanted to do with the property. These closed-door dealings granted
oucher a significant head start on the process {and further dictated the City's eventual RFP
criteria, discussed below) Thus, the RFP's exceedingly short submission timeline is unfeasible
for all bidders with the exception of Boucher, the only bidder that has been able discuss its
proposal with the City for months before the formal RFP was announced.
City administration and staff, and certain Commissioners, recognized that the Commission's
eventual deadlines for RFP issuance and bid submission were unjustified and detrimental. Staff
requested the RFP start on June 3Oth, but ultimately were forced to issue the RFP on June l4th,
even earlier than first requested by the City Commission. Commissioners requested the
response time be extended to ninety-days from June 30th to allow more engagement and
responses, but were not heeded.
In the end, the RFP's issuance and response timelines are arbitrary and capricious. No relevant
timeline factors were considered and the slated reasons on the record are false and not
compelling; the timeline is unjustified by actual lease turnover and development dates and
inimical to the prominence, complexity and sensitivity of the project; and the timeline favors
Boucher's inside-track, bock-room, pre-negotiated proposal; which is why the timeline runs
contrary to the well-reasoned recommendations of multiple members of the City's own staff.
C. The RFP Process is Tainted by Anti-Competitive Communications.
Because this project lease, development and services for the Property ofter conclusion
of the current Leose necessarily requires formal competitive solicitation, the City's
communications and olanning with Boucher before issuance of the RFP intentionally avoided
cone of silence" obligations to receive an RFP in their favor.
As explained above, because replacement of the current Lease involves multimillion-
dollar property and development concerns and services contracts in excess of $100,000, a
formal, public, competitive, solicitation process was always required by City Code." That is,
both the City's "no-bid" and exclusive-LOI to Boucher were inherently impermissible. The City
Code further formally prohibits any communication regarding a particular request for proposal
between o potential bidder, service provider, bidder, lobbyist or consultant, on the one hand,
and the City Manager, the City's administrative stoff, City Mayor and City Commissioners, on
the other hand. Code Sec. 2-486{0) Had o formal request tor proposal been advertised per
See April 21, 2023 A. Hudck Memo {"It is in the City's best interest to follow the formal competitive
solicitation process and issue o Request for Proposals {RFP) for the best possible use and viable
concepts for the operation and management of this City site.").
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the City Manager's recommendation, the cone of silence would have precluded Boucher's
efforts to negotiate an inside agreement.
However, the City and Boucher intentionally avoided the cone of silence when the City
in effect pre-negotiated this project with Boucher prior to and outside normal and mandatory
public procurement requirements. Boucher, as a potential and actual bidder, had meetings
and communications with City Commissioners ond City administrative personnel, designed to
and in which they in fact did olan and advocate for Boucher's takeover of the Property. This
was all after the City effectively "advertised" that they would be engaging in competitive
solicitation- after the City decided and made public that it would pursue new lease,
development, and services terms for the Property but outside on RFP process, and outside the
public eye. Had the City Commission followed the City Manager's recommendation, the
Code's cone of silence protections would have ensured transparency and equal treatment of
prospective bidders to ensure against the very inside-track, pre-negotiation taking place here.
That the City eventually issued the instant RFP does not cure the existing anti-competitive
communications. Rather, the current RFP exacerbated the misconduct. Boucher's violative pre-
R?FP-issuance communications provided it an anticompetitive advantage over all other
prospective bidders.
D. Purposefully Vague Criteria Prevents an Exact Comparison of Bids.
The City's decision to pursue an expedited RFP, against recommendations by City staff and
multiple Commissioners, hos in turn prevented the City's procurement department, multiple
neighborhood stakeholders, interested third parties, and even members of the City Commission
from meeting to develop at least a concept of what the future of One Ocean Drive should be
prior to any RFP. The result is an RFP with material terms too vague to allow administration and
stoff to discretely and definitively compare incoming bids, as required for a competitive
solicitation.
Absent a vision, the RFP cannot comply with the basic tenets of a competitive procurement. As
noted above, all bidders must be afforded an "exact comparison of bids" to "secure fair
competition on equal terms." Belote, 138 So. 01 723-24. Without "[rleosonobly definite plons
and specifications," bids "cannot in the nature of things be competitive. Advocacy Ctr. for
Persons With Disabilities, Inc., 721 So. 2d ot 755. An RFP's specifications must "be sufficiently
certain and definite to secure a fair basis for competitive bidding, and should contain nothing
that would otherwise prevent or restrict full and free competition." ld. ("Uncertainty or
unreasonableness of the terms of the specifications will render the award of a contract void.").
