STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
CUBIC TRANSPORTATION SYSTEMS, INC.,
Petitioner,
vs.
DEPARTMENT OF TRANSPORTATION,
Case No. 14-2322BID
Respondent,
and
XEROX STATE AND LOCAL SOLUTIONS, INC.,
Intervenor.
/ ACCENTURE LLP,
vs.
Petitioner,
Case No. 14-2323BID
DEPARTMENT OF TRANSPORTATION,
Respondent,
and
XEROX STATE AND LOCAL SOLUTIONS, INC.,
Intervenor.
/
RECOMMENDED ORDER
Pursuant to notice, a final hearing in this cause was held in Tallahassee, Florida, on June 18 and 19, and July 9
through 11, 2014, before the Division of Administrative Hearings by its designated Administrative Law Judge, Linzie F. Bogan.
APPEARANCES
For Petitioner in 14-2322BID:
Thomas H. Bateman, III, Esquire Albert T. Gimbel, Esquire
Bryan Duke, Esquire Messer Caparello, P.A. 2618 Centennial Place
Tallahassee, Florida 32308 For Petitioner in 14-2323BID:
J. Stephen Menton, Esquire Rutledge Ecenia, P.A.
119 South Monroe Street, Suite 202 Tallahassee, Florida 32301
For Respondent: Denise Johnson, Esquire
Florida Department of Transportation Mail Station 58
605 Suwannee Street
Tallahassee, Florida 32399-0458
For Intervenor: W. Robert Vezina, III, Esquire
Vezina, Lawrence & Piscitelli, P.A.
413 East Park Avenue Tallahassee, Florida 32301
John A. Tucker, Esquire Robert H. Hosay, Esquire Foley & Lardner, LLP Suite 1300
One Independent Drive Jacksonville, Florida 32202
STATEMENT OF THE ISSUE
Whether Respondent Department of Transportation’s intended decision to conduct negotiations with Xerox State and Local Solutions, Inc., under ITN-DOT-13/14-8001-SM is contrary to the
Department’s governing statutes, rules, or policies or to the solicitation specifications.
PRELIMINARY STATEMENT
On November 1, 2013, the Florida Department of Transportation (Department/DOT/Respondent) advertised an Invitation to Negotiate (ITN), soliciting proposals from firms interested in participating in competitive negotiations for the award of a contract to provide a Centralized Customer Service System (CCSS) and associated operations and maintenance. On April 10, 2014, the Department posted vendor rankings which advised of the Department’s intent to commence negotiations with the first-ranked vendor, Xerox State and Local Solutions, Inc. (Xerox). Accenture LLP (Accenture) and Cubic Transportation Systems, Inc. (Cubic), (collectively referred to as (Petitioners/Protesters) timely filed notices of intent to protest the Department’s rankings, and also timely filed respective formal written protests.
On May 16, 2014, both protest petitions were referred to the Division of Administrative Hearings (DOAH). The cases were consolidated and Xerox intervened. At the hearing, Joint Exhibits 1 through 63, and 64A were admitted into evidence, as were: Accenture Exhibits 3, 8 and 9; Cubic Exhibits 1 through
13, 15 through 18, 20, 21, 24, 25, 27, 29, 32, 35, 40 through 42,
47, 50, 52, 53, 56, 57, and 61 through 77; Xerox Exhibits 1
through 3, 4A, 7A, 8A, 9A, 10, 11, and 17 through 23; and Accenture/Cubic Joint Exhibit 2.
Accenture offered testimony from Sheree Merting, the procurement officer for the Florida Turnpike Enterprise (FTE); Diane Gutierrez-Scaccetti, FTE’s executive director; and Laura Kelley, acting executive director of the Orlando-Orange County Expressway Authority (OOCEA). Cubic offered testimony from Jon Ramirez, Cubic’s corporate representative. Accenture and Cubic offered testimony from Timothy Garrett, an employee of HNTB Corporation (HNTB), acting as a consultant to FTE; John McCarey, of McCarey Consulting, LLC, a consultant to FTE; and Joseph Waggoner, executive director of the Tampa Hillsborough Expressway Authority (THEA). Xerox offered testimony from Richard Bastan, Xerox’s group president for the transportation line of business. Xerox and the Department offered testimony from Javier Rodriguez, executive director of the Miami-Dade Expressway Authority (MDX). Additional testimony was offered by deposition transcripts and marked as exhibits.
A ten-volume transcript of the proceedings was filed with DOAH on August 5, 2014. The parties submitted Proposed Recommended Orders, which have been considered by the undersigned.
FINDINGS OF FACT
The ITN
The Department is an agency of the State of Florida charged with planning, acquiring, leasing, constructing, maintaining, and operating toll facilities and cooperating with and assisting local governments in the development of a statewide transportation system. § 334.044(16)-(22), Fla. Stat. (2013).1/ The Department is authorized to enter contracts and agreements to help fulfill these duties. See §§ 20.23(6) and 334.044(7),
Fla. Stat.
FTE is a legislatively created arm of the Department and is authorized to plan, develop, own, purchase, lease, or otherwise acquire, demolish, construct, improve, relocate, equip, repair, maintain, operate, and manage the Florida Turnpike System. § 338.2216(1)(b), Fla. Stat. FTE is also authorized to cooperate, coordinate, partner, and contract with other entities, public and private, to accomplish these purposes. Id.
The Department has the express power to employ the procurement methods available to the Department of Management Services under chapter 287, Florida Statutes.2/ § 338.2216(2), Fla. Stat.; see also Barton Protective Servs., LLC v. Dep’t of
Transp., Case No. 06-1541BID (Fla. DOAH July 20, 2006; Fla. DOT Aug. 21, 2006).
OOCEA (now known as the Central Florida Expressway Authority), MDX, and THEA are legislatively created or authorized agencies of the State with the power to fix, alter, charge, establish, and collect tolls, rates, fees, rentals, and other charges for the services and facilities system. §§ 348.0003(1)-
.0004(2)(e), Fla. Stat. Each of these authorities has the power to enter contracts and to execute all instruments necessary or convenient for the carrying on of its business; to enter contracts, leases, or other transactions with any state agency or any other public body of the State; and to do all acts and things necessary or convenient for the conduct of its business and the general welfare of the authority in order to carry out the powers granted to it by law. § 348.0004(2)(g), (h), (k), Fla. Stat.
On November 1, 2013, the Department advertised the ITN, soliciting proposals from vendors interested in participating in competitive negotiations for the award of a contract to provide a CCSS and associated operations and maintenance. The ITN was issued pursuant to section 287.057, Florida Statutes.
The purpose of the ITN is to replace the existing customer service center systems of FTE, OOCEA, THEA, and MDX with a CCSS that can be expanded over time to include other tolling and transit agencies in the State of Florida. The CCSS is expected to process nearly all electronic toll transactions in Florida. The successful vendor will enter a contract directly
with the Department. The Department will then enter agreements with the other authorities to address coordinated and joint use of the system.
Generally, the ITN sets forth a selection process consisting of two parts. Part one involves: (a) the pre- qualification, or shortlisting, of vendors in order to determine a vendor’s eligibility to submit proposals; and (b) the proposal submission, evaluation, and ranking. Part two is the negotiation phase. The instant proceeding relates only to part one. Part two -- negotiations -- has yet to occur.
The TRT and Selection Committee – The Evaluators
Cubic alleges that “not all of the members of either [the Technical Review or Selection Committee] teams had the requisite experience or knowledge required by section 287.057(16)(a)1., Florida Statutes.” Accenture alleges that “the Selection Committee did not collectively have expertise in all of the subject areas covered by th[e] ITN.”
Section 287.057(16)(a) provides in part that the agency head shall appoint “[a]t least three persons to evaluate proposals and replies who collectively have experience and knowledge in the program areas and service requirements for which commodities or contractual services are sought.”3/ In accordance with the requirements of section 287.057(16)(a), the ITN established a Technical Review Team (TRT) that would be “composed
of at least one representative from each Agency and may include consultant (private sector) staff.” The ITN also provided for a Selection Committee that would be “composed of executive management at the Agencies.”
Each agency executive director appointed two individuals from their agency to the TRT. Each agency director was familiar with the background and qualifications of their appointees, who had experience in various aspects of tolling operations including tolling, software, finance, and procurement.
The following individuals were appointed to serve on the TRT. Bren Dietrich, a budget and financial planner for FTE, has an accounting degree and has worked at FTE for 12 years in budget and financial planning. Mr. Dietrich has been a technical committee member for seven or eight procurements. Mohamed Hassan, a senior operations manager for FTE, has been in information technology for nearly 40 years and with FTE for 22 years handling all aspects of software development and maintenance for the state’s largest tolling authority.
Mr. Hassan’s expertise is in software development and maintenance. Mr. Hassan oversees staff that is responsible for maintaining the database application systems, hardware, communications coming in and going out of the customer service center, and any development projects such as transaction processing or account management system upgrades. Steve Andriuk
is a deputy executive director for MDX and oversees all tolling operations within MDX’s jurisdiction. Mr. Andriuk’s tolling background goes beyond his tenure at MDX, as he previously was an executive director at Chesapeake Bay Bridge Authority. Jason Greene, MDX’s comptroller of financial controls and budget manager, has a background in finance and accounting and in project management. Mr. Greene has been with MDX for 11 years.
