STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KNAUS SYSTEMS, INC. OF FLORIDA, )

)

Petitioner, )

)

vs. ) CASE NO. 96-2365BID

)

DEPARTMENT OF LABOR AND )

EMPLOYMENT SECURITY, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, William R. Cave, Hearing Officer, Division of Administrative Hearings (Division), held a formal hearing in this matter on May 30, 1996, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Daniel H. Thompson, Esquire

Berger and Davis, P.A.

215 South Monroe Street, Suite 804 Tallahassee, Florida 32301

For Respondent: Edward A. Dion, General Counsel

Department of Labor and Employment Security Suite 307, Hartman Building

2012 Capital Circle, Southeast Tallahassee, Florida 33399-2152

STATEMENT OF THE ISSUES

1. Did Respondent Department of Labor and Employment Security (Department) properly reject the response submitted to the Department's Request For Proposal No. RFP 96-033-VA, For Computer Hardware and Related Equipment Maintenance Including Operating Software (RFP) by Petitioner Knaus Systems, Inc. (Knaus)?

   
   

2. Did the Department provide Knaus with a clear point of entry to challenge the Department's decision, and, if so, did Knaus timely file its notice of protest or formal written protest?

PRELIMINARY STATEMENT

This matter was referred to the Division of Administrative Hearings by the Department on May 17, 1996, for the assignment of a Hearing Officer and conduct of a formal hearing after Knaus filed a Petition for Administrative Proceedings, Notice of Protest and Formal Written Protest (Petition) with the Department on May 13, 1996. The Petition for Administrative Proceedings challenged the Department's determination that Knaus' proposal to the RFP was nonresponsive as provided to Knaus in writing on April 19, 1996. The Notice of Protest was to

the RFP award by the Department as set forth in its bid tabulations, which was posted from April 25 to April 30, 1996. The Formal Written Protest challenged the bid tabulations, and further alleged that Knaus was not given a sufficiently clear point of entry to challenge the posting within the April 25 to April 30, 1996, time frame. On May 29, 1996, the Department filed a Motion To Dismiss and on the same date the parties filed a Joint Prehearing Stipulation.

At the hearing, Knaus presented the testimony of Anthony J. Knaus. Knaus' exhibits 1 through 7 were received as evidence. The testimony of Anthony J. Knaus that the Knaus proposal would have been competitive and would have had a substantial likelihood of scoring successfully, had the Department considered the proposal, was proffered by Knaus after an objection by the Department as to the relevancy of such testimony was sustained. The Department presented the testimony of Christine Lee Pipkin and Vonnie Allen. The Department's exhibits 1, 2 and 3 were received as evidence. After hearing argument of the parties on the Department's Motion To Dismiss, the Hearing Officer reserved ruling on the motion with the understanding that it would be addressed in the Recommended Order.

A transcript of this proceeding was filed with the Division on June 11, 1996. The parties timely filed their Proposed Recommended Orders. A ruling on each proposed finding of fact submitted by the parties has been made as reflected in an Appendix to the Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made:

1. On January 29, 1996, the Department issued an RFP which requested a Vendor Technical Proposal (technical proposal) and a Vendor Cost Proposal (cost proposal).

   
   

2. Knaus was on the Department's bidder's list and received a copy of the RFP around the end of January, 1996.

   
   

3. Knaus is engaged in the business of selling and servicing computer hardware, and currently has nine contracts with the State of Florida in response to requests for proposals.

   
   

4. As required by Rule 60A-1.002(9)(a), Florida Administrative Code, the original RFP contained the Department of Management Services' Form PUR 7033, revised 1/9/95, (cover sheet), which in pertinent part provides:

   
   

   PROPOSALS WILL BE OPENED 3:00 P.M., MARCH 19.

   1996 and may not be withdrawn within 30 days after such date and time.

   
   

   POSTING OF PROPOSAL TABULATIONS

   
   

   Proposal tabulations with recommended awards will be posted for review by interested parties at the location where proposals were opened and will remain posted for a period

   of 72 hours. Failure to file a protest with- in the time prescribed in Section 120.53(5), Florida Statutes shall constitute a waiver

   of proceedings under Chapter 120, Florida Statutes. Posting will be on or about MARCH 21, 1996

   
   

5. In pertinent part, Sections 2 and 5 of the RFP provide:

   
   

   2.1 RFP Submission Date

   Vendors shall submit their proposals on or before the date and time indicated in Section

   5.9 and to the location indicated in Section

   5.12 of this Request For Proposal.

   * * *

   2.5 Addenda

   All addenda to this Request For Proposal will be in writing, with content and number of pages described, and sent to all Vendors known to be in receipt of this Request For

   Proposal. The Vendor must acknowledge receipt of all addenda in in writing and submit with the Proposal.

   * * *

   5.1 Bid Evaluation and Award

   Proposals which do not meet the requirements specified in this Request for Proposal will not be considered for award.

   Please return your sealed bid response in

   the enclosed self-addressed envelope labeled: BID: RFP 96-033-VA

   TIME: 3:00 p.m.

   DATE: March 19, 1996

   The Proposal number must be clearly marked on the outside of the vendors submittal.

   Failure to identify a Proposal in the above prescribed manner shall result in automatic disqualification of the Proposal.

   * * *

   5.9 Calendar of Events

   Listed below are the important date and times by which actions noted must be taken or completed. If the Department finds it necessary to change any of these dates or times, the change will be accomplished by addendum.

