STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE SYSTEMS CONSULTANTS, )

)

Petitioner, )

)

vs. ) CASE NO. 88-2897BID

)

DEPARTMENT OF LABOR AND )

EMPLOYMENT SECURITY, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tallahassee, Florida, on June 30, 1988, before Arnold H. Pollock, Hearing Officer. The issue for consideration was whether Petitioner, Office Systems Consultants, submitted the lowest responsive bid in Respondent's Procurement No. 88-073-SV.

APPEARANCES

For Petitioner: W. S. Webb, Jr., Vice President

Office Systems Consultants 1351 Thomasville Road

Post Office Box 147 Tallahassee, Florida 32302

For Respondent: Jeffries H. Duvall, Esquire

Legal Counsel

Florida Department of Labor and Employment Security

The Montgomery Building, Suite 131 2562 Executive Center Circle, East Tallahassee, Florida 32399-0657

BACKGROUND

On May 27, 1988, Respondent, Florida Department of Labor and Employment Security (DLES), announced its intention to award a contract in its procurement no. 88-073-SV, for microimaging supplies, to a bidder other than Petitioner, Office Systems Consultants (OSC). On May 31, 1988, OSC filed a letter of protest and a Petition For Formal Hearing in which it protested the intended award and requested formal hearing. On June 13, 1988, the matter was forwarded to the Division of Administrative Hearings and the undersigned, to whom the case was assigned, set the hearing for June 30, 1988 at which time it was held as scheduled.

At the hearing, Petitioner presented the testimony of W. S. Webb, Jr., Vice President of the company; Charles J. Magalian, Chief of DLES's Bureau of Records; and William R. Rothman, Purchasing Director for DLES, and introduced Petitioner's Exhibits 1-3 and 5-7. Respondent also presented the testimony of

Mr. Rothman and introduced Respondent's Exhibits A and B. The Hearing Officer accepted a blank copy of the Bid form as OR#1.

No transcript of the proceedings were furnished, Petitioner submitted Proposed Findings of Fact which are ruled upon in the Appendix hereto.

FINDINGS OF FACT

1. On April 22, 1988, the DLES mailed an Invitation to Bid, to several prospective bidders, including Petitioner and others, soliciting bids on printer supplies for the department's Kodak IMT 350 Printer. The items needed were:

   
   

   1. 180 Cases, Ektamate II Toner,

      Product 1088178

   2. 48 cases, Fuser Oil, Product #1994698

   3. 24 pkgs., Recordak Imprinter

      Red Inking Ribbons, Cat#9238, and

   4. 24 cases, Kodak Ektamate A Magazines, Cat#1119130.

      
      

      The bid was an all or none bid and in the Purpose clause of the Invitation, where the items sought were listed, DLES specifically stated, "no substitutions." In its Invitation to Bid, the department reserved the right to reject all bids. At General Condition 7, the bid form reads, inter alia

      
      

      "Any manufacturers' names, trade names, brand names, information and/or catalog numbers listed in a specification are for information

      and not intended to limit competition. The bidder may offer any brand for which he is an authorized representative, which meets or exceeds the specifications for any items ....

      If bids are based on equivalent, indicate on the bid form the manufacturer's name and number. Bidder shall submit with his bid, cuts, sketches, and descriptive literature and/or complete specifications. Reference to literature submitted with a previous bid will not satisfy this provision.

      The State of Florida reserves the right to determine acceptance of item(s) as an approved equivalent. Bids which do not comply with these requirements are subject to rejection. Bids lacking any written indication of intent to bid an alternative brand will be received and considered in complete compliance with the specifications as listed on the bid form. "

      The bid form specifically notes at the bottom of the General Conditions, "Note: Any and all special conditions and specifications attached hereto which vary from these general conditions shall have precedence."

      
      

2. Petitioner submitted its bid as follows:

   
   

   1. 180 cases of Ektamate II Toner

      $125.00 each $22,500.00 Total

   2. 48 cases, Fuser Oil

      $58.00 each $2,784.00 Total

   3. 24 pkgs., Recordak Imprinter Red Inking Ribbons

      $117.00 each $2,808.00 Total

   4. 24 cases, Kodak Ektamate A Magazines

   $96.00 each $2,304.00 Total

   
   

   for a grand total of $30,396.00. There was no issue of fact or law as to items b, c, and d. Petitioner was low bidder. As to item a), the Ektamate II toner, Petitioner noted in its bid that it proposed to provide "MT Toner by Minolta, Item 8908-744, as per the attached." Attached to the bid form were:

   
   

   1. a letter dated on August 27, 1988 from Mr. Webb to Mr. Rothman, manually amending a prior letter

      of same parties, dated December 8, 1987;

   2. a letter dated May 27, 1988 from Mr. Webb to Mr. Rothman manually amending a prior letter of same parties dated December 29, 1987;

   3. a letter dated December 22, 1987 from Minolta's S.E. Regional Marketing Manager to Mr. Web; and

   4. a marketing brochure for Minolta's RP505 microfilm reader-printer."

