This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1159a.SAC
DATE: 3/29/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 1159 Contractual Services Contract Liability Limits
SPONSOR(S): Constitutional Rights, Rule of Law & Government Operations Subcommittee, Yarkosky
TIED BILLS: IDEN./SIM. BILLS: CS/SB 1188
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Constitutional Rights, Rule of Law &
Government Operations Subcommittee
15 Y, 0 N, As CS Wagoner Miller
2) State Affairs Committee Wagoner Williamson
SUMMARY ANALYSIS
Florida law requires state agencies seeking to procure commodities or contractual services in excess of
$35,000 to use a competitive solicitation process. Depending on the type of contract and scope of work or
goods sought, an agency may use one of three procurement methods: invitation to bid, request for proposals,
or invitation to negotiate. A competitive solicitation for contractual services in excess of $35,000 must be
evidenced by a written agreement embodying all provisions and conditions of the procurement of such
services, including the financial consequence that the agency must apply if the contractor fails to perform in
accordance with the contract. However, current law does not provide mandatory minimum or maximum
measures for liability under such contracts.
The bill requires the written agreement for a procurement of contractual services in excess of $35,000 to
include a contract provision that limits the contractor’s liability for direct damages to the greater of $100,000,
the dollar amount of the contract purchase, or two times the charges rendered by the contractor under the
purchase order. The contract provision must provide that the limitation does not apply to claims arising under
the indemnity agreement. It also requires the contract provision to provide that, unless specified in the contract
or purchase order, no party will be held liable to another for special, indirect, punitive, or consequential
damages, and that no party will be liable for lost profits, lost revenue, or lost institutional operating savings.
Finally, the contract provision must provide that the State may set off any liability or other obligation of the
contractor or its affiliates to the state against any payments due to the contractor.
The bill does not appear to have a fiscal impact on state or local governments.
STORAGE NAME: h1159a.SAC PAGE: 2
DATE: 3/29/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Present Situation
Competitive Solicitation for Commodities or Contractual Services
Florida law requires state agencies use a competitive solicitation process
1
when procuring commodities
or contractual services in excess of $35,000.
2
A competitive solicitation is the process of requesting
and receiving two or more sealed bids, proposals, or replies submitted by responsive vendors in
accordance with the terms of a competitive process, regardless of procurement method.
3
Depending on
the type of contract and scope of work or goods sought, an agency may use one of three procurement
methods: invitation to bid,
4
request for proposals,
5
or invitation to negotiate.
6
Invitation to Bid
An agency must use an invitation to bid (ITB) if the agency can define the scope of work or specific
commodity sought. An ITB must include a detailed description of the commodity or contractual service
sought and whether the agency contemplates renewal of the contract. If the agency contemplates
renewal of the contract, then each bid submitted in response to an ITB must include the price for each
year for which the contract may be renewed. Bid evaluations must include consideration of the total
cost for each year of the contract, including renewal years, and the contract must be awarded to the
responsible
7
and responsive
8
vendor who submits the lowest responsive bid.
9
Request for Proposals
An agency must use a request for proposals (RFP) when the purposes and uses for the contractual
service or commodity sought can be specifically defined and the agency is capable of identifying
necessary deliverables. A vendor may respond with various versions of services or commodities to
meet the specification of the solicitation. Before issuing an RFP, the agency must specify in writing the
reasons an ITB is not practicable. An RFP must include a statement describing the commodities or
contractual services sought, the relative importance of price and other evaluation criteria, and whether
the agency contemplates renewal of the contract. The contract is awarded by written notice to the
responsible and responsive vendor whose proposal is most advantageous to the state.
10
Invitation to Negotiate
An invitation to negotiate (ITN) is a solicitation used by an agency that is intended to determine the best
method for achieving a specific goal or solving a particular problem. An ITN identifies one or more
responsive vendors with which the agency may negotiate in order to receive the best value. Before
issuing an ITN, the agency head must specify in writing the reasons an ITB or an RFP are not
practicable. An ITN must include questions being explored, the facts being sought, and the specific
1
S. 287.057(1), F.S.
2
S. 287.017, F.S., creates five purchasing categories and their corresponding threshold amounts: Category One: $20,000; Category
Two: $35,000; Category Three: $65,000; Category Four: $195,000; Category Five: $325,000.
3
S. 287.012(6), F.S.
4
S. 287.057(1)(a), F.S.
5
S. 287.057(1)(b), F.S.
6
S. 287.057(1)(c), F.S.
7
A “responsible vendor” is a vendor who has the capability in all respects to fully perform the contract requirements and the integrity
and reliability that will assure good faith performance. S. 287.012(25), F.S.
8
A “responsive vendor” is a vendor that has submitted a bid, proposal, or reply that conforms in all material aspects to the solicitation.
S. 287.012(27), F.S.
9
S. 287.057(1)(a), F.S.
10
S. 287.057(1)(b), F.S. STORAGE NAME: h1159a.SAC PAGE: 3
DATE: 3/29/2023
goals of the solicitation. The agency may select one or more vendors to begin negotiations and then
award the contract to the responsible and responsive vendor that the agency determines will provide
the best value to the state.
11
Contract Evaluations and Negotiations
For a contract in excess of $195,000, the agency head must appoint at least three people to evaluate
proposals and replies who collectively have experience and knowledge in the program areas and
service requirements for which commodities or contractual services are sought.
12
In addition, the
agency head must appoint three people
13
to conduct negotiations during an ITN procurement who
collectively have experience and knowledge in negotiating contracts, contract procurement, and the
program areas and service requirements for which commodities or contractual services are sought.
