STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GTE COMMUNICATIONS CORPORATION, )

)

Petitioner, )

vs. ) CASE NO. 90-4568BID

) UNIVERSITY OF SOUTH FLORIDA, )

)

Respondent, )

and )

) AMERICAN TELEPHONE & TELEGRAPH ) COMPANY, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was conducted on August 6 and 7, 1990, in Tampa, Florida, before Veronica E. Donnelly, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Lorin H. Albeck, Esquire

GTE Telephone Operations-South Area One Tampa City Center

Post Office Box 110, MC7 Tampa, Florida 33601-0110

For Respondent: Thomas M. Beason, Esquire

Donna H. Stinson, Esquire MOYLE FLANIGAN KATZ FITZGERALD

& SHEEHAN, P.A.

The Perkins House, Suite 100

118 North Gadsden Street Tallahassee, Florida 32301

For Intervenor: Norman H. Rosner, Esquire

AT&T Legal Department Post Office Box 7800

1200 Peachtree Street, N.E. Atlanta, Georgia 30309

Donna J. Katos, Esquire FLOYD PEARSON RICHMAN GREER WEIL ZACK & BRUMBAUGH, P.A.

Courthouse Center-Suite 2600

175 N.W. First Avenue Miami, Florida 33128-1817

STATEMENT OF THE ISSUES

Whether the Respondent, University of South Florida

(the University), arbitrarily evaluated the response to a request for bid proposals submitted by Petitioner, GTE Communications Corporation (GTE), for the Tampa Campus Communication System, Proposal No. 9-300-C.

Whether the University should set aside its notice to award the contract to American Telephone & Telegraph Company (AT&T) and rebid the contract.

PRELIMINARY STATEMENT

On or about April 3, 1989, the University released is request for proposals (RFP) for a communications system for its Tampa campus. By October 2, 1989, timely proposals had been received from five bidders, including GTE and AT&T. In January of 1990, the University completed its technical evaluation of the proposals. During this review, the proposals were ranked in the following order:

1. AT&T

2. United Telephone

3. IBM

4. GTE

5. Southern Bell

In the last stage of review, the University opened the cost proposals for only the top three ranked vendors. The cost proposal submitted by GTE was not included in this group of

vendors. After analysis, the University posted its intention to award the contract to AT&T. A notice of protest and a formal written bid protest were timely filed by GTE, pursuant to Section 120.53, Florida Statutes.

Prior to hearing, AT&T was granted leave to intervene

in the bid protest proceedings. A joint prehearing stipulation from all parties was filed. As a result, the focus of the hearing was reduced to a determination of whether the system overview evaluation and the technical evaluation of GTE's proposal were completed in a arbitrary and capricious manner that resulted in an improper exclusion of this proposal from the financial evaluation. If an improper review is found to have occurred, GTE seeks to have the current notice of award set aside for a rebidding of the contract.

The University asserts that the proposals were properly evaluated. AT&T contends for the first time in its proposed recommended order that GTE lacks standing to protest the award, due to its failure to reach the cost analysis stage of review.

During the hearing, GTE presented two witnesses and filed thirteen exhibits lettered A-M. GTE was allowed to file the deposition of Emmett A. Clary, Jr. post hearing, as a rebuttal exhibit. This exhibit was marked as GTE's Exhibit N.

The University called six witnesses and moved twenty- seven exhibits into evidence. These were marked Exhibit #1-27. AT&T did not present any witnesses. An exhibit marked Intervenor's Exhibit #1 was submitted. All of the exhibits presented by all parties were accepted into evidence by the Hearing Officer.

The transcript of the proceedings was filed August 20, 1990. Proposed recommended orders were timely received from the parties. Rulings on the proposed findings of fact are in the Appendix of the Recommended Order.

FINDINGS OF FACT

1. The Request for Proposals, No. 9-300-C (RFP), issued by the University on April 3, 1989, was designed to present the information and specifications necessary for each vendor to prepare and present a proposal responsive to the needs of the University. Through its RFP, the University was seeking the procurement of new communications services for the Tampa campus. The University wanted a technologically advanced, integrated system that would assist the University in its goal to become a major research university.

   
   

2. Within the RFP, the University stated that it wanted to acquire the following: a Digital Telecommunications System (DTS), a Data Local Area Network (DLAN), a Video Local Area Network (VLAN), Distribution Systems, and Associated Systems.