   Date/Time		Event
   February 13,	1996	Written Vendors
   		Inquiries Due
   February 22,	1996	Pre-proposal
   		Conference (Vendor
   		attendance is
   		mandatory)
   February 28,	1996	Addenda issued by
   		Department

   March 19, 1996 Opening of Vendor 3:00 p.m Technical Proposals

   April 2, 1996 Opening of Vendor 10:30 a.m. Cost Proposals

   April 4, 1996 Posting of RFP Award

   * * *

   1. Responsiveness and Rejection of Proposals

      All proposals must be in writing. A responsive proposal is an offer to perform the scope of services called for in the Request For Proposal. A Proposal may be rejected if it fails to meet the general requirements and mandatory specifications as stated in this Request for Proposal. . . .

   2. Submission of Proposals

   Sealed proposals must be received by the Department of Labor and Employment Security at the address noted below, on or before the date and time shown in Section 5.9 "Calendar of Events". . . .

   * * *

   The vendor must submit both a technical proposal for evaluation and a cost proposal. Both proposals must be in a separate sealed envelope and clearly marked on the outside stating technical proposal or cost proposal Both proposals must be delivered as stated above.

   * * *

   Proposals, including amendments, may be mailed or hand-delivered, but in either case must be received no later than 3:00 P. M. on March 19, 1996. . . .

   NUMBER OF COPIES: 1 original and

   5 copies for each category bid

   SUBMIT TO: Vonnie Allen -- DLES

   Computer Maintenance, Department of Labor and Employment Security, 2012 Capitol Circle S.E.

   104 Hartman Building, Tallahassee, Florida 32399-2169

   DEADLINE: March 19, 1996 at 3:00 p.m

   * * *

   5.16 Posting of Recommended Award Proposal tabulation with recommended award will be posted for review by

   interested parties at the Department's Office of Purchasing on or about the date noted on the cover sheet of this RFP, and will remain posted for a period

   of seventy-two (72) hours, not including weekends or holidays. [Emphasis supplied]

   
   

6. In accordance with the initial RFP, the technical and cost proposals were to be submitted in separate sealed envelopes within a single envelope to the Department on or before 3:00 p.m. on March 19, 1996, which was also the date for opening the technical proposals. All vendors, including Knaus, understood that for their response to the RFP to be timely both the technical proposal and the cost proposal had be received by the Department on or before 3:00 p.m. on March 19, 1996, the time and date scheduled for opening the technical proposals set out in Section 5.9.

   
   

7. The date (March 21, 1996) shown on the cover sheet of the RFP for posting proposal tabulations with recommended awards is different from the date (April 4, 1996) shown in Section 5.9 of the RFP for posting RFP award. It is unclear whether these are two separate events requiring separate dates or a conflict as to the posting date.

   
   

8. In accordance with the terms of the RFP, the Department conducted a mandatory Pre-proposal Conference on February 22, 1996. Knaus was represented at this conference. Questions raised by Knaus and other vendors at this conference necessitated an amendment to the RFP.

   
   

9. On March 13, 1996, the Department issued Addendum [No.] 1 to the RFP, a copy of which was received by Knaus. In pertinent part, Addendum [No.] 1 provides:

   
   

   March 13, 1996

   Addendum: [No.] 1

   Bid: [No.] 96-033-VA

   Opening Date/time: March 19, 1996, changed

   (Technical) to April 2, 1996

   April 2, 1996 changed to

   April 16, 1996 (Cost)

   
   

   Dear Sir or Madam:

   
   

   The subject Request for Proposal is hereby amended as follows:

   * * *

   
   

   5.1, 5.9, 5.12

   RFP Technical Opening is to be changed from 3:00 p.m. on March 19, 1996 to 3:00 p.m. on April 2, 1996. The Cost Opening is to be changed from 10:30 a.m. April 2, 1996 to

   10:30 a.m. April l6, 1996.

   
   

10. Addendum [No.] 1 did not amend or delete the requirement of the RFP that the technical and cost proposals be sealed in separate envelopes and both envelopes to be placed in the self-addressed envelope furnished with the RFP and submitted to the Department.

    
    

11. All vendors, other than Knaus, relying only on the RFP and Addendum [No.] 1 concluded that both the technical and cost proposal were to be submitted on or before the opening of the technical proposal and therefore, submitted their technical and cost proposals on or before 3:00 p.m. on April 2, 1996.

    None of the vendors, including Knaus, submitted their response to the RFP on or before March 19, 1996, the original submittal date for responses and the original opening date for technical proposals.

    
    

12. The Department received Knaus' technical proposal on April 1, 1996, and Knaus' cost proposal on April 5, 1996.

    
    

13. On April 11, 1996, Vonnie Allen, the Department's Purchasing Specialist, telephoned Anthony J. Knaus, President and Chief Executive Officer for Knaus, to advise him that the Knaus proposal was non-responsive because the Department had not received both the technical and cost proposal before the opening of the technical proposals at 3:00 p.m. on April 2, 1996. During this telephone conversation, Anthony Knaus expressed his understanding of Addendum [No.] 1 as not requiring receipt of the cost proposal by the Department before the opening of the technical proposal at 3:00 p.m. on April 2, 1996.

    
    

14. After his conversation with Vonnie Allen on April 11, 1996, Anthony Knaus wrote Allen a letter advising her that based on Addendum [No.] 1 that Knaus intended to file a protest in regards to the RFP.

