STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

XEROX CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 83-3360BID

) STATE OF FLORIDA, DEPARTMENT OF ) GENERAL SERVICES, )

)

Respondent, )

and )

) DEPARTMENT OF AGRICULTURE AND ) CONSUMER SERVICES and EASTMAN ) KODAK COMPANY, )

)

Intervenors. )

)

RECOMMENDED ORDER

This case was heard on March 5, 1984, by R. L. Caleen, Jr., a hearing officer with the Division of Administrative Hearings, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Kenneth G. Oertel, Esquire

Oertel and Hoffman, P.A.

Suite 646 Lewis State Bank Building Tallahassee, Florida 32301

and

Charles M. Bredehoft, Esquire Counsel, Mid-Atlantic Region Office of General Counsel Xerox Corporation

1616 North Fort Myers Drive Arlington, Virginia 22209

For Respondent: William P. Beck, Esquire

Assistant General Counsel Department of General Services

452 Larson Building Tallahassee, Florida 32301

For Intervenor, Robert A. Chastain, Esquire Department of General Counsel

Agriculture and Department of Agriculture and Consumer Consumer Services

Services: 513 Mayo Building Tallahassee, Florida 32301

For Intervenor, Martha Harroll Hall, Esquire Eastman Kodak Carlton, Fields, Ward, Emmanuel, Company: Smith & Cutler, P.A.

410 Lewis Skate Bank Building Tallahassee, Florida 32301

ISSUE

Whether the Department of General Services ("DGS") should grant the Department of Agriculture and Consumer Services' ("Agriculture") request to acquire a duplicating machine from Eastman Kodak Company ("Kodak") as a single source exception to competitive bidding requirements.

Background

On September 16, 1983, Agriculture certified to DGS the need to purchase a Kodak 250 AF duplicator as a single source commodity, without soliciting competitive bids. On September 26, 1983, DGS approved the request. The Kodak duplicator was subsequently acquired and has been used by Agriculture since October, 1983.

By petition dated October 10, 1983, Xerox Corporation (Xerox) challenged the approval of the single source purchase by DGS and requested a Section 120.57(1), Florida Statutes, proceeding. On October 26, 1983, DGS forwarded this case to the Division of Administrative Hearings for assignment of a hearing officer. Both Agriculture and Kodak intervened as parties. Hearing was set for February 27, 1984, but on motion by Xerox, was reset for March 5, 1984.

At hearing, Xerox called as its witnesses: Salvatore Cavallaro, John Shipp, Pamela Shields, Kator Merritt, Dermot Nee and Gregory Williams. Xerox' Exhibit Nos. 1 through 6, 7-A, 7-H, 7-C, 8, 9, and 11 through 16 were received in evidence.

DGS and Kodak presented no testimony, but DGS' Exhibit Nos. 1 and 2, and Kodak Exhibit Nos. 1 and 2 were received in evidence. Agriculture called no witnesses and offered no exhibits.

By agreement, the depositions of Steve Wharton, David Jackson, Charles Stryker III, J. Malcolm Haney, and David Grant were received in evidence, in lieu of live testimony.

The transcript of hearing was filed on March 28, 1984. The parties filed proposed findings of fact and conclusions of law by April 11, 1984. Those proposed findings incorporated in this Recommended Order are adopted; otherwise, they are specifically rejected as unsupported by the evidence or as irrelevant or unnecessary to resolution of the issue presented.

Based on the evidence presented, the following facts are determined: FINDINGS OF FACT

I.

Agriculture's Request

1. On September 16, 1983, Agriculture requested the approval of DGS to purchase an Eastman Kodak 250 AF Duplicator as a single source commodity. This

   request was made in writing pursuant to Rule 13A-1.10, Florida Administrative Code, and contained several reasons for the purchase.

   
   

2. Prior to making its request to purchase a Kodak 250 AF, Agriculture had considered other duplicating machines, including the Xerox model 9500. At the time it considered these other machines, Agriculture's print shop manager believed that the Kodak 250 AF was not available on the local market.