   
   

3. Although the specifications for the DTS in the RFP suggest that a vendor provide a university owned, premise based communications system, it was stated elsewhere within the RFP that the University "welcomes proposals for other communications technologies, including enhanced Centrex service to be provided on a regulated or combination regulated/unregulated basis."

   
   

4. "Centrex" is the industry--wide term used to describe central office based systems as opposed to premise based systems. Because such a system could provide the same features and service of a premise based system, this deviation or variance to the proposal specifications would be allowed, if a design using enhanced Centrex service was otherwise consistent with the stated needs and requirements of the University.

   
   

5. This particular specification within the RFP was

   not the only technical specification the University may have been willing to waive. The RFP was written in a manner that allowed vendors to submit variances to any part of the terms, conditions or specifications. Because the University was requesting an advanced communication system which it envisioned would meet its needs for the rest of this century, flexibility in design was encouraged. However, if a variance was submitted, it was to be included as an exception to the RFP and had to be fully explained. Areas of partial compliance or agreement also

   required an explanation from the vendor. These variances were to be evaluated by representatives of the University as part of the technical review after the proposals were accepted.

   
   

6. Due to the flexibility in design allowed within the

   RFP, the University was unable to set forth the criteria it would use to distribute points prior to its review of the proposals actually submitted.

   
   

7. In spite of the flexibility allowed in the proposals, the University's specifications in the RFP and its published responses to vendor questions, required that single- line and multi-line station sets have digital telephones. The only exceptions to the digital telephone requirement were the designated analog telephones for elevators, hallways and facsimile transmissions.

   
   

8. Prior to the acceptance of proposals on October 2, 1989, there were no notices of protest filed challenging the

   specifications in the RFP or the procedure the University intended to use to evaluate any variances in its post bid review.

   
   

9. In its response to the RFP, GTE proposed a central office based system. The system utilized a digital DMS-100 switch manufactured by Northern Telecom and analog telephones. The analog telephones would connect with data terminals on a single line using an Integrated Voice Data Multiplexer (IVDM). This device converts digital computer data into analog signals. The IVDM uses frequency division multiplexing, an analog technology. In this design, a second IVDM is required to separate voice and data signals for connection to separate port cards. The proposed IVDM connectors transmit data at 19.2 kilobytes per second.

   
   

10. Although such a system is a workable proposal, it

    does not conform in all material respects to the minimum technical requirements within the proposal specifications. The University seeks a digital end to end system, that uses digital telephones. Time division multiplexing is also required. Data transmissions are specified to occur at 56 kilobytes per second, almost two and a half times the speed of the transmission proposed by GTE.

    
    

11. The RFP was liberal enough in its minimum specifications to allow competitive responsive proposals on comparable products from various vendors for the equipment and features sought by the University. These specifications were consistent with the stated needs of the University for a technologically advanced, integrated communications system.

    
    

12. The proposal posted by the University from AT&T conforms in all material respects to. the RFP. It was determined to be the most advantageous to the University, taking into consideration price, and the stated needs of the University in the RFP.

13. The RFP involved in these proceedings was independently reviewed by the Department of General Services, Division of Communications. Although the agency did not necessarily concur in the weighting of the points by the technical review committee, it did agree that AT&T had the apparent responsive low bid proposal and that GTE's proposal should have been excluded from the financial evaluation.

    
    

14. During the exercise of the evaluation procedures

    used by the University, the evaluation committee did not act with favoritism, or in bad faith. There was no fraud, collusion, or other misconduct.

    
    

15. The University's bid evaluation committee for the technical review of the DTS consisted of six University representatives. All had professional experience that would assist in the evaluation.

    
    

16. The committee first attended one or two training seminars to receive training in evaluation techniques. They were given 3,150 points to distribute across the six subsections of the DTS section of the proposals.

    
    

17. Once the committee began its review, it undertook

    a lengthy evaluation process which consisted of the following: a) an evaluation of each proposal against the RFP,

    1. preparation of written questions regarding specific proposals, which were forwarded from the oversight committee to the vendors,

    2. the review of the oral presentations and written responses from the vendors, d) the technical evaluation, e) the preliminary independent ranking of the proposals on a scale of 1 to 5, and

    f) the reaching of a consensus based upon a unanimity of ranking. Bonus points were awarded at separate times and did not reflect the ranking, so as to avoid any "shadow effect."

