STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BTI SERVICES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-0180BID

) FLORIDA PREPAID POST-SECONDARY ) EDUCATION EXPENSE BOARD, )

INTERNATIONAL COMPUTAPRINT ) CORPORATION, and NORTH AMERICAN ) FINANCIAL SERVICES, LTD., )

)

Respondents. )

)

RECOMMENDED ORDER

This matter was heard by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings, on February 5, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner, Robert J. Winicki, Esquire BTI Services: Mahoney, Adams & Criser, P.A.

50 North Laura Street, Suite 3300 Jacksonville, Florida 32202

For Respondent, Geoffrey Smith, Esquire Florida Prepaid Blank, Rigsby & Meenan, P.A. Post-Secondary 204 South Monroe Street Expense Board: Tallahassee, Florida 32301

For Intervenor, Paul Ezatoff, Esquire

North American Katz, Kutter, Haigler, Alderman, Financial Davis & Marks, P.A.

Services, Ltd.: 106 East College Avenue

Tallahassee, Florida 32301 STATEMENT OF THE ISSUES

The issues are whether the proposal of BTI Services, Inc., submitted in response to Request for Proposals No. 92-1 issued by the Florida Prepaid Post- Secondary Expense Board for a records administrator was correctly rejected by the Board as non-responsive; and whether the Board correctly treated the proposals received from two other entities, North American Financial Services, Ltd., and International ComputaPrint Corporation, as responsive.

PRELIMINARY STATEMENT

The Florida Prepaid Post-Secondary Expense Board referred this matter to the Division of Administrative Hearings on January 15, 1993, and a final hearing was held on February 5, 1993. International ComputaPrint Corporation did not participate in the proceeding. At that hearing 18 exhibits of BTI Services, Inc., were received in evidence, as were five exhibits offered by the Prepaid Post-Secondary Expense Board, and 15 exhibits offered by Intervenor, North American Financial Services, Ltd. BTI Services, Inc., also read into the record portions of depositions of William F. Nichols, an employee of the Prepaid Post- Secondary Education Expense Board, and of Francis Marinelli of North American Financial Services, Ltd. The Executive Director of the Prepaid Post-Secondary Expense Board, William W. Montjoy, testified on behalf of the Board, and North American Financial Services, Ltd., called Clay Stabler of BTI Services, Inc., as an adverse witness. The transcript of the hearing was filed on February 18, 1993. The parties filed proposed recommended orders on March 1, 1993. Rulings on proposed findings are made in the appendix to this Recommended Order.

FINDINGS OF FACT

The Board and its program.

1. The Florida Prepaid Post-Secondary Education Expense Board (Board) is an agency which administers the Florida Prepaid College Program. The Board sells advance payment contracts for tuition and dormitory expenses at Florida post- secondary education institutions. The Board is required by Section 240.551(8)(a), Florida Statutes (1991), to contract with a records administrator to conduct the day-to-day operations of its program. The Petitioner, BTI Services, Inc. (Barnett), is the current records administrator. BTI Services, Inc., is affiliated with Barnett Bank. The Board issued its Request for Proposal Number 92-1 on July 31, 1992, seeking a records administrator for a 3- year contract term with the option to renew the contract for further periods.

   
   

2. The following portions of the Request for Proposal (RFP) bear upon the responsiveness of the proposals submitted by the parties:

   
   

   SECTION I GENERAL INFORMATION

   
   

   * * *

   
   

   1.4 Period of Contract

   The duration of any contract resulting from this RFP shall be for three (3) years from the date of its execution. The current records administration contract expires on June 30, 1993. Respondent shall be completely operational on July 1, 1993. It is the intent of the Board to review and define necessary services at the end of three (3) years.

   Respondents shall submit in their response to this RFP, the terms and conditions for service in additional years. The Board reserves the option to renew the contract or any portion of the contract under the terms and conditions set forth in this RFP or any other such conditions as may be negotiated between the

   parties for two additional one (1) year periods. Renewal shall be contingent upon, among other things, availability of funds, continued need, and satisfactory performance by the successful Respondent. Moreover, the contract is subject to an annual performance evaluation of the successful firm.

   
   

   * * *

   1. Proposal Opening

      It is the Respondent's responsibility to assure that its proposal is delivered at the proper time and place of the proposal opening. Proposals which, for any reason, are not timely delivered will not be considered.

      Late proposals will not be accepted; they will be returned unopened to the Respondent. Offers by facsimile or telephone are not acceptable. A proposal may not be altered after opening. [Emphasis in original]

      
      

   2. Acceptance of Proposal by Board

   The Board reserves the right to accept or reject any and all proposals and to award the issuing contract in the best interest of the State of Florida.