Lisa Lumbard, who has been with OOCEA for 16 years, is the interim chief financial officer and previously was the manager of accounting and finance. Ms. Lumbard runs OOCEA’s finance and accounting office and has both procurement experience and substantial experience in the financial aspects of back- office tolling. David Wynne is the director of toll operations of OOCEA and is responsible for the overall collection of all tolls and for the violation enforcement process. Mr. Wynne has held some iteration of this position for approximately 11 years and worked for OOCEA for 16. He also has both procurement and substantial tolling experience. Robert Reardon, THEA’s chief operating officer, is responsible for THEA’s day-to-day operations, including tolls. Mr. Reardon has been with THEA for six years and has experience as a technical evaluator for public procurements. Rafael Hernandez is THEA’s manager of toll operations and oversees all toll operations within THEA’s jurisdiction.
The TRT members collectively have the requisite knowledge and experience in tolling, software, finance, and procurement.
The following individuals constituted the Selection Committee. Diane Gutierrez-Scaccetti has been FTE’s executive director since 2011 and worked for the New Jersey Turnpike Authority for over 20 years, the last two as executive director and the previous 14 as deputy executive director. Laura Kelley is OOCEA’s deputy director over finance administration and the interim executive director. Ms. Kelly has 30 years’ experience in transportation finance and management, 15 of which occurred at the Department and eight of which occurred at OOCEA overseeing information technology, finance, and procurement. Javier Rodriguez, MDX’s executive director, oversees all MDX operations, including planning, finance, operations, and maintenance functions. Mr. Rodriguez has been with MDX for seven years and was with the Department for over 15 years prior to his employment with MDX. Joseph Waggoner has been THEA’s executive director for approximately seven years. Prior to joining THEA, he was with the Maryland Department of Transportation for nearly 30 years, six of which were in tolling operations.
ITN section 2.6.2 provides as follows:
Following Proposal Oral Presentations by all short-listed Proposers (see section 2.25 Proposal Oral Presentations for additional
details) the Technical Review Team members will independently evaluate the Proposals based on the criteria provided in Section
2.5.2 and will prepare written summary evaluations. There will then be a public meeting of the Selection Committee at the date, time and location in Table 1-2 Procurement Timeline. The Technical Review Team’s compiled written summary evaluations will be submitted to the Selection Committee. The Technical Review and Selection Committee will review and discuss the individual summary evaluations, and the Selection Committee will come to consensus about ranking the Proposers in order of preference, based on their technical approach, capabilities and best value. In addition to the Technical Review Team, the Selection Committee may request attendance of others at this meeting to provide information in response to any questions.
The ITN is structured such that both the TRT and the Selection Committee have shared responsibility for evaluating proposals, with the Selection Committee having ultimate responsibility for ranking the Proposers for the negotiations stage of the procurement process.
Combining the eight members of the TRT with the four members of the Selection Team means that there were a total of 12 individuals tasked with the responsibility of evaluating the proposals prior to the negotiations stage of the process.
Pre-Qualification and Rankings
In the pre-qualification portion of the ITN, interested vendors initially submitted reference forms to demonstrate that the vendors met the minimum project experience set forth in the
ITN. Vendors meeting this requirement were invited to give a full-day Pre-Qualification Oral Presentation to the TRT in which each vendor was given the opportunity to demonstrate its proposed system. Under ITN section 2.6.1,
A Technical Review Team will attend the Pre- Qualification Oral Presentations and will develop scores and written comments pertaining to the reviewed area(s) identified in Section 2.5.1. The Technical Review Team will be composed of at least one representative from each Agency and may include consultant (private sector) staff.
The scores provided by each Technical Review Team member for each area of the Pre- Qualification Oral Presentations will be totaled and averaged with the scores of the other Technical Review Team members to determine the average score for an area of the Pre-Qualification Oral Presentation. The average score for each area of a Pre- Qualification Oral Presentation will then be totaled to determine a total Pre- Qualification Oral Presentation score.
Each vendor’s Pre-Qualification Oral Presentation was then scored based on criteria set forth in ITN section 2.5.1. Any vendor that received a score of 700 or higher was “short- listed” and invited to submit proposals. Put differently, those receiving a score of at least 700 were deemed qualified to submit formal proposals.
ITN section 2.5.1 provides that the “review/evaluation of the Pre-Qualification Oral Presentations will not be included in decisions beyond determining the initial short-list of Proposers to proceed in the ITN process.” Accordingly, the
scores assigned in the pre-qualification phase were irrelevant after the short-listing.
Six vendors submitted pre-qualifications responses, including Xerox, Accenture, and Cubic. On January 21, 2014, the Department posted its short-list decision, identifying that all six vendors, including Xerox, Accenture, and Cubic, were deemed qualified to submit formal written proposals to the ITN (the “First Posting”).
As required by section 120.57(3)(a), Florida Statutes, the posting stated, “Failure to file a protest within the time prescribed in Section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120, Florida Statutes.” This posting created a point of entry to protest, and no vendor initiated a protest.
After the First Posting, short-listed vendors submitted technical and price proposals and made Proposal Oral Presentations.
ITN section 2.24 provides detailed instructions for technical and price proposal preparation and submission. ITN section 2.25 (as amended by Addendum 8) sets forth the process for short-listed vendors to make Proposal Oral Presentations to the TRT.
Short-listed Proposers will each be scheduled to meet with the Technical Review Team for Proposal Oral Presentations of their firm’s capabilities and approach to the Scope of Work and Requirements within the time period identified in Table 1-2 Procurement Timeline. Short-listed Proposers will be notified of a time and date for their Proposal Oral Presentation. Proposal Oral Presentation sessions are not open to the public. The Selection Committee will attend these Presentations.
In advance of the Proposal Oral Presentations Proposers will be given detailed instructions on what the format and content of the Proposal Oral Presentation will be, including what functionality shall be demonstrated.
The Department may also provide demonstration scripts to be followed. Proposers should be prepared to demonstrate key elements of their proposed System and Project approach and to respond to specific questions regarding their Proposals.
These Proposal Oral Presentations will be used to present the Proposer’s approach and improve understanding about the Department’s needs and expectations. The Technical Review Team will participate in all Proposal Oral Presentations. After each Oral Presentation, each individual on the Technical Review Team will complete a written summary evaluation of each Proposer’s technical approach and capabilities using the criteria established in Section 2.5.2 in order to assure the Technical Proposal and Oral Presentations are uniformly ranked. The evaluation will consider both the Technical Proposal and the Oral Presentations.
ITN section 2.5.2 is titled “Best Value Selection” and provides as follows:
The Department intends to contract with the responsive and responsible short-listed
Proposer whose Proposal is determined to provide the best value to the Department. “Best value,” as defined in Section 287.012(4), F.S., means the highest overall value to the state, based on objective factors that include but are not limited to . . . .
ITN section 2.5.2 goes on to delineate seven “objective factors,” or evaluation criteria, on which proposals would be evaluated:
Company history
Project experience and qualifications
Proposed Project approach to the technical requirements
Proposed approach to the Project plan and implementation
Proposed approach to System Maintenance
Proposed approach to Operations and performance
Price
ITN section 2.6.2 explains the process for evaluation of technical proposals and Proposal Oral Presentations and states
that:
Following Proposal Oral Presentations by all short-listed Proposers (see Section 2.25 Proposal Oral Presentations for additional details) the Technical Review Team members will independently evaluate the Proposals based on the criteria provided in Section
2.5.2 and will prepare written summary evaluations. There will then be a public meeting of the Selection Committee at the date, time and location in Table 1-2 Procurement Timeline. The Technical Review Team’s compiled written summary evaluations will be submitted to the Selection Committee. The Technical Review Team and Selection Committee will review and discuss the individual summary evaluations, and the Selection Committee will come to consensus
about ranking the Proposers in order of preference, based on their technical approach, capabilities and best value. In addition to the Technical Review Team, the Selection Committee may request attendance of others at this meeting to provide information in response to any questions.
Of the six short-listed vendors, five submitted proposals and gave Proposal Oral Presentations, including Xerox, Accenture, and Cubic. The Department then undertook a ranking using the evaluation criteria delineated in ITN section 2.5.2. To perform this ranking, TRT members individually evaluated the proposals and prepared detailed, written evaluations that tracked
the evaluation criteria factors. The TRT’s evaluations, together with proposal summaries prepared by HNTB, were provided to the Selection Committee in preparation for a joint meeting of the TRT and Selection Committee on April 9, 2014.
At the April 9th meeting, the TRT and Selection Committee members engaged in an in-depth discussion about the bases for and differences between the individual TRT members’ rankings and evaluations. Thereafter, the Selection Committee made its ranking decision.
On April 10, 2014, the Department posted its ranking of vendors, with Xerox first, Accenture second, and Cubic third (the “Second Posting”).
The Second Posting also announced the Department’s intent to commence negotiations with Xerox as the first-ranked vendor.4/ If negotiations fail with Xerox, negotiations will then begin with second-ranked vendor Accenture, then Cubic, and so on down the order of ranking until the Department negotiates an acceptable agreement.
Accenture and Cubic each timely filed notices of intent to protest the Second Posting and timely filed formal written protest petitions and the requisite bonds.
