vs. ) CASE NO. 86-4460B1D
Respondent. )
Pursuant to notice, a formal hearing was conducted in this case on March 16, 1987, at Tallahassee, Florida, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing by the following counsel:
MacFarlane, Ferguson, Allison & Kelly 804 First Florida Bank Building Tallahassee, Florida 32301
For Respondent: Robert L. Powell, Assistant General Counsel Department of Health and
This is a bid protest case in which the Petitioner, Burroughs Corporation, timely filed a formal written protest of proposed action by the Department of Health and Rehabilitative Services. DHRS proposes to recommend that the subject contract be awarded to Datamaxx USA Corporation. Burroughs contends that the Datamaxx bid is nonresponsive and that the contract should be awarded to Burroughs. Datamaxx was advised of the pendency of this proceeding and of its right to seek intervention, but Datamaxx did not participate in the case.
Prior to the hearing the parties entered into a prehearing stipulation which contained a number of admitted facts. At the hearing both Burroughs and DHRS presented the testimony of the following witnesses: Charles Patrick Ray, Perry Charles Smith, Jr., and James Ronald Hall, all DHRS employees who served on the bid drafting and bid evaluation committees. Petitioner's exhibits one through eight were received in evidence at the hearing.
On April 15, 1987, a transcript of the hearing was filed with the Hearing Officer and by agreement of the parties the deadline for proposed recommended orders was established as being 30 days thereafter. Both parties filed proposed recommended orders containing proposed findings of fact and conclusions of law. Specific rulings on all proposed findings of fact are contained in the Appendix which is attached to and incorporated into this recommended order.
Based on the admissions of the parties, on the testimony of the witnesses at the hearing, and on the exhibits received in evidence, I make the following findings of fact:
For at least the past 10 years, the DHRS Data Communications Network has been maintained by Burroughs on a sole source basis. At the end of the previous Burroughs Terminal Maintenance contract with Burroughs, the Department of General Services (DOS) asked DHRS to bid the contract in lieu of sole source procurement, it being the belief of DOS that there was competition in this area.
On or about September 19, 1986, DHRS published an Invitation to Bid which advised prospective bidders that sealed bids would be opened on October 20, 1986, for a contract, known as "Burroughs Terminal Maintenance" [Bid No. 86 ATM] regarding maintenance of the terminals of the DHRS Data Communications Network.
The Special Conditions of the Invitation to Bid contained, among others, the following provisions:
The State has established certain require- ments with respect to bids to be submitted by bidders. The use of "shall," "must" or "will" (except to indicate simple futurity) in this Invitation to Bid indicates a requirement or condition from which a material deviation may not be waived by the State. A deviation is material if, in the State's sole discretion, the deficient response is not in substantial
accord with this Invitation to Bid requirements, provides an advantage to one bidder over other bidders, has a potentially significant effect
on the quantity or quality of items bid, or on the cost to the State. Material deviations cannot be waived. (at p. 1)
No negotiations, decision, or actions shall be initiated or executed by the bidder as a result of any discussions with any State employee. Only those communications which are in writing from the Department's Purchasing office may be considered as a duly authorized expression on behalf of the State. Also, only communications from bidders which are signed
and in writing will be recognized by the State as duly authorized expressions on behalf of the bidder. (at p. 2)
All personnel performing maintenance must be trained to service the equipment covered by this contract. Training shall be completed before the individual is assigned to service the equipment covered by this contract. Training shall be provided to whatever level is necessary to ensure the individual has the required qualifications to perform satisfactory maintenance service on Burroughs equipment
listed in Attachment A of this Invitation to Bid. Bidder shall submit with their bid a summary of their Burroughs training program and resumes of personnel who will be performing this training and the resumes of personnel who will be per- forming the maintenance. (at p. 8)
Bidder shall certify to the State, at the time the bid is submitted, that bidder has existing established service centers staffed with personnel trained to service the equipment covered by this contract . . .
In lieu of this requirement, if bidder does not have existing established service centers, liaison office, and trained personnel, and bidder submits a plan for compliance, the required certification must be given the State no later than two (2) weeks prior to the anticipated starting date of the contract as indicated in the paragraph of this document entitled Calendar of Events.