    
    

18. Although there was no specific and detailed criteria used by the committee to award points to each subsection of each proposal, the process used had a methodology that was uniformly applied to all of the proposals.

    
    

19. The issuance of only 20% of the available points for Subsections 2.1 and 2.2 in GTE's proposal was deliberate. The committee based this point assignment upon its collective reasoning that digital telephones with digital lines were an

    integral part of the stated needs and requirements of the University in the RFP. GTE's proposed analog system was designed to merely augment the present telecommunications system. It did not offer the more modern digital foundation that the University wanted to establish for its foreseeable future needs. A reduced sound quality was being offered, along with slower speed for data transmissions. Conversion of stations by the University's communication maintenance crew would be more difficult under this analog-digital system, and the lack of control over data devices by the University was viewed as a negative factor from the committee's standpoint.

20. GTE had the means and opportunity to acquire equipment that would have complied with the requirements of the RFP.

    
    

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Section 120.53 and 120.57(1), Florida Statutes.

    
    

22. In this case, GTE seeks to have the University's proposal award of its communications system contract to AT&T set aside. The underlying rationale for the protest is that the technical evaluation of all DTS proposals by the committee was completed without specific, ascertainable, objective guidelines. GTE contends that the lack of specific criteria in the RFP to guide the committee in its evaluation resulted in a subjective decision that treated GTE unfairly in the review process.

    
    

23. Ordinarily, objections to the lack of specific criteria in an invitation to bid are made within seventy-two hours after receipt of the bid solicitation. Rules 10-13.008 and 13A- 1.006(3), Florida Administrative Code, set forth the procedures a prospective bidder is required to use if it intends to contest the bid specification. However, GTE is granted standing to protest the specifications at this stage of the proceedings because the RFP specifically encouraged vendors to submit variances to the specifications. This approach placed vendors in a quandary as to what stage in the process they were able to effectively challenge the specifications. Accordingly, GTE is given the opportunity in this proceeding to challenge the committee's assessment of the DTS section of its

    
    

24. During the hearing, the University explained the evaluation procedures used by the technical evaluation committee in its review of the proposals. Based upon the evidence presented, the review process was logical. The committee established a methodology prior to review, and uniformly applied it to all of the proposals. As a result, GTE was unable to factually demonstrate by a preponderance of the evidence that the committee made an arbitrary decision when GTE's proposal was evaluated. The burden is upon the protestant to establish that the University acted in an arbitrary manner. Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

25. The DTS system proposed by GTE to the University was a workable proposal, but it did not conform in all respects with the minimum technical requirements within the RFP. This was made clear during the hearing process. Therefore, the low evaluation given to GTE's proposal was well founded. Linder the terms of the RFP, the University was required to accept the proposal of the apparent responsive bidder who complied with the proposal requirements. To attempt to do otherwise violates the legislative intent for fair and open competition in public procurement contracts, as set forth in Section 287.001, Florida Statutes.

26. The protest by GTE in these proceedings was not frivolous. A reasonable argument can be made that the lack of definite plans and specifications in the RFP made it impossible for the evaluation committee to make an exact comparison of the bids. Webster v. Belote, 136 So. 721 (Fla. 1931). An independent review of the RFP and the evaluation process was necessary to assure that GTE was treated fairly in this case. Therefore, attorneys fees and costs should not be awarded to any prevailing party in this proceeding.

RECOMMENDATION

Based upon the foregoing, it is RECOMMENDED:

That GTE's protest in Proposal No. 9-300-C be denied

and that the bid be awarded to AT&T, the apparent responsive low bidder.

DONE and ENTERED this 24th day of September, 1990,

in Tallahassee, Leon County, Florida.

VERONICA E. DONNELLY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings

this 24th day of September, 1990.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-4568BID

GTE's proposed findings of fact are addressed as follows:

1. Rejected. Contrary to fact. See HO #7.

2. Accepted. See HO #9.

3. Accepted. See HO #9.

4. Accepted.

5. Accepted. See HO #16.

6. Accepted. See HO #9.

7. Accepted. See HO #17.

8. Accepted, but limited in its representations. See HO #18.

9. Rejected. Describes end result, not process. See HO #18.

10. Rejected. Contrary to fact. See HO #20.

11. Accepted.

12. Accepted.

13. Accepted. See HO #18.

14. Accepted. See HO #18.

15. Accepted. See HO #19.

16. Accepted.

17. Accepted.

18. Accepted. See HO #20.

19. Accept first sentence. See HO #20. Last sentence rejected. Speculative.

20. Rejected. Incomplete. See HO #18 - #20.

21. Accepted.

USF's proposed recommended order is addressed as follows:

