STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LIVENDCO, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 86-2888BID

) UNIVERSITY OF WEST FLORIDA, )

)

Respondent, )

and )

) CANTEEN SERVICE COMPANY, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

This matter came on for hearing in Pensacola, Florida, before Robert T. Benton, II, Hearing Officer of the Division of Administrative Hearings, on August 19, 1986. The parties have filed proposed recommended orders, including proposed findings of fact, which are addressed by number in the attached appendix. The parties are represented by counsel:

For Petitioner: Charles C. Sherrill, Esquire

435 East Government Street Pensacola, Florida 32581

For Respondent: Stephen B. Shell, Esquire

SHELL, FLEMING, DAVIS & MENGE

Seventh Floor, Seville Tower

226 South Palafox Place Pensacola, Florida 32598

For Intervenor: Sam A. Viviano, Esquire

LEVIN, WARFIELD, MIDDLEBROOKS, MABIE, THOMAS, MAYES & MITCHELL, P.A.

226 South Palafox Street Pensacola, Florida 32598

After respondent University of West Florida (UWF) announced its intention to award intervenor Canteen Service Company, Inc. (Canteen) a contract for installation and maintenance of certain vending machines, petitioner Livendco, Inc. (Livendco) filed a notice of protest, then a formal written protest, as provided for in Section 120.53(5), Florida Statutes (1985). UWF forwarded the matter to the Division of Administrative Hearings for hearing.

ISSUES

Whether UWF should redraw the bid specifications and issue another invitation for bids? If not, whether UWF should award the contract to Canteen, or disqualify Canteen's bid as unresponsive? Whether, if the specifications were valid but Canteen's bid was not responsive, UWF should award the contract to Livendco, or disqualify Livendco's bid, too, as unresponsive?

FINDINGS OF FACT

1. In response to UWF's invitation to bid, which was mailed to thirteen potential bidders, Livendco, Canteen, Pensacola Tom's Sales, Buffalo Rock Pepsi- Cola Company, and Hygeia Coca-Cola Bottling Company submitted bids for installation and maintenance of some or all of the vending machines UWF's invitation to bid called for on campus.

   
   

2. Preparation of the invitation to bid had fallen to UWF's business manager, Thomas W. Henderson, III, who examined the "revenue history" of the 64 machines in place at UWF and used previous bid specifications as a model.

   
   

3. The invitation solicited bids on three bases: (1) for all food and drink vending machines; (2) for all canned drink vending machines; and (3) for all food and drink vending machines other than canned drink vending machines. The bid specifications provided:

   
   

   The University will contract with a maximum of two vendors, a canned drink vendor and a vendor of cup drinks, snacks, candy, gum and sandwiches. ... [A]n award will be made to a single contractor unless the best financial return from the best multiple contractor proposal exceeds the best single contractor proposal by 10 percent or more.

   
   

   Only Canteen, Livendco and Pensacola Tom's Sales bid on food and drink vending machines other than canned drink machines. After evaluating the bids, UWF announced its intention to award two contracts, one to Hygeia Coca-Cola Bottling Company, and one to Canteen.

   
   

4. The decision to award two contracts, instead of one, and the choice of Hygeia Coca-Cola Bottling Company have not been called into question in these proceedings. Hygeia Coca-Cola Bottling Company proposed to install machines in each of the dormitories for unmarried students on the north side of the UWF campus.

   
   

   Specifications

   
   

5. The information and instruction sheet for prospective bidders on UWF vending program bid specifications, Petitioner's Exhibit No. 3, comprises some

   18 pages. In pertinent part, the specifications provide:

   
   

   [T]he commission offered to the University shall not be the exclusive factor in determination of the best proposal;...

   service, product quality, consumer cost, ability to perform, and business reputation in the community will also be considered in the selection...

   * * *

   Each proposal shall be accompanied by a letter from the chief executive officer of the company providing the following information:

   • History and business experience of the company.

   • Six local businesses served by the company, three of which must be accounts of similar size as the University.

     Include the name and telephone number of an individual who can provide information about your performance.

     * * *

   • Description of products to be vended and source of supply.

   • Description of vending equipment to be provided.

   * * * There are eight dormitory

   buildings on the north side of campus...

   The University would prefer a snack machine and a drink machine in all of these dorms except the [two devoted to] married student housing, but recognizes that there may be insufficient volume to satisfactorily support the machines.

   Please include in your bid proposal

   a statement as to how your company would plan to service these locations...

   * * *

   
   

   CONDITIONS:

   
   

   1. Dollar bill changers may be provided at the discretion of the contractor...

   2. New installations will be requested as deemed necessary by the University Office of Auxiliary Services.

   3. At any time that the vendor's records indicate a machine is operating at a loss, upon approval of the Office of Auxiliary Services, the machine may be withdrawn.

   4. The University reserves the right in every instance to grant, or to remove, or to refuse installation of a machine in any particular location on campus...

   * * *

   10. All machines furnished under this contract shall have a new or nearly new

   appearance...

   Petitioner's Exhibit No. 3.

   
   

   The specifications contain a list of locations for some 16 canned drink machines and about 46 other vending machines. Among the locations listed are two of the six dormitories for unmarried students on the north side of the campus.