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The City's clear lack of vision for One Ocean Drive admitted on the record by the City
prevented the crafting of sufficiently certain and definite specifications to form the basis for a
competitive process, warranting rescission of the RFP.
Further, as identified in Section l supra, the RFP criteria as written allows the City extensive
latitude to negotiate material aspects of a bidder's proposal post-submission Aside from its
illegality, this extensive latitude further complicates the RFP process due to multiple vague
criteria regarding contractual length for a proposal and the related scoring of associated
material components. Specifically, Section 0100, Sub-Section 3.l allows each bidder to submit
on "Option 1" for up to ten (lO) years, and an "Option 2" for up to thirty (30} years. Each
option can include contract extension options, provided no option exceeds the lO year mark
(for Option l) or the 30 year mark (for Oplion 2). Additionally, the agreements can be either
a lease, concession agreement, or a combination of the two. The City's expansive options here
underlie the RFP's lack of a "vision" for the Property, demonstrating the RFP's purpose to select
on operotor now, and decide that vision later.
Multiple questions were posed to the City about how these varying term lengths or other options
would be scored. In response, the City indicated that term length receives no specific score, but
will affect various components of the proposal, including, tor example, the design and timeline
for improvements and financial terms. This presents a unique problem preventing bidders from
adequately responding to the RFP. The City's vague clarification neither identifies a preference
for, or any specific criteria dictating, how the City would compare from a financial perspective
a contract with extension options to a fixed contract (under either Option l or 2). At bottom,
there is no financial formula identified for a bidder to best respond to the City's request as it
relates to term length, and the City will seemingly be judging contract lengths (and related
extension options) based on unwritten criteria aligning with whatever vision the City determines
in the future. This type of review is arbitrary, capricious, and contrary to the requirement
proposals be evaluated based on specific criteria contained within an RFP. See /Aurora Pump v.
Gould Pump, Inc., 424 So. 2d 70, 75 (Flo. 1st DCA 1982) (overturing agency award of
contract based in part on reliance of unwritten criteria in review process and eventual award}.
Separately, the City provides no definite, quantifiable, or ascertainable criteria in which either
Option l or Option 2 will be judged against each other to reach a decision, further violoting
the procurement and "exact comparison" principles outlined above, thus again highlighting the
RQFP's real purpose of selecting an operator now, and deciding the City's vision later. See
Advocacy Ctr. or Persons With Disabilities, Inc. 721 So. 2d at 755.
Section 0300, Tob 6, for example, provides qualitative scoring criteria related to the design and
timeline and accompanying financial proposals.
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Vague specifications do not allow actual comparison of bids based on discernable criteria. This
RFP suffers from that detect across the most material of its specifications.
E. The City's Inclusion of Arbitrary Criteria Artificially Promotes
Boucher's Proposal, Aligns the RFP with Boucher's Original No-
Bid Proposal, Thereby Creating an Anti-Competitive Advantage.
In effect and {it appears) by design, the instant RFP contains specifications and criteria which,
rather than advancing legitimate City goals, ensure successful award to o predetermined
preferred bidder, Boucher.
Bid awards are improper where they are contrary to competition, meaning they: (o) create the
appearance of and opportunity for favoritism; (b) erode public confidence that contracts ore
awarded equitably and economically; ({c) cause the procurement process to be genuinely unfair
or unreasonably exclusive; or (d) are unethical, dishonest, illegal, or fraudulent. See, e.g., R.
N. Expertise Inc. v. Miami-Dade County School Bd, et al., Case No. 01-26631D, 2002 WL
185217,21-22 {Fl Di. Admin. Hrgs. Feb. 4, 2002); see also E Builder v. Miami-Dode
County School Bd. et al, Case No. 03-1581BID, 2003 WL 22347989, '1O {Fla. Di. Admin
Hrgs. O+. 10, 2003).
ln the foll of 2022, City Commissioners become aware that Boucher was offering a "high-end
beach club" concept for its no-bid proposal, and that there hod been discussions with Major
food Group about a potential partnership. The City c#tempted to award the Property to Boucher
without the required competitive solicitation process first, an outright no-bid, and an
exclusive-LOI. This RFP was the City's third procedural choice, despite that it was always
required by Code. After ensuing communications and negotiations between City representatives
and Boucher regarding and further developing this concept, the May l7 Resolution and the
RFP were narrowly drafted in a way to ensure that Boucher would qualify and ultimately succeed
in winning the bid, even without the help of o partner like Major food Group, specifically by
being awarded points for providing services insufficiently related to the actual operation or
management of a "high-end beach club."
