STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
RECOGNITION EQUIPMENT, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 86-4570BID
) DEPARTMENT OF LABOR AND EMPLOYMENT ) SECURITY and SCAN OPTICS, INC., )
)
Respondents, )
and )
)
SCAN OPTICS, INC., )
)
Intervenor. )
)
RECOMMENDED ORDER
Pursuant to written notice a formal hearing was held in this case before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on December 8-10, 1986, in Tallahassee, Florida.
APPEARANCES
For Petitioner: Edwin F. Blanton, Esquire
Post Office Box 12808 Tallahassee, Florida 32317
For Respondents: Kenneth H. Hart, Jr., Esquire Department of General Counsel
Labor and Department of Labor and Employment Employment Security
Security Suite 131, Montgomery Building 2562 Executive Center Circle, E. Tallahassee, Florida 32399-0657
Scan Optics, Inc. Leonard A. Carson, Esquire
John D.C. Newton, II, Esquire CARSON & LINN, P.A.
Mahan Station 1711-D Mahan Drive
Tallahassee, Florida 32301
and
Thomas J. McHale, Esquire Gager, Henry & Narkis
One Exchange Place Post Office Box 2480
Waterbury, Connecticut 06722
PROCEDURAL STATEMENT
The Department of Labor and Employment Security (hereinafter referred to as the "Department") , issued a Notice of Intent to Award Contract to the Respondent-Intervenor, Scan Optics, Inc. (hereinafter referred to as "Scan Optics"). The Petitioner, Recognition Equipment, Inc., timely filed a Formal Written Protest and Petition for Formal Administrative Proceeding challenging the Department's proposed award. By letter dated November 21, 1986, the Department referred the Petitioner's request to the Division of Administrative Hearings.
At the commencement of the final hearing Scan Optics was granted leave to intervene in the case. Scan Optics is also a named Respondent.
At the final hearing, the Petitioner presented the testimony of W. Russell Rothman, Dan Haversbourke, Charles Longworth, Keith Sides, William A. Stallworth and Robert Layne. Petitioner's exhibits 1-4 were accepted into evidence.
The Department presented the testimony of Talmadge O. Harrison, W. Russell Rothman and William A. Stallworth. The Department's exhibit 2, which was marked as a "DLES" exhibit, was accepted into evidence. DLES exhibit 1 was not offered into evidence.
Scan Optics presented the testimony of Charles Longworth and Leo Cooper.
Scan Optics exhibits 1 and 2 were accepted into evidence.
The parties were given 15 days from the date the transcript of the proceeding was filed to file proposed recommended orders. The parties were subsequently given an additional 7 days to file their proposed recommended orders. The parties were informed at the conclusion of the final hearing that I would take the same number of days to prepare this Recommended Order that the parties took from the date of the filing of the transcript to file their proposed recommended orders. Therefore, this Recommended Order is being issued within 22 days after the proposed recommended orders were due.
The parties have timely filed proposed recommended orders which contain proposed findings of fact. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order or the Appendix attached to this Recommended Order. In the Appendix it is indicated where proposed findings of fact which have been accepted have been made in this Recommended Order and why proposed findings of fact which have not been accepted have been rejected.
ISSUE
Whether the Department acted arbitrarily and capriciously in giving notice of its intended award of a contract for the purchase of optical character reading equipment to Scan Optics?
FINDINGS OF FACT
The Department is the state agency charged with the administration of Florida's unemployment compensation insurance program. The Department's Bureau of Claims and Benefits (hereinafter referred to as the "Bureau") is responsible for receiving claims for unemployment insurance benefits and for the disbursement of unemployment insurance payments.
In processing and paying claims for unemployment insurance benefits, the Bureau must work with the Comptroller, who issues the payment checks.
The Comptroller's office has been issuing checks on IBM punch cards. The Bureau has also been using IBM punch cards in processing unemployment insurance claims so that the punch cards could be collated with the IBM punch card checks issued by the Comptroller.
In early 1984, the Bureau was informed that IBM card stock would no longer be printed.
In early 1985, the Bureau was informed by the Comptroller's office that the Comptroller was going to begin to use paper warrants for the payment of benefits instead of IBM cards. As a result of this change, the Department is no longer able to use checks issued by the Comptroller to collate with its IBM punch cards.
Because of the switch to paper warrants by the Comptroller, the Department began in 1985 to look at other technologies capable of efficiently working with paper warrants.
The Bureau formed a committee to explore alternatives. That committee researched alternatives and visited other states to determine how other states were processing claims.
The Department decided to purchase an optical character reader (hereinafter referred to as an OCR), for use in processing unemployment compensation claims.
An OCR is a device which reads printed or handwritten characters. It scans a document, reads characters by comparing them to a mask or template and reads and records the data.
The Department plans to use the OCR to read and record data from certifications for unemployment compensation insurance benefits. The data recorded will be transferred to the Department's mainframe IBM computer for use in processing by an automated benefits system.
The Petitioner and Scan Optics are manufacturers of OCR equipment. Scan Optics has been manufacturing OCR equipment for 20 years.
The Department requested a list of vendors from the Division of Purchasing and received a list of 167 potential vendors.
On July 14, 1986, the Department issued a Request for Proposals (hereinafter referred to as the "RFP"), seeking competitive bids for the purchase by the Department of an OCR.
All 167 potential vendors were notified of the RFP by the Department.
Approximately 25 of the potential vendors requested a copy of the RFP.
Only the Petitioner and Scan Optics submitted proposals in response to the RFP.
A 6 member committee appointed by the Department prepared the RFP. Three members of the committee were employees of the Bureau and three members were employees of the Department's Bureau of Computer Data Systems.
A request for proposal is a solicitation by an agency of offers from potential vendors to provide a needed commodity or service. It is different from a bid where the agency simply identifies the product it wishes to purchase and chooses the vendor offering the product at the lowest cost.
