STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DOUGLAS PRINTING COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 83-1984BID

) DEPARTMENT OF AGRICULTURE AND ) CONSUMER SERVICES, DIVISION OF ) FORESTRY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Arnold H. Pollock, Hearing Officer with the Division of Administrative Hearings, in Tallahassee, Florida, on August 19, 1983. The issue for consideration was whether Respondent could legally reject Petitioner's bid on a contract for printing and rebid the contract.

APPEARANCES

For Petitioner: James R. McCachren, Jr., Esquire

Post Office Drawer 1170 Tallahassee, Florida 32302

For Respondent: Robert A. Chastain, Esquire

General Counsel Department of Agriculture

and Consumer Services Mayo Building

Tallahassee, Florida 32301 BACKGROUND INFORMATION

On June 7, 1983, Petitioner, Douglas Printing Company, Inc. (Douglas), by letter, notified the Department of Agriculture and Consumer Services, Division of Forestry (Respondent), of its intention to protest the rebid of a proposed contract for the printing of two of Respondent's publications on which it felt it was low responsive bidder. Therefore, on June 8, 1983, the Director of the Division of Forestry (Director) notified Douglas it had put the rebid on hold for 10 days to permit Douglas to file a formal petition of protest. That formal petition, which included a request for formal hearing, was received by Respondent on June 17, 1983.

At the hearing, Petitioner called Grace Harrison, Larry Amison, Charles Smith, Bernard Gandy and Anthony Minichiello, and introduced Petitioner's Composite Exhibit 1. Respondent presented the testimony of John M. Bethea.

FINDINGS OF FACT

1. On May 19, 1983, Respondent mailed official Invitations to Bid (IFB) forms to 18 different firms, including Petitioner, soliciting bids for Class VI printing in accordance with the specifications and conditions attached to the letter, signed by R. E. Read, Jr. This letter contained the comment, "As the best interests of the State may require, the right is reserved to reject any and all bids and to waive any irregularities in bids received." This letter also advised prospective bidders who had questions regarding the IFB to call Larry Amison, the individual who had drafted the accompanying specifications. The notice of IFB, published in the Tallahassee Democrat on Thursday, May 19, 1983, also contained a notice of reservation of the right to reject all bids.

   
   

2. Only five IFB forms were returned. Three of the five were returned without bids for various reasons, such as "Not Competitive," "Unable to meet specified delivery date" and "Cannot schedule job of this proportion at this time." This type of explanation, in government procurement circles, need not be taken at face value, but is often used to signal the recipient's thanks for the invitation to bid and a desire to be invited to bid again at some time in the future. The other two forms received were bids: one from Zenith Communications Group, and one from Petitioner.

   
   

3. This procurement was somewhat unusual in that the IFB stipulated the amount of money the agency had to spend and requested a hid as to the most product it could get for that money. There were two publications involved: "A" and "B." An alternative was given on delivery date options: one within 30 working days of receipt of approved proofs, and one within 45. Zenith offered to provide 7,180 copies of Book "A" and 7,155 copies of Book "B" (14,335 total books) for a total price of $53,400 1/ within 30 working days. Petitioner offered to provide 9,473 copies of Book "A" and 4,950 copies of Book "B" (15,423 total books) for a total price of $53,344.64 within 45 days.

   
   

4. The bids were opened on June 1, 1983, and published from June 1 through June 10, 1983. They were brought to the Director for consideration upon opening. It is his responsibility to evaluate the bids and make a recommendation to the Commissioner of Agriculture on the successful low bidder. Since there was only one bid on each delivery date, the Director felt there were not two comparative bids. As a result, he forwarded the bid package to Ms. Grace Harrison, a purchasing agent with the Department of Agriculture and Consumer Services and an individual very familiar with the procurement of printing services. After a review of the entire bid package, Ms. Harrison's studied opinion was that there were two valid bids and Douglas was the low bidder, and it is so found. Ms. Harrison also felt it was unusual not to receive any more responses than were received on a procurement of this magnitude. This same opinion is held by Mr. Amison, who drafted the specifications. Others have differing opinions, however. Whether it was unusual or not, however, is immaterial. There were two valid bids, and only two are required for an award. However, even in the case of two bids, the agency reserved the right to reject any and all bids.

   
   

5. As a result, on or about June 6, 1983, the Director decided, based on his understanding of state policy on the matter and in light of the size of the procurement, to seek more bids through rebidding. In this case, the Director felt more bids were available because of the responses of the nonbidders which referred to the response times being so short. Therefore, he directed a rebid, and this information was communicated to all bidders, including Petitioner. On June 7, 1983, Petitioner wrote to the Director, disagreeing with his decision

   and notifying him of its protest. On the following day, the Director notified Petitioner the rebidding was being delayed, giving Petitioner 10 days to file a formal notice of protest. This was done in a timely manner.