Failure to comply with this requirement shall result in rejection of the bid and award of the bid to the next lowest responsive bidder.
The Invitation to Bid was drafted by the Department of Health and Rehabilitative Services.
The only bidders on the contract (other than no- bids) were Burroughs and Datamaxx.
DHRS found Burroughs and Datamaxx both to be responsive bidders and posted their bids making them public in the recognized manner of publicizing the
bidder to be awarded a bid. Both bids were found to be responsive by DHRS at the time they were made public. The Datamaxx bid was the lowest bid and the Burroughs bid was the next to lowest bid. DHRS staff recommended the contract be awarded to Datamaxx. The Datamaxx bid was approximately $784,000 less than the Burroughs bid.
In its bid Datamaxx indicated that it understood and agreed to all provisions of the Invitation to Bid, specifically including those dealing with Mandatory Requirements, Verbal Instruction Procedure, Rejection of Bids, Bid Evaluation, Performance Mandatories, and Certification.
Datamaxx submitted the Certification required under the terms of the Invitation to Bid and did not submit a plan for compliance with its bid.
Datamaxx never requested in writing that the requirement for resumes be waived, and DHRS never advised Datamaxx in writing that it did not have to submit the resumes.
Datamaxx did not submit with its bid the resumes of training and maintenance personnel required under Performance Mandatory 10 of the Invitation to Bid.
Performance Mandatory No. 10 required the submission of resumes with the bid, and did not concern an event that would take place after the bid had been let.
DHRS considered the requirement for resumes to be a mandatory requirement.
The qualifications of the persons who would be performing the maintenance under the contract would have a potentially significant effect on the quality of the maintenance provided.
Nothing could be more material to the contract than the ability of the personnel to perform that contract.
The difference in the dollar amount of the bids of Burroughs and Datamaxx influenced the decision of DHRS in finding Datamaxx to be a responsive bidder. This was a major reason Datamaxx was found to be a responsive bidder.
In evaluating the Datamaxx bid, DHRS went outside the material provided in the Datamaxx bid.
Subsequent to the posting of bids, DHRS met with Datamaxx and advised Datamaxx that its initial submission was deficient for not including resumes with the bid, that DHRS had waived the resumes, but that in order for DHRS to continue its recommendation that the bid be awarded to Datamaxx, DHRS had to have the resumes prior to the awarding of the bid. DHRS considered it an error and a deficiency in the bid that the resumes were not furnished.
Datamaxx, on November 6, 1986, advised DHRS in a letter to Charles Ray that it would submit a plan which would address, among other things, service personnel resumes by November 17, 1986.
DHRS could not have considered Datamaxx's letter of November 6, 1986, in evaluating whether Datamaxx was a responsive bidder, because that letter was
not received until after DHRS had already found Datamaxx to be a responsive bidder and recommended that the contract be awarded to Datamaxx.
Had Datamaxx not submitted the resumes prior to November 17, 1986, DHRS staff would have recommended that the award of the contract be withdrawn.
The performance the State would receive under the contract would directly depend on the qualifications of the persons performing the service and the maintenance, and the resumes would be the only source of information regarding the qualifications of the personnel.
CONCLUSIONS OF LAW
Based on the foregoing findings of fact and on the applicable legal principles, I make the following conclusions of law.
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this case. Sections 120.53(5) and 120.57(1), Fla. Stat.
The first issue to be resolved is whether the failure of Datamaxx to submit resumes of training and maintenance personnel as required by Performance Mandatory No. 10 of the Invitation to Bid is a material deviation from the Invitation to Bid such as to render Datamaxx a nonresponsive bidder.
The parties have stipulated that Performance Mandatory No. 10 required the submission of resumes of training and maintenance personnel with the bid and that Datamaxx did not submit such resumes with its bid. Burroughs contends that the failure to submit the resumes constituted a material deviation from the Invitation to Bid, and that, consequently, Datamaxx was a nonresponsive bidder; DHRS contends that failure to submit the resumes was not a material deviation and that, therefore, Datamaxx was a responsive bidder.