The RFP set forth the Department's functional requirements and asked vendors to respond in any manner which they believed would meet those requirements.
In the RFP, the Department stated the requirements which vendors were required to meet, evaluation criteria and the weight to be given to those criteria. It was also provided that responses would be verified by documentation and demonstration in a benchmark test.
In the RFP, vendors were informed that if they disputed the reasonableness, necessity, or competitiveness of the RFP they must file a protest in accordance with Section 120.53(5), Florida Statutes. Paragraph 8 of the General Conditions.
Vendors were also informed that any questions concerning the conditions and specifications of the RFP had to be submitted in writing to the Department no later than 10 days prior to the proposal opening and that "[n]o interpretation shall be considered binding unless provided in writing by the State of Florida in response to request in full compliance with this provision." Paragraph 5 of the General Conditions.
Section 1.07 of the RFP instructed vendors to examine the RFP to determine if the requirements were clearly stated. Section 1.10 of the RFP provided that only written and signed vendor communications would be considered and that only written communications from the purchasing off ice would be considered authoritative.
The Petitioner did not file a protest of the terms of the RFP pursuant to Section 120.53(5), Florida Statutes.
Section 1.03 of the RFP provided for a vendors conference at which the contents of the RFP and any written inquiries from the vendors could be discussed.
The Petitioner and Scan Optics submitted written questions to the Department.
The vendors' conference was scheduled and conducted on July 30, 1986. Representatives of the Petitioner and Scan Optics attended the vendors' conference. The questions submitted by the Petitioner and Scan Optics were discussed.
At the commencement of the vendors' conference, the Department's representative cautioned all present that statements made during the conference would not modify the RFP. This representation was heard and understood by the Petitioner's representative at the vendors' conference.
Subsequent to the vendors' conference, the Department issued amendments to the RFP. The cover letter dated August 7, 1986, conveying the amendments to the Petitioner stated that any questions about the amendments had to be received in writing in the Office of Purchasing no later than 5:00 p.m., August 12, 1986. Draft samples of claims' certification forms and paper stock described in Section 3.01.18 of the RFP were also sent to the Petitioner and Scan Optics.
The Petitioner did not submit any additional questions about the RFP or the amendments before 5:00 p.m., August 12, 1986.
The Department proposed to accept Scan Optics' proposal and purchase the OCR from Scan Optics. The Petitioner brought this administrative action challenging the Department's proposed action.
Chapter I of the RFP contains administrative and general information.
Chapter II of the RFP contains a description of the Department's current system, a list of proposed OCR applications and the objective of the Department.
Chapter III of the RFP sets out the technical requirements. Mandatory requirements and desirable requirements are provided.
The terms "mandatory requirement" are defined in Section 1.17.ao of the RFP as follows:
"Mandatory Requirement" shall be defined as a requirement the vendor must meet for the proposal to be considered responsive, failure
to meet a mandatory requirement will cause the proposal to be rejected.
The terms desirable requirement" are defined in Section 1.17.ak of the RFP as follows:
"Desirable Requirement" shall be defined as a function, feature, or service the State considers necessary for optimal application flexibility, ease of system operation, or system reliability. Failure to meet a desirable requirement will result in a
lower technical evaluation.
The technical requirements set out the specifications which the Department had determined must (mandatory) or should (desirable) be met in order for an OCR to fulfill the Department's objectives.
Chapter IV of the RFP provides the evaluation process the Department was to follow in determining which proposal to accept. The evaluation process was to include the awarding of points for compliance with the technical requirements.
The RFP also included provisions designed to ensure that the representations of a vendor in a proposal would be fulfilled, including a benchmark test to verify certain representations of a vendor and acceptance testing after the equipment was purchased and installed.
The general objective of the Department was provided in Section 2.04 of the RFP:
The State wishes to procure an Optical Character Reading System with related soft- ware capable of meeting the requirements for the reading of UI benefit certifications and other UI applications that are feasible. The Optical Character Reading System will consist of a [sic] Optical Character Reader (OCR) and Correction System. The complete System will be bought from a single vendor.
Section 1.17.ap of the RFP defines "objective" as:
A statement describing generally the system to be procured. Any proposed system not meeting the objective will be rejected.
Although Section 2.03.3 of the RFP provides that processing of quarterly wage reports is a major application, the RFP does not require that the proposed OCR equipment must be capable of this application.
The only requirement is that the objective" be met. The reference to "other UI applications that are feasible" in the objective was intended to refer to future applications of the OCR which the Department only wanted to be aware of. There was no requirement that proposed OCR's be capable of other applications.
The RFP made it clear that proposals would be based on the technical requirements of Chapter III of the RFP and would be evaluated pursuant to Chapter IV of the RFP. When these chapters and the "objective" are considered it is clear that the Department was proposing to purchase an OCR to perform the task of reading unemployment insurance claims forms and not wage reports.
The responses to the RFP submitted by the Petitioner and Scan Optics were evaluated by the committee established by the Department to prepare the RFP.
The committee determined whether the vendors met the mandatory requirements of the RFP and allocated points for mandatory and desirable requirements based upon the vendors' responses.
The committee's evaluation consisted of 3 stages as required by the RFP. First, the committee evaluated and scored the vendors' technical responses. Each vendor was awarded points for their responses to the mandatory and desirable requirements as provided in the RFP. The committee fairly and reasonably applied the scoring system.
Secondly, the committee evaluated and scored the vendors' cost responses as provided in the RFP.
Finally, each vendor's scores were added. The vendor with the highest score was then given an opportunity to subject its proposed system to a benchmark test. The RFP provided that only the vendor with the highest points from the first 2 stages of the evaluation would be subjected to the benchmark test.
The benchmark test was used by the Department to verify some of the statements in the highest scoring vendor's response, including some responses which the committee had some questions about during the evaluation.