    
    

15. On April 15, 1996, Anthony Knaus again wrote Allen a letter in regards to the April 11, 1996, telephone conversation advising Allen that he had not received written notification from the Department of Knaus' noncompliance with the RFP but that Knaus would proceed with the protest. The letter further advised Allen that Knaus intended to file a formal protest.

    
    

16. On April 19, 1996, Barbara Chance, Purchasing Director for the Department, wrote Knaus a letter advising Knaus that its response to the RFP was non-responsive due to the cost proposal not being submitted as stated in the RFP, and returning Knaus' certified check that had been submitted with its proposal. No further explanation of the basis for this determination was included in the letter. Likewise, there was no notice of Knaus' right to challenge the Department's determination as required by Section 120.53(5)(b), Florida Statutes, and Rule 60A-1.001(7) and (8), Florida Administrative Code.

    
    

17. On April 23, 1996, the Department issued what is titled "NOTIFICATION [No.] 2" concerning Cost Opening Date which advised Responsive Vendors that the cost opening had been moved to 9:00 a.m. on April 24, 1996, and such opening was to be held at the Hartman Building, 2012 Capital Circle, Southeast. The letter further advised the Responsive Vendors that posting of the intended award would be "approximately Thursday, April 25, 1996 at 9:00 a.m.". Since the Department did not consider Knaus a responsive vendor, Knaus did not receive a copy of "NOTIFICATION [No.] 2". Knaus was never advised by the Department of the change in dates for the posting of intended award prior to or during the time of posting.

    
    

18. On April 25, 1996, Dennis H. McVeen, General Manager for Knaus, wrote the Department's General Counsel concerning Barbara Chance's letter of April 19, 1996, and requested that Knaus be advised of the exact deadline for filing its protest. The Department never responded to this letter.

    
    

19. The Department did not respond to any of Knaus' letters, and has yet to advise Knaus of its right to contest the Department's determination that because Knaus' cost proposal was not received by the Department on or before the opening of the technical proposal at 3:00 p.m. on April 2, 1996, Knaus' response to the RFP was non-responsive .

20. On April 25, 1996, the Department posted the bid tabulations for the RFP, which, in pertinent part, states: "FAILURE TO FILE A PROTEST WITHIN THE TIME PRESCRIBED IN SECTION 120.53(5). FLORIDA STATUTES, SHALL CONSTITUTE A WAIVER OF PROCEEDINGS UNDER CHAPTER 120, FLORIDA STATUTES." The Bid Tabulation indicated a Posting Time/Date from 8:00, 4/25 until 8:00, 4/30. The Bid Tabulation does not indicate whether 8:00 was a.m. or p.m. However, Allen testified that it was intended to be a.m. Knaus was listed on the Bid Tabulation as to "Technical only" and was shown as NR or non-responsive. The Department has not fully evaluated Knaus' response to the RFP.

    
    

21. Knaus obtained a copy of the Bid Tabulation sometime after 8:00 a.m. on April 30, 1996, which was after the time for posting. Obtaining a copy of the Bid Tabulation was the result of Knaus' own efforts and cannot be attributed to any efforts on the part of the Department.

    
    

22. Knaus filed its Petition For Administrative Proceedings, Notice of Protest and Formal Written Protest on May 13, 1996, with the Department.

    
    

23. Knaus did not file a Notice of Intent to Protest or Formal Protest addressed to the specifications contained in the RFP or Addendum [No.] 1.

    
    

24. There was no evidence that Knaus gained any advantage by submitting the cost proposal after the technical proposals were opened.

    
    

25. There is sufficient evidence to establish facts to show that Knaus knew or should have known that the RFP as amended by Addendum [No.] 1 required that both the technical and cost proposal be submitted together on or before April 2, 1996.

    
    

    CONCLUSIONS OF LAW

    
    

26. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding pursuant to Sections 120.53(5) and 120.57(1), Florida Statutes.

    
    

27. Section 120.53(5)(a)3., Florida Statutes, in pertinent part provides:

    
    

    1. An agency which enters into a contract pursuant to the provisions of ss.

       282.303-282.313, chapter 255, chapter 287, or chapters 334-349 shall adopt rules specifying procedures for the resolution of protests arising from the contract bidding process. Such rules shall at least provide that:

       1. The agency shall provide notice of its decision or intended decision concerning a bid solicitation or a contract award as follows:

          * * *

          3. For any other agency decision, notice of a decision or intended decision shall be given either by posting the bid tabulation

          at the location where the bids were opened or by certified United States mail or other express delivery service, return receipt requested.

          The notice required by this paragraph shall contain the following statement: "Failure to file a protests within the time prescribed in s. 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under Chapter 120, Florida Statutes."

          
          

28. In accordance with Section 120.53(5), Florida Statutes, the Department adopted Rule 38A-1.0046, Florida Administrative Code, which adopts by reference the Department of Management Services' Rules 60A-1.001 through 60A-1.018, Florida Administrative Code, concerning procedures for resolving bid/request for proposal protests. Rule 60A-1.001(7), Florida Administrative Code provides in pertinent part:

    
    

    1. Notice of Decision . . . All notices of decisions or intended decision shall contain the statement: "Failure to file a protest within the time prescribed in Section 120.53(5), F.S., shall constitute a waiver of proceedings under Chapter 120, Florida Statutes." Notices of intended awards, including rejection of some or all bids received, shall be given as provided in Rule

       60A-1.001(16)(b), F.A.C. Notices of all other decisions shall be given by certified mail,

       or other express delivery services,

       . . ..