   
   

3. In an effort to learn more about available products and materials, Kator Merritt, Agriculture's print shop manager, had telephoned DGS employee Darby Nee. During that telephone conversation, Mr. Merritt told Mr. Nee that the print shop was experiencing a backlog of work waiting to be stapled. Mr. Nee suggested that Agriculture take a look at the Kodak 250 AF, which contains on-line stapling capability. Mr. Merritt responded that he did not know it was locally available.

   
   

   II.

   
   

   DGS' Response

   
   

4. In his telephone conversation with Mr. Merritt, DGS' Darby Nee did not deny or approve any request for a duplicating machine. Be viewed Mr. Merritt's call as a request for information. Mr. Merritt did not feel pressured by DGS to purchase the Kodak 250 AF nor discouraged from purchasing the Xerox 9500, which was also discussed.

   
   

5. DGS responded to Agriculture's request by letter dated September 26, 1983, approving the purchase of a Kodak 250 AF. It is this approval which is at issue here.

   
   

6. Prior to DGS' approval of Agriculture's request, DGS employee Darby Nee conducted an on-site survey which verified Agriculture's need for the Kodak 250 AF. During this survey Mr. Nee made a visual inspection of Agriculture's print shop operation, reviewed production records and talked to print shop employees. He concluded that on-line finishing (stapling) was necessary to eliminate the bottleneck in the print shop operations, and that the Kodak 250 AF was the only duplicator available which could provide on-line finishing and meet Agriculture's volume demands of 400-500,000 copies per month. Based on an examination of Agriculture's job tickets for the period of April 1, 1983 through September 30, 1983, Mr. Nee also determined that 59.7 percent of all duplicating work collated and stapled off-line by the (existing) Xerox 920 could have been finished totally on-line with the Kodak 250 AF.

   
   

   III.

   
   

   Agriculture's Needs

   
   

7. Agriculture's needs, insofar as they relate to the duplicating aspect of its print shop operation, are to get the work out on time and avoid labor intensive operations.

   
   

8. Agriculture's need to be efficient in its print shop operations is part of a larger strategy to lessen manpower needs. Agriculture's print shop is part of the Bureau of General Services, which has a critical personnel shortage. In each of the last several years, Agriculture has experienced a decrease in the number of positions authorized by the Legislature. At the direction of its agency head, Agriculture has tried to implement a policy of increased

   productivity by automating, whenever possible, and reducing hands-on labor requirements.

   
   

9. Agriculture's response to decreasing manpower affects the print shop operation. Because the print shop has experienced cutbacks and does not expect the addition of any more positions, it has sought more automated equipment. And because other parts of the agency have also experienced a manpower shortage, print shop personnel must perform tasks unrelated to the print shop.

   
   

10. The operator of the duplicator, as well as other print shop personnel, must be as free as possible from having to perform finishing tasks, such as stapling, which would prevent them from performing work outside the print shop.

    
    

    IV.

    
    

    Xerox Model 9200

    
    

11. The Xerox model 9200 duplicator, replaced by the Kodak 250 AF, failed to satisfy Agriculture's needs. Work was not done on time because bottlenecks developed. These bottlenecks were primarily caused by having to staple copies off-line with the Xerox 920 jogger-stitcher and lack of duplexing capabilities. Of the two shortcomings, the lack of on-line stapling was the most serious. Because of the manpower shortages, once jobs were printed they were stacked on counters until stapled. This led to delays in getting jobs out.

    
    

    V.

    
    

    Xerox Model 1075

    
    

12. Xerox contends that the Xerox 1075, which has on-line stapling and duplexing capability, can satisfy Agriculture's needs. But the Xerox 1075 would not satisfy Agriculture's needs. Different printing jobs at Agriculture require copies to be stapled in different positions. Some jobs are stapled in the top left-hand corner, some are stapled two to the side (book style), some are stapled at both top corners of the, page and some require stapling at other positions. The Kodak 250 AF can staple in six different positions but the 1075 can staple in only one position.