   * * *

   1.17 Restrictions on Communications with Board Staff

   From the date this RFP is issued until a determination is made, the only Respondent- initiated contact related to this RFP allowed between Respondent and any member of the Prepaid Postsecondary Education Expense Board, or member of the Board staff, is during the prebidder's conference. Any unauthorized contact may disqualify the Respondent from further consideration.

   * * *

   
   

   SECTION III INFORMATION REQUIRED FROM

   RESPONDING PROPOSERS

   
   

   3.2 Sufficiency of Response

   Respondent's proposal must be submitted in the format outlined below. There should be no attachments, enclosures or exhibits other than those considered by the Respondent to be essential to a complete understanding of the proposal submitted. Each section of the proposal must be clearly identified with appropriate headings. . . .

   * * *

   F. Price Proposal

   The information requested in this section is required to support the reasonableness of the Respondent's quotation. THIS PORTION OF THE PROPOSAL MUST BE LABELED, THEN BOUND SEPARATELY FROM THE REMAINDER OF THE PROPOSAL.

   The price proposal shall be in the format as described in exhibit "D", Price Proposal Worksheet. Any deviation from the worksheet format or instructions will be cause for rejection of the proposal. Respondent shall also provide specific Records Administrator charge rates as referenced in Section 2.2(F)(13) for such items as computer programming, etc.

   * * *

   
   

   3.7 Regulatory Restrictions and Litigation Each Respondent must describe in detail any past or pending regulatory restrictions, consent orders, stipulations or litigation to which the Respondent or any of its principals, owners, directors or officers has ever been a party that would affect its ability to provide the required services. Respondents must indicate if any officers, principals, owners or directors have been convicted of a felony. If so, a detailed description of each incident must be included. Respondent must also indicate whether or not any liquidated damages have ever been imposed against the Respondent for the untimely completion of any task required by the terms of any contract for services entered into between the Respondent and any other entity during the past five (5) years. If so, a detailed description of each such incident, including the amount of liquidated damages imposed, must be included. Respondent must execute a sworn statement on public entity crimes, exhibit "F."

   
   

   SECTION IV MANDATORY REQUIREMENTS

   
   

   1. Introduction

      The Board has established certain mandatory requirements which must be included as a part of any submitted proposal. The use of "shall," "must," or "will" (except to indicate simple futurity) in this RFP indicates a mandatory requirement or condition.

      
      

      The words "should" or "may" in this RFP indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable will not by itself cause rejection of a proposal.

      The right is reserved to determine which Respondents have met the basic requirements of this RFP, and to determine whether any deviation from the requirements of the specifications, terms and conditions contained herein is merely minor or technical in nature; the right to accept bids which deviate in minor or technical fashion is also reserved.

      Only those Respondents who have met the basic requirements of this RFP will be considered; any Respondent who has not done so will be rejected. The right is reserved to reject any or all proposals. Failure to meet any contractual obligations may result in cancellation of any award.

      
      

   2. Mandatory Criteria

   Specific attention is directed to the following mandatory provisions contained in this RFP. Each Respondent must comply with each of these provisions and present an index citing the page number within its proposal that fulfills these mandatory provisions.

   Failure to comply with these mandatory

   provi sions is sufficient cause to disqualify the proposal without further evaluation or consideration. [Emphasis in original]

   
   

   Each Respondent must provide evidence of, or expressly indicate a willingness and ability to meet, the following mandatory criteria:

   
   

   RFP Section

   Numbers Provisions

   
   

   1.9 Proposals to be signed and sealed

   1.13 Primary responsibility for delivering services

   1.19 Annual appropriations

   2.1-2.2 Scope of services requested

   2.3 Control

   1. Identification of Respondent

   2. Sufficiency of response

   3. Copies of proposals

   1. Financial information

   2. Regulatory Restrictions and Litigation

   6.1 General terms

   6.2(A)-6.2(BB) Contents of contract

   SECTION IV EVALUATION

   
   

   1. Proposal Submission

      Only proposals submitted in the time frame stated herein and with the content as required by this RFP will be reviewed and considered by Board staff and the Board.

      
      

   2. Evaluation Criteria

   If Respondent does not meet all of the mandatory requirements set forth in Section IV above, such proposal may be rejected by the Board as nonresponsive.

   
   

   The Board seeks to contract for services described herein with the responding firm who submits the best proposal. The written proposals will be evaluated by Board staff and rankings submitted to the Board will utilize the following 100 point grading system.