1. Accepted. See preliminary statement.

2. Accepted. See preliminary statement.

3. Accepted. See preliminary statement.

4. Accepted.

5. Accepted.

6. Accepted.

7. Accepted.

8. Accepted. See HO #1.

9. Accepted. See HO #2.

10. Accepted.

11. Accepted.

12. Accepted. See HO #10.

13. Accepted. See HO #5.

14. Accepted.

15. Accepted.

16. Accepted.

17. Accepted.

18. Accepted.

19. Accepted. See HO #17.

20. Accepted.

21. Accepted.

22. Accepted. See HO #18.

23. Accepted.

24. Accepted.

25. Accepted.

26. Accepted.

27. Accepted.

28. Accepted.

29. Accepted. See HO #18.

30. Accepted.

31. Rejected as to IBM. Irrelevant. Otherwise accepted.

32. Accepted. See HO #7, #9 and #10.

33. Accepted.

34. Accepted.

35. Accepted.

36. Accepted.

37. Accepted. See HO #9 and #10.

38. Accepted. See HO #9.

39. Accepted.

40. Rejected. Uncorroborated hearsay.

41. Accepted. See HO #20.

42. Accepted. See HO #13.

43. Accepted. See HO #13 and #20.

44. Rejected. Argumentative.

45. Rejected. Irrelevant to proceeding.

46. Rejected. Argumentative.

47. Accepted.

48. Accepted. See HO #13.

49. Accepted. See HO #20.

    
    

    AT&T's proposed findings of fact are addressed as follows:

    
    

    1. Rejected. Irrelevant.

    2. Accepted. See HO #5.

    3. Accepted. See HO #1.

    4. Accepted. See HO #8.

    5. Accepted.

    6. Accepted. See HO #7.

    7. Accepted. See HO #18.

    8. Accepted.

    9. Rejected. See HO #16.

    10. Accepted. See HO #17 and #18.

    11. Accepted. See HO #18.

    12. Accepted. See HO #18.

    13. Accepted. See preliminary statement.

    14. Accepted. See preliminary statement.

    15. Accepted. See preliminary statement.

    16. Accepted.

    17. Accepted. See HO #15.

    18. Accepted.

    19. Accepted. See HO #13.

    20. Rejected. Improper summary.

    21. Rejected. Improper summary.

    22. Accepted.

    23. Rejected. Irrelevant. See HO #5.

    24. Rejected. Irrelevant.

    25. Accepted.

    26. Accepted.

    27. Accepted.

    28. Accepted.

    29. Accepted. See HO #7 and #10.

COPIES FURNISHED:

Lorin H. Albeck, Esquire

GTE Telephone Operations-South Area One Tampa City Center

Post Office Box 110, MC7 Tampa, Florida 33601-0110

Thomas M. Beason, Esquire Donna H. Stinson, Esquire MOYLE FLANIGAN KATZ FITZGERALD

& SHEEHAN, P.A.

The Perkins House, Suite 100

118 North Gadsden Street Tallahassee, Florida 32301

Norman H. Rosner, Esquire AT&T Legal Department Post Office Box 7800

1200 Peachtree Street, N.E. Atlanta, Georgia 30309

Donna J. Katos, Esquire FLOYD PEARSON RICHMAN GREER

WEIL ZACK & BRUMBAUGH, P.A.

Courthouse Center-Suite 2600

175 N.W. First Avenue Miami, Florida 33128-1817

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA UNIVERSITY OF SOUTH FLORIDA

GTE COMMUNICATIONS CORPORATION,

Petitioner,

vs. DOAH CASE NO. 90-4568BID

UNIVERSITY OF SOUTH FLORIDA,

Respondent.

and AMERICAN TELEPHONE & TELEGRAPH,

Intervenor.

/

FINAL ORDER

On September 24, 1990, the Hearing Officer of the Division of Administrative Hearings submitted to the University of South Florida ("USF") and to the other parties in this proceeding a recommended order, a copy of which is attached as Exhibit A.