    
    

13. The Xerox 1075 would also not meet Agriculture's volume requirements, which average 425,000 copies a month. Xerox, itself, recommends a maximum monthly volume for the 1075 which falls far short of Agriculture's needs. Initially, Xerox did not recommend the 1075 as a replacement for the 9200; neither does it recommend it now.

    
    

    VI.

    
    

    The Kodak 250 AF and Xerox Model 9500

    
    

14. Since October, 1983, the Kodak 250 AF has satisfied Agriculture's needs by performing duplicating jobs on time and by freeing-up the operator and other print shop employees from labor intensive operations. The operator does other things while the 250 is running. The job is a stapled, finished product when it comes out of the machine. Agriculture's duplicating needs could not now be satisfied by the Xerox model 9500, or any other duplicator except the Kodak

    250 AF, because only the Kodak 250 AF performs on-line stapling, produces a finished product, and meets the agency's high volume requirements.

15. Without operator intervention, the Kodak 250 AF is able to produce a stapled, finished product because of its on-line finishing capability. This feature is important because the majority of duplicating jobs at Agriculture require stapling. The Xerox 9500 does not, however, have on-line finishing capability. The stapling is performed off-line by hand; this is labor intensive work even when the Xerox 920 jogger-stitcher is used. The jogger-stitcher can jog and stitch only one set (copy) at a time. The Kodak 250 AF also has a high monthly volume capacity which enables it to satisfy Agriculture's volume requirements.

    
    

16. The Xerox model 9500 cannot satisfy Agriculture's need to avoid labor intensive operations and free-up print shop personnel for other tasks because it cannot do on-line finishing and produce a finished product. Unlike the Kodak

    250 AF, which stacks, in offset fashion, stapled copies, the Xerox 9500 places unstapled copies into separate sorting bins. The 9500 can be equipped with only

    50 bins, which must be unloaded by hand. If the bins are filled, the Xerox 9500 will stop and will not restart until 25 bins have been unloaded. Consequently, unlike the Kodak 250 AF, the Xerox 9500 requires constant operator attendance.

    
    

17. In comparing the productivity of the Xerox 9500 and Kodak 250 AF, Xerox and Kodak concluded that their particular machines could perform Agriculture's work load in less time than the other's. Both seemingly agree, however, that the Xerox 9500 would take about 76 hours to complete a month's work at Agriculture. If the Xerox 9500 operator was unable to overlap copying jobs and allowed the machine to stop between jobs, an additional 7.5 hours must be added. If the operator was unable to attend the machine at all times, thus allowing the machine to stop in the midst of a job, an unknown amount of additional time must be added.

    
    

18. The evidence is conflicting on the amount of time required for the Kodak 250 AF to complete a like amount of work. Xerox estimates that it would take the 250 AF 88.36 hours to complete the month's job assignments, while Kodak estimates 66.28. The difference results from each party using different time factors or productivity standards. These are standards which are derived by precisely measuring the time required for the machine and its operator to complete specified tasks. The conflicting estimates are resolved in favor of Kodak, which used productivity standards derived from timing and re-timing machine and operator in a con- trolled setting. In contrast, the Xerox productivity standards for the Kodak 250 AF were, in large part, derived from a single timing session taken a week before hearing on a visit to a Kodak 250 AF in use at a federal building in Washington, D.C. The Kodak 250 AF was in a walk-up convenience printing center, not a print shop setting where an operator is trained for and operates the machine. Productivity standards derived from a walk-up convenience center are not valid for a print shop setting.

    
    

19. Because of manpower shortages at Agriculture, the time required for an operator (as opposed to a duplicating machine) to complete the month's work is pertinent. The Kodak 250 AF would require less than three hours while the Xerox 9500 would require 13.57 hours.