Negotiations are not at Issue
ITN section 2.26 provides:
Once Proposers have been ranked in accordance with Section 2.6.2 Proposal Evaluation, the Department will proceed with negotiations in accordance with the negotiation process described below. Proposers should be cognizant of the fact that the Department reserves the right to finalize negotiations at any time in the process that the Department determines that such election would be in the best interest of the State.
Step 1: Follow the evaluation process and rank Proposals as outlined in Section 2.6 Evaluation Process.
Step 2: The ranking will be posted, in accordance with the law (see Section 2.27), stating the Department’s intent to negotiate and award a contract to the highest ranked Proposer that reaches an acceptable agreement with the Department.
Step 3: Once the posting period has ended, the Negotiation Team will undertake negotiations with the first-ranked Proposer
until an acceptable Contract is established, or it is determined an acceptable agreement cannot be achieved with such Proposer. If negotiations fail with the first-ranked Proposer, negotiations may begin with the second-ranked Proposer, and so on until there is an agreement on an acceptable Contract.
The Department reserves the option to resume negotiations that were previously suspended. Negotiation sessions are not open to the public and all negotiation sessions will be recorded by the Department.
Step 4: The Negotiation Team will write a short plain statement for the procurement file that explains the basis for Proposer selection and how the Proposer’s deliverables and price will provide the best value to the state.
Step 5: The Department will contract with the selected Proposer.
As Accenture and Cubic protested the decision by the Department to enter negotiations with Xerox (and because of the automatic stay provision of section 120.57(3), Florida Statutes) the negotiation phase of the procurement never commenced. Thus, this proceeding concerns the Department’s actions up to the Second Posting, and not what may happen during future negotiations.
Second Posting and Intended Award
Section 1.2 of the ITN sets forth the procurement timeline for the CCSS project. The ITN originally indicated that the “Posting of Ranking/Intended Award” would occur on March 31, 2014. By addendum issued on February 13, 2014, the date for
“Posting of Ranking/Intended Award” was changed to April 10, 2014. Section 1.3.1 of the ITN provides an agenda for the April 10, 2014, “Meeting to Summarize and Determine Ranking/Intended Award.”
Section 2.27 of the ITN is labeled “POSTING OF RANKING/INTENDED AWARD.” Section 2.27.1, Ranking/Intended Award, provides that “[t]he Ranking/Intended Award will be made to the responsive and responsible Proposer that is determined to be capable of providing the best value and best meet the needs of the Department.” Section 2.27.2 is labeled “Posting of Short- list/Ranking/Intended Award” and provides in part that “[a]ny Proposer who is adversely affected by the Department’s recommended award or intended decision must . . . file a written notice of protest within seventy-two hours after posting of the Intended Award.”
Joint Exhibits 10 and 12 are copies of forms used to announce the rankings of the Proposers. It is not clear from the record if these forms are a part of the ITN. Nevertheless, the forms are identical in format. Each form has three boxes that follow the words “TYPE OF POSTING.” The first box is followed by the word “Shortlist,” the second box is followed by the word “Ranking,” and the third box is followed by the words “Intended Award.” The form also has three columns that coincide with the three boxes previously referenced.
The three columns are respectively labeled, “X indicates shortlisted vendor,” “ranking of negotiations,” and “X indicates intended award.” With respect to the last two columns, explanatory comments appearing at the bottom of the form read as follows:
** Ranking: The Department intends to negotiate separately and will award a contract to the highest ranked vendor that reaches an acceptable agreement with the Department. The Department will commence negotiations with the number one ranked vendor until an acceptable contract is agreed upon or it is determined an acceptable agreement cannot be reached with such vendor. If negotiations fail with the number one ranked vendor, negotiations may begin with the second-ranked vendor, and so on down the order of ranking until the Department is able to negotiate an acceptable agreement.
*** Intended Award: “X” in the Intended Award column indicates the vendor whom the Department intends to award the contract to, but does not constitute an acceptance of any offer created by the vendor’s proposal or negotiations. No binding contract will be deemed to exist until such time as a written agreement has been fully executed by the Department and the awarded vendor. If irregularities are subsequently discovered in the vendor’s proposal or in the negotiations or if the vendor fails to submit required [b]onds and insurance, fails to execute the contract, or otherwise fails to comply with the ITN requirements, the Department has the right to undertake negotiations with the next highest vendor and continue negotiations in accordance with the ITN process, reject all proposals, or act in the best interest of the Department.
On April 10, 2014, the Department issued a posting wherein the “Ranking” box was checked and the “Intended Award” box was not. According to Sheree Merting, it was a mistake to have only checked the “Ranking” box because the box labeled “Intended Award” should have also been checked.
Petitioners contend that by not simultaneously checking both the “Ranking” and “Intended Award” boxes that the Department materially changed the process identified in the ITN.
Protesters’ arguments as to this issue appear to be more related to form than substance.
In looking at the plain language of the ITN, it reasonably appears that the Department intended to simultaneously announce the “Ranking” and “Intended Award.” The fact that the Department failed to combine these two items in a single notice is of no consequence because neither Cubic nor Accenture have offered any evidence establishing how they were competitively disadvantaged, or how the integrity of the bidding process was materially impaired as a consequence of the omission. In other words, Sheree Merting’s confessed error of not checking the “Intended Award” box contemporaneously with the “Ranking” box is harmless error. See, e.g., Fin. Clearing House, Inc. v. Fla.
Prop. Recovery Consultants, Inc., Case No. 97-3150BID (Fla. DOAH Nov. 25, 1997; Dep’t of Banking & Fin. Feb 4, 1998)(applying harmless error rule to deny protest where agency initially
violated provisions of section 287.057(15), Florida Statutes, by selecting two evaluators instead of three required by statute, but later added required evaluator).
Sequential Negotiations
As previously noted, section 2.26 of the ITN provides that following the ranking of the short-list proposers, the “Negotiation Team will undertake negotiations with the first- ranked Proposer until an acceptable Contract is established . . . [and] [i]f negotiations fail with the first-ranked Proposer, negotiations may begin with the second-ranked Proposer, and so on until there is an agreement on an acceptable Contract.”
Petitioners assert that the Department has abandoned the sequential negotiation process set forth in section 2.26 and has announced “that it will conduct the procurement negotiations only with Xerox as the number one ranked proposer” and that the process of negotiating with only one proposer is contrary to the law because section 287.057(1)(c) “requires that the Department negotiate with all proposers within the competitive range.”
Diane Gutierrez-Scaccetti testified as follows (T:
1119):
Q: Now, you understand that as a result of the rankings that were posted on April 10th, negotiations under this ITN are to proceed with only a single vendor, is that right?
A: I believe the ITN provided for consecutive negotiations starting with the
first-ranked firm and then proceeding down until we reached a contract.
Contrary to Petitioners’ assertions, the evidence establishes that the Department intends to follow the negotiation process set forth in section 2.26.
Petitioners’ contention that section 287.057(1)(c) does not authorize sequential negotiations is a challenge to the terms, conditions, and specifications of the ITN and should have been filed within 72 hours after the posting of the solicitation as required by section 120.57(3)(b). Petitioners have waived their right of protest with respect to this issue. Petitioners’ waiver notwithstanding, section 287.057(1)(c) does not preclude the type of sequential negotiation process set forth in section
2.26 of the ITN.
Section 287.057(1)(c) provides in part that “[t]he invitation to negotiate is a solicitation used by an agency which is intended to determine the best method for achieving a specific goal or solving a particular problem and identifies one or more
responsive vendors with which the agency may negotiate in order to receive the best value.” (Emphasis added). Section 287.057(1)(c)4. provides that “[t]he agency shall evaluate replies against all evaluation criteria set forth in the invitation to negotiate in order to establish a competitive range of replies reasonably susceptible of award [and] [t]he agency may
select one or more vendors within the competitive range with
which to commence negotiations.” (Emphasis added).
The opening paragraph of section 287.057(1)(c), which is essentially the preamble portion of the ITN provisions, expresses the purpose for which the ITN process was developed, to wit: “to determine the best method for achieving a specific goal or solving a particular problem.” In furtherance of the stated purpose, the Legislature instructs, in the preamble, that the process should “identif[y] one or more responsive vendors with which the agency may negotiate in order to receive the best value.” If the preamble is read in statutory isolation, then one could reasonably conclude that if the agency identifies more than one responsive vendor then the agency should negotiate with each of the vendors “in order to receive the best value.” Arguably, the preamble merely looks at vendor “responsiveness” as the guidepost for determining with whom the agency shall negotiate. Mere “responsiveness” however, is clearly not the only standard for selecting a vendor through the ITN process and illustrates why this portion of the statute cannot be read in isolation.
As previously noted, subparagraph four of section 287.057(1)(c), provides that the agency “shall . . . establish a competitive range of replies reasonably susceptible of award,” and once this is done, “[t]he agency may select one or more
vendors within the competitive range with which to commence
negotiations.” (Emphasis added). By using the word “may” in subparagraph four, the Legislature is authorizing agencies to exercise discretion when selecting vendors with whom to negotiate. In exercising its discretion, agencies can decide to negotiate with a single vendor or with multiple vendors. An agency’s exercise of its discretion is not absolute and the “check” on the exercise of its discretion, in the context of the instant case, is a bid protest whereby an unsuccessful bidder can attempt to prove that the procurement process was impermissibly tainted. Contrary to Petitioners’ allegations, the sequential negotiation process utilized by the Department in the present case does not run afoul of section 287.057.