   
   

   A. Price (35 points)--Fees and other costs charged to purchasers that affect account values or operational costs related to the program will be evaluated. THIS PORTION OF THE PROPOSAL MUST BE LABELED, THEN BOUND AND SEALED SEPARATELY FROM THE REMAINDER OF THE PROPOSAL. The fees proposed must be in the format as described in exhibit "D", Price Proposal Worksheet. Any deviation from the worksheet format or instructions will be cause for rejection of Respondent's proposal.

   * * *

   C. Personnel and Computer Capability (20 points)--The proposal shall clearly describe the background, quality and level of expertise of Respondent's staff and affirmatively state agreement with the provisions of Section 1.13, 2.2(A)(7), 2.2(A)(8), 2.2(G), 2.3, 3.2(A)-(C) and 6.2(A)-(BB). Computer capability for the scope and level of service described in paragraph 2.2 shall be evaluated.

   
   

3. North American Financial Services, Ltd. (North American), International ComputaPrint Corporation (ICC), and Barnett submitted timely responses to the RFP which were opened by Board staff on September 30, 1992.

   
   

4. The response of Barnett was voluminous, containing about 1,000 pages in three bound volumes. The proposal submitted by Barnett omitted 35 pages, numbered C-129 through C-164, which contained information concerning Barnett's computer capabilities. The index required by Section 4.2 of the RFP submitted with Barnett's proposal showed that the missing pages were responses to Criteria 2.2(G)6 through 2.2(G)13, which were mandatory criteria under Sections 4.2 and 5.2(C) of the RFP. These pages described the computer services to be provided

   during the contract term which would commence in July of 1993. Barnett's index did not indicate that the necessary response to Section 2.2 of the Board's RFP could be found in any other portions of its proposal.

   
   

5. Because Barnett is the Board's current records administrator, Board staff knew of Barnett's current computer capabilities. What the RFP required, however, was an offer of services to be provided during the new contract term. Staff members could have drawn on their familiarity with Barnett as an existing vendor, but it would be improper for the staff to evaluate the proposal based on Barnett's current services, as they were not necessarily ones Barnett proposed to provide in the future.

   
   

6. The discovery that pages were omitted from the Barnett proposal caused Board staff to carefully go through the proposals received from North American and ICC and, in the process of doing so, staff found in them certain defects and omissions. Neither of those proposals omitted entire sections of responses required by the RFP, however.

   
   

7. The North American proposal omitted pricing for the two option years after the three-year base contract, which had been requested by Section 1.4 of the RFP, and failed to respond fully to Section 3.7 of the RFP, which sought a detailed description of any past or pending regulatory restrictions, consent orders, stipulations or litigation to which the bidder or any of its officers or directors had been a party which would affect the bidder's ability to provide services to the Board.

   
   

8. The response of ICC failed to address sections of the RFP involving the contents of the contract for services.

   
   

9. The Board 's Executive Director sent letters to all three bidders on October 26, 1992, requesting that they file the omitted materials or supplement deficient items, and offer a full explanation of why that information had not been included in their initial submissions. Each bidder then submitted a letter of explanation and the supplemental information Board staff requested. Board staff referred all three proposals, together with the supplemental information, to an evaluation committee for review, evaluation, and ranking.

   
   

10. Under the evaluation procedure described in Section V of the RFP, a total of 300 points (100 per evaluator) could be awarded to a bidder. The committee ranked Barnett's proposal first, awarding 276 points; North American's second with 270 points; and ICC's third with 257 points. The total projected three-year costs based on each bid were: Barnett - $9,389,887; ICC -

    $7,789,259; North American - $7,977,564 (Barnett Exhibit 8, attachment 4, page 4, paragraph C). The evaluation was brought to the Board at its meeting on December 15, 1992.

    
    

    Barnett's initial proposal and supplemental response.

    
    

11. Section 4.2 of the RFP required that every proposal include an index, citing the page numbers which addressed mandatory provisions of the RFP. It was obvious that the responses would be large, and Board staff is small. Staff could not search through proposals to try to determine whether information submitted was meant to satisfy a mandatory provision of the RFP. Bidders' attention had been specifically directed in Sections 4.1 and 4.2 of the RFP to the mandatory indexing requirements. They had notice that failure to respond to the section of the RFP dealing with the scope of services requested, or with any

    other specifically designated mandatory requirement, would be "sufficient cause to disqualify the proposal without further evaluation or consideration" (RFP, Section 4.2).