Background

In April, 1989, the University of South Florida (USF) published a Request for Proposals (RFP) for a Tampa Campus Communication System. After evaluation of proposals, in June, 1990, USF published notice of its selection of American Telephone & Telegraph's proposal as most advantageous. GTE Communication Corporation filed a protest on the award to AT&T which was forwarded to the Division of Administrative Hearings for hearing.

Ruling on Exceptions USF Exceptions

1. USF excepts to the Recommended Order to the extent it fails to award USF its costs as a prevailing party pursuant to Section 287.042(2)(c), Florida Statutes. The Hearing Office ruled in the last paragraph of the Conclusions of Law that GTE's petition was not frivolous, which is dispositive of the issue of an award of fees and costs as sanctions pursuant to Section 120.57(1)(b)5, Florida Statutes, but this conclusion is not dispositive of USF's right to recover costs and charges pursuant to bond provisions of Section 287.042(2)(c), Florida Statutes. That section provides, that if the agency prevails, "it shall recover all costs and charges . . ." USF's first exception is well founded and is therefore granted.

2. USF excepts to the last paragraph of the Conclusions of Law wherein the Hearing Officer concludes:

   
   

   An independent review of the RFP and the evaluation process was necessary to assure that GTE was treated fairly in this case.

   
   

   Before the hearing commenced GTE agreed in the joint prehearing stipulation that it has been informed of the evaluation procedures used by USF and did not contend the evaluation committee acted with favoritism, in bad faith or fraudulently. GTE also agreed the AT&T proposal was responsive. The Hearing Officer found that the bid review process was logical and uniformly applied to all of the proposals, that the GTE proposal did not conform to the minimum technical requirements of the RFP, that the low evaluation given to GTE's proposal was well-founded and that under the terms of the RFP the University is required to accept the proposal which complied with the RFP and "to do otherwise would violate legislative intent for fair and open competition." This proceeding did not result in any modification of the evaluation, this proceeding was not necessary to assure fairness. The exception is granted. Based on the foregoing, all but the first sentence of the last paragraph of the Hearing Officer's conclusions of law are rejected.

   
   

3. USF excepts to the Hearing Officer's conclusion of law on page 10 that the RFP specifically encouraged vendors to submit variances to the specifications and that GTE has standing to challenge the Request for Proposal specifications.

Findings of Fact paragraph 5 states that the RFP allowed vendors to submit variances and specifies the variances must be explained and would be evaluated. The Hearing Officer also found the RFP required a digital end-to-end system and GTE's proposal did not conform to this minimum requirement. (Paragraph 10) GTE was not encouraged to bid a non-digital system.

The Hearing Officer's conclusion relates to GTE's standing to challenge this specification, but GTE did not dispute the RFP requirement for a digital system. The conclusion is neither accurate nor relevant.

The exception is granted.

Ruling on Costs

USF is the prevailing party in this proceeding. As set forth in Section 287.042(2)(c), Florida Statutes, USF is entitled to recover its costs and charges in this proceeding. USF is therefore awarded its costs and charges, excluding attorney's fees, and jurisdiction is retained to establish the amount of costs. If the amount is in dispute, the issue shall be remande to the Hearing Officer and a separate order will be entered on amount of costs.

Conclusion

Having ruled on all of the exceptions, it is ORDERED that:

1. Except as otherwise stated in this Final Order, the Recommended Order is adopted and incorporated here by reference;

2. That GTE's protest in proposal number 9-300-C is denied and the bid is awarded to AT&T, the responsive low bidder; and

   
   

3. USF is awarded its costs in this matter and a separate order will be entered on the amount to be determined in accordance with Section 287.042(2)(c), Florida Statutes.

Notice of Rights

Any party to this Final Order may seek judicial review of this order under Section 120.68 of the Florida Statutes by filing notice of appeal under Rule 9.110, the Florida Rules of Appellate notice of appeal under Rule 9.110, the Florida Rules of Appellate Procedure, with the Clerk of the University of South Florida in the Office of General Counsel, 4202 E. Fowler Avenue, ADM 250, Tampa, Florida 33620-6250 and by filing a copy of the notice of appeal, accompanied by the applicable filing fees with appropriate District Court of Appeal. The notice of appeal must be filed within thirty days of the date when the order is filed with the clerk of the University of South Florida.

DONE AND ORDERED on this 15 day of October, 1990 in Tampa, Florida.

President

Docket for Case No: 90-004568BID

Orders for Case No: 90-004568BID