       
       

29. Apparently, the reference to Rule 60A-1.001(16)(b), Florida Administrative Code, is in error since Rule 60A-1.001(8)(a), Florida Administrative Code, sets out procedures for notices rather than the above- referenced rule which only defines "Minor Irregularity" and does not address notices. Rule 60A-1.001(8)(a), Florida Administrative Code, provides:

    
    

    1. Notice of Intended Award and Award--

    (a) Notice of intended award, including rejection of some or all of bids/proposals received, and intent to negotiate shall be given by posting the bid/proposal tabulation where the bids/proposals were opened, or by certified United States mail, return receipt requested, or other express delivery service, whichever is specified in the bid solicitation or the request for proposals. All notices of decision or intended decision shall contain the statement: "Failure to file a protest within the time prescribed in Section 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under Chapter 120, Florida Statutes", and show the beginning and ending posting dates for the bid/proposals posting, or if noticed by certified mail, indicate such action must be taken within

    72 hours after receipt of such notice.

    
    

30. Clearly, the Department failed to advise Knaus of a clear point of entry under the Department's own rules to challenge the Department's decision

    that because Knaus had failed to timely submit to the Department Knaus' cost proposal along with Knaus' technical proposal on April 2, 1996, Knaus' response to the RFP was non-responsive, and to challenge the Department's bid tabulations. Under the circumstances presented in this case, Knaus' delay in filing its written protest and petition for administrative proceedings does not constitute a waiver of proceedings under Chapter 120, Florida Statutes. SWS Partnership v. Florida Department of Corrections, 567 So.2d 1048 (Fla. 5th DCA 1990); Northrop and Northrop Building Partnership v. State, Department of Corrections, 528 So.2d 1249 (Fla. 1st DCA 1988). Therefore, the Department's Motion To Dismiss is Denied.

    
    

31. The RFP requires the vendors to place the technical proposal and the cost proposal in separate envelopes and to identify the envelopes as such. Also, the RFP requires the vendors to place the two envelopes in a single envelope at the time of submitting their response to the RFP to the Department. These requirements were not deleted or amended by Addendum [No.] 1. Therefore, since a proposal has to be submitted before it can be opened, the first opening date, whether it is the opening date for the technical proposal or the opening

    date for the cost proposal, becomes the date of submission to the Department for both proposals. This position is supported by the language in Section 2.1 that vendors shall submit their proposals on or before the date and time indicated in Section 5.9 and the language in Section 5.12 that proposals must be received by the Department on or before the date and time shown in Section 5.9. The opening date for both the technical proposal and the cost proposal are set out in Section 5.9. However, since the opening date for the technical proposal occurs before the opening date for the cost proposal, the opening date for the technical proposal also becomes the date of submission for the proposals.

    Further support for this position is found in the language in Section 5.12 which states that the proposals must be received by the Department no later than 3:00

    p.m. on March 19, 1996. Again, the same date as the opening date for the technical proposals. By changing the technical proposal opening date from 3:00

    p.m. on March 19, 1996, to 3:00 p.m. on April 2, 1996, and providing a later date (April 16, 1996) for the opening of the cost proposals, Addendum [No.] 1 changed the submission date for the response (the technical and cost proposals) from on or before 3:00 p.m. on March 19, 1996, to on or before 3:00 p.m. on April 2, 1996.

    
    

32. There is no dispute that Knaus knew that the RFP, as amended required the submittal of Knaus' technical proposal on or before 3:00 p.m. on April 2, 1996. Therefore, considering the expertise of Knaus' personnel who prepare and submit proposals such as this one, it is logical to assume that Knaus knew or should have known that the RFP, as amended required the technical proposal and the cost proposal to be submitted together in a single envelope to the Department on or before 3:00 p.m. on April 2, 1996.

    
    

33. Knaus failed to submit its cost proposal on or before 3:00 p.m. on April 2, 1996, and therefore failed to timely submit its response to the RFP However, this should be considered as a minor irregularity as defined in Rule 60A-1.001(16), Florida Administrative Code, which can and should be waived.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law it is recommended that the Department of Labor and Employment Security enter a final order that Knaus' failure to timely submit its cost proposal was a minor irregularity and is waived, and directing staff to reevaluate all responses, including Knaus', under the RFP, as amended.

RECOMMENDED this 24th day of July, 1996, at Tallahassee, Florida.

WILLIAM R. CAVE, 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 July, 1996.

APPENDIX TO RECOMMENDED ORDER CASE NO. 96-2365BID

The following constitutes my specific rulings, pursuant to Section 120.59(2), Florida Statutes, on all of the proposed findings of fact submitted by the parties in this case.

Knaus' Proposed Findings of Fact.

1. Proposed findings of fact 1 through 37, 44, 45 and 47 are adopted in substance as modified in Findings of Fact 1 through 25.

2. Proposed findings of fact 38 through 43 go to the weight of the testimony of witness and are not considered as proposed findings of fact.

3. Proposed finding of fact 46 is neither material nor relevant.

4. Proposed finding of fact 48 is covered in the Preliminary Statement.

Department's Proposed Findings of Fact.

1 Proposed findings of fact 1 through 14 and 16 through 21 are adopted in substance as modified in Findings of Fact 1 through 25.

2. Proposed finding of fact 15 is neither material nor relevant.

COPIES FURNISHED:

Douglas L. Jamerson, Secretary

Department of Labor and Employment Security Suite 303, Hartman Building

2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152

Edward A. Dion, General Counsel

Department of Labor and Employment Security Suite 307, Hartman Building

2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152

Daniel H. Thompson, Esquire Berger and Davis, P.A.