Section 287.042, Florida Statutes, gives the Division of Purchasing of the Department of General Services authority to make all rules and definitions regarding purchasing, including bidding, and provides that its rules are to be followed by all agencies. The Division of Purchasing has promulgated those rules in Chapter 13A-I, Florida Administrative Code.
Rule 13A-1.002(10) provides as follows regarding minor irregularities:
The agency shall reserve the right to waive any minor irregularities in an otherwise valid bid/proposal. A minor irregularity is a variation from the invitation to bid/request for proposal terms and conditions which does not affect the price of the bid/proposal, or give the bidder or offeror an advantage or benefit not enjoyed by other bidders or offerers, or does not adversely impact the interest of the agency. Variations which are not minor cannot be waived.
Permitting Datamaxx to submit its bid without the resumes as required by the Invitation to Bid gave Datamaxx an unfair advantage not enjoyed by the other bidders. Its position is somewhat similar to that of Gulf Contracting Company in the case of Harry Pepper & Associates, Inc., et al. vs. City of Cape
Coral, 352 So.2d 1190 (Fla. 2d DCA 1978). In Pepper the bidders bid on a water plant, a major component of which was a particular type pump, and the Invitation to Bid required each bidder to specify the manufacturer of the pump he proposed to use. Gulf was the low bidder and Pepper the next lowest bidder, but the pump Gulf proposed to use was nonconforming. The City contacted Gulf and asked it to amend its bid to meet specifications, which it did. The City then awarded the contract to Gulf. The Pepper court cited the case of Webster v. Belute, 138 So. 721 (Fla. 1931), as establishing the following purposes for having a bidding process:
[T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism band fraud in its various forms; to secure the best values for the county at the lowest possible expense; and to afford an equal advantage to all desiring to do business with the county, by affording an opportunity for an exact comparison of bids. (at p. 1194)
The Pepper court went on to note that in order to insure this competitiveness, ". . . a bidder cannot be permitted to change his bid after the bids have been opened, except to cure minor irregularities." (at p. 1192) In determining whether a deviation is material, the court then looked to see whether the variation gave the bidder an unfair advantage, and found that the inclusion in Gulf's bid of a nonconforming pump was an advantage not enjoyed by other bidders. The court described Gulf's advantage as follows:
Therefore, Gulf had everything to gain and nothing to lose. After everyone else's bids were opened, Gulf was in a position to decide whether it wanted the job bad enough to incur the additional expense of supplying conforming pumps. (at p. 1193)
Datamaxx is in a similar situation in this case. It did not submit resumes of training and maintenance personnel as was required of other bidders who certified their bids as did Datamaxx. It was told after the bids had been opened that in order for DHRS to continue to recommend that it be awarded the bid, it would have to submit the required resumes. It was then in the same position as Gulf. If it wanted the job bad enough to incur the expense of training personnel to perform the contract, it could get the bid; if it did not wish to in our that expense, it would not be the recommended bidder.
In the case of City of Opa-Locka v. Trustees of the Plumbing Industry Promotion Fund, et al., 193 So.2d 29 (Fla. 3rd DCA 1966), the lower bidder failed to prequalify by obtaining a certificate of competency. After the bid was submitted, the bidder then obtained the certificate and its bid was accepted. The court ruled that the City could not waive the necessity of a bidder having the certificate, finding that such a procedure would give such a bidder an unfair advantage over those who had to prequalify. In addition, the court observed that
If the City may in its discretion waive this
section it would be conducive to favoritism by allowing some bidders to qualify after their bids are accepted while refusing to consider bids of others on the grounds that they did not prequalify. (at p. 32)
Under Rule 13A-1.002(10), Florida Administrative Code, a deviation is also material if it adversely impacts the interests of the agency. The question then, is whether the lack of resumes adversely impacts the interest of DHRS.
The interest of DHRS at stake is that of having the terminals in its Data Communications Network maintained.