   
   

3. The December 22, 1987 Minolta letter states that Minolta supplies the copier portion of Kodak's IMT-350 reader-printer in which the "engine" is "based upon" Minolta's RP505 engine. It also supplies to Kodak the toner for use in the IMT-350. The toner is "a part of a patented copy process" in which the patent is held by Minolta. Though this letter raises a strong implication that the engine is the same in both company's models and that the toners are both supplied by Minolta, the use of the words "based upon" instead of words such as "identical to" or "the same as" leaves sufficient room for doubt to require independent evidence of identity of product. Respondent determined Petitioner's bid to be non-responsive.

   
   

4. The other two letters referred to in 2(a) and (b), above, merely reiterate this information and offer to provide the same to FDLE.

   
   

5. Eight qualified vendors, including the Petitioner, bid on this solicitation. Petitioner's bid of $30,396.00 was the lowest bid. Alpha Micrographic Supplies of Jacksonville was second low bidder. Its bid of

   $34,538.00 total, was, however, considered non-responsive since the price sheet

   was unsigned. The second lowest responsive bidder was BCS, Inc. of Norcross, Georgia, whose total bid of $35,052.00 was made up of the following elements:

   
   

   a) Toner: $150.00/CS $27,000 total

   - $4,500 more than Petitioner's bid.

   1. Fuser Oil: $60.00/CS $2,880 total

      • $96 more than Petitioner's bid.

   2. Ribbons: $118.00/CS $2,832 total

      • $24 more than Petitioner's bid.

   3. Magazines: $97.50/CS $2,340 total

      • $36 more than Petitioner's bid.

   
   

   BCS's total bid was $4,656.00 more than Petitioner's. On May 27, 1988, DLES posted the Notice of Intended Award to BCS and Petitioner submitted its protest on May 31, 1988. The protest was timely filed.

   
   

6. Respondent, DLES, in its evaluation of the bids, determined that Petitioner's bid was also unresponsive' as to item number 1, the toner, in that its offering of Minolta toner, rather than the Ektamate II toner, constitutes an unauthorized substitute. The department concluded that the special conditions and specifications, which called for no substitutions, made the proposal for Minolta toner unresponsive. Further, even if a substitution were permitted under General Condition 7, as an equivalent product, Petitioner failed to submit adequate descriptive literature or specifications.

   
   

7. At the hearing, Petitioner introduced the wrappers which were affixed to the bottle in which the respective toners were contained. While the bottles were identical except for color, the wrappers are not. The boxes in which the individual bottles are enclosed, however, are also identical in shape, folds, etc., though the color and printing are obviously not. No chemical analysis of the two substances was presented to show their identical composition, however, nor was any expert testimony presented to show they were the same.

   
   

8. A micrographics newsletter dated October, 1985, a newsletter for the industry, also reflects that Minolta has a 3 year contract to deliver 10,000 IMT printers to Kodak to be used by it in its micrographic copiers. This is supported by an April 24, 1985, note from Minolta's Director of Marketing in its Micrographics Division to all Minolta Micrographic dealers to the same effect.

   
   

9. The operator's manual for the Kodak IMT-350, for which the supplies in issue here were being purchased, indicates as to toner, "Important. For best results, use only KODAK EKTAMATE II toner in the printer." On the other hand, where it refers to paper and fuser oil, only the terms "paper" and "fuser oil" are used. No mention of a specific brand is made.

   
   

10. Respondent is concerned that in light of these specific references in the owner's manual, use of another product not stipulated for use, would void the warranty on the printer. To overcome this, on June 22, 1988, Mr. Webb brought two bottles of the Minolta toner to Mr. Magalian, DLES's Chief of the Bureau of Records, and requested he use them as a test in the Kodak equipment. Mr. Magalian properly refused to do this without first insuring through Kodak, that the Minolta toner was an equivalent product which would not injure the equipment or void the warranty. Mr. Webb agreed and requested that the Kodak findings be put in writing. This had not been done as of the hearing.

    
    

11. It should be noted that Mr. Webb's request was made two days before the hearing. When Mr. Magalian discussed testing of the product with Mr. Webb

    in early January, 1988, and requested samples of the toner to be tested, they were not furnished even though Kodak was receptive to the test and agreed to perform it on any sample provided. Mr. Webb does not recall that January, 1988 request but does not deny it happened.

    
    

12. In light of the above, it is found that though superficially, through packaging, and inferentially through the correspondence, the "engine" systems for the printers are the same and the toners should be the same as well, Petitioner has failed to satisfactorily establish that the toners are identical in composition. It is clear they do not carry the same brand name.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.

    
    

14. Chapter 287, Florida Statutes, regulates the procurement of supplies by state agencies. Specifically, Section 287.012(2), defines a "responsive bidder" to be a one who has submitted a bid which conforms in all material respects to the invitation to bid. Section 287.057(2) requires that this contract be awarded "to the qualified and responsive bidder who submits the lowest and best bid.