The unfortunate appearance and opportunity for favoritism glaring in these RFP criteria is
exemplified in the RFP's minimum requirements drafted to ensure Boucher's eligibility and
competitiveness. The Moy l 7 Resolution and the RFP explain that the City is seeking on operator
for the "management or operation of a high-end beach establishment and ancillary uses on
the Properly and adjacent concession area." See RFP, Section 0100, Sub-Section 3. When
questioned about these criteria, the City's Corporate Representative was unable to define "high-
Boucher needed flexibility to ensure it was qualified to respond to the RFP independently of any
potential partnership with Major food Group, as Boucher had been shopping other vendors in case a
partnership with Major Food Group fell through.
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end beach establishment," but knew the supporting Commissioner was aware Boucher was
offering o "high-end beach club."
As currently written, the minimum eligibility requirements require in pertinent part:
The Bidder or a principal shall demonstrate ct least five (5) years of experience
{within the last ten (l0} years} in managing or operating a beach establishment,
beach concession or g similar operation. Similar operation shall mean o
recreational facility or concession whose purpose is to cater to patrons by
providing recreational options (e.g., beach/pool access, spa services, etc.) and
food/beverage options at a cost.
(emphasis added). The City's Corporate Representative testified he was unaware as to why the
Cily opted to place this special criteria in the RFP. This minimum requirement is scored pursuant
to the Qualifications (Tab 2) section. Tab 2, Section 2.1.2 allows Boucher to aoply its
experience managing beach chair and umbrella services in support managing or operating ol
any future "high-end beach establishment."
Setting aside the significant head start afforded to Boucher, the inclusion of the "beoch
concession or o similar operation" parameters to the defining requirement and concept of a
"high-end beach establishment" are arbitrary. Experience in these areas, while perhaps
relevant, are not themselves a sufficient yard-stick for managing o so-called "high-end beach
establishment" (which the City cannot in any event define), and such requirements prove anti-
competitive by affording Boucher another unfair advantage to qualify for scoring where it would
not otherwise receive points. Presumably, the City will argue it provided in the RFP +he "joint
venture" option, which could give Boucher the opportunity to receive those points based on
Major Food Group's experience {if deemed sufficiently relevant to a "high-end beach
establishment"). However, this does not explain cratting the minimum eligibility requirements to
allow Boucher maximum insurance and flexibility in independently qualifying for the RFP,
including for reasons insufficiently tethered to actually monaging and operating a "high-end
beach establishment." Nor does it explain the City's focus on expediting the RFP in a way that
precludes other bidders from having sufficient time to reasonably conduct due diligence and
determine the viability of a long-term partnership for the operation and management of One
Ocean Drive. The arbitrary requirements and timing of the RFP have thus made it exceedingly
difficult for bidders other than Boucher even an incumbent as eminently qualified as Nikki
Beach to fairly compete in this process.
Conclusion
The future of One Ocean Drive is of key importance lo the residents of Miami Beach, the City
Commission, City Staff, and all potential bidders here. Accordingly, Nikki Beach is asking for
the RFP process to be afforded the publicity, transparency, and equal-footing required for
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competitive solicitation; clear and proper criteria designed not to favor a pore-designated
proposal but to determine the best outcome of the City and its residents; and rational timelines
to allow robust and complex planning and the open and honest dialogue with Miami Beach
stakeholders and residents affected by the future develooment of One Ocean Drive that it
deserves.
V. Requested Relief
Based on the foregoing, Nikki Beach requests the following relief:
]. The City immediately issue a notice staying the solicitation of bids (i.e., suspending the
August 15, 2023 bid submission deadline) while the instant protest is under review,
pursuant to Code Sec. 2-371/h); and
2. The Cily rescind the RFP to allow for the correction of the various criteria identified
herein and obtain input on the specifications from Miami Beach stakeholders and
residents affected by this future development and issue a new request for proposal in
accordance with binding Florida law; and/or
3. The City issue an addendum correcting the various criteria and subsequently extend the
RFP for an additional ninety-day (90) period to allow all potential bidders a fair
opportunity to compete for the future of One Ocean Drive.