Petitioners forcefully argue that they have been shutout of the negotiation process because neither of them was ranked first. This assertion mischaracterizes the nature of the sequential negotiation process used by the Department. The evidence shows that if the Department fails to come to terms with Xerox, then negotiations may begin with the second-ranked vendor, and so on down the order of ranking until the Department negotiates an acceptable agreement. The truth of the matter is that neither of the protesters has been shutout of the negotiations. It is simply the case that neither occupies the preferred position of being the highest ranked, short-listed vendor.
Petitioners also argue that the Florida Department of Transportation Commodities and Contractual Services Procurement Manual – 375-040-020, prohibits sequential negotiations. For invitations to negotiate, the manual provides:
There are two general negotiation methods used:
Competitive Method A – Vendors are ranked based on technical qualifications and negotiations are conducted commencing with the first ranked vendor.
Competitive Method B – Vendor qualifications are evaluated and vendors may be short-listed. Negotiations of scope and price will be conducted with short-listed or all vendors. An award is made to the vendor with the best combination of proposal, qualifications, and price.
According to Petitioners, the ITN does not comport with either Method A or Method B. Again, Petitioners failed to timely challenge the ITN specifications regarding sequential negotiations and thus have waived this argument.
Even if the merits of the argument are considered, Petitioners’ argument fails. The methods described in the manual are not the only methods available to the Department; in fact, the manual, by stating that “there are two general negotiation methods used (emphasis added),” recognizes that the methods are subject to refinement or modification as the Department deems best to meet the perceived needs of a particular solicitation as long as the final method complies with section 287.057(1), Florida Statutes. Further, the procurement manager for the ITN,
Sheree Merting, testified that the shell, or template, provided by the Department’s central office, and used when drafting an invitation to negotiate, contains a combination of the manual’s methods A and B, which is referred to as A/B. The order of negotiations provided for in the ITN and reiterated in the First and Second Postings is not, therefore, inconsistent with the Department’s policies or procedures.
Best Value Decision
Petitioners contend that the Department, via the Second Posting, has already (and improperly) determined which vendor will provide the best value to the State even though negotiations have not yet occurred. This contention is not supported by the evidence.
ITN section 2.5.2 states the Department’s intent to contract with the vendor whose proposal is determined to provide the best value and sets forth the statutorily mandated objective factors, or criteria, on which proposals will be evaluated. ITN section 2.6.2 provides that the TRT and Selection Committee will review and discuss the TRT members’ individual summary evaluations and the Selection Committee “will come to consensus about ranking the Proposers in order of preference, based on technical approach, capabilities and best value.”
The evidence reflects that the evaluation factors were applied during the evaluation process to formulate a best value
ranking, but the question of which vendor ultimately provides the best value to the State will not be conclusively determined until after negotiations are concluded. See § 287.057(1)(c)4., Fla.
Stat. (“After negotiations are conducted, the agency shall award the contract to the responsible and responsive vendor that the agency determines will provide the best value to the state, based on the selection criteria.”). As testified by Ms. Gutierrez- Scaccetti, “[t]he Selection Committee agreed upon the ranking of firms. It has not made an award.” This is consistent with the ITN and Florida law, which require award to the best value proposer after negotiations.
Evaluation Criteria Properly Followed
As explained above, ITN section 2.5.2 sets forth the evaluation factors that the TRT and Selection Committee were to use in evaluating proposals. Petitioners allege that the TRT and Selection Committee did not follow the ITN and based their evaluations and rankings on factors other than those listed in ITN section 2.5.2.
The evidence establishes that the TRT did in fact use these factors, as evidenced by the detailed evaluation summaries prepared by each of the eight TRT members, which almost uniformly tracked these factors. Seven of these summaries are organized by headings that mirror the seven criteria of section 2.5.2. The remaining summary, prepared by TRT member Mohamed Hassan, was
formatted in terms of pros and cons, but nonetheless addressed all of the section 2.5.2 evaluation criteria. Reflective of the TRT’s approach, TRT member David Wynne prepared detailed, typed proposal summaries that are four pages long and single-spaced for each proposal. Mr. Wynne’s summaries capture his deliberate thought process in ranking the proposals and include headings that directly tie back to the evaluation criteria in the ITN.
His summaries include specific details from each proposal justifying his qualitative assessment of the proposals. For example, he discusses the benefits of Xerox’s Vector 4G tolling platform, Xerox’s proposed project schedule, and maintenance.
Mr. Wynne even included a breakdown of the pricing and his thoughts on how the pricing compared to the other vendors.
The other TRT members had equally detailed summaries.
When read as a whole, these summaries demonstrate that the TRT engaged in a rational, deliberative, and thoughtful evaluation of the proposals based on the ITN criteria.
Additionally, the TRT members testified that they applied the ITN section 2.5.2 factors in conducting their evaluations. Thus, the evidence demonstrates that the TRT members did as instructed in the ITN and evaluated proposals based on ITN section 2.5.2’s factors. There is no credible basis to find that the section 2.5.2 criteria were not the bases of the TRT’s evaluations, rankings, and narratives.
The evidence also establishes that the Selection Committee applied ITN section 2.5.2 factors in reaching its decision. The Selection Committee reviewed the TRT summaries, along with a detailed notebook prepared by HNTB, the Department’s consultant. The HNTB notebook was a comprehensive summary of information compiled from the vendors’ voluminous proposals and organized in a digestible format to aid the Selection Committee’s review, including helpful summaries providing head-to-head objective comparisons of vendor pricing, software development, and vendors’ exceptions and assumptions. The HNTB notebook of materials objectively compiled the content taken directly from the vendors’ own proposals and included no editorial comments or opinions by the Department’s consultants.
Moreover, the HNTB notebook contained a chart summarizing the TRT’s rankings by TRT member, along with copies of each TRT member’s detailed written summaries. It also contained a detailed, 36-page pricing summary that pulled price information directly from the vendors’ proposals and summarized the information in a manner that allowed for easy side-by-side comparison.
The notebook also included a systems matrix summary that was prepared by taking proposed systems information directly from the vendors’ proposals and combining it in a format that
could be easily processed. In fact, the notebook even included pages copied directly from the proposals.
Armed with the comprehensive TRT summaries and the HNTB notebook, the Selection Committee then engaged the TRT in a thoughtful and detailed discussion and analysis of the qualitative merits of each vendor’s proposal -- all within the bounds of the section 2.5.2 criteria.
Petitioners contend that during the TRT and Selection Committee’s discussions, issues such as risk were improperly considered. Although “risk” was not a separately labeled criterion under section 2.5.2 (“risk of solution” is, however, referenced as a sub-bullet), risk is inherently a significant consideration in each of the evaluation factors. Stated differently, the concept of risk is integral to the ITN section
2.5.2 factors, and the Department properly considered such risks.
For example, a vendor’s prior project experience -- whether it has successfully completed similar projects before -- was a listed criterion, which is directly relevant to the risk the Department would take in selecting a vendor, that is, the risk that the vendor’s experience is or is not sufficient to assure a timely project completion and quality services under the ITN. Indeed, section 287.057(1)(c) requires that the Department consider prior experience.
Another example of risk considered by at least one Selection Committee member was the potential that Accenture’s project manager would not be assigned solely to this project, but might be shared with Accenture’s Illinois tolling project (“local presence commitment” is referenced as a sub-bullet in section 2.5.2). The evidence shows that Accenture stopped short of saying without qualification that its project manager would be released from Illinois and solely assigned to CCSS. This uncertainty raised a risk concern whether the critical project implementation would be properly managed. Considerations such as these are rational and reasonable.
There is a Reasonable Basis for the Department’s Ranking
Petitioners further contend that there was no reasonable basis for the Department’s intended decision to begin negotiations with Xerox. However, as explained above, the evidence demonstrates the opposite as the TRT and Selection Committee collectively discussed and considered the evaluation criteria and the Selection Committee reached consensus on moving forward to negotiations with Xerox. Moreover, there is ample evidence that the Selection Committee’s decision was rational and reasonable.
The TRT and Selection Committee’s discussion at the April 9, 2014, meeting where the ranking decision was reached, demonstrates the studied analysis by which the evaluations were
conducted. At the meeting, the four Selection Committee members, who had already reviewed the TRT members’ individual rankings and evaluations, each questioned the TRT members about their assessments of the proposals. Selection Committee members asked about the bases for the differences between the individual TRT members’ evaluations, and the TRT members explained why they ranked the vendors the way they did. The discussion revolved around the top three ranked vendors, Xerox, Accenture, and Cubic, which one TRT member described as being “head and shoulders above the rest” -- that is, above the vendors ranked fourth and fifth.
As noted above, the Selection Committee members’ primary focus in these discussions was on risk assessment -- the financial risks, operations risks, and information technology risks that the TRT members believed accompanied each proposal. Major Selection Committee items of discussion included modifications to the existing systems, proprietary versus off- the-shelf software issues, and the vendors’ proximity to Florida. Additional discussion points included the risk associated with Accenture’s use of multiple subcontractors and Cubic’s lack of experience with certain tolling systems.