Based upon the committee's evaluation, Scan Optics was selected as the highest scoring vendor and its proposed system was subjected to the benchmark test.
The benchmark test is provided for in Chapter X of the RFP.
If Scan Optics' system had failed the benchmark test with regard to a mandatory requirement, its proposal would have been rejected. If it had failed to fulfill a desirable requirement, its response would have been rescored.
The benchmark test was designed to give some assurances that a vendor's claims were correct. The test gave the committee confidence that the vendor was providing accurate information.
Scan Optics' system successfully completed the benchmark test.
During the first two stages of the evaluation, the committee looked at each vendor's total response, read all of the documentation submitted by the vendors and did all the research it could without actually having the system itself to evaluate.
Not every response of the vendor was verified with absolute certainty. It was necessary for the Department to exercise judgment and discretion in determining whether responses were responsive to the RFP. Each response was evaluated as a whole and relevant information contained in one response was considered in evaluating other responses.
Both vendors' responses were reviewed carefully. Both vendors provided responses which were not as thorough as the committee desired. The committee exercised its discretion in those instances and reviewed all documentation and the complete response to determine if sufficient information had been provided to conclude that a response was acceptable.
Clarification or explanation of some responses was requested by the committee from both vendors.
The manner in which mandatory responses were to be evaluated is provided in Section 1.06 of the RFP:
The State has established certain requirements with respect to Request for Proposals to be submitted by vendors. The use of "shall", must" or "will" (except to indicate simple futurity) in this Request indicates a require- ment or condition from which a material deviation may not be waived by the State.
A deviation is material if the deficient
response is not in substantial accord with this Request for Proposal requirements [sic] provides an advantage to one vendor over other vendors, has a potentially significant effect on the quantity or quality or items proposed, or on the cost to the State.
Material deviations cannot be waived.
Determining whether a deviation was material required the Department to use discretion.
The RFP does not require rejection of a proposal if a desirable requirement was not met. Section 1.06 of the RFP provides the following with regard to desirable requirements:
The words "should" or "may" in this Request for Proposal indicate desirable attributes or conditions, but are permissive in nature.
Deviation from, or omission of, such a desirable feature, will not in itself cause rejection of a proposal.
In determining whether a mandatory requirement was met, the committee determined if a vendor's response indicated that the requirement could be met. If there was any question about the vendor's response, the committee then evaluated the response to determine if the response was sufficient to justify rejecting the entire proposal. This is a reasonable approach.
The Department, through its committee, exercised its discretion fairly and equitably in reviewing each vendor's response.
Scan Optics proposed a 442 system in response to the RFP. A 4542 system consists of two primary hardware component: a 4500 editing system and a
542 optical scanner.
Section 3.01.1 of the RFP provides the following mandatory requirement The Vendor must supply documentation indicating
the proposed System's capabilities to meet each
mandatory and desirable item listed in this RFP. The documentation must refer to the section and item number it applies to in this RFP.
There is no requirement in the RFP that the documentation provided by a vendor be listed.
Scan Optics provided a great deal of documentation with its response. The Department reasonably concluded that the documentation provided met the requirement of Section 3.01.1 of the RFP. A list of most of Scan Optics' documentation was provided with its response. In addition to the documentation listed, Scan Optics provided a Model 542 Product Guide and a Model 533/542 Operator's Manual.
Scan Optics' Models 530 and 540 optical scanners are very similar to their Model 542. The designation 540 refers to a family of optical scanners which includes the Model 542. Most of the information concerning the operation
and capacity of the 540 also applies to the 542. Differences are due to greater capacity and speed of the 542 and internal differences.
All of the documentation supplied by Scan Optics was considered by the committee in its evaluation and was determined to satisfy the requirement of Section 3.01.1 of the RFP.
The committee talked with representatives of Scan Optics to determine whether documents pertaining to Model 530/540 supplied to the Department were relevant. The Department was informed that the Model 542 was a member of the same family of models and the information provided in the Model 530/540 documents was also applicable to the Model 542.
Manufacturers of computer equipment have constantly evolving families of models with a number of similarities. The use of manuals and guides which apply to a family line is a common practice. The committee reasonably accepted the Model 530/540 documents as documentation supporting the Model 542 proposed.
Section 3.01.10.f of the RFP initially required that vendors show how the Initial System could be upgraded to meet a number of requirements, including the " [a]bility to read 700 different fonts including handprint in a multifont mode."
The Petitioner submitted a written question which was discussed at the vendors' conference concerning the use of the term "fonts."
There are not 700 fonts in the English language. An OCR is capable of scanning written documents and reading and recording the data contained thereon. Each particular design or style of a1phabetic (A to Z, in upper and lower case) and numeric (0 to 9) characters typed or written is called a font. Each style, or font, is unique and different from other styles.
Characters are recognized and read by an OCR by templates or masks. Templates or masks determine an OCR's ability to read a particular character of different fonts. To read all the characters of one font, 36 masks or templates are needed. A single mask or template can read the same character, such as the letter "A" in more than one font.
The question raised by the Petitioner was discussed at the vendors' conference and resulted in a written amendment to the mandatory requirement of Section 3.01.10.f.
Section 3. 01.l0.f of the RFP, as amended, required that the Initial System be upgradeable to include the " [a]bility to read 700 different fonts/masks/templates, plus alpha numeric hand print."
The Department and the vendors realized that Section 3. 01.10.f of the RFP, as amended, required that the ability to read 700 templates or masks, and not 700 fonts, was what was required.
The Petitioner did not submit any questions concerning the amendment to Section 3.01.10.f of the RFP. The Petitioner's representative at the vendors' conference indicated that he understood the amendment and that the amendment eliminated the confusion created by the original requirement concerning "700 fonts."
