STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMERICAN BUSINESS SYSTEMS, )

)

Petitioner, )

)

vs. ) Case No. 97-2842BID

)

DEPARTMENT OF LABOR AND )

EMPLOYMENT SECURITY, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on July 9, 1997, in Tallahassee, Florida, before Ella Jane P. Davis, a duly assigned Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Linda Klusmeier, Qualified Representative 8638 Phillips Highway, Room 12

Jacksonville, Florida 32256

For Respondent: Edward A. Dion, Esquire

307 Hartman Building

2012 Capital Circle Southeast Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUE

Whether the Department acted illegally, arbitrarily, dishonestly, or fraudulently when it rejected all of the bids submitted in response to Invitation to Bid No. 97-023-OR. See Section 120.57(3), Florida Statutes (1997).

PRELIMINARY STATEMENT

By letter dated June 6, 1997, Petitioner American Business

Systems (hereafter referred to as "ABS") filed a formal written protest challenging the Department of Labor and Employment Security's determination that its bid was nonresponsive and rejecting all bids received in response to Invitation to Bid No. 97-023-OR (hereafter referred to as "ITB") for mailing equipment. The protest was referred to the Division of Administrative Hearings and scheduled for formal hearing on July 9, 1997.

At the commencement of formal hearing, Linda Klusmeier, Owner of ABS, was examined and accepted as Petitioner's Qualified Representative.

Petitioner presented the oral testimony of Dave Klusmeier and John Bowls and offered five exhibits, three of which were admitted in evidence. The Department presented the oral testimony of Bobby Brooks and Oradell Rollins and had three exhibits admitted in evidence.

The parties stipulated to the admission of their Joint Prehearing Stipulation as Administrative Law Judge Exhibit A. It has been utilized as appropriate in preparation of this Recommended Order.

The transcript of proceedings was filed on August 5, 1997.

Both parties timely filed Proposed Recommended Orders, which have been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner ABS is an authorized dealer for Neopost, a manufacturer of mailing equipment. Petitioner is also a

   Certified Minority Business Enterprise, pursuant to Chapter 287, Florida Statutes.

2. Prior to the subject Invitation to Bid, the Department issued a similar Invitation to Bid. That bid was initially awarded to Pitney Bowes, Inc., but Pitney Bowes, Inc., was unable to meet delivery requirements of that bid, and the Department decided to re-bid.

3. The Department issued the subject ITB No. 97-023-OR on March 10, 1997. Pursuant to its terms, the bid opening was held on April 29, 1997.

4. The subject ITB provides, in pertinent part, as follows:

   At page 3 of 11 MANDATORY REQUIREMENTS

   
   

   The state has established certain requirements with respect to bids to be submitted by bidders. The use of "shall", "must", or "will" (except to indicate simple futurity) in this Invitation to Bid/Request for Purchase indicates a requirement or condition from which a material deviation may not be waived by the State. The words "should", or "may" in this /Request for Purchase to Bid [sic] indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature, will not in itself cause rejection of a bid. (emphasis supplied)

   At page 6 of 11 MANUFACTURER REPRESENTATIVE

   
   

   Bidder must provide proof of authorized dealership for equipment specified and the beginning and ending term of authorization. (emphasis supplied)

   
   

   SERVICE

   
   

   . . .

   
   

   Service is to be provided direct from the manufacturer. Third party service is acceptable only if it may be demonstrated

   that the location that is to provide the service can demonstrate 36 months experience in servicing the model proposed. Failure to receive this certification will be sufficient cause for rejection of this bid. (emphasis supplied)

   
   

5. The manual signature of Ms. Klusmeier on ABS's April 1997 Bid certified that the bid was in compliance with all requirements of the ITB, "including but not limited to, certification requirements."

6. ABS is not a manufacturer of the mailing equipment it bid. In its Bid, ABS enclosed a certificate issued by the Department's Minority Business Advocacy and Assistance Office certifying that ABS was a Minority Business Enterprise (MBE) under the provisions of Chapter 287, Florida Statutes. However, ABS failed to specifically include proof of authorized dealership for the equipment specified with its bid.

7. At all times material, the Department's MBE office had a copy of ABS' manufacturer-dealer agreement with Neopost (the manufacturer) and an ABS catalogue displaying all the Neopost bid items and stating that ABS is an authorized dealer for Neopost. However, this information was not part of the subject bid response package. Rather, it had been previously submitted by ABS to obtain MBE certification. It was not re-submitted as part of ABS' ITB response package.

8. ABS has manufacturer's (Neopost's) authorized service centers in Florida. ABS intended that ABS and another authorized dealer would provide service in the State of Florida for the

   equipment it bid. However, ABS failed to include with its Bid a demonstration that either ABS or the other dealer had a minimum of 36 months' experience servicing the Neopost equipment.

9. The November 1996 ITB had requested the same manufacturer and service information as the subject April 1997 ITB, and ABS responded in the same way to both ITB's. ABS was not ruled unresponsive in November 1996 on that basis.