   
   

6. The phrase regarding the agency's right to reject bids is contained in every State IFB. Its purpose is to permit state agencies to reject bids where it becomes apparent there is a valid and legitimate benefit to be gained by the agency in doing so. One such situation is when, in the bona fide opinion of the agency, there are insufficient bids. While there is a difference of opinion as to whether only two bids are unusual in a procurement of this nature, there is no dispute that it would have been beneficial to the agency to have received more than two, since more bids would increase competition.

   
   

7. To rebid the contract at this juncture would undoubtedly increase competition to the potential benefit of the Respondent. However, Petitioner claims it would also work to its detriment because other potential bidders would have access to the details of the two present bids and would thereby gain an advantage. This may be the result of rebidding.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings. Rule 13A-1.06(3), Florida Administrative Code; and Section 120.57(1), Florida Statutes (1981).

   
   

9. All purchases of printing for which the total contract value exceeds

   $1,000 shall be made on a competitive bid basis [Rule 13A-1.13(4), Florida Administrative Code]. Class S printing contracts, such as this, must be let to the lowest responsible bidder [Rule 13A-1.13(3), Florida Administrative Code]. However, the agency must reserve the right to reject any or all bids [Rule 13A- 1.03(10), Florida Administrative Code].

   
   

10. Substantial discretion is left with an agency head to control the award of contracts within its procurement activity to ensure that the State gets the best possible return for its money, that a contract is not let for a sum greater than the available funds, and that there is an actual competitive area of bidding on a particular proposal. However, this discretion is not without limits. As Petitioner aptly points out, the exercise of discretion by the agency must not be arbitrary, unreasonable, or capricious. Wood-Hopkins Contracting Company v. Roger J. Au & Son, Inc., 354 So.2d 446, 450 (1 DCA Fla. 1978).

    
    

11. Where, as here, there are no rules which stipulate the circumstances wherein the agency may reject all bids, to justify doing so, the decision must be made rationally, within the bounds of agency discretion, and not arbitrarily. Couch Construction Co., Inc. v. Department of Transportation, 361 So.2d 172 (1 DCA Fla. 1978). Further, the decision must not be tainted by personal considerations. Solar Energy Control, Inc. v. State of Florida Department of Health and Rehabilitative Services, 377 So.2d 746 (1 DCA Fla. 1979).

    
    

12. Nowhere in the rules of this agency are there listed any acceptable reasons for rejecting all bids. The general rule is that this may he done when to do so is in the best interests of the agency. In the instant case, there was no showing of any reason for rejection of all bids other than that the Director felt an inadequate number of bids had been received. The specifications were not ambiguous, and the bids were responsive. The Director, within five days after bid opening, chose to reject all bids on the honest and worthy basis that

    he felt more bids would be forthcoming that might well result in a better price for the agency. This is neither arbitrary nor capricious, nor is there any showing of personal consideration by the Director.

    
    

13. Had the rejection of all bids been made on the basis of the small number of bids received without opening them, there would be little doubt that the rejection could be sustained. However, once the agency opened the bids and published the bid analysis, identifying the apparent low bidder and the pertinent details of its bid, the possibility of unfair advantage converts to a probability of unfair advantage which necessitates an award to the lowest qualified bidder.

    
    

14. The Petitioner has submitted a proposed recommended order which includes proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law above. They have been otherwise rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues, or legally erroneous.

RECOMMENDATION

In light of the foregoing, it is RECOMMENDED:

That Petitioner, Douglas Printing Company, Inc., be awarded Contract DOF- ADM-79.

RECOMMENDED this 8th day of September, 1983, in Tallahassee, Florida.

ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 8th day of September, 1983.

ENDNOTE

1/ Zenith's computation of total price is in error, since their two subtotals added together come to $53,350, not $53,400, as the form states.

COPIES FURNISHED:

James R. McCachren, Jr., Esquire Ervin, Varn, Jacobs, Odom

& Kitchen

Post Office Box 1170 Tallahassee, Florida 32302

Robert A. Chastain, Esquire General Counsel

Department of Agriculture and Consumer Services

Mayo Building

Tallahassee, Florida 32301

The Honorable Doyle Conner Commissioner of Agriculture The Capitol

Tallahassee, Florida 32301

Docket for Case No: 83-001984

Orders for Case No: 83-001984