215 South Monroe Street, Suite 804 Tallahassee, Florida 32301

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the final order in this case concerning their 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.

================================================================= AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF LABOR & EMPLOYMENT SECURITY DIVISION OF ADMINISTRATIVE SERVICES

KNAUS SYSTEMS, INC., OF FLORIDA,

Petitioner,

DOAH Case No. 96-2365BID

vs. Case No. 96-043-OSAS

DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY,

Respondent.

/

FINAL ORDER

The Department of Labor and Employment Security issued a Request for Proposal (RFP) for computer hardware and maintenance. The Department found the bid of Knaus Systems, Inc., of Florida to be non-responsive because Knaus filed its cost proposal late. Knaus challenged the action in a Petition for Administrative Proceedings, Notice of Protest and Formal Written Protest (Petition). Following hearing, a hearing officer with the Division of Administrative Hearings recommended that the Department waive the late filing of the cost proposal as a "minor irregularity" and that the Department reevaluate all responses. This cause comes to the Department for the purpose of issuing a Final Order. s 120.57(1 )(b)(1 0), Fla. Stat. (1995). The Department adopts the Hearing Officer's Recommended Order (R.O.), as modified below; grants Knaus's Exceptions to Recommended Order, in part, and rejects the Exceptions, in part; and dismisses its Petition.

1. Procedural history.

   
   

   On January 29, 1996 the Department issued RFP number 96-033-VA, entitled "Computer Hardware & Related Equipment Maintenance Including Operating Software." Respondent's Exh. 1. The cover sheet of the RFP states that the Department would open proposals at 3:00 p.m. March 19, 1996 and post the proposal tabulations on or about March 21, 1996.

   
   

   The Special Conditions of the RFP instruct vendors to submit two proposals, a technical proposal and a cost proposal. Section 2.1 requires vendors to submit their proposals on or before the date indicated in section 5.9, the calendar of events. Section 5.9 indicates that the Department will open the technical proposals at 3:00 p.m. March 19, 1996, open the cost proposals at 10:30 a.m. April 2, 1996, and post the RFP award on April 4, 1996. Section 5.12 provides that the proposals must be received by the Department "no later than 3:00 p.m. on March 19, 1996."

   
   

   The RFP also prescribes procedural requirements. Section 5.1 states that proposals that do not meet the requirements specified in the RFP will not be considered for award. It further requests vendors to return the sealed bid response in the enclosed self-addressed envelope. Section 5.12 instructs each vendor to submit both a technical proposal for evaluation and a cost proposal and requires that "[b]oth proposals must be in a separate sealed envelope and clearly marked on the outside stating technical proposal or cost proposal. Both proposals must be delivered as stated above." Section 6.2 also provides that the cost proposal must be sealed separately from the technical proposal.

   
   

   On March 13, 1996, the Department issued Addendum number 1 to the RFP, which amended the timetable prescribed in sections 5.1, 5.9, and 5.12.

   Specifically, the Department changed the opening of the technical proposals to 3:00 p.m. April 2, 1996 and the opening of the cost proposals to 10:30 a.m.

   April 16, 1996. Respondent's Exh. 2.

   
   

   Knaus filed its technical proposal on April 1, 1996 and its cost proposal on April 5, 1996. RO. para. 12. The Department received the technical proposal and the cost proposal from each of the other nine vendors before 3:00 p.m.

   April 2, 1996. Tr. 95.

   
   

   On April 11, 1996, Vonnie Allen, the Department's Purchasing Specialist, advised Anthony J. Knaus, President and Chief Executive Officer of Knaus, by telephone that Knaus's proposal was non-responsive because it failed to submit the technical proposal and cost proposal before 3:00 p.m. April 2. R.O. para. 13; Tr. 49. On that date, Mr. Knaus wrote a letter to Ms. Allen expressing his intent to file a protest "[biased on addendum No. 1." Petition Exh. 3. On April 15, Mr. Knaus wrote another letter to Ms. Allen, acknowledging her telephone call of April 11 and reaffirming his intent to proceed with our position regarding our protest." Petition Exh. 4. The Department has not evaluated fully Knaus's response to the RFP. R.O. para. 20.

   
   

   Barbara Chance, Purchasing Director for the Department, wrote a letter to Knaus on April 19, 1996 advising that its response to the RFP was non-responsive because the cost proposal was not submitted in accordance with the RFP. R.O. para. 15; Petition Exh. III.

   
   

   On April 23, 1996, the Department issued Notification number 2 to the responsive vendors, which did not include Knaus, indicating changes in the calendar of events so that the cost opening would occur on April 24, 1996 and

   the posting of the award would occur approximately at 9:00 a.m. April 25, 1996.

   R.O. para. 17; Petition Exh. IV.

   
   

   On April 25, 1996, the Department posted the Bid Tabulation, which listed Knaus as "technical only" and identified its bid as non-responsive. On April 30, 1996, the Department hand delivered a copy of the Bid Tabulation to Knaus. Tr. 68.

   
   

   The Bid Tabulation contains the statutory notice to vendors that "[f]ailure to file a protest within the time prescribed in section 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under chapter 120, Florida Statutes." Respondent's Exh. 3. Knaus filed its Petition on May 13, 1996, asking the Department to consider its proposals to the RFP to be timely and to evaluate its proposals with those submitted by the other vendors.

   Alternatively, it asked that the Department consider all bids to be non- responsive. Petition at 11.