10. In April 1997, ABS also initially was treated as a responsive bidder. On May 1, 1997, the only two bids (ABS and Pitney Bowes, Inc.) were opened by one of the Department's Purchasing Specialists, Oradell Rollins. The Department posted its intent to award the bid to ABS.

11. On May 5, 1997, Pitney Bowes, Inc., the only other bidder for the subject ITB, filed a timely Notice of Intent to Protest with the Department. Pitney Bowes, Inc., is a manufacturer and bidder which services its own products.

12. The Department's Purchasing Office has never established a pattern of accepting an MBE Certificate in lieu of specified bid elements.

13. The Department afforded Pitney Bowes, Inc., an informal protest procedure without notification to, or participation by, ABS.

14. On May 16, 1997, upon request from the Department's Director of Purchasing, ABS immediately forwarded a letter to the Department from Neopost advising that ABS was an authorized Neopost dealer; that ABS and others had been certified by the

    manufacturer to service the mailing equipment ABS had bid for the subject ITB; and that ABS had been servicing Neopost equipment for more than 36 months. Ms. Rollins had previously requested

    this information just after bids were opened but had not indicated it was urgent. This type of information is not normally requested after bid opening.

15. The Department's Purchasing Office considered waiving the missing information because its personnel had dealt satisfactorily with ABS on other contracts for a number of years, but such waiver is not the Department's usual procedure.

16. On May 15, 1997, Pitney Bowes, Inc., timely filed with the Department its Formal Written Protest. Petitioner faults this letter's recitation that the Pitney Bowes, Inc., representative saw the alleged flaws in the ABS bid on the day that bids were opened. Petitioner proved that the Pitney Bowes, Inc., representative could not have seen ABS's bid on the day of the bid opening, but the same information could have been derived subsequently. Pitney Bowes' April 1997, Notice of Protest is not in evidence for comparison with its Formal Written Protest. No nefarious dealings or collusion necessarily flows from the foregoing findings of fact.

17. Based upon a review of the Formal Written Protest of Pitney Bowes, Inc., and upon advice of the Department's General Counsel, the Department determined that ABS's bid on the subject 1997 ITB was, in fact, nonresponsive because, when opened, it had failed to contain "proof of authorized dealership," and also had failed to include the required "certification" on "Third Party Service."

18. On May 22, 1997, the Department sent a letter to ABS advising ABS of the Department's decision and further advising that the Department intended to re-bid for the equipment. ABS received the Department's letter on May 27, 1997.

19. The Department's decision to re-bid instead of to award to Pitney Bowes, Inc., was in part determined by its desire to avoid situations in which there is only one responsive bidder. It was also influenced by Departmental concerns that the Pitney Bowes, Inc., bid was much higher than the disqualified ABS bid. Departmental personnel believed that a re-bid would secure a lower cost to the Department.

20. ABS timely filed its Notice of Intent to Protest and its Formal Written Protest. Pitney Bowes, Inc. was given notice of the referral of Petitioner's protest to the Division of Administrative Hearings and chose not to intervene.

21. ABS established that it currently provides mailing equipment for the Department all over the State of Florida and that it coordinates service for that equipment through a Neopost network in all those locations. However, ABS did not establish that it has provided or serviced exactly the same type of equipment for the Department at each of these locations, as ABS bid in April 1997.

22. Over time, ABS has dealt with Purchasing Specialist Oradell Rollins on these other Departmental Contracts. Prior to the subject 1997 bid opening, Mr. Bowls, ABS's "Neopost Government Specialist," had informed her that ABS covered the

    State of Florida for Neopost. Ms. Rollins had received an ABS catalogue and ABS's MBE Certificate in connection with ongoing business prior to the April 1997 bid opening.

23. ABS does not perceive that ABS using other dealers certified by the manufacturer (Neopost) constitutes ABS using "Third Party" service agents, nor does ABS consider itself to be a "Third Party," as that term is used in the subject ITB. However, the Department has consistently interpreted "Third Parties" to include any dealers who are not simultaneously manufacturers and bidders, and its ITBs require bidders who are not also manufacturers to demonstrate within their Bid that each service location is certified and has 36 months' experience at the time of bid opening.

    CONCLUSIONS OF LAW

    
    

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

25. Petitioner's assertion that it was improper for the Department not to permit its participation in the informal protest resolution proceedings between the Department and Pitney Bowes, Inc., is immaterial to this formal proceeding. Section 120.57(3), Florida Statutes (1997) does not provide for Petitioner's involvement at that stage. Petitioner's window of opportunity to protest proposed Agency action opened with the May 22, 1997 Departmental letter of intent to reject all bids. Petitioner took advantage of this opportunity, and the instant

    proceeding constitutes its administrative protest and "day in court."

26. Herein, Petitioner, as the sword-wielder, has the burden of establishing that the agency's intended rejection of all bids is "illegal, arbitrary, dishonest, or fraudulent." See Section 120.57(3)(f), Florida Statutes (1997).

27. Rule 60-A.1.001(16) provides:

Minor Irregularity - A variation from the invitation to bid/request for proposal terms and conditions, which does not affect the price of the bid/proposal, or give the bidder or offeror an advantage or benefit not enjoyed by other bidders or offerors, or does not adversely impact the interests of the agency.

