STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

M/A-COM, INC.,

Petitioner,

vs.

DEPARTMENT OF MANAGEMENT SERVICES, STATE TECHNOLOGY OFFICE,

Respondent,

and

MOTOROLA, INC.,

Intervenor.

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) Case No. 04-1091BID

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RECOMMENDED ORDER

Administrative Law Judge Don W. Davis of the Division of Administrative Hearings (DOAH) held a final hearing in the above titled cause on April 26-27, 2004, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Mark A. Hendricks, Esquire

Panza, Maurer & Maynard, P.A.

Bank of America Building, Third Floor 3600 North Federal Highway

Fort Lauderdale, Florida 33308

For Respondent: Gerard York, Esquire

Department of Management Services 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

For Intervenor: William E. Williams, Esquire

J. Andrew Bertron, Jr., Esquire Huey, Guilday, Tucker, Schwartz

& Williams, P.A.

1983 Centre Pointe Boulevard, Suite 200 Post Office Box 12500

Tallahassee, Florida 32317-2500 STATEMENT OF THE ISSUE

Whether the State of Florida, Department of Management Services, State Technology Office (Respondent) issued a Notice of Intent to Award a contract, pursuant to an Invitation to Negotiate (ITN), to Motorola, Inc., (Intervenor) which was contrary to Respondent’s governing statutes, rules, polices, or any applicable bid or proposal specification.

PRELIMINARY STATEMENT

Respondent issued ITN 009 in order to secure proposals from vendors for the provision of services related to “an interoperability network solution” for a statewide communication system. Notice of Respondent’s action was posted on the internet at www.MyFloridaMarketplace.com.

On October 28, 2003, four vendors submitted responses to the notice. On November 19, 2003, Respondent posted an initial ranking and narrowed the field of four potential providers to three. Negotiations with the three remaining vendors followed.

Following receipt of additional information from the vendors and a series of meetings with each, Respondent posted a Notice of Intent to Award. The notice contained the rankings of

the three finalists and documented Respondent’s intent to award the contract to Intervenor. In points, M/A-COM, Inc., (Petitioner) was ranked last and Intervenor was ranked first.

On March 10, 2004, Petitioner timely filed a Notice of Protest of the Notice of Intent to award to Intervenor.

Subsequently, on March 29, 2004, Petitioner then filed a Formal Written Protest. The matter was then referred to DOAH by Respondent.

At the final hearing, the parties presented 39 joint exhibits, which were received into evidence. Petitioner also presented the testimony of four witnesses and two additional exhibits. Respondent and Intervenor presented no witnesses, but did offer two additional joint exhibits that were admitted into evidence.

A Transcript of the hearing was filed with DOAH on May 4, 2004. All parties filed Proposed Recommended Orders, which have been reviewed and utilized in the preparation of this Recommended Order.

FINDINGS OF FACT

1. On or about September 5, 2003, Respondent issued ITN 009 for a “interoperability” network solution to enable public safety users of disparate systems to have interoperability between their various communications systems. Since the State of Florida has no common radio communication technology for

   public safety agencies, Respondent sought solutions, through the ITN, that would permit first responders and other safety personnel to integrate various disparate systems in time of need.

2. By the response submission deadline of October 28, 2003, four vendors submitted replies to the ITN: JPS Communications (Raytheon), Unisys, Petitioner, and Intervenor.

3. The process of selecting one of the vendors proceeded in three phases: an evaluation of replies phase, a presentation phase, and a negotiation phase.

4. Five teams of evaluators (24 team members) from first responder agencies around the state that will have to use the system were appointed by Respondent to review and evaluate the replies.

5. The evaluation team members met November 3 through 5, 2003, to begin the process. Each of the five teams evaluated the replies and assigned scores to each proposer’s solution to the problem. Respondent averaged the scores of the five teams and assigned raw scores, not inclusive of costs, to vendor proposals as follows: Raytheon, 72.0; Petitioner, 102.4; Intervenor, 101.8; and Unisys, 58.2.

6. On November 19, 2003, Respondent posted the initial ranking of vendors selected for further consideration. Petitioner, Intervenor, and Unisys were selected to make

   presentations regarding their proposed solutions. Petitioner filed a protest with regard to the ranking, pursuant to provisions of Section 120.57(3), Florida Statutes, but subsequently withdrew that protest.

7. Following the presentations by the three vendors (Petitioner, Intervenor, and Unisys), on December 2 and 3, 2003, the evaluation teams again scored the vendors with the following result: Petitioner, 105.33; Intervenor, 113.33; and Unisys,

   85.66. Notice of the ranking of the three vendors was posted on December 19, 2003. All three vendors were asked by Respondent to continue into the final phase, negotiations.

