The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Fiscal Policy
BILL: CS/CS/SB 1188
INTRODUCER: Fiscal Policy Committee; Governmental Oversight and Accountability Committee and
Senator Boyd
SUBJECT: Contract Liability
DATE: April 14, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. McVaney McVaney GO Fav/CS
2. McVaney Yeatman FP Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 1188 requires each contract for more than $35,000 of contractual services to include a
provision limiting a vendor’s liability to a defined monetary threshold. The bill requires all
contracts for services in excess of $35,000 to include a provision limiting vendor liability for
direct damages 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. This limitation of
liability clause does not impact other contractual provisions relating to indemnification for any
contractual services or insurance coverage for professional services contracts.
This requirement also applies to purchases by the early learning coalitions.
The bill is expected to have an indeterminate impact on state expenditures.
The bill takes effect July 1, 2023.
REVISED: BILL: CS/CS/SB 1188 Page 2
II. Present Situation:
Competitive Solicitation for Commodities or Contractual Services
Chapter 287, F.S., regulates state agency procurement of personal property and services. The
Department of Management Services (DMS) oversees state purchasing, including professional
and contractual services, as well as commodities needed to support agency activities.
1
Current law establishes the following purchasing categories:
Category One: $20,000.
Category Two: $35,000.
Category Three: $65,000.
Category Four: $195,000.
Category Five: $325,000.
2
Florida law requires state agencies procuring for commodities or contractual services in excess
of $35,000
3
to use a competitive solicitation process.
4
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.
5
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,
6
request for proposals,
7
or invitation to
negotiate.
8
Invitation to Bid
When an agency is capable of defining the scope of work or specific commodity sought, then an
agency must use an invitation to bid (ITB). 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
9
and responsive vendor
10
who
submits the lowest responsive bid.
11
1
See ss. 287.032 and 287.042, F.S., which establish the powers and duties of DMS.
2
Section 287.017, F.S.
3
See s. 287.017, F.S., for a list of purchasing categories and their corresponding threshold amounts.
4
Section 287.057(1), F.S.
5
Section 287.012(6), F.S.
6
Section 287.057(1)(a), F.S.
7
Section 287.057(1)(b), F.S.
8
Section 287.057(1)(c), F.S.
9
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. Section 287.012(25), F.S.
10
A “responsive vendor” is a vendor that has submitted a bid, proposal, or reply that conforms in all material aspects to the
solicitation. Section 287.012(27), F.S.
11
Section 287.057(1)(a), F.S. BILL: CS/CS/SB 1188 Page 3
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 document. 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.
12
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. It 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 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.
13
Contracts
A competitive solicitation for contractual services in excess of $35,000
14
must be evidenced in
writing by a written agreement embodying all provisions and conditions of the procurement of
such services.
15
The written agreement must include, but not be limited to, a provision:
That bills for fees or other compensation for services or expenses be submitted in detail
sufficient for a proper preaudit and postaudit thereof.
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.
16
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.
Specifying a scope of work that clearly establishes 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 the final date by which such criteria must be met for completion
of the contract.
12
Section 287.057(1)(b), F.S.
13
Section 287.057(1)(c), F.S.
14
There is 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.
15
Section 287.058(1), F.S.
16
See s. 112.061, F.S. BILL: CS/CS/SB 1188 Page 4
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.
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 that renewals are contingent upon satisfactory performance evaluations by the
agency and subject to the availability of funds.
Specifying the financial consequences that the agency must apply if the contractor fails to
perform in accordance with the contract.
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.
17
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.
18, 19
Unless otherwise provided in
the General Appropriations Act (GAA) or the substantive bill implementing the GAA, the Chief
Financial Officer (CFO) may waive these requirements for certain services that are exempt from
competitive solicitation requirements.
20,21
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 the:
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.
23
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
State Purchasing Rules
The DMS has adopted Form PUR 1000 General Contracting Conditions which must be included
in any contract competitively procured by an agency, unless superseded through negotiation with
the vendor. There are 47 distinct provisions that must be included. The twentieth, “Limitation of
Liability”, in pertinent part, provides:
17
Section 287.058(1)(a)-(i), F.S.
18
There is an exception in the case of a valid emergency as certified by the agency head.
19
Section 287.058(2), F.S.
20
Section 287.058(5), F.S.
21
Section 287.057(3)(e), F.S., exempts certain services from the competitive solicitation requirements of chapter 287, F.S.
22
Section 287.058(6), F.S.
23
Section 216.1366(1), F.S.
24
Section 216.1366(2), F.S. BILL: CS/CS/SB 1188 Page 5
Limitation of Liability. For all claims against the Contractor under any
contract or purchase order, and regardless of the basis on which the claim is
made, the Contractor’s liability under a contract or purchase order for direct
damages shall be 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. This limitation shall not apply to claims
arising under the Indemnity paragraph contain in this agreement.
The DMS has also adopted Special Contract Conditions to be used in state term contracts and
alternative source contracts. These conditions supersede the PUR 1000 conditions and serve as a
baseline for all agency purchases off a state term contract or alternative contract source. These
conditions do not include a cap on vendor liability.
III. Effect of Proposed Changes:
Section 1 amends s. 287.058, F.S, to require all contracts for services in excess of $35,000,
without exceptions for any services, to include a specific contractual provision that limits the
vendor’s liability for direct damages 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.
This limitation of liability clause does not impact other contractual provisions relating to
indemnification for any contractual services or insurance coverage for professional services
contracts.
Section 2 reenacts s. 287.0571, F.S., to incorporate by reference the changes made in section 1 to
be included in the business case to outsource services.
Section 3 reenacts s. 1002.84, F.S., to incorporate by reference the changes made in section 1 to
require each early learning coalition to comply with the new requirement.
Section 4 provides that the bill takes effect July 1, 2023.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
Not applicable. The mandate restrictions do not apply because the bill does not require
counties and municipalities to spend funds, reduce counties’ or municipalities’ ability to
raise revenue, or reduce the percentage of state tax shared with counties and
municipalities.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None. BILL: CS/CS/SB 1188 Page 6
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None identified.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The bill may significantly limit a vendor’s liability under a contract with a state agency.
C. Government Sector Impact:
State agencies will have more limited remedies to offset costs associated with a vendor’s
breach of contract, including damages related to data breaches, lost revenues, and
institutional savings.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends sections 287.058, 287.0571, and 1002.84 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS/CS by Fiscal Policy on April 13, 2023:
The committee substitute establishes a limitation on a vendor’s liability for breach of
contract. However, this limitation does not impact any other contractual provisions
relating to indemnification for any contractual services or insurance coverage for
professional service contracts.
CS by Governmental Oversight and Accountability on March 22, 2023:
The committee substitute requires all contracts for services in excess of $35,000 to
include a provision limiting vendor liability for direct damages to the greater of BILL: CS/CS/SB 1188 Page 7
$100,000, the dollar amount of the contract or purchase order, or two times the charges
rendered by the contractor under the purchase order.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.