No statements were made by representatives of the Department during the vendors' conference concerning the requirement of Section 3.O1.10.f of the RFP, as amended. A statement concerning proposing a "maximum capability machine" was directed only to the Petitioner. The Department was aware that the Petitioner's maximum capability machine with regard to templates or masks was a machine with 720 templates. Therefore, the Petitioner was told that if it bid its maximum capability machine it would meet the requirement of Section
3.01.10.f of the RFP, as amended. This discussion was directed only at the Petitioner and was in response to the Petitioner's question, submitted in writing, about the requirement of Section 3.01.10.f of the RFP before it was amended.
Section 3.01.10 of the RFP contains 7 subparagraphs labeled "a" through "g". Scan Optics' response to Section 3.01.10 of the RFP contained only
5 subparagraphs labeled "a" through "e". The responses of Scan Optics did not correspond to the subparagraphs of Section 3.01.10 of the RFP. There was no requirement that they do so.
One of the subparagraphs for which there was no labeled response from Scan Optics, Section 3.01.10.f of the RFP, pertains to upgrading the Initial System to read 700 templates. Scan Optics proposed a system which already contained 768 templates. There was therefore no requirement to explain how the system could be upgraded.
The other subparagraph for which there was no labeled response from Scan Optics, Section 3.01.10.g of the RFP, pertains to upgrading the Initial System to include "necessary system CPU's and controllers." Scan Optics' response to Section 3.01.10 of the RFP, when considered with other responses and the documentation provided, indicated that the Initial System would meet this provision.
The Department reasonably determined that the response of Scan Optics to Section 3.01.10 of the RFP adequately explained how its system could be upgraded.
Section 3.01.13 of the RFP contains the following mandatory requirement:
The OCR must capture and store data on a 9-Track, 1600 and/or 6250 BPI EBCDIC Tape compatible with the equipment in use at the Caldwell Data Center at the State's Central Office in Tallahassee. Each tape
drive in the proposed system must be usable for both output and input operations.
The requirement of Section 3.01.13 of the RFP was amended to add the following sentence:
The drives in use in the Data Caldwell Center [sic] are IBM 3420 Dual Density (1600 6250 BPI) with
odd parity.
In its response Scan Optics quoted the requirement without the amendment and then provided the following answer:
The Scan-Optics Tape Drive provided is an operator selectable 1600 or 6250 BPI EBCDIC drive compatible with IBM equipment including the equipment in use at the Caldwell Data Center, and is capable of output or input.
Although Scan Optics did not quote the requirement with the amendment, the amendment was included elsewhere in its response and Scan Optics' representatives were aware of the amendment.
Even though Scan Optics did not correctly quote the requirement as amended, its response indicates that Scan Optics' proposal meets the amended requirement. Scan Optics indicated that its system is compatible with the Caldwell Data Center's equipment and identified the drives which it uses.
The failure to quote the amended requirement was merely an oversight on the part of Scan Optics. There is no requirement that the requirements of the RFP be properly quoted or quoted at all in a response.
Section 3.01.15 of the RFP, as amended, provides the following mandatory requirement:
The OCR Microfilm camera must provide an image reduction ratio within the range of 40:1 to 50:1, image reduction in duplex mode and provide at least two (2) blip sizes based on Kodak IMT specifications which can be selected under program control. The system must be capable of filming any blip sizes based on predefined conditions on a document by document basis.
In its response Scan Optics identified the range of its image reduction ratios and indicated that it would provide the blip sizes required.
Although Scan Optics' response can be interpreted to indicate something which Scan Optics will be able to do in the future, the Department reasonably accepted Scan Optics' response.
The committee knew that technology for meeting the microfilm requirement existed and was in use in the industry. Based upon documentation provided by Scan Optics, the committee also knew that the reduction ratios could be provided by Scan Optics because its camera was under program control and was therefore adjustable. Because the camera was under program control, the committee knew that it could be adjusted to provide two blip sizes.
The committee also knew that if Scan Optics was selected as the high scorer as a result of the first two phases of the evaluation its camera would be subjected to the benchmark test. In fact, Scan Optics' camera was subjected to the benchmark test and demonstrated that the requirements of Section 3.01.15 of the RFP could be met.
Scan Optics properly responded Section 3.01.15 of the RFP and the Department reasonably accepted its response.
Section 3.01.18 of the RFP provides the following mandatory requirement:
The OCR must be capable of processing documents with a paper weight range from 20 lbs. to 110 lbs. A paper thickness of .0075 inch capability is required.
Scan Optics' response to Section 3.01.18 of the RFP was as follows:
Standard Scan-Optics specification of paper weight is from 20 lbs. to 100 lbs. However, Scan-Optics personnel will modify the transport vacuum pumps and perform the necessary pre- ventative maintenance routines to accomplish
the additional 10 percent requirement at the higher paper range, as we have done in numerous
other installations.
Scan Optics' total response indicates that it can meet the requirement of Section 3.01.18 of the RFP. The Department reasonably accepted the response. The Department-knew that similar equipment was frequently modified to fit specific jobs, that Scan Optics had indicated that it had modified its equipment in "numerous other installations" and that Scan Optics had indicated that it would modify its transport system. The Department also knew that the ability to process 110 lb. paper would be benchmark tested.
The vendors were provided with sample forms which were .0075 inch thick and 110 lb. weight. This was the actual paper used by the Comptroller.
Scan Optics' ability to meet the requirement of Section 3.01.18 of the RFP was tested and demonstrated in the benchmark test.
Section 3.01.43 of the RFP provides the following mandatory requirement: "The Vendor must propose to provide four (4) manuals for application and program development."
Section 3.01.44 of the RFP provides the following mandatory requirement: "The Vendor must propose to provide three (3) sets of manuals for support of system operations.
Scan Optics indicated that it would provide the manuals at the time the contract was awarded.
There was no requirement that a vendor provide the manuals at the time a response was filed. Section 3.01.43 and Section 3.01.44 of the RFP only sought assurances that the manuals would be provided.