   
   

   The Department referred the Petition to the Division of Administrative Hearings for a formal proceeding. The Department filed a Motion to Dismiss the Petition on May 29, 1996. The formal proceeding was held on May 30.

   
   

   The Department filed a Proposed Recommended Order and Knaus filed a document styled "Recommended Order." 1/ The hearing officer issued his Recommended Order on July 24, 1996 (copy attached), recommending that the Department waive Knaus's failure to timely submit its cost proposal as a "minor irregularity" and that the Department reevaluate all responses. Knaus filed Exceptions to Recommended Order.

   
   

2. Standards of review.

   
   

   The sole responsibility of the hearing officer in a competitive bidding dispute is to ascertain whether the agency acted "fraudulently, arbitrarily, illegally, or dishonestly." Moore v. State, Dep't of Health and Rehabilitative Servs., 596 So.2d 759, 761 (Fla. 1st DCA 1992)(citing Department of Trans. v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988)).

   
   

   The Legislature limited the scope of an agency's review of a hearing officer's recommended order:

   
   

   The agency may adopt the recommended order as the final order of the agency. The agency in its final order may reject or modify the conclusions of law and interpretation of administrative rules in the recommended order. The agency may not reject or modify the findings of fact, including findings of fact that form the basis for an agency statement, unless the agency first determines from a review of the complete record, and states with particularity in the order, that the findings of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law.

   
   

   s 120.57(1)(b)10, Fla. Stat. (1995). Stated alternatively, an agency is bound by the findings of the hearing officer unless the findings are unsupported by competent substantial evidence, Asphalt Pavers, Inc. v. State, Dept of Transp., 602 So.2d 558, 561 (Fla. 1st DCA 1992)(citation omitted), or fail to comply with

   essential requirements of law. Florida Dep't of Corrections v. Bradley, 510 So.2d 1122, 1123 (Fla. 1st DCA 1987).

   
   

   1. Knaus's untimely notice of protest.

      
      

      An adversely affected person has a statutorily created point of entry to protest the contract bidding process:

      
      

      Any person who is affected adversely by the agency decision or intended decision shall file with the agency a notice of protest in writing within 72 hours after the posting of the bid tabulation or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after the date he or she filed the notice of protest. . . . Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under this chapter. . .

      
      

      s 120.53(5)(b), Fla. Stat. (1995) 2/

      
      

      Knaus violated multiple requirements of this section. First, Knaus did not file its notice of protest within 72 hours of receiving the Bid Tabulation.

      Second, Knaus did not file a formal written protest within 10 days after it filed the notice of protest. Third, Knaus filed a notice of protest and formal written protest in the same document. On its face, Knaus's Petition justifies the Department's decision to dismiss Knaus's protest.

      
      

      The hearing officer concluded that Knaus delayed in filing its written protest and petition for administrative proceedings. R.O. para 30. Knaus filed no exceptions to the recommended order regarding this point and thereby waived any objection to the underlying factual findings. Environmental Coalition of Fla., Inc. v. Broward County, 586 So.2d 1212, 1213 (Fla. 1st DCA 1991).

      
      

      Instead, Knaus claims that the Department failed to provide notice of the non-responsiveness and the bid tabulation. Petition para. 19. The hearing officer concluded that the delay in filing the Petition was excused, based on his determination that the Department failed to provide Knaus with a clear point of entry to challenge the Department's decision that Knaus's response was non- responsive and to challenge the Department's bid tabulation. R.O. para. 30.

      Without elaboration, the hearing officer relies on two cases, SWS Partnership v. Florida Department of Corrections, 567 So. 2d 1048 (Fla. 5th DCA 1990), and Northrop and Northrop Building Partnership v. State, Department of Corrections,

      528 So.2d 1249 (Fla. 1 st DCA 1988). Each case faulted the agency for violating section 120.53(5), yet each case easily is distinguishable.

      
      

      In SWS, the agency advised SWS by letter that its bid was not selected, but the agency failed to provide the notice mandated by section 120.53(5)(a)3. The agency dismissed the protest by SWS, relying on an interoffice memorandum that advised that bidders were notified when bids would be posted. The Fifth District Court of Appeal ruled that the agency failed to give SWS a clear point of entry because it did not provide SWS with a copy of the interoffice memorandum.

      
      

      In Northrop, the agency advised Northrop by telephone that its bid had been rejected. The First District Court of Appeal ruled that the agency violated section 120.53(5) in two respects. First, the telephonic communication was no substitute for the means of notice prescribed in section 120.53(5)(a)3, which

      requires posting or certified U.S. mail. Second, the agency failed to provide the statutorily mandated statement.

      
      

      Unlike the protesters in SWS and Northrop, Knaus had actual notice of the Department's decision when it received a copy of the Bid Tabulation. Knaus had actual notice that the Department regarded its proposal to be non-responsive for its failure to submit the technical proposal and cost proposal before 3:00 p.m. April 2, 1996. Mr. Knaus learned of the Department's decision when Vonnie Allen telephoned on April 11 and through Barbara Chance's April 19 letter. Mr. Knaus acknowledged that he understood the Department's action in his letters to the Department dated April 11 and 15. The Department also provided actual notice when it hand delivered a copy of the Bid Tabulation on April 30, 1996 to Knaus's representative.

      
      

      Finally, the Bid Tabulation contains the statutory notice of section 120.53 that the district courts found lacking in SWS and Northrop. Another essential fact distinguishes those cases the protester in each filed its notice of protest timely. Fatal to its cause, Knaus filed its notice of protest on May 13, 1996 (R.O. para. 22), ten days after the expiration of the 72-hour notice period.