    
    

12. At final hearing, Barnett identified for the first time pages within its proposal which it claimed responded to the mandatory requirements of Sections 2.2(G)6 through 2.2(G)13 of the RFP. This new index was never provided to members of the evaluation committee, for it did not exist then. It is not clear that the pages identified in this new index actually respond to the requirements of Sections 2.2(G)16 to 2.2(G)13, for no witness at the final hearing testified that they did. The submission of this new index evidences a misunderstanding of the purpose of this hearing, however. The question presented is not whether Barnett now can identify portions of its original submission which responded to mandatory requirements of the RFP. Those pages of its original submission were not indexed for the use of the evaluation committee. The Hearing Officer cannot act as a member of the bid evaluation committee and make some de novo, independent determination of the sufficiency of this new index. The only purpose of the index was to permit evaluation of the proposal, something the Hearing Officer cannot do.

    
    

13. When Barnett replied with its letter of explanation, it included what it then characterized as the "9 copies of pages C-129 through C-164" originally required, explaining that "these pages were intended to be included in [Barnett's] response" as evidenced by "the detailed table of contents and cross- reference provided" in its initial response (North American Exhibit 4). Barnett blamed the omission on a photocopying error. Barnett's letter did not tell the Board that changes had been made to these 35 pages. They were not the pages Barnett originally intended to include with its response to the RFP, but amended pages which did not exist on the bid opening date in the form submitted on October 30, 1992 (Tr. 69, 77).

    
    

14. Barnett's changes were due, at least in part, to Barnett's review of the North American and ICC proposals opened on September 30, 1992, and its analysis of what it believed were "overall deficiencies" in them (Moorer Deposition at 28). Barnett knew from comments by Board staff that its price proposal was about 20% higher than the other proposals (Moorer Deposition at 40). The evidence is unsatisfactory on just who initiated this discussion. Had Barnett done so, it would have been in violation of Section 1.17 of the RFP, which prohibited vendor initial contact with Board staff on the substance of the proposals before a proposal was selected by the Board.

    
    

15. The most significant change Barnett made in the revised 35 pages offered to "serialize" dormitory and tuition accounts. Other changes referred to software modifications Board staff and Barnett were already working on. This was an attempt to increase its score under the evaluation criteria found in Section 5.2(A) of the RFP. To the extent that Mr. Stabler was careful, at final hearing, to deny that the new "serialization" proposal was a price change, but merely created a potential for a price reduction, that testimony is unconvincing. Mr. Stabler acknowledged during his deposition that the effect of serialization, if implemented, would be to cut substantially the cost to the Board for handling contracts which included payments for both tuition and dormitory space.

    
    

16. The changes also emphasized the programming ability of Barnett, for after review of the other proposals Barnett believed that those bidders had placed too much emphasis on hardware capability and too little on programing ability. These changes were designed to enhance Barnett's competitiveness in

    the technical areas of personnel and computer capabilities under the evaluation criteria found in Section 5.2(C) of the RFP (Moorer Deposition at 37). Board staff recognized that the offer to provide a serialization computer program was new, and realized it could reduce the costs paid by the Board. The evaluators did not include the serialization proposal in its evaluation, because staff regarded it as an inappropriate attempt to modify price. The evaluation committee did award points for other parts of the 35 pages submitted with Barnett's October 30, 1992, letter of explanation.

    
    

    North American's initial proposal and supplemental response

    
    

17. The price proposal which North American submitted used the Board's price proposal worksheet, the form specifically required by Section 3.2(F) of the RFP, which tells bidders: "Any deviation from the worksheet format or instructions will be cause for rejection of the proposal." The Board's worksheet has no space for supplying separate "option year" pricing information, even though Section 1.4 of the RFP indicated that the Board wanted pricing for a three-year base period and for two additional one-year option periods. The usefulness of the option year prices is problematic, for Section 1.4 of the RFP stated the Board's intent to redefine the services to be provided at the end of the three-year base contract, which would require a price renegotiation. The way the Board's worksheet is set up, charges are based upon the number of tuition and dormitory accounts serviced, not upon a "per year" charge. Nothing in the price worksheet or Section 3.2 of the RFP mention the possibility of stating an option year price separately from the price for the base three-year term. The Board staff did not mention the omission of option year pricing as a deficiency in the October 26, 1992, omissions letter.

    
    

18. North American's proposal did not deviate from the worksheet format or instructions. Nothing in the RFP required that the option year prices be separately stated if no price change in the option years was proposed. North American contends that its price was good for the initial contract term and for the renewal periods. While this is somewhat self-serving, it is also consistent with the required format of the price proposal worksheet.

    
    

19. The fundamental problem is the RFP's internal inconsistency. The request that the bidder include the terms and conditions for service in the option years (the fourth and fifth years) appears in the general information section of the RFP. But the price proposal worksheet, part of Section 3.2 of the RFP, has no place to enter option year price information. This inconsistency probably went unnoticed by Board staff because they placed no importance on the option year pricing. It has been the Board's practice to circulate a new Request For Proposal at the end of each three-year period and to negotiate new services and prices at the end of that base term. The text of Section 1.4 is consistent with this practice. The Board was focusing on the selection of a vendor to provide services during the three-year base period of the contract.