    
    

20. "Absolute operator time" is the minimal time an operator must be in attendance at the machine. Assuming Agriculture's monthly work load, the Kodak

    250 AF would require less than three hours of "absolute operator time." The Xerox 9500 would require 21.76 hours. During these hours, the operator would be unable to perform off-line functions, such as cutting or folding.

21. The Kodak 250 AF, in use at Agriculture since October, 1983, has proven itself in actual service. It has enabled Agriculture to increase productivity, eliminate bottlenecks, and decrease manpower needs in its print shop.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this proceeding. s. 120.57(1), Fla. Stat. (1983).

    
    

23. Section 287.062(1)(c), Florida Statutes (1983), empowers DGS to authorize single source exceptions from competitive bid requirements:

    
    

    (c) Commodities available only from a single source may be excepted from the bid requirements upon the filing by the head of an agency of a certification of conditions and circumstances with the division [of purchasing] if, subsequent thereto, the division authorizes the exception in writing.

    
    

24. DGS Rules 13A-1.01(14) and 13A-1.10 further define single source purchases:

    
    

    13A-1.01 Definitions.

    (14) Single Source Purchases.--A single source purchase is the purchase of a commodity or contractual service that is available from only one source.

    * * *

    13A-1.10 Single Source Purchases.

    (1) Authorization of Single Source Purchases.--Purchases of commodities from a single source may be excepted from bid requirements by the Division of Purchasing, in writing, upon the filing of a certification by the head of an agency stating the conditions and circumstances requiring the purchase meeting the provisions as defined in Rules 13A-1.01(14),

    13A-1.02(3), 13A-1.02(4). This certification shall set forth the purpose and need and why the commodity is the only one that will produce the desired results. The Division shall, within 10 working days upon receipt of a single source request, request additional information or approve or deny the request stating the reasons there for.

    
    

25. The statute excepts from competitive bidding "commodities available from only a single source." s. 287.062 (1)(c), Fla. Stat. (1983). "Commodity" is defined as "any of the various supplies, materials, goods, merchandise, class B printing, equipment, and other personal property purchased, leased, or otherwise contracted for by the state and its agencies." s. 287.012(3). The Kodak 250 AF is one of the various duplicators available for state purchase and is a distinct commodity. It is distinguished from other duplicators by its

    mechanical features, which if necessary and if available from only one source, may qualify it for an exception to bidding requirements.

    
    

26. Agriculture needs a duplicator with mechanical features which only the Kodak 250 AF has. This is the only available duplicator which delivers a stapled, finished job within the volume range and stapling requirements of Agriculture. This unique capability enables it to satisfy Agriculture's need to automate finishing tasks that were previously done by hand. Productivity can be increased while manpower needs are decreased. Its acquisition by Agriculture as a single source purchase, therefore, is excepted from the competitive bid requirements of Section 287.062, Florida Statutes.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That DGS authorize Agriculture to purchase the Kodak 250 AF duplicator as a single source commodity.

DONE and ENTERED this 17th day of July, 1984, in Tallahassee, Florida.

R. L. CALEEN JR. 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 17th day of July, 1984.

COPIES FURNISHED:

Kenneth G. Oertel, Esquire Oertel and Hoffman, P.A.

Suite 646 Lewis State Bank Building Tallahassee, Florida 32301

Charles M. Bredehoft, Esquire Counsel, Mid-Atlantic Region Office of General Counsel Xerox Corporation

1616 North Fort Myers Drive Arlington, Virginia 22209

William P. Beck, Esquire Assistant General Counsel Department of General Services

452 Larson Building Tallahassee, Florida 32301

Robert A. Chastain, Esquire General Counsel

Department of Agriculture, and Consumer Services

513 Mayo Building Tallahassee, Florida 32301

Martha Harrell Hall, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A.

410 Lewis State Bank Building Tallahassee, Florida 32301

Ronald W. Thomas, Executive Director

Department of General Services Room 115 Larson Building Tallahassee, Florida 32301

Docket for Case No: 83-003360

Orders for Case No: 83-003360