Scan Optics' response to Section 3.01.43 and Section 3.01.44 of the RFP and the Department's acceptance of the response was reasonable.
Prior to amendment, Section 3.03.2 of the RFP provided the following desirable requirement:
The Vendor should be able to upgrade the OCR font recognition as the Vendor makes improve-
ments in font recognition to improve OCR read rates. This upgrade should be installable by the State.
Section 3.03.2 of the RF was renumbered as Section 3.02.2 and the last sentence was amended to provide: "This upgrade should be installable by the State or, if installed by the Vendor, at no additional cost to the State."
Scan Optics' response quoted the requirement before the amendment. The response, however, indicated that the requirement, as amended, could be met and the amendment was included in another portion of the Scan Optics' response.
The Department reasonably accepted the response of Scan Optics to Section 3.02.2 of the RFP.
Section 3.02.3 of the RFP (originally numbered 3.03.3) includes a desirable requirement that vendors specify the projected number of desk weekly unemployment insurance claim certification documents a vendor's proposed system could process in one hour with no more than three operators -- one to operate the OCR and two to correct unrecognized characters.
Section 3.02.3 of the RFP provides that the document to be processed and the rules for processing are described in Chapter x, Section 10.2 of the RFP. The vendor with the highest score was to be benchmark-tested pursuant to these rules to determine if the vendor's response was accurate. Chapter x, Section 10.2 of the RFP describes the data that would be included in the claim form, how the form would be completed, the weight of the paper and the styles or fonts which would be used.
Section 3.02.3 of the RFP only requires that the number of documents processed be provided.
Scan Optics' response to Section 3.02.3 of the RFP provided that "Scan-Optics throughput based upon your requirements above will be: 3,500 desk weekly UI claim certification forms in one hours [sic]."
Scan Optics' response went on to repeat the criteria set out in the RFP and provided: "Therefore, because of the above variables, Scan-Optics throughput has been calculated using the following assumptions:" The response goes on to provide certain assumptions made by Scan Optics in calculating the number of documents it projected could be processed.
The assumptions set out in Scan Optics' response do not expressly limit or condition its estimate of 3,500 documents per hour. The response was given with knowledge that the estimate would have to be proved to be accurate in the benchmark test.
Scan Optics' response was based upon the use of a standard formula and was reduced from 4,800 to 3,500 in order to give a projection which could be met and accounted for loss of productivity due to jams, operator absence and other problems. The projection was tested by Scan Optics before the proposal was submitted to the Department.
The Department accepted the projection of Scan Optics and awarded Scan Optics the maximum points available for the desirable requirement of Section 3.02.3 of the RFP, 280 points. The Department did not take into account the assumptions expressed by Scan Optics in its response.
The evidence did not prove if the assumptions expressed by Scan Optics are inconsistent with the rules for processing which would be followed in the benchmark test.
Scan Optics successfully demonstrated its ability to process 3,500 forms per hour in the benchmark test.
The benchmark test did not incorporate the assumptions made by Scan Optics. The forms used in the test were completed by individuals who received less instructions than claimants and State employees who will actually complete the forms. Even the instructions given were not completely followed. The benchmark test provided an accurate test of Scan Optics' ability to process claims.
The Department reasonably accepted Scan Optics response to Section
3.02.3 of the RFP.
Section 1.14 of the RFP required vendors to provide five references where "similar or exact proposed equipment and Licensed Software is installed and operational."
Section 4.05 of the RFP provided for the manner in which references were to be evaluated. Up to 10 points per reference could be awarded, up to a maximum of 50 points.
Section 4.05.6 of the RFP defined "similar equipment and software" to mean equipment consisting of "an OCR with microfilm option that reads either numeric handprint or multifont." [Emphasis added].
The Petitioner and Scan Optics provided more than five references. All references were contacted.
Five of the references provided by both vendors had similar equipment and software as defined by Section 4.05.6 of the RFP. Scan Optics' five satisfactory references were Newport News Ship Building, IRS Atlanta, Barnett Bank of Florida, State of Ohio Department of Taxation and State of Tennessee Department of Revenue.
The Department reasonably concluded that the references provided by Scan Optics satisfied the requirement of Section 1.14 of the RFP.
The Department did not evaluate Scan Optics' response in an arbitrary and capricious manner.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Section 120.57(1), Florida Statutes (1986 Supp.). The parties participating in this proceeding have standing.
The Petitioner has alleged that the Department acted arbitrarily and capriciously in proposing to award to Scan Optics a contract for the purchase of an OCR. The Petitioner further alleged that it is the most qualified and responsive vendor to the RFP which is the subject of this dispute.
Section 287.062(1), Florida Statutes (1986 Supp.), requires that no purchase of commodities with a purchase price in excess of $3,000.00 may be made unless made upon competitive bids received, except:
(e) When an agency determines in writing that the solicitation for competitive bids is not practicable or not advantageous to the state, commodities may be procured by requests for proposals. . .
Section 287.012(11), Florida Statutes (1986 Supp.), defines the terms "request for proposals" as follows:
(11) "Request for proposals" means a written solicitation for sealed proposals with the title, date, and hour of the public opening designated. The request for proposals is used when the agency
is incapable of specifically defining the scope of work for which the commodity, group of commodities, or contractual service is required and when the agency is requesting that a qualified offeror propose a commodity, group of commodities, or contractual service to meet the specifications of the solicitation document. A request
for proposals includes, but is not limited to, general information, applicable laws and rules, functional or general specifi- cations, statement of work, proposal instructions, and evaluation criteria.
Requests for proposals shall state the relative importance of price and any other evaluation criteria.
The Department issued a RFP seeking to purchase an OCR. Based upon its review of the responses to the RFP it received from the Petitioner and Scan Optics, the Department proposed to accept the proposal of Scan Optics. It is this decision that the Petitioner challenges in this proceeding.