Relevant to this issue is, first of all, the admission of DHRS personnel that nothing could be more material to the contract than the ability of the personnel to perform the contract and that the performance the State would receive under the contract would directly depend on the qualifications of the persons performing the service and the maintenance, and that the resumes would be the only source of information regarding the qualification of the personnel. It is difficult to see how anything required under the Invitation to Bid could more adversely impact the interests of the agency than the failure to submit the resumes; they were at the heart of any evaluation of the ability of the bidder to perform the contract.
This crucial importance of the resumes is further established by the testimony that DHRS considered it an error and a deficiency in the Datamaxx bid that the resumes were not included; that consequently, in order for DHRS to continue in its recommendation that Datamaxx be awarded the bid, the resumes must be submitted; and that if the resumes were not submitted prior to November 17, 1986, DHRS would withdraw its recommendation that Datamaxx be awarded the contract. Clearly, if the failure to submit resumes was only a minor irregularity, DHRS would not change its recommendation because such deficiency was not cured.
Furthermore, Rule 13A-1.001(13)(a), Florida Administrative Code, defines a responsive bidder as one whose bid "conforms in all material respects to the invitation to bid and Rule 13A-1.001(13)(b) states that a responsive or qualified bidder/offeror
means a person or firm with the capability in all respects to perform fully the contract requirements and the integrity and reliability to assure good faith performance. Failure to provide information to determine responsibility in response to a condition of a bid/proposal requiring information will be cause for such bid/proposal to be rejected.
Rule 13A-1.001(13) also provides that ". . . The responsiveness of the bid or proposal and the qualifications or responsibility of the offeror will be determined as of the time the bids/proposals are made public."
In this case the evidence established that the resumes required by Performance Mandatory No. 10 of the Invitation to Bid constituted information required by the bid to determine the responsibility (capability in all respects to perform fully the contract requirements) of the bidder.
Since Rule 13A-1.001(13) provides that the responsiveness of the bid and the qualifications of the bidder must be determined at the time the bids are made public, DHRS could not base its evaluation of Datamaxx on information to be received after the bids were posted, especially since Datamaxx certified its training personnel in its bid and did not submit a plan for compliance as provided as an alternative in the Invitation to Bid. Consequently, the failure to submit resumes is a ground for rejection of the bid under Rule 13A- 1.001(13)(b).
An examination of the specific terms of the Invitation to Bid itself also leads to the conclusion that the failure of Datamaxx to submit the resumes was a material deviation from the Invitation to Bid and not merely a minor irregularity. First, the Invitation to Bid provides that "shall" indicates a requirement which cannot be waived by the State, and Performance Mandatory No. 10, which deals with the resume requirement, states that "Bidder shall submit with their bid . . . resumes of personnel who will be performing the maintenance." Second, the Invitation to Bid provides that
A deviation is material if, in the State's sole discretion, the deficient response is not in substantial accord with this Invitation to Bid requirements, provides an advantage to one bidder over other bidders, has potentially significant effect on the quantity or quality of items bid, or on the cost to the State. Material deviations cannot be waived. (emphasis supplied)
Although the Invitation to Bid states that a determination of materiality is in the State's sole discretion, all discretionary functions of public entities are subject to the requirement that their exercise not be arbitrary, unreasonable, or capricious; Wood-Hopkins Contracting Company v. Roger J. Au & Son, Inc., et al., 354 So.2d 446 (Fla. 1st DCA 1978). Given the foregoing definitions of a material deviation, it is instructive to note that DHRS admitted that "the qualifications of the persons who would be performing the maintenance under the contract would have a potentially significant effect on the quality of the maintenance provided." (emphasis supplied)
It appears from the testimony that the primary reason DHRS found Datamaxx to be responsive was that its bid was substantially lower than that of Burroughs, and it further appears that DHRS was willing to go outside the information provided in the bids in order to justify its decision. Indeed, DHRS admitted that it waived the resume requirement for Datamaxx, but it did not waive it for any other bidder. Although a desire to save the State money is commendable, it does not justify evaluating bids differently in order to award the contract to one particular bidder. The DHRS should have first made a determination of responsiveness, and then looked at the amount of the bid, and not have found a bid responsive merely because it was the lowest bid.