    
    

20. The evaluation committee never considered the option year pricing in its scoring. Had it done so, it would have been a detriment to Barnett, for it already had the highest price proposal. The two other bidders had not proposed any price increase for the "option years," while Barnett had proposed an 8% price increase for those years.

21. Because the Board's past practice has been not to rely on the option year pricing to extend contracts for the records administrator beyond the base period, North American gained no advantage in the evaluation process by failing to specifically include option year pricing, which was not called for on the required price proposal worksheet.

    
    

22. The initial response of North American contained the sworn statement on public entity crimes required by Section 3.7 of the RFP. The submission said nothing about any past or pending regulatory restrictions, consent orders, stipulations or litigation to which North American or its officers or directors had been a party which would affect its ability to provide the required services.

    
    

23. What is most significant is that the opening phrase of Section 3.7 requires the bidder to "describe in detail" any such matters. North American indicated by its response to the October 26, 1992, omissions letter that it had nothing to say on the subject because there were no such restrictions which it could describe (North American Exhibit 6, final page). There is no evidence that there are any restrictions which North American should have described, but did not. Another portion of Section 3.7 of the RFP required bidders to indicate "whether or not" liquidated damages had been imposed against them in the past five years for failure to meet contract obligations. Arguably, this sentence could require the response that no such damages had ever been imposed. As with the regulatory restrictions, there is no evidence that any liquidated damages had been imposed against North American in the last five years which should have been disclosed, but were not. Read together, however, it was not unreasonable for North American to say nothing in response to these portions of the RFP. North American concealed nothing by its failure to respond in the negative to Section 3.7. It gained no advantage as a result of its interpretation that the text of the section required no response from it. Its supplemental submission did not affect its bid price.

    
    

    Action by the Board

    
    

24. After staff evaluated and ranked the proposals, they were submitted to the Board for formal action. The Board decided to reject the Barnett proposal as nonresponsive because the initial proposal had omitted 35 pages of mandatory information. The omission was properly chargeable to Barnett's neglect to verify that all pages required were being submitted to the Board. Although the Board did not know it, Barnett had altered the pages it submitted after its competitors' bids had been opened, in a manner designed to enhance Barnett's bid.

    
    

25. The Board accepted the North American proposal as responsive and indicated its intention to negotiate with North American as the highest ranked responsive bidder. The Board was persuaded by North American's explanation of its failure to include specific option year pricing and failure to state that there were no applicable regulatory restrictions or instances where liquidated damages had been imposed, because there were none. The Board believed that North American had made an understandable interpretation of the Board's RFP, and that North American gained no advantage over any other bidder as the result of those omissions.

    
    

26. Barnett filed a timely protest and formal written protest of the Board's action under Section 120.53(5), Florida Statutes (1991).

    CONCLUSIONS OF LAW

    
    

27. The Division of Administrative Hearings has jurisdiction over this matter. Sections 120.53(5) and 120.57(1), Florida Statutes.

    
    

28. In its proposed order the Board argues that the threshold question presented is whether Barnett's failure to post a cost bond under Section 287.042(2)(c), Florida Statutes (1991), at the time the notice of protest was filed is fatal to the Barnett protest. This matter was first raised in North American's motion to dismiss and was denied in a written order, entitled Order On Prehearing Conference, entered on January 26, 1993. The text of that order is incorporated here by referenced, as required by Rule 28-5.205, Florida Administrative Code. North American has reasserted this ground for dismissal in a supplement to its motion, filed with its proposed recommended order.

    
    

29. The Board has attached to its proposed recommended order and North American has attached to its supplemental motion a number of unpublished orders by the Department of General Services which they argue show that the Department has consistently held that failure to post the required bond when the formal protest is filed is fatal to a bid protest. The first problem with this analysis is that it relies on material which is not part of the evidentiary record. None of this material was introduced at final hearing, so Barnett neither had the opportunity to object to it on any grounds which might be valid, or to present countervailing evidence. Section 120.57(1)(b)4., Florida Statutes (1991).

    
    

30. Under Section 120.57(1)(b)8, findings of fact must be "based exclusively on the evidence of record and on matters officially recognized." The appended materials do not meet this requirement. Moreover, the materials are unpersuasive. The most that can be said for the Department of General Services' position is that it is easy to administer. It permits the agency to wash its hands of any bid protest not accompanied by the bid bond without

    looking into the validity of the protest. At worst the Department's position is simplistic.