8. Respondent formed a team of four negotiators, assisted by a technical subject matter expert, to negotiate with the three finalists. Numerous meetings of the negotiators were convened to make a determination as to which proposed solution constituted the “best value to the state.” During that time, Respondent’s negotiators engaged in a discussion of vendor replies; face to face negotiating sessions with vendors; discussion of technical issues with the parties and technical experts; and discussions among themselves as a group.

9. Respondent requested all three remaining vendors to submit “best and final offers” (BAFOs) on February 16, 2004.

10. All three vendors complied with Respondent’s request and submitted BAFOs on February 18, 2004. Final prices were:

    Unisys, $23,011,660; Intervenor, $23,026,742; and Petitioner,

    
    

    $34,216,586. Based on those prices and the determination of “best value” by the negotiating team, Respondent ranked Intervenor as first choice; Unisys as second choice; and Petitioner as third choice.

11. Respondent posted Notice of Intent to award the contract to Intervenor on March 5, 2004. Respondent stated in the notice that it would attempt to negotiate the contract first with Intervenor; and, failing successful negotiation, proceed next with the other finalists.

12. Petitioner filed a Notice of Protest on March 10, 2004, and requested formal administrative proceedings. By operation of law, further negotiation between Respondent and Intervenor was stayed. Intervenor filed a Petition to Intervene, which was granted on March 29, 2004, following referral of the matter to DOAH.

13. Petitioner alleges that Respondent used criteria and an evaluation process that was inconsistent with the criteria, evaluation and process set forth in the ITN. Paragraph 4.11 of the ITN is entitled “Evaluation Criteria” and outlines a broad evaluation criteria to obtain “best value for the state” that reads in relevant part as follows:

    Technical Solution (50%): Criteria for this part of the evaluation will be taken from Tabs B and C including system design, local

    system modifications, functionality, security, standards, and ease of use. This also includes implementation, system support and administration, and training.

    
    

    Implementation, Support and Company Qualifications (20%): Criteria for this part of the evaluation will be taken from Tab D.

    
    

    Cost (30%): Criteria for this part of the evaluation will be taken from Tab E.

    
    

14. During the first phase of the negotiation, the five evaluation teams were permitted to score responses of vendors by using information from anywhere in a vendor’s reply. Nothing in paragraph 4.11 of the ITN specifies that Respondent score every criterion in Tabs B, C, and D.

15. Respondent’s negotiation team had extensive discussions on each proposal. Team members reviewed design, implementation, and technology of each vendor’s solution to insure that vendors had a full understanding of what was being proposed. Although negotiation team members discussed many of the same criteria used by the evaluation teams, the score sheets of the evaluators were not in front of the negotiators.

16. In the course of three days of negotiations, Respondent’s team members asked vendors questions with the intent of determining weaknesses and strong points in each individual proposed solution. Consequently, Respondent

    negotiators obtained valuable improvements and additions to the vendors’ proposed solutions.

17. Notably, Respondent’s negotiation team obtained a substantial reduction in price from Intervenor during the process. Intervenor’s initial price for implementation and five years of operation and maintenance of the system was

    $39,953,341.	In its BAFO,	Intervenor reduced this amount to
    $23,026,742.	By contrast,	Petitioner’s price increased from

    
    

    $33,807,491 to $34,216,586 after the process.

    
    

18. Respondent’s negotiation team viewed the scoring and rankings from the prior phases as an indication that the three remaining vendors were qualified to deliver the services sought by the agency. Negotiators for Respondent did not rank vendors until the very end of the process, after a review of all information, and receiving the BAFOs. Scores from the prior evaluation phase were not used to rank vendors in the negotiation phase, but simply as a check or validation of the negotiation team’s independent ranking. Each member of the negotiating team arrived independently at the conclusion that Intervenor’s solution presented the best value to the state.

19. No evidence was provided that scores from the reply and presentation phases had any impact on the process beyond qualifying vendors to participate in negotiations.

    CONCLUSIONS OF LAW

    
    

20. The Division of Administrative Hearings has jurisdiction over this subject matter and the parties to this action pursuant to Section 120.57(1) and (3), Florida Statutes.

21. Petitioner filed an Unopposed Motion to Amend its Formal Written Protest on April 19, 2004. The motion was granted at final hearing.