VI. Record and Reservation of Rights
This Specifications Challenge incorporates all exhibit and materials submitted herewith
(including submitted electronically), as well as all records referenced herein
Nikki Beach has submitted multiple public records requests to the City regarding the City's
process to develop the current RFP, as well as documents relating to the Boucher Brothers' and
Major Food Group's involvement in same. At the time of this submission, Nikki Beach has not
received all requested documents, which were timely requested well in advance of this
submission pursuant to Fla. Stat. Ch. 119. Accordingly, Nikki Beach reserves the right to
supplement the record with any responses provided after this submission in support of this
Specifications Challenge. See, eg., Optiplan, Inc. v. School Bd. of Broward County, 710 So.
2d 569, 572 (Flo. 4th DCA 1998).
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STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
Museum Tower, Suite 2200
150 West Flagler Street
Miami, Florido 33130
Maria A. Fehretdinov
Florida Bar # 52084
mfehretdinoy@stearnsweaver.com
Jason S. Koslowe
Florida Bar # 122758
jkoslowe@stegrnswegver_com
Telephone: 305-789-3200
fox. 305-789-2675
l 06 E. College Avenue
Suite # 700
Tallahassee, FL 32301
Telephone: (850) 329-4853
Fax: (850) 329-4863
Christopher R. Clark
Florida Bar# l 002388
crclark@stearnsweayer_com
Robert J. Walters
Florida Bar II l 024733
rwalters@stearnsweaver.com
Certification of Service
This document with referenced attachments has been provided within ten city business
days of bid opening via e-mail to the addresses above, with courtesy hard copy to the City
Manager, as referenced in the City of Miami Beach, Code of Ordinances, Sec. 2-371.
/s/Christopher R. Clark
Christopher R. Clark
Florido Bar# l 002388
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CH
City of Miami Beach, N7CG Convemion Center Drive. Miami each, Florida 33139, ww.miamibeachil.gov
August 4, 2023
Via Federal Express: TRK # 772954073443
Via e-Mail: mfehretdinoy@stearnswyeayer.com
Maria A. Fehretdinov, Esq.
Stearns Weaver Miller Weissler Alhadeff
150 West Flagler Street, Suite 2200
Miami, FL 33130
RE: Bid Protest by Penrod Brothers, Inc. d/b/a Nikki Beach ("Penrod") Relating to Request
for Proposals No. 2023-479-KB ("RFP") for Management and Operation of a High-End
Beach Establishment ("Beach Establishment") at the Beach Club located at 1 Ocean
Drive and the Adjacent Concession Areas (the "Property")
Dear Ms. Fehretdinov,
The City has reviewed the above referenced bid specifications protest you filed on behalf
of Penrod dated July 31, 2023. The City Manager and the City Attorney have carefully reviewed
your protest. The City hereby partially grants and partially denies Penrod's bid protest as further
detailed below.
A. Penrod's Allegations
Penrod has submitted a protest alleging that the RFP is defective because it somehow:
i. Allows the City to alter material bid terms post-award;
ii. Contains anti-competitive timelines;
iii. Incorporates anti-competitive communications;
iv. Contains vague criteria that prevent comparison of bids; and
v. Contains arbitrary criteria that create anti-competitive advantages.
As set forth in greater detail below, the City will grant partial relief and otherwise denies
these allegations in their entirety and finds that the RFP provides for a competitive procurement
process that ensures fair competition upon equal terms to all bidders in accordance with City,
State, and other applicable law.
B. Penrod's Protest Lacks Substantive Merit.
As a threshold matter, protests at this stage of the procurement are limited by ordinance
to whether the written specifications of the solicitation are legally flawed. Penrod's allegations
largely shoot wide of this mark and make numerous unsupported allegations that essentially claim
that the outcome of this procurement is predetermined and that if this solicitation results in an
award to any proposer other than Penrod, it must therefore be illegitimate. Such allegations are
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August 4, 2023
Page 2 of 7
factually and legally meritless, and do not form the basis for any challenge to the RFP's
specifications, terms or requirements. Additionally, virtually all the case law put forward by Penrod
relates to protests in the invitation to bid procurement framework, and as such, is inapplicable to
the City's RFP procurement framework and inapplicable to the facts at hand. Accordingly, the City
will address the specifications themselves.