    
    

31. For the reasons stated in the order entered on the motion to dismiss, analysis of the text of the bonding requirement and of Section 120.53(5)(b) shows that the Legislature set only two jurisdictional requirements: filing a timely notice of protest and timely formal written protest.

    
    

    Standard of review

    
    

32. In ordinary substantial interest cases under Section 120.57(1), Florida Statutes (1991), the administrative proceeding is a de novo one designed to formulate rather than to review final agency action. The formal presentation of evidence gives the agency the opportunity to reconsider its intended action and to change its mind. This had been true in bid disputes. Capeletti Brothers, Inc. v. Department of General Services, 432 So.2d 1359, 1363-64 (Fla. 1st DCA 1983).

    
    

33. Since the decision of the Supreme Court of Florida in Groves-Watkins Constructors v. Department of Transportation, 530 So.2d 912 (Fla. 1988), the hearing officer's role in bid protests under Section 120.53(5), Florida Statutes, changed. The court ascribed the same role to hearing officers under the Administrative Procedure Act which the circuit courts fulfill when reviewing actions of city councils or boards of county commissioners on their bid solicitations, which are not subject to APA disciplines. Moore v. State,

    Department of Health and Rehabilitative Services, 596 So.2d 759 (Fla. 1st DCA 1992), accord, Procacci v. Department of Health and Rehabilitative Services, 603 So.2d 1299 (Fla. 1st DCA 1992).

    
    

34. The standard of review applicable to bid awards by cities and counties was described in Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So.2d 505, 507 (Fla. 1982). The soliciting county or municipality enjoys wide discretion in selecting a successful bidder, and as long as the local government's discretion was exercised honestly, its decision will not be overturned even if it appears erroneous to the court. If reasonable persons could disagree about the correctness of agency's decision, it is affirmed. Liberty County, supra, 421 So.2d at 507.

    
    

35. The Supreme Court expanded on this review standard somewhat in its Groves-Watkins decision, stating that the hearing officer should determine no more than whether the state agency's decision to award the bid to the successful bidder was fraudulent, arbitrary, illegal, or dishonest. 530 So.2d at 914. Accord, Scientific Games v. Dittler Brothers, 586 So.2d 1128, 1131 (Fla. 1st DCA 1991).

    
    

36. According to the prehearing stipulation, Barnett has not contended that the Board's actions was fraudulent, illegal, or dishonest, but rather that it was arbitrary.

    
    

37. In another context, the First District Court of Appeal described an arbitrary act as one that is unsupported by facts or logic. Agrico Chemical Co.

    v. Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA), cert. denied, 376 So.2d 74 (Fla. 1979). That analysis appears to be appropriate here. On the record made, the Board's decision is not illogical, or devoid of factual support.

    
    

    Analysis

    
    

38. The index Barnett prepared for its original submission showed that the

    35 pages omitted were its responses to the portion of the RFP on scope of services requested (Section 2.2), a mandatory part of its submission under Section 4.2 of the RFP. The Board staff could not evaluate the proposal without that information. The most it could do would be to assume that Barnett intended to provide the same services in the new contract period which it provided under the old contract, but there would be no factual basis for that assumption.

    
    

39. Section 4.2 of the RFP specifically told bidders that failure to comply with mandatory provisions would be "sufficient cause to disqualify the proposal without further evaluation or consideration." See Finding 2, above.

    
    

40. While staff evaluated the proposal, the Board was not bound by that decision. The Board's reliance on the portion of the RFP reserving the agency's right to reject proposals which failed to meet mandatory criteria was not arbitrary. It is factually rooted in the text of the RFP and is logical, because the proposal could not be evaluated in the absence of the omitted material.

    
    

41. The same question is presented in a slightly different fashion if framed as whether the omission of the 35 pages from Barnett's initial submission was a minor irregularity. According to state purchasing Rule 60A-1.001(31), Florida Administrative Code, a minor irregularity is a variation from the invitation to bid which "does not affect the price of the proposal or give the

    bidder or offeror an advantage or benefit not enjoyed by other bidders or offerors, or does not adversely impact the interest of the agency." This distills the holding in the decision of the Third District Court of Appeal in Robinson Electrical Inc. v. Dade County, 417 So.2d 1032 (Fla. 3rd DCA 1982).

    
    

42. Robinson Electrical held that a defect in a bid response was fatal if overlooking it would deprive the agency of the product or service it had described in its bid specifications, or if the defect would "adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders." 417 So.2d at 1034.