In order to resolve this dispute it is essential to understand the nature of the RFP process:
Implicit in the definition of an RFP is
the underlying rationale that, in some types of competitive procurement, the agency may desire am ultimate goal but cannot specifically tell the offerors how to perform toward achieving that goal; thus, a ready distinction arises between an RFP and an IFB. Typically, an IFB is rigid and identifies the solution to the problem. By definition, the invitation specifically defines the scope of the work required by soliciting bids responsive to the detailed plans and specifications set forth. Section
287.057(1)(1) and (2), as amended. On the contrary, an RFP is flexible, identifies the problem, and requests a solution.
Consideration of a response to an IFB is controlled by cost, that is, the lowest and best bid, whereas consideration of an offer to an RFP is controlled by technical excellence as well as cost. [Footnote omitted].
System Development Corporation v. Department of Health and Rehabilitative Services, 423 So.2d 433, 434 (Fla. 1st DCA 1982).
The nature of a RFP requires that an agency, in reviewing responses to RFP's, exercise broad discretion:
We are constrained to review the agency's decision under these circumstances only so far as to determine whether the decision was arbitrary, capricious or beyond the scope of its discretion, which discretion is very broad:
So long as a public agency acts in good faith, even though they may reach a conclusion on facts upon which reasonable men may differ, the courts will not generally interfere with their judgment, even though the decision reached may appear to some persons to be erroneous. Volume Services Division v. Canteen Cor., 369 So.2d 391, 395 (Fla.
2d DCA 1979)
Systems Development Corporation, 423 So.2d at 434-435. In order for the Petitioner to succeed in its challenge, it must prove that the Department abused its broad discretion and that its proposed decision to accept Scan Optics' response to the RFP was arbitrary, capricious or beyond its discretion. The Petitioner also has the burden of proving that any deviation or irregularity in Scan Optics' response which was accepted by the Department was a material deviation or irregularity. Tropabest Foods, Inc. v. Department of General Services, 493 So.2d 50 (Fla. 1st DCA, 1986).
In its protest, the Petitioner raises a number of alleged deviations in Scan Optics' response. In its proposed recommended order, the Petitioner proposes findings of fact and conclusions of law concerning only three of the alleged deviations.
First, the Petitioner has proposed findings of fact and conclusions of law concerning its allegations that, based upon statements made at the vendors' conference conducted by the Department, the Department asked the Petitioner and Scan Optics to bid their maximum capability systems. The Petitioner argues that certain statements made at the vendors' conference are admissible under the parol evidence rule and that the Department is equitably estopped from denying the statements. The Petitioner's reliance upon the parol evidence rule and the doctrine of equitable estoppel is misplaced.
The RFP process results in a contract. Therefore, it is appropriate to determine the intent of the potential parties to the contract. In determining the intent of the parties to a contract, the language employed in the contract is generally the determinant factor. Parol evidence should be considered only if the language of the contract is ambiguous or its meaning is doubtful. See, Valenti v. Coral Reef Shopping Center, Inc., 316 So.2d 559 (Fla. 3rd DCA 1975). Negotiations before the execution of a contract are absorbed into the contract. Id.
In this case, the language of the RFP is clear and unambiguous.
There is no need to resort to parol evidence to determine the intent of the parties as to the capability of the system to be offered to the Department. The RFP clearly requires that a vendor submit a response offering a system capable of upgrading to include the ability "to read 700 different fonts/masks/temp1ates, plus alpha numeric hand print." Although the meaning of the technical terms used in this requirement may not be clear and unambiguous, it is clear that the systems to be offered should be capable of upgrading to provide the ability to read 700 fonts/masks/templates, and nothing more. There is no need to resort to parol evidence to determine if the Department required something more, i.e., a vendor's maximum capability system.
Even if it were proper to consider the statements made by a representative of the Department concerning bidding a vendor's maximum capability system, the evidence proves that the Department did not intend that all vendors propose their maximum capability system. The statements in question were made only to the Petitioner. The Department was aware that the Petitioner's maximum capability machine was a machine with 720 templates. Therefore, the Petitioner was told that if it bid its maximum capability machine it would meet the requirements of Section 3.01.10.f of the RFP, as amended. The statements were directed only at the Petitioner and were in response to a question submitted in writing by the Petitioner. The amendment issued by the Department in writing as a result of the Petitioner's question and the discussion at the vendors' conference is unambiguous -- it does not require that the vendors submit their maximum capability system.
The Petitioner's reliance upon the doctrine of equitable estoppel is also misplaced. The essential elements of estoppel are:
a representation by the party estopped to the party claiming the estoppel as to some material fact, which representation is contrary to the condition of affairs later
asserted by the estopped party; (2) a reliance upon this representation by the party claiming the estoppel; and (3) a change in the position of the party claiming the estoppel to his detriment, caused by the representation and his reliance thereon.
Quality Shell Homes & Supply v. Roley, 186 So.2d 837, 841 (Fla. 1st DCA 1966).
In this case, there was no representation by the Department to the Petitioner as to a material fact which is contrary to a later representation of the Department. As explained by the Department's representative, the statements to the Petitioner are consistent with the requirements of the RFP.
Additionally, any reliance upon statements made to the Petitioner was not reasonable in light of the warnings given to the vendors that only written statements should be considered binding. The vendors were informed in the RFP that "[n]o interpretation shall be considered binding unless provided in writing by the State of Florida in response to a request . . . in writing submitted to the Department no later than 10 days prior to the proposal opening. The vendors were also informed in the RFP that only written and signed vendor communications would be considered and that only written communications from the purchasing office would be considered authoritative. Finally, the vendors were orally told at the commencement of the vendors' conference that statements made during the conference would not modify the RFP.