From these discussions, it appears that the overriding factor behind the Selection Committee’s ranking decision at the April 9 meeting was Xerox’s proven experience with other similar and large tolling projects, including some of the country’s
largest tolling systems, which Accenture and Cubic simply did not possess.5/ As one Selection Committee member expressed, Xerox brought a “comfort level” that did not exist with Accenture and Cubic.
Moreover, Xerox, with 78 percent, is the leader in the evaluative category that looks at the percentage of the company’s existing baseline system that meets the CCSS requirements -- more than Accenture’s and Cubic’s combined percentages. As the percentage of existing baseline system compliance increases, the implementation risks decrease. Selection Committee members
Diane Gutierrez-Scaccetti and Joseph Waggoner expressed the importance of this based on their firsthand experience with existing tolling systems in use for their respective agencies.
In sum, this analysis and assessment is a valid and reasonable basis for the Department’s decision.
Cubic also contends that such analysis is improper because the ITN allowed transit firms to submit proposals, thus making tolling experience an irrelevant evaluative factor. This contention fails because by prequalifying transit firms to bid, the Department was not precluded from considering a vendor’s specific tolling experience as part of the evaluative process. Contrary to Cubic’s allegation, the factors listed in ITN section 2.5.2, including “Project Experience and Qualifications,” contemplate tolling experience as being part of the relevant
analysis. Therefore, the Selection Committee was fully authorized under the ITN to consider the benefits of a proven commodity -- a firm with Xerox’s extensive tolling experience. The Selection Committee’s qualitative assessment that, on the whole, Xerox was the better choice for commencing negotiations was supported by reason and logic and was wholly consistent with the ITN specifications.
Petitioners further argue that the Department’s ranking decision is inconsistent with the pre-qualification scoring, where Accenture and Cubic each scored slightly higher than Xerox. This argument fails as ITN section 2.5.1 expressly provides that the evaluations and scoring of the Pre-Qualification Oral Presentations will not be included in decisions beyond determining the initial short-list. Regardless, these three vendors were essentially tied in that scoring: Accenture’s score was 885.38, Cubic’s was 874.75, and Xerox’s was 874.00.
Petitioners also contend that the Selection Committee’s ranking decision is inconsistent with the ranking decision of the TRT majority. The ITN is clear, however, that the Selection Committee would be the final arbiter of ranking.
No Demonstrations Were Cancelled
The procurement timeline in the original ITN allotted ten business days for Proposal Oral Presentations. The revised timeline in Addendum 8 allotted two days. Cubic asserts that
this reduction in presentation time occurred because the Department, without explanation, cancelled planned vendor demonstrations that were to occur during Proposal Oral Presentations, thus placing Cubic at a disadvantage as it was unable to present its demonstrations to Selection Committee members. Cubic also asserts that the cancellation of demonstrations is an indication that the Department had already made up its mind to select Xerox.
The ITN and the testimony are unequivocal that no demonstrations were “cancelled.” ITN section 2.25 contemplates that the Department may request demonstrations in the proposal evaluation phase but in no way states that demonstrations will be held. Section 2.25 also provides that if any demonstrations were to be held, they would be as directed by the Department. Thus, the ITN did not guarantee Cubic any presentation, as Cubic suggests. Moreover, all vendors were treated equally in this regard.
Further, the evidence reflects that the decision to hold demonstrations only during the Pre-Qualification Presentations was made when the ITN was released and that the Department never planned to have vendor demonstrations at the Proposal Oral Presentations. Indeed, during the mandatory pre- proposal meeting, the Department informed all vendors of the planned process, to include one demonstration at the pre-
qualification phase and an oral presentation and question-and- answer session during the proposal and ranking phase.
In short, Cubic presented no credible evidence in support of its allegations regarding the alleged cancellation of the demonstrations or any resulting harm.
Exceptions and Assumptions were properly considered
The ITN required vendors, in their technical proposals, to identify assumptions and exceptions to contract terms and conditions. Significantly, the ITN states that the Department is not obligated to accept any exceptions, and further that exceptions may be considered at the Department’s discretion during the evaluation process. ITN Technical Proposal Section 9 provides, in its entirety:
Technical Proposal Section 9: Exceptions and Assumptions
If Proposers take exception to Contract terms and conditions, such exceptions must be specified, detailed and submitted under this Proposal section in a separate, signed certification. The Department is under no obligation to accept the exceptions to the stated Contract terms and conditions.
Proposers shall not identify any exceptions in the Price Proposal. All exceptions should be noted in the certification provided for in Proposal Section 9.
Proposers shall not include any assumptions in their Price Proposals. Any assumptions should be identified and documented in this Section 9 of the Proposal. Any assumptions included in the Price Proposals will not be
considered by the Department as a part of the Proposal and will not be evaluated or included in any Contract between the Department and the Proposer, should the Proposer be selected to perform the Work.
Failure to take exception in the manner set forth above shall be deemed a waiver of any objection. Exceptions may be considered during the Proposal evaluation process at the sole discretion of the Department.
Petitioners allege that the ITN did not clearly set forth how vendors’ exceptions and assumptions would be treated and that the Department accordingly failed to consider such exceptions and assumptions. This is a belated specifications challenge and therefore has been waived. Regardless, the evidence demonstrates that both the TRT and Selection Committee did, in fact, consider the exceptions and assumptions in the evaluation and ranking of proposers.
The TRT and Selection Committee were instructed to consider exceptions and assumptions and to give them the weight they deemed appropriate subject to staying within the confines of the ITN’s section 2.5.2 criteria. Consistent with these instructions, some TRT members included comments regarding exceptions and assumptions in those members’ evaluation summaries, reflecting that exceptions and assumptions were considered during the evaluation process. Other TRT members considered the exceptions of minimal significance given that the Department would address them during negotiations and was not
bound to agree to any. Indeed, the evidence was that it was the Department’s intent to sort out the exceptions and assumptions in the negotiation process and, again, that the Department need not agree to any exceptions initially set forth by the vendors.
Thus, the Department acted rationally and within the bounds of the ITN and its discretion when considering exceptions and assumptions.
The Selection Committee Reached Consensus
Accenture alleges that the Selection Committee failed to carry out its duty to reach a “consensus” in ranking vendor proposals. The evidence establishes the exact opposite.
The ITN provides that the Selection Committee will come to “consensus” about ranking the vendors in order of preference, based on technical approach, capabilities, and best value. A consensus does not require unanimity.
According to the testimony of Selection Committee member Javier Rodriguez, who was the only Selection Committee member who voted for Accenture as his first choice, “at the end, Xerox got three votes from the Selection Committee; Accenture got one. So for me, consensus meant: Are we in consensus to move forward with Xerox? And as I said at the selection meeting, I didn’t object. So from a consensus standpoint, we’re moving on to starting negotiations with Xerox, and that was the intent.”
Therefore, the unrebutted evidence is that the Selection Committee did, in fact, reach consensus.
Subject Matter Experts
Accenture contends that the TRT and Selection Committee made use of subject matter experts in the course of the evaluation and ranking in violation of Florida statutory requirements and governing procurement policies. The record, however, is void of any substantial competent evidence in support of these allegations.
Tim Garrett is the tolls program manager for HNTB under the General Engineering Consulting contract for FTE.
Mr. Garrett was the overall project manager assigned to support FTE in the development and execution of the ITN. He and other HNTB employees, such as Wendy Viellenave and Theresa Weekes, CPA, provided support to both TRT and Selection Committee members in regards to summarizing proposals and defining the process. There is no evidence that any employee of, or sub-consultant to, HNTB communicated qualitative assessments or opinions about any of the competing proposals to TRT or Selection Committee members.
Rather, the evidence shows that HNTB facilitated the TRT’s and Selection Committee’s evaluation work by presenting to the committee members data in the form of summaries, charts, and recapitulations pulled from the voluminous technical and price proposals submitted by the five competing vendors.
Other than the support provided by HNTB, the record is essentially devoid of evidence that proposal evaluators made use of subject matter experts.6/ But in any event, neither Petitioner has made a showing that the use of subject matter experts is proscribed by governing statutes, rules, policies, or the specifications of the ITN.
Although the use of subject matter experts was not addressed in the ITN itself, the Department, before the Pre- Qualification Oral Presentations in early January 2014, issued written “Instructions to Technical Review Committee.” These instructions authorized TRT members to confer with subject matter experts during the procurement process on specific technical questions and subject to certain additional parameters, as follows:
Subject Matter Experts
Subject matter experts are authorized to support the TRC on specific technical questions that the TRC members may have throughout the procurement process. Subject matter experts may respond to questions on any aspect of the procurement or proposal, but may not be asked to, nor will they support, the evaluation of proposals, which is the responsibility of each TRC member.
A subject matter expert can discuss the specific elements of the ITN and a vendor’s proposal with a TRC member, but they cannot meet with more than one TRC member at a time, unless in a public meeting – subject to the Procurement Rules of Conduct stated above.
The subject matter experts are fact finders. A subject matter expert cannot disclose the specific questions asked by another TRC member.