1. The RFP Does Not Allow for Negotiation of Terms More Favorable to the
Successful Proposer.
Penrod alleges that the RFP impermissibly allows the City to alter material bid terms after
award of a contract. This misconstrues the intent of Section 0100, Subsection 13 of the RFP,
which provides in part:
Following selection, the City may enter into negotiations with the selected Bidder(s)
to determine financial and other terms and conditions, including without limitation
scope of improvements, concept, program and scope of services, insurance/bond
requirements, indemnification, and other customary terms as authorized by the
City Commission.
This RFP provision allows for standard negotiation of detailed terms and conditions that
are not necessarily required in a bidder's proposal and is intended to reserve the City's right to
negotiate with the selected (i.e. successful) bidder such contract provisions that are more
favorable to the City based on wholistic consideration of the selected bidder's entire proposal.
Nothing about this RFP provision constitutes a "waiver of competitive bidding requirements," as
the Protest suggests. All proposers in response to the RFP must conform to the RFp'g
requirements, which intentionally allow for a reasonable degree of individuality from proposers.
Nonetheless, in order to eliminate any perceived ambiguity, the City shall clarify in the form of an
Addendum to the RFP that the City may negotiate to secure financial and other terms and
conditions that are more favorable to the City than in the submitted bid, and to further define the
parameters of the proposed scope of improvements, concept, program and scope of services.
Such RFP language is clearly permissible under Florida law.1 Accordingly, the City hereby
partially grants Penrod's protest and shall forthwith issue Addendum No. 5 containing this
clarification.
2. The RFP's Time Constraints are Necessary and Reasonable.
Florida Courts repeatedly make clear that, in reviewing challenges to a public agency's
procurement decisions, a "public body has wide discretion" in the bidding process and decisions
by the public body should not be overturned "even if it may appear erroneous and even if
reasonable persons may disagree." Department of Transportation v. Groves-Watkins
Constructors, 530 So. 2d 912, 913 (Fla. 1988) (quoting Liberty County v. Baxter's Asphalt &
Concrete, Inc., 421 So. 2d 505 (Fla. 1982) (emphasis in original). "[The] sole responsibility is to
ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." Id_ at 530
So. 2d at 914.
'City of Cocoa y_ Villas of Cocoa Village,_LL,, 343 S0. 30 122 (Fla. 5th DCA 2022) (finding that selection of highest-ranked proposal
did not create a binding contract where RFP contemplated that the winning proposer would negotiate a development agreement
containing various terms, including development schedule, proposer's fee, overall project cost, and other details); H._Gore Enterprises_
Inc. v. City of West Palm Beach, 617 So. 2d 1160 (Fla. 4th DCA 1993) (finding that selection of proposal did not create a contract
where negotiations were required to finalize a contract).
City of Miami Beach, 70 Convention Center Drive. Miami Beach. Florida 33139. ww.mwamibeachi.gov
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Penrod alleges that issuance of the RFP prior to lease expiration for the Property and the
"60 day" period to respond to the RFP are anti-competitive. As an initial matter, Penrod ignores
the reality that procurement of contracts well in advance of contract expiration is a local
government best practice. See e.g. Miami-Dade County Resolution No, R-658-23 (establishing
policy requiring commencement of procurements no less than two years prior to contract
expiration).
Here, the City has a substantial interest in commencing the RFP process in advance of
Penrod's existing lease expiration to minimize service interruption at the conclusion of Penrod's
current lease. The anticipated length of the competitive procurement process and the procedural
and regulatory steps that will follow RFP contract award further support the RFp's time
constraints. Specifically, the City's concession and/or lease approval procedures are extensive
and require multiple stages of review, feedback, and approval. Furthermore, even after the City
complies with its own procedural requirements, the City and the successful proposer must
potentially comply with extra-jurisdictional reviews and potentially, even voter referenda.