    
    

43. The additional 35 pages Barnett submitted gave it an advantage, because Barnett did not send in the omitted pages as they existed as of the time of the bid opening. Barnett amended them after learning that its price was about 20% high, which it attempted to remedy by proposing serialization. The discussion with Board staff about the price differential between the Barnett proposal and the other proposals violated the spirit of Section 1.17 of the RFP, but the evidence does not demonstrate that Barnett initiated the discussion, so it has no significance. Barnett's changes also emphasized its software capabilities, following its review of the other two bids, which it believed were vulnerable because they had focused on hardware assets rather than their programming capabilities. This is precisely the sort of advantage which the Robinson Electrical test would characterize as a non-waivable irregularity.

    This is true even though the staff declined to give Barnett the benefit of the price reduction that would follow from serialization of the tuition and dormitory accounts. On this record it is not possible to say that the evaluation of Barnett's technical software capabilities touted in the 35 pages had no effect on its evaluation score under Section 5.2(C) of the evaluation criteria, given the narrow differences in scores.

    
    

44. Section 1.11 of the RFP states that "a proposal may not be altered after opening." See Finding 2, above. This is a flat prohibition against modifying a proposal after competitors' proposals have been reviewed. But when read in context with the immediately following section, Section 1.12, which permits the Board to issue the contract in the best interest of the state, these provisions can be harmonized to permit only modifications which would be corrections of minor irregularities under the Robinson Electrical test codified in Rule 60A-1.001(31), Florida Administrative Code. This is consistent with the language reserving the right to waive minor or technical deficiencies found in Section 4.1 of the RFP.

    
    

45. Once Barnett attempted to modify its price proposal through offering to serialize accounts in order to improve its price proposal, which was otherwise about 20% high, its bid was subject to rejection under Section 1.11 of the RFP. An attempt to change the price after a bid opening is no minor or technical change. Mercedes Lighting & Electrical Supply Company v. State, Department of General Services, 560 So.2d 272, 278 (Fla. 1st DCA 1990).

    
    

46. The next question is whether the Board acted illogically, and thus arbitrarily, when it treated North American's proposal as sufficient, even though it was also supplemented after the bid opening.

    
    

47. The nature of the supplementation by North American is quite different. Failure to submit specific option year pricing is explainable because the price proposal worksheet which Section 3.2(F) of the RFP required North American to use had no place for a separate option year price. It is not illogical for the Board to resolve in North American's favor the ambiguity

    created by the apparent request for option year prices made in Section 1.4 of the RFP and the absence of a place to state option year prices on the required price proposal worksheet. This is all the more true because the RFP states that services can be renegotiated at the end of the three-year base contract period, for historically the Board has rebid records administrator contracts at the end of each period.

    
    

48. Since no bidder was evaluated on the basis of its option year pricing, North American gained no advantage, and Barnett suffered no detriment from the absence of option year pricing in the North American proposal.

    
    

49. The absence of a response to Section 3.7 concerning regulatory restrictions or past instances of the imposition of liquidated damages was adequately explained by North American. Since there were no such restrictions and no liquidated damages had been imposed, there was nothing for it to say. The Board's acceptance of this explanation is not illogical. Neither did

    Barnett prove that there are undisclosed restrictions or defaults in performance which led to the imposition of liquidated damages which should have been taken into consideration when evaluating the North American proposal.

    
    

50. Lastly, had Barnett submitted the 35 pages in their original form, without redaction prompted by review of the competitors' proposals, its price would have been about 20% higher than the bid of North American. As the Court of Appeal for the Third District observed in Intercontinental Properties, Inc.

v. State, Department of Health and Rehabilitative Services, 606 So.2d 380, 386 (Fla. 3rd DCA 1992), public contracts should be awarded to the lowest responsive bidder. No public interest is served by disqualifying a low bid for some technical omission which gave that bidder no unfair competitive advantage.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Prepaid Post-Secondary Education Expense Board rejecting the protest of BTI Services, Inc., and ordering staff to negotiate a contract with North American Financial Services, Ltd.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this day of March 1993.

WILLIAM R. DORSEY, JR.

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 25th day of March 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-0180BID

The following constitute my rulings on proposed findings of fact submitted by the parties, as required by Section 120.59(2), Florida Statutes (1991).

Rulings on findings proposed by Barnett:

1. Adopted in Finding of Fact 1.

2. Adopted in Finding of Fact 3.

3. Sentences 1 and 2 adopted in Finding of Fact 4. Sentence 3 rejected for the reasons stated in Finding of Fact 3. The final sentence is rejected as irrelevant.

4. Rejected because in its prehearing stipulation Barnett challenged only North American's failure to include option year pricing and to respond to the inquiry on regulatory restrictions. See also Finding of Fact 7.