1. Section 120.57(3)(f), Florida Statutes (1997) provides, in pertinent part,

   In a competitive-procurement protest, no submissions made after the bid or proposal opening amending or supplementing the bid or proposal shall be considered.

   
   

2. Despite the "personal opinion" offered by one of the Department's witnesses on cross-examination that a waiver of the specifications in question affecting "Third Party Service" would only constitute waiver of a "minor irregularity" because receiving such additional information after bid opening did not allow Petitioner to change the price of its bid, give the Petitioner an advantage over other bidders in this situation, or adversely impact the interest of the agency, it is concluded that for this ITB, the required information could not be legally waived as a "minor irregularity."

3. An Invitation to Bid is a less nebulous item than a Request for Proposals (hereafter referred to as "RFP"), and its interpretation is held to a tighter standard. RFPs often contain specific language permitting some items to be qualified between bid opening and contract signing. Nonetheless, a requirement that everything be in place at the date of proposal or award can be written into even an RFP. See Harrison v. Office Systems Consultants, 533 So. 2d 833 (Fla. 1st DCA 1988).

4. Herein, the ITB clearly mandated that,

   
   

   Bidder must provide proof of authorized dealership for equipment specified and the beginning and ending term of authorization. (emphasis supplied)

   
   

5. Herein, the ITB also specifically stated,

   
   

   . . . Third party service is acceptable only if it may be demonstrated that the location that is to provide the service can demonstrate 36 months experience in servicing the model proposed. (emphasis supplied)

   
   

   That sentence may be less than articulate, but it is not ambiguous. It does not denote mere futurity, and it is not merely permissive. The Department has specified that the only way in which third party service can meet the ITB specifications is if it is demonstrated that the service center in each third party location has 36 months' experience. That sentence is then followed by the very specific,

   Failure to receive this certification will be sufficient cause for rejection of this bid. (emphasis supplied)

   
   

   This final sentence presumes that the certification must be submitted simultaneously with the Bid in order for the Bid to be

   complete and responsive.

   
   

6. The present situation is not the type wherein the solicitation requests that "deliverables" be set upon a time line to be established after bid opening and before actual contract- signing. Such situations anticipate that requests for additional information will equate with an industry-wide practice of putting servicing agents in place after bid opening. In such situations some waivers might be permissible. See Unisys Corporation v. Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, and Science Applications International Corporation, DOAH Case No. 94-3251BID (RO

   August 31, 1994, FO September 12, 1994). The present situation also is not one in which the apparent successful bidder had no required service locations and dealers in place at the time of bid opening and was, in effect, permitted to amend its Bid after bid opening by hustling around to locate complying third parties, which is clearly anti-competition and unfair. See, City of Opa Locka v. Trustees of the Plumbing Industry Promotion Fund, 193 So. 2d 29 (Fla. 3d DCA 1966). Herein, there is a somewhat hybrid situation in that the Department had a clear bid requirement concerning servicing by Third Parties. Petitioner had authorized, experienced servicing agents in place but did not clearly state so within its Bid submittal. Rather, Petitioner tried to use an MBE Certificate to demonstrate compliance with that mandatory bid requirement. An agency is not required to go behind an MBE Certificate to extrapolate all supporting

   documentation of the preceding MBE application. Later, the Petitioner asserted that knowledge within the Department from prior contracts should be enough. However, an agency is not required to assemble all oral communications and past dealings on previous contracts and then use this information to "interpret" or "supplement" an incomplete bid after opening just for bidders with whom the agency has previously done business. Indeed, to do so clearly gives those bidders an advantage, and many bid protests flow from just such gratuitous agency "supplementations" of incomplete bids. The controlling statute therefore requires that each bid package must be complete upon submission to the agency.

7. As part of the protest procedure, the Department requested additional information and considered waiving the mandatory ITB requirement at issue, but waiving such a requirement does not inspire confidence in the system and is contrary to the express ITB. The Department also considered not waiving the Petitioner's error and awarding the contract to Pitney Bowes, Inc. Ultimately, the agency decided that the fairer procedure was to reject all bids and try again. In the absence of clear proof of illegality, arbitrariness, dishonesty, or fraudulent dealing, the Department should be permitted to re- bid.

RECOMMENDATION

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 dismissing the protest of American Business Systems and establishing a time frame in which its Invitation to Bid may be relet.

RECOMMENDED this 24th day of September, 1997, in Tallahassee, Leon County, Florida.

ELLA JANE P. DAVIS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax FILING (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1997.

COPIES FURNISHED:

Linda Klusmeier, Qualified Representative American Business Systems

8638 Phillips Highway, Room 12

Jacksonville, Florida 32256

Edward A. Dion, General Counsel Department of Labor and

Employment Security

2012 Capital Circle, South East

307 Hartman Building Tallahassee, Florida 32399-2189

Douglas L. Jamerson, Secretary Department of Labor and

Employment Security

2012 Capital Circle, South East

303 Hartman Building Tallahassee, Florida 32399-2152

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 97-002842BID

Orders for Case No: 97-002842BID