Prior to award of a concession agreement, lease agreement, or such other agreements in
connection with the Property, the City must:
1. Review and evaluate proposals submitted in response to the RFP;
2. Engage in potentially extensive negotiations with the successful bidder;
3. Allow the successful proposer sufficient time to conduct community outreach to ensure it
addresses residents' concerns related to the design and operation of the Beach Establishment;
4. Place the proposal (including any proposed ordinance amendments) for review and
approval before various City boards (including the City's Planning Board) at public hearings that
must be noticed in accordance with statutory requirements;
5. Hold two readings before the City Commission for approval of the proposed agreement(s)
and/or any necessary amendments to the City's land development regulations and/or
Comprehensive Plan;
6. Resolve any potential bid protests or legal challenges to the final award;
7. Potentially submit the final lease to a voter referendum, in accordance with either Section
1.03(b) of the City Charter (if applicable) and/or Article VII of the Miami-Dade County Charter (if
applicable); and
8. Allow the successful proposer time to engage design professionals to prepare all drawings
that may be necessary for appearance before the City's land use boards, permitting and/or
improvements to be performed on the Property, which due to the Property's location may entail
regulatory review by agencies outside of the City's jurisdiction, including, without limitation, Miami-
Dade County and the Florida Department of Environmental Protection.
City of Miami each, 'JO Convention Center Drive, Miami Beach, Florida 33139, ww.marioeachfl.gov
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Accordingly, the City's commencement of the RFP in June 2023 is reasonable in light of
the need to ensure prudent stewardship of the Property and the continued economic development
and improvement of the City's South of Fifth Street Neighborhood.
Additionally, the City's decision to set an RFP response due date of 63 days after its
issuance on June 13, 2023, provides all potential bidders a reasonable timeframe to respond. In
fact, the 63-day response period provides a deadline to respond that is in line with state and local
government procurement timeliness requirements. For example, Section 255.065(3)(b), Florida
Statutes, provides that a procurement timeframe for public-private partnership proposals "must
be at least 21 days, but no more than 120 days, after the initial date of publication"; the City's RFP
response timeframe is perfectly in line with the Florida legislature's approved timeline for
solicitations involving complex public-private partnerships. Importantly, Section 255.065, Florida
Statutes, governs procurements of projects that are typically similar in complexity (if not more
complex) than the Beach Establishment.
The City is not providing any unfair advantage to any potential bidder as all bidders must
comply with the 63-day response deadline. Penrod claims, without any substantiation, that the
City has created this "expedited" RFP response time in order to favor a particular bidder.
Importantly, Penrod has failed to identify even one RFP specification, requirement, or other
material term that gives any bidder an unfair advantage in responding to the RFP within the RFP
timeframe or that would require an unreasonable amount of time for any bidder to meet in order
to respond to the RFP. Furthermore, contrary to Penrod's contentions, if any potential bidder
possesses a unique advantage in responding to the RFP, it is Penrod, who is uniquely familiar
with operating the Property over the past 37 years. To the City's knowledge, no other potential
bidder has the experience or even familiarity with the challenges of operating the Property that
Penrod possesses. Accordingly, Penrod's protest as to the time for responses is denied.?
3. The RFP Process was not and is not Tainted by Improper Communications.
Section 2-486 of the City's Code of Ordinances provides that a "Cone of silence shall be
imposed upon each RFP, RFQ, or bid after the advertisement of said RFP, RFQ, or bid..."
prohibiting communications between a potential vendor, service provider, bidder, lobbyist, or
Consultant and (1) the City's administrative staff, (2) the Mayor, City Commissioners or their
respective staffs, and/or (3) any member of a city evaluation and/or selection committee.
Penrod has failed to provide even a single communication from any potential bidder that
would be prohibited since the imposition of the cone of silence upon the issuance of the RFP.
Penrod alludes to violations of the "intent" of the cone of silence, but such argument carries no
merit; communications prior to the issuance of a competitive solicitation are simply not prohibited
under the Cone of Silence. Furthermore, Penrod has failed to identify even one RFP specification,
requirement, or other term that resulted from a communication prior to the issuance of or during
the RFP. Nor has a communication been provided that actually supports a conclusion that the
RFP was drafted or modified to provide an unfair competitive advantage to any bidder. Lastly,
Penrod's contention that the City "pre-negotiated" the project or that an exclusive "no-bid" letter
of intent (LOI) exists is completely unsubstantiated and untrue. Notwithstanding Penrod's bare-
?As set forth in greater detail below, the City is nevertheless extending the deadline for submission of responses to the RFP by
fourteen (14) days.