    
    

15. In the instant case, Petitioner contends that the agency erred in declaring its low bid unresponsive. It argues that notwithstanding the portion of the special conditions which calls for "no substitutions," the provisions of General Condition 7 permit the substitution of another brand toner (Minolta) for the Ektamate II toner by Kodak, so long as the appropriate descriptive literature to show identity of product is submitted with the bid. Petitioner contends the letters written to the agency in December, 1982, and adapted in May, 1988, accompanying the December 14, 1987, Minolta letter and the equipment brochure, are sufficient descriptive literature to meet the terms of General Condition 7. The agency properly disagrees. Neither the letters referred to above, nor the other documentation submitted at the hearing, in the absence of some concrete evidence of identity of product, are conclusive of that fact. The agency, for good reasons stated, is not satisfied that the Minolta toner is the same thing as the Ektamate II toner requested and declares the Petitioner's bid unresponsive on that basis.

    
    

16. In cases such as this, Petitioner carries the burden of demonstrating that the agency's action declaring its bid unresponsive was arbitrary, capricious, or unreasonable. Capeletti Brothers, Inc. v. State, Dept. of General Services, 432 So.2d 1359, 1363-64 (Fla. 1st DCA, 1983). At the same time, the agency is awarded "wide discretion" in soliciting and accepting bids and its decision, when based on an honest exercise of this discretion, will not be overturned by a court even if it may appear erroneous and even if reasonable persons may disagree. Liberty County v. Broker's Asphalt and Concrete, Inc.,

    421 So.2d 505, 507 (Fla. 1982). Finally, this is not a case where the agency's action is being reviewed. This is a de novo proceeding intended to formulate final agency action. Capeletti Brothers, Inc., supra.

    
    

17. Here, the evidence raises a strong implication that the Minolta Toner and the Ektamate II toner are the same. Possibly, if the products were compared properly, either by a review of the chemical specifications or by analysis, they would be seen to be so. However, Petitioner failed to present this type of evidence, relying instead on superficial appearances and less than definitive industry comments. The agency, on the other hand, has a most legitimate reason

    for requiring approved toner the continued validation of warranty on several expensive machines. It cannot be said that this is arbitrary, capricious, or unreasonable even if some might be convinced by the evidence presented. The responsibility lies with DLES procurement authorities and their reasons for rejection are reasonable and sound.

    
    

18. Petitioner was given the opportunity in January, 1988, to resolve, once and for all, the question of identity by providing, upon the request of DLES, a sample for testing by Kodak. It failed to do so and cannot reasonably now delay the procurement process by calling for the test it was offered but ignored previously.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

Recommended that Respondent issue a Final Order finding Petitioner's bid unresponsive and awarding the contract here in issue to the lowest responsive bidder consistent with its previously announced intent to award.

Recommended in Tallahassee, Florida, this 28th day of July, 1988.

ARNOLD H. POLLOCK, 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 28th day of July, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-2975BID

The following constitutes my specific rulings on the Proposed Findings of Fact submitted by the parties.

By the Petitioner:

1. Accepted and incorporated in Findings of Fact 2, 4 & 5.

2. Accepted and incorporated in Findings of Fact 2.

3. Accepted and incorporated in Findings of Fact 1.

4. Accepted and incorporated in Findings of Fact 2.

5 - 6. Accepted and incorporated in Findings of Fact 5.

1. Accepted but not relevant.

2. Accepted and incorporated in Findings of Fact 1 as to General Condition 7. Irrelevant as to other provisions cited.

3. Accepted.

4. Accepted and incorporated in Findings of Fact 1.

5. First sentence accepted. Second sentence accepted and incorporated in Finding of Fact 8. Third sentence

   rejected as contra to the evidence except for packaging similarities which are accepted and incorporated herein. Fourth sentence rejected as a Finding of Fact and not descriptive of any issue since the mere fact of Kodak's purchasing of toner from Minolta is not proof of the identity of the product.

6. Rejected as to the conclusion that the evidence offered at the hearing demonstrated that the toner was identical.

7. Rejected as a Conclusion of Law and not a Finding of Fact.

COPIES FURNISHED:

W. S. Webb, Jr.

Vice President

Office Systems Consultants 1351 Thomasville load

Post Office Box 147 Tallahassee, Florida 32302

Jeffries H. Duvall, Esquire Legal Counsel

Florida Department of Labor and Employment Security

The Montgomery Bldg., Suite 131 2562 Executive Center Circle, East Tallahassee, Florida 32399-0657

Hugo Menendez, Secretary Department of Labor and

Employment Security

206 Berkeley Building 2590 Executive Center

Circle, East

Tallahassee, Florida 32399-2152

Docket for Case No: 88-002897BID

Orders for Case No: 88-002897BID