No evidence has been presented to establish that the Instructions to Technical Review Committee, as to the use of subject matter experts, violated Florida law or the terms of the ITN, or that any subject matter expert -- whether affiliated with HNTB or not -- failed to perform within the parameters set forth in the Instructions.7/
Both Petitioners devoted significant hearing time to the FTE consultancy work of John McCarey, McCarey Consultants, LLC, and John Henneman, an employee of Atkins Engineering, Inc., and sub-consultant to HNTB. There has been no showing by Petitioners that either Mr. McCarey or Mr. Henneman served as a subject matter expert to any member of the TRT or Selection Committee or that either had improper contacts in regards to the evaluation or ranking of the vendors.
The undisputed evidence is that Mr. McCarey did not serve as a subject matter expert for any of the evaluators. As for Mr. Henneman, although one TRT member testified in deposition that he “believe[d]” Mr. Henneman was a technical expert or considered one of the subject matter experts, there is no evidence that Mr. Henneman served as a subject matter expert for any of the evaluators -- TRT or Selection Committee.
In sum, there is simply no evidence that any of the subject matter experts had any improper influence on the TRT or Selection Committee members.8/
No Improper Contacts, Attempts to Influence, or Bias
Cubic alleges that there was improper contact between the Department and Xerox during this protest that violates the statutorily imposed “cone of silence” for procurements. Cubic also asserts that there were attempts by Xerox to influence the evaluations or rankings based on the Department’s, or the other agencies’, past or existing relationships with Xerox or Xerox’s acquired entities.
There simply is no record support for the assertions that there was any improper contact or any attempt by any person to influence the Department’s evaluations or rankings based on past or existing relationships between the Department and Xerox or Xerox’s acquired entities.
Xerox’s counsel did not have any contact with the TRT or the Selection Committee prior to the filing of the protests and the attendant “stop” of the procurement process pursuant to section 120.57(3)(c), Florida Statutes. The only contact Xerox’s counsel had with TRT or Selection Committee members was as a participant with the Department’s counsel in pre-deposition meetings with some witnesses designated by Petitioners -- all in the context of ongoing litigation following the filing of
Accenture’s and Cubic’s protest petitions. This contact is essentially no different than Petitioners’ contact with Department personnel in depositions and the trial, as well as during the section 120.57(3)(d)1., Florida Statutes, settlement conference with the Department.
Furthermore, all such contact was after both the TRT’s and the Selection Committee’s work under the ITN was completed and the said contact was of no import to the procurement process.
In short, there is no evidence of attempts by Xerox to influence the process, improper contact between Xerox and the Department, or Department bias in favor of Xerox.
Responsiveness of Xerox’s Proposal
The evidence, at best, is that the Department has yet to fully vet the representations made in the proposals by the respective Proposers, including Xerox. Protesters suggest that such a full vetting is a condition precedent to negotiations. Such an argument, however, ignores ITN section 2.12, which has to be reconciled with ITN section 2.9.1 b).
ITN section 2.9.1 b) provides in part that “[t]he Proposer shall have Key Team members with the following experience at the time of Proposal submission.” The section then goes on to list several positions that fall within the “Key Team Personnel” category. Petitioners contend that the Contract Project Manager, Quality Assurance Manager, and Human Resources
Manager proposed by Xerox fail to meet the “Qualifications of Key Team Personnel” set forth in ITN section 2.9.1 b), thus rendering the Xerox proposal nonresponsive.
ITN section 2.12 provides in part that “[a]fter the Proposal due date and prior to Contract execution, the Department reserves the right to perform . . . [a] review of the Proposer’s
. . . qualifications [and that] [t]his review will serve to verify data and representations submitted by the Proposer and may be used to determine whether the Proposer has an adequate, qualified, and experienced staff.”
Xerox’s omission, at this point in the process, amounts to a non-material deviation from the ITN specifications given that ITN section 2.12 reserves in the Department the right to review key personnel representations made by Xerox, and any other short-listed Proposer, at any time “prior to Contract execution.”
Cubic also contends that Xerox and Accenture submitted conditional Price Proposals rendering their proposals non- responsive under ITN section 2.16. The analysis turns on the provisions of Technical Proposal Section 9: Exceptions and Assumptions, which provides a detailed description of how exceptions and assumptions are to be provided by vendors, and explains that “[e]xceptions may be considered during the Proposal evaluation process at the sole discretion of the Department.”
As provided by the ITN, all vendors included a detailed listing of exceptions and assumptions in their Technical Proposal.
Consistent with the discretion afforded to the Department under ITN Technical Proposal Section 9 to consider listed exceptions during the Proposal evaluation process, the Department then made the following inquiry of each of the Proposers:
Please identify whether your price proposal is based on the Department’s acceptance of the Exceptions in Section 9 of your technical proposal?
Please identify whether your price proposal is based on the Department’s acceptance of the Assumptions in Section 9 of your technical proposal?
Xerox responded to both inquiries as follows: “The Xerox price proposal is based on the assumptions and general risk profile created by the inclusion of Section 9. We assume the parties will reach mutual agreement on the issues raised in Section 9 without a material deviation in the price proposal.”
In addition to providing written answers to the questions, the vendors also addressed these issues in the Proposal Oral Presentations in response to questions by the Department. By the end of the Proposal Oral Presentations, all three vendors had made clear to the Department that resolution of exceptions and assumptions would not affect the proposed price.
For example, Xerox’s senior executive in charge of the procurement, Richard Bastan, represented that there is no financial implication to any of the exceptions and that Xerox would honor the terms and conditions and the scope of services in the ITN for the price set forth in the Price Proposal.
Accordingly, none of the proposals were improperly conditioned, and Xerox, Accenture, and Cubic were treated equally.
Cubic also contends that Xerox’s proposal was nonresponsive as Xerox allegedly failed to meet the stated experience minimums for transactions processed and accounts maintained. There is, however, no credible evidence to support this contention. Indeed, the evidence is that the Department, through its consultant HNTB, verified these requirements by calling the referenced projects. Moreover, Xerox met or exceeded the stated minimums with its New York project reference. The Department’s decision that Xerox was responsive on this issue is logical, reasonable, and supported by the evidence.
Price Proposals
ITN section 2.5.2 lists “price” as a factor to consider in determining “Best Value.” The vendors’ price proposals were presented to the TRT members for purposes of conducting their evaluations. Price was also an appropriate factor for consideration by the Selection Committee.
Accenture argues that “[t]he ITN does not indicate how pricing will be considered by FDOT during the selection process.” Accenture’s contention that the ITN failed to disclose the relative importance of price is a challenge to the terms, conditions, and specifications of the ITN and should have been filed within 72 hours after the posting of the solicitation, as required by section 120.57(3)(b). Accenture has waived its right of protest with respect to this issue.
Conflict of Interest
Accenture complains that “[n]either Mr. Henneman nor Mr. McCarey submitted conflict of interest forms as required under the Department’s Procurement Manual . . . [because both] were present during the oral presentations made by the vendors in connection with this procurement.” Accenture also complains that Wendy Viellenave never disclosed that her husband works for TransCore, a company that is a subcontractor for Xerox.
Ms. Viellenave’s husband currently works for TransCore as a maintenance and installation manager in California and has not worked in Florida in nearly twenty years.
There is no credible evidence that Ms. Viellenave, through the relationship with her husband, has any “significant” direct or indirect -- financial or otherwise -- interest in TransCore that would interfere with her allegiance to the Department. The fact that Ms. Viellenave is married to an
individual that works for a Xerox subcontractor is insufficient, in itself, to establish a real or potential conflict of interest.
Jack Henneman currently runs the back office operation for FTE at its Boca Raton facility. His future role for the CCSS is as project manager for the implementation of the CCSS.
Mr. Henneman became aware of the CCSS procurement through his work on a Florida Transportation Commission Report that culminated in 2012. This report documented the cost efficiencies for all of the tolling authorities in Florida.
Mr. Henneman attended some of the Pre-Qualification Demonstrations as his schedule would permit because he is the “go-forward” project manager for the CCSS implementation.
Mr. Henneman formerly worked for ACS from 2002 – 2009, and met Ms. Gutierrez-Scaccetti during his employment with the company. Mr. Henneman was the transition manager for the transfer of the back office operation of the New Jersey Turnpike from WorldCom to ACS. Mr. Henneman did not have any contact with Ms. Gutierrez-Scaccetti from approximately 2009 to 2012.
In his capacity as the “go-forward” project manager, Mr. Henneman reviewed the technical proposals submitted by the vendors in the instant proceeding but he did not have any discussions with the TRT members or the Selection Committee members about the proposals. He reviewed the technical proposals for the purpose of educating himself so that he would be better
prepared to carry out his functions as the “go-forward” project manager.
John McCarey is a sub-consultant to FTE general engineering contractor, Atkins. Mr. McCarey has a future role as being a part of the negotiations group for the CCSS.
Mr. McCarey formerly worked for Lockheed for approximately 25 years and then spent 5 years working for ACS. Mr. McCarey was the chief financial officer for ACS’s State and Local Solutions Group at one time. Mr. McCarey left the employment of ACS in 2006. Mr. McCarey currently assists with various functions, including work on issues with the consolidation of the back office systems of OOCEA and FTE. For approximately 10 years before becoming a sub-consultant, Mr. McCarey had not had any contact with Ms. Gutierrez-Scaccetti. As it relates to the CCSS project, there is no persuasive evidence that Mr. McCarey provided recommendations to the TRT or the Selection Committee.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction to hear this protest and to issue a recommended order. §§ 120.569 and 120.57, Fla. Stat.