The foregoing establishes that the failure of Datamaxx to submit the resumes required by Performance Mandatory No. 10 of the Invitation to Bid constituted a failure to provide information to determine responsibility of a bidder under Rule 13.001(13)(b), Florida Administrative Code, and that such failure gave Datamaxx an unfair advantage not enjoyed by other bidders and adversely impacted the interests of DHRS, and was consequently a material deviation from the Invitation to Bid. For these reasons the bid of Datamaxx should be rejected as a nonresponsive bid.
The second issue to be resolved is whether, with Datamaxx being a nonresponsive bidder, the contract should be awarded to Burroughs or sent back to DHRS for rebidding or other action pursuant to Section 13A-1.002(3), Florida Administrative Code.
Since the contract in question deals with both services and commodities, it is deemed a contract for the acquisition of commodities (see Rule 13A-1.001(3), Florida Administrative Code). Regarding bids on commodities, Rule 13A-1.002(3) provides in part as follows:
When no competitive bids/proposals are received for the purchase of a commodity or group of commodities exceeding the threshold amount for category Two in the bid/proposal solicitation, the agency shall review the situation in order to determine the reasons, if any, who no competitive bids/proposals were received before issuing a second invi- tation to bid/request for proposals. . . .
In determining whether the DHRS should proceed under Rule 13A- 1.002(3), the threshold question is: Were "competitive bids" received? Rule 13A-1.001(12) defines "competitive bids" as being "two or more valid responses to an invitation to bid/proposal." Rule 13A-1.001(13) defines a valid bid as "A responsive offer in full compliance with the bid/proposal specifications and conditions by a responsible person or firm." The same rule goes on to state that "The responsiveness of the bid or proposal and the qualifications or responsibility of the offeror will be determined as of the time the bids/proposals are made public." (emphasis supplied)
Burroughs argues that since the evidence established that at the time the bids were made public Datamaxx was determined by DHRS to be a responsive bidder, the Datamaxx bid was a valid bid within the meaning of Rule 13A- 1.001(13), and, therefore, there were competitive bids within the meaning of Rule 13A-1.001(12). Therefore, argues Burroughs, Rule 13A-1.002(3) dealing with rebidding does not come into operation. Burroughs' argument overlooks the fact that the evidence also establishes that the DHRS preliminary determination that Datamaxx was a responsive bidder was an erroneous determination. The Datamaxx bid is not responsive today and it was not responsive "as of the time the bids/proposals [were- made public." Accordingly, there being only one responsive bid, the provisions of Rule 13A-1.002(3), Florida Administrative Code, are applicable. Such being the case, DHRS should either rebid the contract or take other action pursuant to Rule 13A-1.002(3), Florida Administrative Code.
For all of the foregoing reasons, it is recommended that a final order be entered to the following effect:
DONE AND ENTERED this 25th day of June 1987, at Tallahassee, Florida.
MICHAEL M. PARRISH
FILED with the Clerk of the Division of Administrative Hearings this 25th day of June 1987.
APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-4460B1D
The following are my specific rulings on each of the proposed findings of fact submitted by both parties:
Paragraphs 1 through 19 are accepted with a few minor editorial modifications.
The first two lines of paragraph 20 are rejected as redundant. The remainder of paragraph 20 is accepted.
Paragraphs 1 and 2 are accepted in substance.
Paragraph 3 is rejected as constituting unnecessary details. Paragraphs 4 through 7 are accepted.
Paragraphs 8, 9, and 10 are rejected as irrelevant.
Paragraph 11 is rejected in part as irrelevant and in part as contrary to the greater weight of the evidence.
Paragraph 12 is accepted.
Paragraph 13 is rejected as constituting irrelevant and unnecessary details.
Robert L. Powell Assistant General Counsel Department of Health and
Edgar Lee Elzie, Jr., Esquire MacFarlane, Ferguson, Allison & Kelly 804 First Florida Bank Building Tallahassee, Florida 32301
Gregory L. Coler, Secretary Department of Health and