      
      

      For these reasons, the Department concludes that the hearing officer erred in dismissing the Department's Motion to Dismiss Petition, in that Knaus had actual notice of the Department's decision and statutory notice that provided its point of entry. The Department rejects the hearing officer's legal conclusion in paragraph 30 to the contrary.

      
      

      Despite Knaus's reliance on the recently reported decision of Bell Atlantic Business Systems Services, Inc. v. Florida Department of Labor and Employment Security, 21 Fla. Law Weekly D1824 (Aug. 12, 1996), the decision does not require a different result. There, the district court considered which of two events initiated the seventy-two hour notice period, the posting of the bid tabulation or Bell Atlantic's receipt of the notice. The court determined that the Department could not dismiss the protest as untimely when disputed facts remained concerning Bell Atlantic's receipt. Here, the record clearly shows that Knaus received actual notice of the Department's action. Moreover, the Department did not run afoul of Bell Atlantic by attempting to compress the point of entry by arguing that receipt of the notice related back to the posting date. Id. at D1825. Knaus's seventy-two hour period began when it received a copy of the bid tabulation.

      
      

      Knaus's untimely filing waived its rights under chapter 120, Florida Statutes. It is procedurally barred from attacking the competitive bid process. Even so, the Department reviews below the hearing officer's substantive findings and conclusions.

      
      

   2. Knaus's untimely cost proposal.

   
   

   The hearing officer recommended that the Department enter a final order, waiving Knaus's late-filed cost proposal and determining Knaus's responses to be responsive. Knaus filed exceptions to the recommended order. These matters are addressed in turn.

   
   

   1. Materiality and waiver of untimeliness.

      
      

      The hearing officer concluded correctly that Knaus did not submit its cost proposal on or before 3:00 p.m. April 1, 1996 and therefore failed to submit timely its response to the RFP. However, he incorrectly concluded that Knaus's

      delay in submitting its cost proposal "should be considered as a minor irregularity and is waived." R.O. para. 33.

      
      

      In regard to the materiality of Knaus's delayed filing, the hearing officer found that there was "no evidence that Knaus gained any advantage by submitting the cost proposal after the technical proposals were opened." R.O. para. 24.

      His legal conclusion that the Department ought to consider Knaus's delay to be a "minor irregularity" is summary in nature and lacks record support.

      
      

      Knaus argues that the hearing officer adopted Knaus's proposed finding of fact number 35, which contained an averment that "[t]he unrebutted testimony of Mr. Knaus also establishes that Knaus did not obtain any advantage in the bidding process by filing its cost response later tha[n] other bidders." Knaus's proposed finding is self-serving and irrelevant to the issues litigated at the hearing. See Tr. 48 (hearing officer sustained on grounds of relevancy the Department's objection to Mr. Knaus's testimony that purported to compare his proposals with those of other vendors).

      
      

      In regard to the suggested waiver of Knaus's delayed filing, the only evidence on the record that would permit the Department to waive noncompliance appears in the RFP and is limited to evaluation of a proposal. The Department expressly reserved the right "to waive minor technicalities and award the proposal to serve the best interest of the Department." Respondent's Exh. 1, para. 5.11. This provision does not authorize the action recommended by the hearing officer because it is limited to evaluation of the proposal itself. Due to its non-responsiveness, the Department did not undertake to evaluate Knaus's proposal. Therefore, the hearing officer's suggestion that the Department waive noncompliance is not supported evidence in the record.

      
      

      Because Knaus did not advocate in its Petition or Exceptions that the Department ought to overlook its delay in filing the cost proposal, the hearing officer's suggestion lacks pertinence. Freeman v. IMC-Agrico Co., 21 Fla. Law Weekly D1788, D1789 (Fla. 1st DCA Aug. 5, 1996). Moreover, the hearing officer unilaterally introduced a waiver theory into this cause, violating the Department's right to due process. See General Devel. Utils., Inc. v. Hawkins,

      357 So.2d 408, 409 (Fla. 1978)(rejecting Public Service Commission's reliance on non-record evidence to establish a basis for granting relief and explaining that the company was denied the opportunity to know in advance the basis on which the Commission chose to rely).

      
      

      For these reasons, the Department concludes that the hearing officer exceeded his authority in suggesting that the Department waive the untimeliness of Knaus's cost proposal. Moore, 596 So.2d at 761; Intercontinental Properties, Inc. v. State Dep't of Health and Rehabilitative Servs., 606 So.2d 380, 386 (Fla. 3d DCA 1992)(concluding that no sound reason supported the hearing officer's decision to override the judgment of HRS in awarding the contract to the lowest bidder, whose failure to attach proof of the agent's authority amounted to "technical deficiencies in form"). The Department rejects the second sentence of the hearing officer's conclusion of law paragraph 33.

      
      

   2. Knaus's Exception Number 1.

   
   

   Knaus objects to the hearing officer's finding of fact number 25, which states that "[t]here is sufficient evidence to establish facts to show that Knaus knew or should have known that the RFP as amended by Addendum [No.] 1 required that both the technical and cost proposal be submitted together on or before August 2, 1996."

   First, Knaus maintains that the finding is not based on competent substantial evidence and that the proceeding on which the finding is based does not comport with the essential requirements of law. Exceptions at 1--6. The Department acknowledges that the hearing officer made no finding as to Mr.