This is a de novo proceeding to determine whether the Department’s notice of intent to negotiate with Xerox is contrary to the Department’s governing statutes, rules, or policies or to the ITN specifications. § 120.57(3)(f), Fla. Stat. Although
this is a de novo proceeding, DOAH does not substitute its judgment for that of the Department. Instead, DOAH engages in a form of “inter-agency review,” the object of which is to evaluate the action taken by the Department. State Contracting & Eng’g Corp. v. Dep’t of Transp., 709 So. 2d 607, 609 (Fla. 1st DCA
1998).
Petitioners have the burden of proof. Petitioners must establish that the Department’s proposed action (the intent to negotiate) was either: (1) contrary to the agency’s governing statutes, (2) contrary to the agency’s rules or policies, or (3) contrary to the ITN specifications. § 120.57(3)(f), Fla. Stat.
To prevail, Petitioners must prove that the agency’s proposed action was: (1) clearly erroneous; (2) contrary to competition; or (3) arbitrary or capricious (that is, an abuse of discretion). R.N. Expertise, Inc. v. Miami-Dade Cnty. Sch. Bd., Case No. 01-2663BID (Fla. DOAH Feb. 4, 2002; Sch. Bd. Miami-Dade Mar. 20, 2002). Petitioners must establish all of the above by a preponderance of the evidence. Id.
Agency action will be found to be clearly erroneous if it is without rational support and, consequently, the Administrative Law Judge has a “definite and firm conviction that a mistake has been committed.” United States v. U.S. Gypsum Co.,
333 U.S. 364, 395 (1948); see also Pershing Indus., Inc. v. Dep’t
of Banking & Fin., 591 So. 2d 991, 993 (Fla. 1st DCA 1991).
Agency action may also be found to be clearly erroneous if the agency’s interpretation of the applicable law conflicts with the law’s plain meaning and intent. Colbert v. Dep’t of Health, 890
So. 2d 1165, 1166 (Fla. 1st DCA 2004).
An act is contrary to competition if it (1) creates the appearance of and opportunity for favoritism; (2) erodes public confidence that contracts are awarded equitably and economically; (3) causes the procurement process to be genuinely unfair or unreasonably exclusive; or (4) is unethical, dishonest, illegal, or fraudulent. Syslogic Tech. Servs., Inc. v. S. Fla.
Water Mgmt. Dist., Case No. 01-4385BID (Fla. DOAH Jan. 18, 2002), modified in part, Case No. 2002-051 (Fla. SFWMD Mar. 6, 2002).
An arbitrary decision is one not supported by facts or logic or one that is despotic. Agrico Chem. Co. v. State Dep’t
of Envtl. Reg., 386 So. 2d 759, 763 (Fla. 1st DCA 1978). To act capriciously is to act without thought or reason or to act irrationally. Id. If agency action is justifiable under any
analysis that a reasonable person would use to reach a decision of similar importance, the decision is neither arbitrary nor capricious. Dravo Basic Mats. Co. v. Dep’t of Transp., 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992).
This procurement process is governed by the “invitation to negotiate” provisions of section 287.057(3), Florida Statutes. The invitation to negotiate process is
distinguished from requests for proposals and invitations to bid in part because it provides the State and competitors more flexibility in crafting a solution to meet the State’s needs.
Invitations to negotiate are used when an agency determines that negotiations may be necessary for the State to receive the best value. § 287.057(1)(c), Fla. Stat.
Section 287.057 provides:
The criteria that will be used for determining the acceptability of the reply and guiding the selection of the vendors with which the agency will negotiate must be specified. The evaluation criteria must include consideration of prior relevant experience of the vendor. The agency shall evaluate replies against all evaluation criteria set forth in the invitation to negotiate in order to establish a competitive range of replies reasonably susceptible of award.
§ 287.057(1)(c)3.-4., Fla. Stat.
Once evaluations are completed,
[t]he agency may select one or more vendors within the competitive range with which to commence negotiations. After negotiations are conducted, the agency shall award the contract to the responsible and responsive vendor that the agency determines will provide the best value to the state, based on the selection criteria.
§ 287.057(1)(c)4., Fla. Stat.
Thus, chapter 287 provides for two distinct parts to every ITN. The first part consists of submission of proposals or replies, evaluations, and ranking. The second part consists of
negotiations with vendors selected from the ranking. In other words, an agency first determines which vendors are responsive and reasonably susceptible of award. The agency is then free to negotiate with one or more vendors and award a contract to the vendor that provides the best value, taking into consideration the selection criteria of the ITN.
The TRT and Selection Committee had the Requisite Experience
Section 287.057(16)(a)1., Florida Statutes, requires that evaluation committees “collectively have experience and knowledge in the program areas and service requirements.”
Implicit in Protesters’ arguments regarding the qualifications of the TRT and Selection Committee is the contention that the Selection Committee and TRT have to each, independent of the other, comply with the provisions of section 287.057(16)(a). Protesters are reading the statute too narrowly.
Given the evaluative nexus between the Selection Committee and the TRT, it is not necessary, and the statute does not require, that each member of the TRT and Selection Committee possess “technical qualifications” related to the underlying procurement. The statute only requires that at least three persons, who collectively have experience and knowledge in the program area for which contractual services are sought, be
appointed to evaluate the proposals. This is precisely what was done in the instant case.
The collective experience of the TRT and Selection Committee more than satisfies the requirements of section 287.057(16)(a). Therefore, the Department acted consistent with the statute, and its decision to use the TRT and Selection Committee members for this procurement is not clearly erroneous, contrary to competition, arbitrary, or capricious.
The Department Complied with the ITN and Florida Law
As explained in the Findings of Fact, the Department’s actions in short-listing and ranking vendors were consistent with the ITN and section 287.057, Florida Statutes. The short-listing and the ranking processes were carried out in a rational, deliberate, and thoughtful manner by the TRT and Selection Committee by applying the ITN evaluation criteria and by considering the materials and information submitted by vendors. The evidence affirmatively establishes that the Selection Committee’s consensus ranking was reasonable and rational and that all vendors were afforded a level playing field. Therefore, it is concluded that the Department’s actions complied with the ITN specifications and Florida law.
The Second Posting is Consistent with the ITN
Petitioners’ argument that the Second Posting does not comport with the ITN and Florida law is rejected. Under section 287.057(1)(c)4., Florida Statutes, the Department must post an award after the negotiations are conducted. The record is unequivocal that the negotiation phase of this procurement has not occurred. The Department’s Second Posting is simply a ranking and notice that negotiations will commence with Xerox as the first-ranked proposer.
The Department acted within its authority to publish the Second Posting. Section 120.57(3)(a) requires that an agency provide a notice of rights to accompany “a decision or intended decision concerning a solicitation, contract award, or exceptional purchase by electronic posting.” Although the statute does not specifically use the word “ranking,” agencies have discretion in determining at what point “the necessary or convenient procedures . . . by which an agency transacts its day- to-day business” crystallize into “agency action” and permit the offering of a point of entry. Capeletti Bros., Inc. v. Dep’t of
Transp., 362 So. 2d 346, 348 (Fla. 1st DCA 1978). The Department properly exercised its discretion to post a decision or intended decision concerning the solicitation here -- that is, the intent to enter negotiations with Xerox. See Barton Protective Servs.,
LLC v. Dep’t of Transp., Case No. 06-1541BID (Fla. DOAH July 20,
2006; Dep’t of Transp. Aug. 21, 2006) (recommending dismissal of protest challenging FDOT’s announced intention to commence negotiations with vendor ranked first by FDOT’s selection committee). In short, the Second Posting is not prohibited by law or policy, and the posting was well within the range of discretion afforded to the Department in transacting its official business.
Moreover, Petitioners were made aware by the ITN’s plain terms that the Department intended to publish the ranking. Assuming for purposes of argument that the ITN was unclear in this regard, Petitioners had an opportunity to challenge the specifications if they believed the specifications were vague. Petitioners did not do so and have waived the right to challenge the specifications. § 120.57(3)(b), Fla. Stat.; Optiplan, Inc.
v. Sch. Bd. of Broward Cnty., 710 So. 2d 569, 572 (Fla. 4th DCA 1998).
Petitioners’ other contentions that the Department’s decision to engage in sequential negotiations is impermissible and that sequential negotiations will not yield the best value to the State are simply incorrect as a matter of law. The ITN plainly provided that the Department would engage in sequential negotiations. Petitioners failed to timely challenge those specifications and thus have waived the argument.
§ 120.57(3)(b), Fla. Stat.; Optiplan at 572. Nevertheless, even
if Petitioners’ arguments are considered, the Department’s decision to enter sequential negotiations is consistent with the ITN and not otherwise prohibited by statute, rule, or policy.
Chapter 287 does not mandate that an agency negotiate with any particular number of vendors in an ITN. Instead, the statute expressly provides that an agency may negotiate with as few as one vendor. § 287.057(3)(b), Fla. Stat. The statute also does not mandate that negotiations be sequential or concurrent. That is, an agency may also choose to negotiate with one vendor at a time or may negotiate with multiple vendors at the same time. See id. The evidence conclusively establishes that the
Department disclosed it would engage in sequential negotiations beginning with the first-ranked vendor, and the Department’s decision to proceed as announced is consistent with the ITN and Florida law.