City oi Miami each, !70 Convention Center Drive. Mier Beach. Florida 33139. wwwmiamieachll.gov
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bones allegations, Penrod does not and cannot allege any facts relating to any negotiated LOI,
because no such LOI exists.3
Curiously, although Penrod now assumes the mantle of a competitive bidding crusader,
the City notes that Penrod has operated its high-end beach club at the Property pursuant to a
decades-long concession agreement that it obtained under a bid waiver. Moreover, as early as
2021, Penrod engaged lobbyists to seek a no-bid extension of its existing contracts with the City
beyond their current expiration dates. See Exhibit "A," the Lobbyist Registration Form for Penrod.
Accordingly, Penrod's own pre-RFP communications with the City belie their current assertions
that communications between the City and any potential vendor prior to the imposition of the cone
of silence somehow violates the intent of the cone of silence and therefore taints the RFP process.
Cf. Intercontinental Properties, Inc. v. State Dep't of Health and Rehabilitative Servs., 606 So. 2d
380 (Fla. 3d DCA 1992) (holding that a protester alleging deficiencies in a competing bid must
show that the protester's own bid does not suffer from the same deficiency.). Accordingly, for the
reasons stated above, including, without limitation, the failure to allege any specification, term, or
requirement of the RFP that Penrod is challenging on the basis of unspecified communications
prior to the issuance of the RFP, Penrod's protest as to this point is denied.
4. RFP Criteria do not Need to Support an Exact Comparison of Bids.
In Florida, governmental entities may employ a Request for Proposal (RFP) procurement
framework when it "...desire[s] an ultimate goal but cannot specifically tell the offerers how to
perform toward achieving that goal..." System Development Corp. v. Department of Health and
Rehabilitative Services, 423 So. 2d 433, 434 (Fla. 1st DCA 1982). In contrast, an Invitation to Bid
procurement framework "... is rigid and identifies the solution to the problem...specifically
defin[ing] the scope of work required by soliciting bids responsive to the detailed plans and
specifications set forth." ld. The City may issue a Request for Proposals when it determines that
an Invitation to Bid" ... is not practicable and it is incapable of specifically defining the scope of the
work required." Id. Accordingly, evaluation criteria for an invitation to bid "is controlled by cost,
that is, the lowest and best bid, whereas consideration of an offer to an RFP is controlled by
technical excellence as well as cost."
The City rejects Penrod's claims that the RFP contains material terms that are too vague
to afford "an exact comparison of bids" to "secure competition on equal terms. Quoting Wester v.
Belote, 138 So. 721, 723-24 (Fla. 1931 ). Contrary to Penrod's contentions, in Florida, the Request
for Proposal procurement framework does not require an exact comparison of bids, but an
evaluation of an offer based on technical excellence as well as cost. System Development Corp.,
423 So. 2d at 434. Towards that end, the City's RFP is clear as to the City's ultimate goal: Section
3 of the RFP states that the purpose of the RFP is "for the management or operation of a high-
end Beach Establishment and ancillary uses on the Property and adjacent concession area."
Because there are many possible iterations of a high-end beach establishment, it is entirely proper
for the City to challenge the private sector to present creative proposals, consistent with the
purpose of the RFP, for the City's consideration. The use of an Invitation to Bid framework, which
° penrod suggests that a "no-bid" contract, even if one existed, is somehow legally impermissible. Section 2-367(e) of the City Code,
however, expressly provides that the City Commission may waive competitive bidding requirements by a supermajority (five-sevenths)
vote when the City Commission finds that such waiver is in the best interests of the City. These allegations are wholly irrelevant to
Penrod's protest, as here, the City Commission did not proceed with any process that would require a waiver of competitive bidding,
and instead authorized the issuance of a competitive solicitation.
City of Miami each, 700 Convention Center Drive, Miami Beach, Florida 33'39, wvr.riamibeachfl.gov
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would necessarily entail a specific vision for the beach establishment and a clearly defined scope
of work, would limit the creativity and innovative spirit that are core components of most successful
private-public partnerships. The City expects that proposals will contain extremely diverse
approaches to accomplishing the above stated purposed and welcomes that diversity. The City
will then elect the proposal that the City Commission best accomplishes those goals based on all
of the evaluation factors.'