14
Contracts
A competitive solicitation for contractual services in excess of $35,000
15
must be evidenced by a written
agreement embodying all provisions and conditions of the procurement of such services. The written
agreement must include, but is not limited to, provisions for the following:
16
That bills for fees or other compensation for services or expenses be submitted in detail
sufficient for proper preaudit and postaudit.
That bills for any travel expenses be submitted in accordance with the law on per diem and
travel expenses of public officers, employees, or authorized persons.
17
Allowing unilateral cancellation by the agency for refusal by the contractor to allow public access
to all documents, papers, letters, or other material made or received by the contractor in
conjunction with the contract, unless the records are exempt from public access.
Specifying a scope of work clearly establishing all tasks the contractor is required to perform.
Dividing the contract into quantifiable, measurable, and verifiable units of deliverables that must
be received and accepted in writing by the contract manager before payment.
Specifying the criteria and final date by which such criteria must be met for completion of the
contract.
Specifying that the contract may be renewed for a period that may not exceed three years or the
term of the original contract, whichever is longer, and that renewals are contingent upon
satisfactory performance evaluations by the agency and subject to the availability of funds.
Specifying the renewal price for the contractual service as set forth in the bid, proposal, or reply.
Specifying that costs for the renewal may not be charged.
Specifying the financial consequences that the agency must apply if the contractor fails to
perform in accordance with the contract; however, current law does not provide mandatory
minimum or maximum measures for liability under such contracts.
18
Addressing the property rights of any intellectual property related to the contract and the specific
rights of the state regarding the intellectual property if the contractor fails to provide the services
or is no longer providing services.
11
S. 287.057(1)(c), F.S.
12
S 287.057(17)(a)1., F.S.
13
If the value of the contract is in excess of $1 million in any fiscal year, then at least one person conducting negotiations must be
certified as a contract negotiator. If the value of the contract is in excess of $10 million in any fiscal year, then at least one person
conducting negotiations must be a Project Management Professional certified by the Project Management Institute. S. 287.057(17)(b),
F.S.
14
S. 287.057(17)(a)2., F.S.
15
S. 287.058(1), F.S., provides an exception for the written agreement for contractual services that provide health and mental health
services or drugs in the examination, diagnosis, or treatment of sick or injured state employees or provide other benefits as required by
ch. 440, F.S.
16
S. 287.058(1), F.S.
17
See s. 112.061, F.S.
18
S. 287.058(1)(h), F.S. STORAGE NAME: h1159a.SAC PAGE: 4
DATE: 3/29/2023
By rule, the Department of Management Services (DMS) adopted specific terms and conditions
pertaining to liabilities arising under contracts for procuring commodities and services.
19
Under the
DMS contract requirements, a contractor’s liability is limited to the greater of $100,000, the dollar
amount of the contract or purchase order, or two times the charges rendered by the contractor under
the purchase order. The DMS contract term excludes liability special, indirect, punitive, or
consequential damages for breach of the contract.
The written agreement must be signed by the agency head or designee and the contractor before the
rendering of any contractual service in excess of $35,000.
20
Unless otherwise provided in the General
Appropriations Act (GAA) or the substantive bill implementing the GAA, the Chief Financial Officer may
waive these requirements for services that are included in law for procurement of commodities or
contractual services.
21
A contract may not prohibit a contractor from lobbying the executive or
legislative branch concerning the scope of services, performance, term, or compensation regarding any
contract to which the contractor and a state agency are parties, after contract execution and during the
contract term.
22
Each public agency contract for services must authorize the public agency to inspect:
23
Financial records, papers, and documents of the contractor that are directly related to the
performance of the contract or the expenditure of state funds.
Programmatic records, papers, and documents of the contractor that the public agency
determines are necessary to monitor the performance of the contract or to ensure that the terms
of the contract are being met.
The contract must require the contractor to provide the records, papers, and documents requested by
the public agency within 10 business days after the request is made.
24
Effect of Proposed Changes
The bill requires the written agreement for a procurement of contractual services in excess of $35,000
to include a contract provision that limits the contractor’s liability for direct damages to the greater of
$100,000, the dollar amount of the contract purchase, or two times the charges rendered by the
contractor under the purchase order. The contract provision must provide that the limitation does not
apply to claims arising under the indemnity agreement. It also requires the contract provision to provide
that, unless specified in the contract or purchase order, no party will be held liable to another for
special, indirect, punitive, or consequential damages, and that no party will be liable for lost profits, lost
revenue, or lost institutional operating savings. Finally, the contract provision must provide that
the State may set off any liability or other obligation of the contractor or its affiliates to the state against
any payments due to the contractor.
B. SECTION DIRECTORY:
Section 1 creates s. 287.058(8), F.S., regarding contract document.
Section 2 provides an effective date of July 1, 2023.
19
Rule 60A-1.002, F.A.C.; PUR 1000, “General Contract Conditions,” s. 20 (Oct. 2006).
20
S. 287.058(2), F.S. There is an exception in the case of a valid emergency as certified by the agency head.
21
S. 287.058(5), F.S.
22
S. 287.058(6), F.S.
23
S. 216.1366(1), F.S.
24
S. 216.1366(2), F.S. STORAGE NAME: h1159a.SAC PAGE: 5
DATE: 3/29/2023
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The provisions contained in the bill may provide the private sector with more stability relating to
limitation of liability when entering into a contract with a state agency.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking by executive branch agencies.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On March 22, 2023, the Constitutional Rights, Rule of Law & Government Operations Subcommittee
adopted a proposed committee substitute (PCS) and reported the bill favorably as a committee substitute.
The PCS revised the bill by requiring specific text defining the limits of liability be included in each contract
for the procurement of commodities or services in excess of the threshold amount for Category Two
procurements, which is $35,000.
This analysis is drawn to the committee substitute as adopted by the Constitutional Rights, Rule of Law &
Government Operations Subcommittee.