22. Ruling upon Intervenor’s Motion in Limine for Order Striking Petitioner’s Witnesses and Prohibiting Testimony, filed April 22, 2004, was reserved at the final hearing. That motion is denied at this time.

23. A confidentially agreement was entered into by the parties on April 25, 2004. Under terms of the agreement, the parties agreed to precautions against disclosure and unauthorized use of confidential trade secret information produced in this proceeding.

24. Petitioner has standing to challenge Respondent’s proposed action to award the subject contract to Intervenor. Additionally, Intervenor has standing to intervene in this proceeding. § 120.57(1) and (3), Fla. Stat.

25. As the party challenging Respondent’s proposed action, Petitioner has the burden of proof in this proceeding.

    § 120.57(3)(f), Fla. Stat.

26. Section 120.57(3)(f), Florida Statutes, provides, in relevant part:

    In a competitive-procurement protest, other than a rejection of all bids, proposals, or replies, the administrative law judge shall conduct a de novo proceeding to determine whether the agency's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, or the solicitation specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious.

    
    

27. Petitioner has the burden of showing that Respondent’s intent to negotiate a contract for the Interoperability Network with Intervenor is contrary to the agency’s governing statutes, rules or policies, or the ITN specifications. The proposed award will not be overturned so long as the decision is based on an honest exercise of discretion. Scientific Games, Inc. v.

    Dittler Brothers, Inc., 586 So. 2d 1128, 1131 (Fla. 1st DCA 1991).

28. The main thrust of Petitioner’s protest, relating to the earlier evaluation process and not the result of the negotiation process, is that Respondent failed to score all of the individual items in Tabs B and D of the ITN, thereby increasing the relative weight to be given items in Tab C.

29. Petitioner’s argument is unpersuasive. Respondent made three postings in this procurement. Petitioner did not

    maintain any protest to the first posting and withdrew its’ protest to the second posting. Both first and second postings by Respondent provided all parties a notice advising substantially affected parties of a point of entry. Further, Petitioner’s withdrawal of its protest following the posting by Respondent of ranking on November 19, 2003, rendered moot any further consideration of this issue.

30. Possibly, Petitioner misapprehends the difference between a request for proposals (RFP) and an ITN. In an ITN, the evaluation and ranking of replies is only the first step in the procurement. Following the evaluation and ranking of replies in an ITN process, the agency “shall evaluate and rank responsive replies against all evaluation criteria set forth in the invitation to negotiate and shall select, based on the ranking, one or more vendors with which to commence negotiations.” § 287.057(3) and (b), Fla. Stat. Petitioner was ranked, selected for the negotiation process, and was not substantially affected at that stage of the process.

31. Following negotiation in an ITN procurement, an “agency shall award the contract to the responsible and responsive vendor that the agency determines will provide the best value to the state.” § 287.057(3)(b), Fla. Stat.

32. Petitioner has also argued that Respondent used scores from the previous rankings in determining who was first, second,

or third in order for negotiation and that; accordingly, the scores should be examined to determine their correctness. The evidence is abundantly clear that Respondent’s negotiators simply added the scores to the ranking process following their unanimous and individual agreement that the Intervenor was their first choice; Unisys was their second choice; and Petitioner was their third choice. Absent a showing that Respondent was not engaged in an honest exercise to obtain the best value for the state, Respondent was free to use whatever criteria in the negotiation phase that it chose. See Scientific Games, 586 So.

2d at 1131.

RECOMMENDATION

Based upon the Findings of Fact and Conclusions of Law, it

is

RECOMMENDED:

That Respondent enter a final order denying Petitioner's protest.

DONE AND ENTERED this 25th day of May, 2004, in Tallahassee, Leon County, Florida.

S

DON W. DAVIS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 25th day of May, 2004.

COPIES FURNISHED:

Gerard York, Esquire

Department of Management Services 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Thomas F. Panza, Esquire Panza, Maurer & Maynard, P.A.

Bank of America Building, Third Floor 3600 North Federal Highway

Fort Lauderdale, Florida 33308-6225

William E. Williams, Esquire Huey, Guilday, Tucker, Schwartz

& Williams, P.A.

1983 Centre Point Boulevard, Suite 200 Post Office Box 12500

Tallahassee, Florida 32317-2500

Alberto Dominguez, Esquire General Counsel

Department of Management Services 4050 Esplanade Way

Tallahassee, Florida 32399-0950

Foyt Ralston, Acting Chief Information Officer

State Technology Office Department of Management Services 4030 Esplanade Way, Suite 115

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 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: 04-001091BID

Orders for Case No: 04-001091BID