Furthermore, to guide bidder responses, Bidders are allowed to submit one proposal for
an Agreement having a term of less than ten (10) years (Option 1) and/or an agreement for a term
equal to or greater than ten (10) years but not more than thirty (30) years, including options
(Option 2). While the RFP allows proposers flexibility in determining the proposed duration of their
deals, the Evaluation Committee will compare proposals submitted for Option 1 (less than 10
years) against other proposals for Option 1, and Proposals submitted for Option 2 (10-30 years)
against other proposals for Option 2, with scoring to be based on the Proposer's Qualifications,
the proposed Programming and Scope of Services, Design and Timeline, Public Benefit, and the
Financial Proposal. The Evaluation Committee's rankings will be presented to the City Manager,
who will review the proposals and consider all relevant factors in making a recommendation to
the City Commission, including those set forth in Section 2-369 of the City Code thereof.
For the reasons set forth above, Penrod's protest as to this point is denied.
5. The City did not Include Arbitrary Criteria in the RFP to Favor or Disfavor
Any Bidder.
Penrod alleges that the City incorporated arbitrary criteria to provide a competitive
advantage or disadvantage to a particular bidder. In support of this contention, Penrod claims that
by requiring at least five (5) years of experience managing or operating a beach establishment,
beach concession, or other similar operation," the City is favoring a particular vendor. The City
notes that this minimum five (5) year experience requirement does not affect how a proposal will
be scored; it is a minimum bar for determining responsiveness. The City notes that Penrod meets
this qualification. Accordingly, this is not a proper basis for Penrod to challenge the specification.
Lastly, Penrod argues that in requesting "management or operation of a high-end beach
establishment and ancillary uses on the Property and adjacent concession area" the City was
attempting to favor a particular potential vendor that Penrod presumes will offer "beach chair and
umbrella services." (emphasis added.) In requesting high-end beach services, the City is not
requesting any particular service features that would advantage one potential bidder of another;
the City is merely seeking proposals that will achieve the City's goals of securing a high quality
Beach Establishment for a world-class tourist destination most famous for its beaches.
For all of the reasons set forth above, Penrod's protest, with the single exception noted
above, must be denied. Notwithstanding the foregoing, the City shall (1) provide a brief extension
of the RFP response deadline equal to the time period from the date of receipt of Penrod's protest
through the date of the City's response plus, to show good faith, an additional ten (10) days, for
penrod's claim that "high end beach establishment" is too vague cannot be taken seriously in light of the fact that Nikki Beach is
regularly described as a 'high end beach bar" and "luxury beach club concept in widely available travel-related websites such as Trip
Advisor. See Exhibit_"," Tri_Ady_sgr and Miami-Beach-nikkiggch_com Scrgenshots. Accordingly, Penrod's claim that the inclusion
of this term disadvantages Penrod to such an extent that it renders the RFP specifications legally deficient is legally and factually
meritless.
City of Miami Beach, '700 Convention Center Drive, Miari Beach, Florida 23139, www.miamibeachfl.gov
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Maria A. Fehretdinov, Esq.
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a total of fourteen (14) additional calendar days, and (2) issue an addendum clarifying that any
terms and conditions included in the successful proposer's response to the RFP shall not be
altered during negotiations other than to secure terms that are more favorable to the City, to flesh
out details not included in the successful response to RFP, and to incorporate the City's customary
terms and conditions, all consistent with the City's intent and all applicable laws.
Pursuant to Section 2-371 of the City Code of Ordinances, Penrod may appeal this
decision by filing an original action in the Circuit Court of the Eleventh Judicial Circuit in and for
Miami-Dade County, Florida, in accordance with the applicable court rules.5 Any action not
brought in good faith shall be subject to sanctions including damages suffered by the City and
attorney's fees incurred by the City in defense of such wrongful action. Pursuant to Section 2-
371(c), the City intends to request reasonable reimbursement for expenses incurred in processing
this protest. The City will send an invoice together will appropriate back-up documentation as
soon as the same is available.
The City expressly reserves all rights.
Sincerely,
DocuSigned by. et.±- ~liria T. H~d~k
City Manager
r-:OocuSigned by:
!±tr
Rafael A. Paz
City Attorney
cc. Mayor Dan Gelber and Members of the City Commission
Rafael E. Granado, City Clerk
Alex Denis, Procurement Director
> contrary to Penrod's erroneous statement regarding the stay of the procurement, under Section 2-371(h) of the City Code of
Ordinances the procurement is not stayed or suspended during an appeal, and the City does not intend to grant any further extension
beyond that stated herein.
City of Miami 3each. 1700 Corvention Center Drive, Miami Beach, Florida 3139. wvw.amibeacbfl.gov