Secondly, the Petitioner has proposed findings of fact concerning the references vendors were required to provide to the Department in their responses. The Petitioner has argued that because Scan Optics does not have a system installed and in operation anywhere which includes a model 4542, the model bid by Scan Optics to the Department, the references submitted by Scan Optics did not involve the same or similar system.
The Petitioner's argument ignores the requirements of the RFP with regard to references. The RFP required that the vendors provide five references where "similar or exact proposed equipment and Licensed Software is installed and operational." "Similar equipment and software" is defined to mean equipment consisting of "an OCR with microfilm option that reads either numeric handprint or multifont."
Scan Optics provided more than five references. At least five of those references have equipment which comes within the definition of similar equipment contained in the RFP. Scan Optics, therefore, complied with the requirements of the RFP with regard to references. The Department did not act arbitrarily or capriciously in accepting Scan Optics' references.
Finally, the Petitioner has proposed findings of fact and conclusions of law with regard to Scan Optics' response to Section 3.02.3 of the RFP. This Section of the RFP requires that vendors specify the projected number of desk weekly unemployment insurance claim certification documents the vendor's proposed system could process in one hour. Assumptions concerning the number of operators and their functions were provided in the RFP. The RFP also provided assumptions concerning the document to be processed and the rules for processing in Chapter X of the RFP.
All that was required by Section 3.02.3 of the RFP is a number. Scan Optics responded that it could process 3,500 forms in a one-hour period, based upon the assumptions or requirements of the RFP. Scan Optics went on, however, to set out certain assumptions which it had made in calculating its estimate. Those assumptions were not considered by the Department in reviewing Scan Optics' response.
Although there was testimony to the effect that the Department wanted to know how many documents could be processed under everyday conditions, the assumptions made by Scan Optics are not inconsistent with the requirements of Section 3.02.3 of the RFP. If the Department in fact wanted to know the number of documents which could be processed under everyday working conditions it should have been more specific in the assumptions it notified vendors of in the RFP. The only assumptions which the Department made are those concerning operators and those contained in Chapter X of the RFP. Those assumptions are not inconsistent with the additional assumptions which Scan Optics made.
The conclusion that the Department was not arbitrary and capricious in ignoring the assumptions expressed by Scan Optics in its response is further supported by the fact that the Department knew that the projected number of documents which could be processed in one hour would be benchmark-tested. Therefore, the Department knew that Scan Optics would have to prove that its estimate was accurate regardless of what assumptions it had made in calculating its estimate. In administering the benchmark test, the Department ignored the assumptions which Scan Optics had made. Only the conditions set out in the RFP were followed. Scan Optics passed the benchmark test and proved its ability to process 3,500 documents in one hour.
Even if the Department had acted arbitrarily or capriciously in accepting Scan Optics' estimate of the number of documents it could process in one hour, the Petitioner failed to prove that any deficiency in Scan Optics' response was a material one. It is possible that if the assumptions had been taken into account Scan Optics would have still been the high point-scorer. The Petitioner proved that Scan Optics had been awarded 280 points (the maximum points possible) for its response. The Petitioner did not prove, however, how many points Scan Optics should have been awarded if the Department had taken Scan Optics' assumptions into account. Therefore, even if the Department had acted arbitrarily in ignoring the assumptions, the Petitioner failed to prove that it would have been the highest scoring vendor.
Sufficient findings of fact have been made supra, rejecting the other alleged deviations contained in the Petitioner's protest but not specifically addressed in its proposed recommended order. There is no need to restate those findings of fact or to discuss them further. Based upon those facts, the Petitioner failed to prove that the Department acted arbitrarily or capriciously in accepting the response of Scan Optics and proposing to purchase the OCR system proposed by Scan Optics.
Based upon the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Formal Written Protest and Petition for Formal
Administrative Proceeding filed by the Petitioner, Recognition Equipment, Inc., be dismissed.
DONE AND ORDERED this 26th day of February, 1987, in Tallahassee, Florida.
LARRY J. SARTIN
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 1987.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-4570 BID
The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they were accepted. Those proposed findings of fact which have been rejected and the reasons for their rejection have also been noted. Paragraph numbers in the Recommended Order are referred to as "RO ."
THE PETITIONER'S PROPOSED FINDINGS OF FACT:
Proposed Finding RO Number of Acceptance or of Fact Number Reason for Rejection
1 RO 13.
2 RO 9 and 75-76.
3 Not supported by the weight of the evidence.
4 RO 25, 27 and 29.
5 Although this statement was made, see RO 81.
6 RO 34-35 and 60.
7 RO 45.
8 RO 34, 36 and 47.
9 RO 48.
10 Irrelevant.
11 RO 124 and 126.
Although the first sentence is true, it is irrelevant. The second sentence is not supported by the weight of the evidence.
The first sentence is accepted in RO 83. The rest of the proposed finding of fact is irrelevant.
Not supported by the weight of the evidence.
Not supported by the weight of the evidence.
The first sentence is argument. The second sentence is irrelevant. If the Petitioner relied on oral state-
ments such reliance was not reasonable.
Not supported by the weight of the evidence.
Not supported by the weight of the evidence. Although Mr. Stallworth
did make the quoted statement, it does not expand the requirements specifically included in the RFP.
Not supported by the weight of the evidence.
The first two sentences are accepted in RO 49. The third and fourth sentences are not supported by the weight of the evidence.
21 RO 57.
22 Not supported by the weight of the evidence.
THE DEPARTMENT'S PROPOSED FINDINGS OF FACT: 1 RO 1, 3 and 5.