5. Adopted in Finding of Fact 8.

6. Adopted in Finding of Fact 9.

7. Adopted in Findings of Fact 9 and 13-15.

8. Sentences 1 and 2 adopted in Finding 14. The remainder is rejected for the reasons stated in Finding of Fact 15.

9. Adopted in Finding of Fact 16.

10. Adopted in Findings of Fact 10 and 16.

11. Rejected for the reasons stated in Findings of Fact 19 and 20.

12. Generally accepted in Finding of Fact 24. The final sentence is rejected for the reasons stated in Finding of Fact 23.

13. Adopted in Finding of Fact 25.

14. Adopted in Finding of Fact 26.

15 & 16. Addressed in preliminary statement.

Rulings of findings proposed by the Board:

1. Generally adopted in Finding of Fact 12.

2. Adopted in Finding of Fact 13.

22 & 23. Adopted in Finding of Fact 14.

1. Adopted in Finding of Fact 15.

2. Adopted in Finding of Fact 16.

3. Adopted in Findings of Fact 6 and 9.

4. Generally adopted in Findings of Fact 9 and 23.

5. Adopted in Finding of Fact 23.

6. Adopted in Finding of Fact 17.

7. Generally adopted in Finding of Fact 17.

8. Adopted in Finding of Fact 18.

9. Implicit in Finding of Fact 20.

10. Adopted in Finding of Fact 20.

11. Adopted in Finding of Fact 19.

12. Adopted in Findings of Fact 18, 19 and 21.

13. Adopted in Findings of Fact 2 and 23.

14. Adopted in Finding of Fact 23.

38-40. Adopted in Findings of Fact 10 and 24.

1. Adopted in Finding of Fact 26.

2. Addressed in the Conclusions of Law.

Rulings on findings proposed by North American:

1. Adopted in Finding of Fact 1.

2. Adopted in Findings of Fact 1 and 2.

3. Adopted in Finding of Fact 3.

II.1. Adopted in Finding of Fact 4.

1. Adopted in Finding of Fact 11.

2. Adopted in Finding of Fact 5.

3. Adopted in Finding of Fact 9.

4. Generally adopted in Finding of Fact 13.

5. Adopted in Findings of Fact 13 and 14.

6. Adopted in Finding of Fact 13.

7. Adopted in Findings of Fact 14 and 15.

8. Adopted in Finding of Fact 16, although it is not clear that 2.5 millions dollars would be saved over the

   three-year base term of the contract.

9. Adopted in Finding of Fact 14.

10. Addressed in Conclusions of Law 44.

11. Adopted in Finding of Fact 16.

12. Implicit in Finding of Fact 13.

13. Adopted in Finding of Fact 12.

14. Implicit in Finding of Fact 16.

15. Implicit in Finding of Fact 12.

17-26. Unnecessary for the reasons stated in Finding of Fact 12.

1. Generally accepted in Findings of Fact 5 and 11.

2. Generally accepted in Finding of Fact 10. III 1. Adopted in Findings of Fact 3, 7

1. Generally adopted in Finding of Fact 23.

2. Unnecessary, covered in the prehearing stipulation. III A.1. Adopted in Finding of Fact 2.

1. Adopted in Finding of Fact 19.

2. Generally adopted in Finding of Fact 18.

3. Adopted in Finding of Fact 2.

4. Implicit in Findings of Fact 18 and 20, when read together.

5. Adopted in Finding of Fact 21.

6. Adopted in Finding of Fact 21.

7. Adopted in Finding of Fact 20. III B.1. Adopted in Finding of Fact 22.

1. Adopted in Finding of Fact 2.

2. Adopted in Findings of Fact 2 and 23.

3. Adopted in Finding of Fact 23.

4. Adopted in Finding of Fact 23.

5. Adopted in Finding of Fact 23.

6. Adopted in Finding of Fact 23.

IV 1. Adopted in Findings of Fact 10, 24 and 25.

2. Adopted in Finding of Fact 26.

COPIES FURNISHED:

Robert J. Winicki, Esquire Mahoney, Adams & Criser, P.A.

50 North Laura Street, Suite 3300 Jacksonville, Florida 32202

Geoffrey Smith, Esquire Blank, Rigsby & Meenan, P.A.

204 South Monroe Street Tallahassee, Florida 32301

Paul Ezatoff, Esquire

Katz, Kutter, Haigler, Alderman, Davis & Marks, P.A.

106 East College Avenue Tallahassee, Florida 32301

Mr. William W. Montjoy, Executive Director Florida Prepaid Postsecondary

Education Expense Board

345 South Magnolia Drive, Suite D-13 Tallahassee, Florida 32301

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 93-000180BID

Orders for Case No: 93-000180BID