   Knaus's state of mind so that he could not have determined what Mr. Knaus "knew."

   
   

   The Department further acknowledges that a vendor's technical proposal and cost proposal need not be submitted "together" to be responsive. The RFP directs that vendors submit a proposal package that contains all specified documents, Respondent's Exh. 1 at para. 5.12, but it does not require that one proposal accompany the other. For instance, a vendor could submit its technical proposal on one date and cost proposal on another date, provided that both were received on or before the due date. Indeed, Vonnie Allen testified that responsive vendors submitted technical proposals in one package and cost proposals in another package. Tr. 95.

   
   

   Knaus's criticism extends to Paragraph 5.1 of the RFP, in which the Department's requested vendors to use the self-addressed envelope enclosed with the RFP. Because no responsive vendor used the self-addressed envelope, Knaus argues, it could not have known to use a single envelope. Rather than imposing a requirement, Paragraph 5.1 expresses the Department's request that vendors use the envelope accompanying the RFP. A response is no less valid for the vendor's failure to use the furnished envelope, provided it complies with the RFP in all material requirements. In these respects, Knaus's exception is granted.

   
   

   However, the finding that Knaus "should have known" that the technical and cost proposals were due together on or before August 2 is supported by competent substantial evidence. In this respect, Knaus's exception is denied.

   
   

   The record establishes that all vendors, other than Knaus, submitted their technical and cost proposals before 3:00 p.m. on April 2, 1996. The conduct of the responsive vendors is consistent with the RFP. The RFP instructed that "[s]ealed proposals must be received . . on or before the date and time shown in Section 5.9 `Calendar of Events."' R.O. at 6 (quoting RFP para. 5.12). The RFP further declared that changes in the schedule would be accomplished by addendum. Respondent's Exh. 1, para. 5.9. Thus, the controlling dates appear in Addendum No. 1, rather than the cover sheet. 3/ It did not matter that the Department did not amend the opening date stated on the cover sheet.

   
   

   Second, Knaus maintains that "the whole effort to amend the original RFP was a failure" for its lack of clear guidance as to the new dates. Exceptions at

   4. Yet, none of the nine responsive vendors submitted a response before March 19, 1996. And all submitted their responses before 3:00 p.m. on April 2, 1996.

   R.O. para. 11. On this point, the testimony of Christine Pipkin, a client representative with International Business Machines, is illuminating. IBM participated in the competitive bid proceeding at issue here. Ms. Pipkin understood Addendum No. 1 to mean that the Department had changed the due date for vendors to submit their proposals from March 19 to April 2 and that the Department would open the technical proposals on April 2 and open the cost proposals on April 16. Further, she stated that this procedure was consistent with the practice of other state agencies and her experience during at least ten previous RFPs with the Department. Tr. 73-75.

   
   

   Except as noted above, the Department denies Knaus's Exception Number 1.

   3. Knaus's Exception Number 2.

   
   

   Knaus objects to the hearing officer's conclusions in paragraphs 31, 32, and the first sentence of paragraph 33. Knaus argues that the hearing officer could not have concluded as a matter of law that Mr. Knaus knew or should have known to submit both proposals on or before the first opening date. Exceptions at 6-7.

   
   

   In addition, Knaus argues that the hearing officer could not have accepted the Department's interpretation that proposals were required to be submitted on or before the first opening date because such an interpretation is assertedly arbitrary. Knaus maintains that it "defies logic" to interpret the bid due date to be synonymous with the opening date on April 2, but not the opening date on April 16. Knaus reasserts his claim that Addendum No. 1 failed to change the date stated on the cover sheet. Exceptions at 7-10.

   
   

   For reasons expressed above, the Department concludes that there is competent substantial evidence on the record to support the hearing officer's conclusion that Knaus should have known to submit its proposals by the April 2 deadline. The Department denies Knaus's Exception Number 2.

   
   

3. Conclusion.

After reviewing the complete record and for the reasons stated above, it is hereby ORDERED that the Hearing Officer's Recommended Order dated July 24, 1996, be ADOPTED as modified above, that Knaus's Exceptions to Recommended Order be ACCEPTED in part and REJECTED in part, and that Knaus's Petition be DISMISSED.

This Final Order constitutes final agency action. Judicial review of this proceeding may be instituted by filing a notice of appeal in accordance with section 120.68, Florida Statutes (1995), in the district court of appeal where the agency maintains its headquarters or where a party resides. Such notice must be filed in the district court within thirty (30) days of the date that this order is filed in the official records of the Department of Labor and Employment Security, as indicated in the clerk's certificate below, or further review of this action will be barred.

DONE AND ORDERED in Tallahassee, Florida this 19th day of September 1996.

Theresa B. Frederick Director

Division of Administrative Services Florida Department of Labor and

Employment Security

ENDNOTES

1/ The Department has not overlooked Knaus's failure to sign its pleading or to include a certificate of service. See respectively Fla. Admin. Code r. 60Q- 2.003(3)(e) and (f).

2/ The section also prescribes comparable time requirements for protesting the specifications. Knaus did not protest the specifications contained in the RFP or Addendum number 1. R.O. para.

3/ If Knaus had understood the addendum to be ineffective to change the date on the cover sheet, he could have submitted his proposals on or before March 19, the original submittal date for responses and the opening date for the technical proposals. "[Petitioner's Proposed] Recommended Order" para. 29. He made no such effort.

Docket for Case No: 96-002365BID

Orders for Case No: 96-002365BID