2 RO 5-6 and 8.
3 | RO | 13 and | 38. |
4 | RO | 12 and | 14-16. |
5 | RO | 22-23. | |
6 | RO | 25. | |
7 | RO | 26-27. | |
8 | RO | 29. | |
9 | RO | 29-30. | |
10 | RO | 73-74. | |
11 | RO | 77-78. | |
12 | RO | 80. | |
13-15 | RO | 81. | |
16 | RO | 40-44. | |
17 | RO | 44. | |
18 | RO | 67-68. | |
19 | RO | 70. | |
20 | RO | 82-84. | |
21 | RO | 84. | |
22 | RO | 87-88 and 90. | |
23 | RO | 91. | |
24 | RO | 93-97. | |
25 | RO | 96. | |
26 | RO | 99-100. | |
27 | RO | 100 and 102. | |
28 | RO | 112-113. | |
29 | RO | 115-116. | |
30 | RO | 122. | |
31 | RO | 57. | |
32 | RO | 47-49. | |
33 | RO | 53. | |
34 | RO | 54-55. | |
35 Irrelevant.
36 RO 54.
37 RO 124 and 127.
38 RO 125.
39 RO 126.
40 RO 127.
41 RO 128.
SCAN OPTICS' PROPOSED FINDINGS OF FACT: 1 RO 1.
RO 8.
RO 9.
4 RO 75-76.
5 RO 76.
6 | Irrelevant. | |
7 | RO 10. | |
8 | RO 11 and 26. | |
9 | RO 11. | |
10 | RO 1-2. | |
11 | Irrelevant. | |
12 | RO 3. | |
13 | Hereby accepted. | |
14 | RO 4. | |
15 | RO 5. | |
16 | RO 6. | |
17 | RO 7. | |
18 | RO 8. | |
19 | RO 13. | |
20 | RO 17. | |
21 | RO 18 and 57. | |
22 | RO 19. | |
23 | RO 20. | |
24 | RO 14-16. | |
25 | RO 21. | |
26 | RO 26. | |
27 | RO 27. | |
28-29 | RO 28. | |
30 | Hereby accepted. | |
31 | RO 29. | |
32 | RO 30. | |
33 | RO 32. | |
34 | RO 33. | |
35 | RO 34 and 37. | |
36 | RO 37. | |
37 | RO 38. | |
38 | RO 39. | |
39 | RO 39. The second | and third sentences |
are irrelevant. | ||
40 | RO | 40. |
41 | RO | 43. |
42 | RO | 44. |
43 | RO | 42 and 44. |
44 The first sentence is not supported by the weight of the evidence. The second sentence is hereby accepted.
45 | RO | 45. |
46 | RO | 56. |
47 | RO | 57. |
48 | RO | 58. |
49 | RO | 59. |
50 | RO | 60. |
51 | RO | 61. |
52 | RO | 62. |
53 | RO | 52. |
54 | RO | 53. |
55 | RO | 54. |
56 | RO | 63. |
Irrelevant.
Hereby accepted.
59 RO 64.
60-64 Irrelevant.
65 RO 38, 47 and 49.
66 RO 47-49.
67 RO 49-51 and 55.
68 RO 65.
69 Hereby accepted.
70 RO 78.
71 RO 66-68 and 70.
72 Hereby accepted.
73 RO 69.
74 RO 70.
75 RO 71.
76 RO 72.
77 RO 78.
78 The first and last sentences are accepted in RO 78-79. The second sentence is not supported by the weight of the evidence.
79 RO 75.
80 RO 82-84.
81 RO 84.
82 RO 85.
83 RO 92.
84 RO 93.
85 RO 95.
86 RO 96.
87 RO 97.
88 RO 98.
89 RO 99-100.
90 RO 101.
91 RO 100.
92 RO 102.
93 RO 86.
94 RO 87.
95 RO 88-90.
96 RO 103.
97 RO 106.
98 RO 105.
99 RO 106.
100 RO 107.
101 RO 104.
102 RO 105.
103 RO 107.
104 RO 108-109.
105 RO 110.
106 RO 111.
107 RO 112-113.
108 RO 114.
109 RO 113.
110 RO 115.
111 RO 116-117.
112 RO 119. The last sentence is irrelevant.
113 RO 118.
114 RO 121-122
Cumulative.
Hereby accepted.
117 RO 123.
118 | RO 124. |
119 | RO 125. |
120 | RO 126. |
121 | RO 127. |
122 | RO 128. |
123 | RO 129. |
124 | RO 130. |
125 | Not a finding of fact. |
COPIES FURNISHED:
Edwin F. Blanton, Esquire Post Office Box 12808 Tallahassee, Florida 32317
Hugo Menendez Secretary
Department of Labor and Employment Security
206 Berkeley Building
2590 Executive Center Circle, East Tallahassee, Florida 32301
Kenneth H. Hart, Jr., Esquire General Counsel
Department of Labor and Employment Security Suite 131, Montgomery Building
2562 Executive Center Circle, East Tallahassee, Florida 32399-0657
Leonard A. Carson, Esquire John D. C. Newton, II, Esquire Mahan Station
1711-D Mahan Drive Tallahassee, Florida 32301
Thomas J. McHale, Esquire Gager, Henry & Narkis
One Exchange Place Post Office Box 2480
Waterbury, Connecticut 06722
| Issue Date | Proceedings |
|---|---|
| Feb. 26, 1987 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 30, 1987 | Agency Final Order | |
| Feb. 26, 1987 | Recommended Order | Petitioner failed to prove award of contract for optical character reader improper. Request for proposal. No estoppel. |
SCAN-OPTICS, INC. vs DEPARTMENT OF REVENUE, 86-004570BID (1986)
PAUL ANDREW LIGERTWOOD vs BOARD OF CHIROPRACTIC, 86-004570BID (1986)
A. B. DICK PRODUCTS COMPANY OF TALLAHASSEE, INC., vs. FLORIDA STATE UNIVERSITY, 86-004570BID (1986)
BOARD OF OPTOMETRY vs. R. TIMOTHY CARTER, 86-004570BID (1986)
PHILIP ANDREW COBB vs BOARD OF CHIROPRACTIC, 86-004570BID (1986)