Additionally, Petitioners’ argument that sequential negotiations will not yield the best value to the State is rejected. The undersigned does not accept Petitioners’ proposition that best value can be achieved only by inviting two or more vendors to negotiations when the plain language of section 287.057 provides for negotiations with one or more vendors. Id.
There Was No Improper Use of Subject Matter Experts
As explained in the Findings of Fact, Petitioners have failed to demonstrate that any TRT or Selection Committee member impermissibly used subject matter experts. The use of subject matter experts is prohibited when these experts become de facto members of the decision-making committee. Cf. R.N. Expertise,
Inc. v. Miami-Dade Cnty. Sch. Bd., Case No. 01-2663BID (Fla. DOAH Feb. 4, 2002; Sch. Bd. Miami-Dade Mar. 20, 2002) (concluding that consultant improperly became de facto evaluator when he went beyond even-handed explanation of technical process or objective summary of proposals’ details). As explained in the Findings of Fact, the evidence affirmatively establishes that all consultants and procurement personnel stayed well within their boundaries.
Petitioners’ arguments are therefore rejected.
The Improper Contact Arguments Are Rejected
As to the purported “cone of silence” violation, Petitioners have failed to allege conduct that is improper or impermissible. The cone of silence is intended by section 287.057(23), Florida Statutes, to prohibit vendors from contacting agency personnel during the pendency of a procurement in an attempt to influence the decision makers. Petitioners’ argument that the cone of silence has been violated is premised on an improper reading of the statute in the context of bid
protests, as the cone of silence provision must be read in conjunction with chapter 120, the Uniform Rules, and the Florida Rules of Civil Procedure (as applicable here). Petitioners’ interpretation is far too broad as it would effectively foreclose the right to conduct discovery, interview witnesses, confer with other parties with similarly aligned interests, and take any other action permissible under the applicable rules and privileges, just as exists in any other litigation.
The “cone of silence” provision cannot be interpreted or applied to prevent such activities and has not been so interpreted in the few cases addressing the cone of silence. Three Division recommended orders have addressed the cone of silence requirement since the provision’s adoption. See Health Mgmt. Sys., Inc. v. Ag. for Health Care Servs., Case No. 08-
2566BID (Fla. DOAH Aug. 15, 2008; Ag. for Health Care Admin. Sept. 2, 2008); CTS Am. v. Dep’t of Highway Safety & Motor
Vehicles, Case No. 11-3372BID (Fla. DOAH Oct. 19, 2011; Dept. of
Transp. Nov. 14, 2011); Roam Secure, Inc. v. Div. of Emerg. Mgmt., Case No. 07-5454BID (Fla. DOAH Apr. 23, 2008; Div. of
Emerg. Mgmt. May 30, 2008). None of these cases applied the cone of silence provision to actions taken during the discovery process of bid protests; instead, all recognized the applicability during active procurements where vendors attempted to improperly influence an agency’s decision prior to a protest.
The allegations in the present case stand in stark contrast to these cases, as the instant allegations all center on contacts occurring after the filing of Accenture’s and Cubic’s protests and during the actual litigation process.
Finally, even if the litigation contacts can somehow be considered improper, section 287.057(23) does not mandate disqualification. Instead, such a decision is left to the agency’s discretion, where the agency must consider such factors as whether anti-competitive harm or a competitive advantage results. On these factors, no such anti-competitive result is present as the TRT’s and Selection Committee’s evaluative work was complete at the time of the protest and the related litigation.
Xerox’s Proposal Was Responsive
Finally, there is no evidence that Xerox’s proposal was nonresponsive to the ITN requirements or that the Department erred in determining that Xerox is responsive. Therefore, the Department’s decision to enter negotiations with Xerox is not contrary to statute, rule, or policy, and is not clearly erroneous, contrary to competition, arbitrary, or capricious.
Conflict of Interest
Section 287.057(17)(a), Florida Statutes, provides in part that “[e]ach agency must avoid, neutralize, or mitigate
significant potential organizational conflicts of interest before a contract is awarded.”
Section 2.2 of the Department’s Commodities and Contractual Services Procurement Manual (Section 2) provides in part as follows:
[t]he Conflict of Interest Certification – Form No. 375-030-50, must be completed and signed by each individual involved in the development of the specifications or scope of work, the development or selection of criteria to be used for evaluation, the evaluation process, and the award process for all procurements of commodities/services that cost more than the dollar threshold amount for Category Two.
The evidence is insufficient to support Accenture’s claim that either Jack Henneman or Wendy Viellenave should have filed a conflict of interest form. Similarly, the evidence is also insufficient to support Accenture’s claim that John McCarey should have filed a conflict of interest form. However, since Mr. McCarey was hired to assist with the yet-to-commence negotiation phase of this procurement, consideration should be given as to whether section 2.2 requires his completion of a conflict of interest form due to his possible involvement in the “award process.”
Based on the Findings of Fact and Conclusions of Law, it is recommended that Petitioners’ protests be dismissed.
DONE AND ENTERED this 4th day of September, 2014, in Tallahassee, Leon County, Florida.
S
LINZIE F. BOGAN
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 4th day of September, 2014.
ENDNOTES
1/ All subsequent references to Florida Statutes will be to 2013, unless otherwise indicated.
2/ The question whether the Department has the authority to purchase services on behalf of and for the use of the other transportation authorities is not before DOAH. Accenture moved to file a second amended petition to include this issue. The motion was denied. Nevertheless, based on the findings in this Recommended Order, it is concluded that the Department does in fact and as a matter of law have the authority to issue the ITN.
3/ Xerox moved to strike paragraphs 24, 25, 27, 28, 76, and 153 of Accenture’s Proposed Recommended Order “to the extent those paragraphs contain any allegations or argument about whether the TRT or the Selection Committee were appointed by the Department’s agency head . . . which is an issue not pleaded or otherwise identified in Accenture’s Amended Protest Petition.” The motion is granted and the undersigned will not address the referenced arguments in this Recommended Order.
4/ Sheree Merting testified that she forgot to check the “Intended Award” box on the ITN posting tabulation form. This omission by Ms. Merting, as explained infra, is harmless as none
of the proposers were advantaged or disadvantaged by the occurrence of the same.
5/ Of the three vendors, only Xerox has fully operational tolling systems in the United States, with existing long-term contracts with the two largest back office systems in the United States; New York and New Jersey.
6/ TRT member Mohamed Hassan conferred with one of his subordinate project managers at FTE who suggested that Mr. Hassan use a “pros and cons” format for the written summary evaluation. There is nothing improper about this conversation.
7/ Xerox does not have the burden to prove a negative, so to speak, but Mr. Garrett’s testimony as project manager is probative. He knows of no instance in which the Instructions as to subject matter experts were not followed. More specifically, he knows of no subject matter expert who evaluated proposals or made any recommendations as to one vendor over another. (Tr.
578) In other words, no person performing the role of subject matter expert became a de facto evaluator.
8/ Petitioners seem to suggest that some subject matter experts had conflicts of interest because of prior relationships with Xerox. Except for suppositions and innuendo, there was no evidence of favoritism by the subject matter experts or anyone else with the Department.
COPIES FURNISHED:
Albert T. Gimbel, Esquire Messer Caparello, P.A.
2618 Centennial Place
Tallahassee, Florida 32308 (eServed)
Eduardo S. Lombard, Esquire
Vezina, Lawrence and Piscitelli, P.A.
413 East Park Avenue Tallahassee, Florida 32301 (eServed)
W. Robert Vezina, III, Esquire Vezina, Lawrence and Piscitelli, P.A.
413 East Park Avenue Tallahassee, Florida 32301 (eServed)
John A. Tucker, Esquire Foley and Lardner, LLP
One Independent Drive, Suite 1300 Jacksonville, Florida 32202 (eServed)
Robert H. Hosay, Esquire Foley and Lardner, LLP 106 East College Avenue, Suite | 900 |
Tallahassee, Florida 32301 (eServed) | |
J. Stephen Menton, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite | 202 |
Post Office Box 551 (32302) Tallahassee, Florida 32301 (eServed) | |
James A. McKee, Esquire Foley and Lardner, LLP 106 East College Avenue, Suite | 900 |
Tallahassee, Florida 32301 (eServed) |
Denise Johnson, Esquire
Florida Department of Transportation Mail Station 58
605 Suwannee Street
Tallahassee, Florida 32399-0458
Ananth Prasad, Secretary
Florida Department of Transportation Haydon Burns Building, Mail Station 57 605 Suwannee Street
Tallahassee, Florida 32399-0450 (eServed)
Gerald B. Curington, General Counsel Florida Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street
Tallahassee, Florida 32399-0450 (eServed)
Trish Parsons, Clerk of Agency Proceedings Florida Department of Transportation Haydon Burns Building, Mail Station 58
605 Suwannee Street
Tallahassee, Florida 32399-0450 (eServed)
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.
| Issue Date | Document | Summary |
|---|---|---|
| Oct. 06, 2014 | Agency Final Order | |
| Sep. 04, 2014 | Recommended Order | The Department's intended decison to conduct negotiations with Xerox State and Local Solutions is not contrary to the Department's governing statutes, rules, policies, or the solicitation specifications. |