   
   

6. The specifications document announced "a pre-bid conference to review these specifications and to answer questions," Petitioner's Exhibit No. 3, which occurred on June 26, 1986, with representatives from Livendco and Canteen, among others, in attendance.

   
   

7. At this conference, Mr. Henderson stated that he was not looking for references whose contracts called for the same volume as UWF anticipated, but only for references who knew about the bidders' performance under contracts of similar size and complexity, or words to that effect.

   
   

   No Problem

   
   

8. Nobody complained at the conference, or at any other time before UWF announced its intention to let the contract to Canteen, that the specifications were inadequate, unintelligible, vague or otherwise defective. Dan Livingston, Livendco's vice president and general manager, prepared Livendco's bid in response to UWF's invitation for bids. He had no difficulty preparing a responsive bid.

   
   

   Bids Evaluated

   
   

9. On July 8, 1986, Mr. Henderson opened the bids and calculated the return UWF could expect under competing bids, assuming historical revenues (stated in the specifications) persisted. On this basis, Mr. Henderson concluded that an award to Hygeia Coca-Cola Bottling Company of the canned drink vending machine contract, coupled with an award to Livendco of a contract for the other vending machines, would yield UWF annually $52,431; while awarding the contract for the other vending machines to Canteen, instead of Livendco, would increase the total to $53,728 per year.

   
   

10. Canteen proposed to install dollar bill validators or acceptors on each snack vending machine, while Livendco offered to place "[s]nack machines with dollar bill validators...in any high volume snack locations," Petitioner's Exhibit No. 5, but only identified three such locations. These devices, which cost $500 each, would permit people without change to use the snack vending machines, if they had dollar bills. Studies at other locations have demonstrated significant increases in sales attributable to dollar bill validators, increases ranging from 28 to 35 percent.

    
    

11. Canteen, but not Livendco, offered to install all new vending machines on the UWF campus.

    
    

12. The products Canteen and Livendco proposed to sell in vending machines on the UWF campus and the prices for which they proposed to sell them do not differ significantly. Canteen, but not Livendco, would offer 18-ounce iced drinks. Livendco would sell danish pastry for less ($.45 v. $.50) while Canteen would sell a slightly larger cup of coffee for the same price (8 1/4 oz. vs. 8 oz.). Pastry sales are a tiny fraction of total sales.

13. Livendco would sell six sticks of gum for $.35, while Canteen would sell five-stick packs for $.30 each. Petitioner's Exhibit No. 4. On the other hand, Canteen proposed to sell ten mint packages for $.30, while Livendco would charge a nickel more for packages containing eleven mints.

    
    

    Northside Dormitories

    
    

14. Canteen failed to make any comment on or proposal about the four unmarried student dormitories on the north side of the campus not listed as vending machine locations in the specifications. After opening the bids, Mr. Henderson so informed Scott G. Overley, Canteen's assistant general manager, who responded, "That would be no problem," or words to that effect. In a separate conversation, Mr. Henderson also brought this omission to the attention of Dan and Jack Livingston of Livendco.

    
    

15. Livendco offered to install snack machines in each of the northside dormitories in which unmarried students live, but agreed to keep in place there only those machines into which people dropped $100 or more a month. Whether revenues below $100 per month would have meant a machine was operating at a loss was not established by the evidence.

    
    

    References

    
    

16. Mr. Henderson never telephoned the references Livendco listed, because he knew Livendco, the largest company of its type in the southeastern United

    S ates, to be "a first class operation." Livendco has had the UWF vending machine contract at UWF for the last 19 years, and Mr. Henderson was aware that Livendco's service had been exemplary.

    
    

17. Dan Livingston complained at hearing that UWF's failure to telephone Livendco's references (and Pensacola Tom's Sales' references) was prejudicial because, he said, Livendco and Pensacola Tom's Sales had listed as references customers who had switched to them on account of dissatisfaction with Livendco.

    
    

18. Over a two-day period, Mr. Henderson spoke to the persons Canteen had listed as references, representatives of Champion International, Armstrong World Industries, Sacred Heart Hospital, The Russell Corporation, The Lewis Bear Company and Aero Technical Services. Everybody gave good reports.

    
    

19. Armstrong World Industries had six clusters with four or five of Canteen's vending machines in each. Canteen stationed a serviceman at Armstrong World Industries eight hours a day, as it proposed to do at UWF.

    
    

20. Aero Technical Services had dealt with Canteen for two years. Their plant, which has nine of Canteen's machines, is open 24 hours a day, seven days a week.

    
    

21. Ralph Fisk of The Lewis Bear Company, where Canteen had installed seven to ten machines, spoke approvingly not only of the vending machine service but also of the meals Canteen served there twice weekly. Mr. Fisk recommended Canteen highly.

    
    

22. At hearing, however, Lewis Bear, Jr. testified on Livendco's behalf. He reported that, on one occasion, hot food was not served on one of the customary days of the week, but this was on Memorial Day and notice had been posted in advance, in keeping with Canteen's agreement.

23. Although The Lewis Bear Company contract only called for the machines to be refilled once a day, Canteen undertook trips to refill them twice daily at the request of an employees' committee. After a while, Canteen stopped making the second trip each day; sales did not justify it, in Canteen's employees' opinion: of 400 items in each machine, only 50 a day sold. At the renewed request of The Lewis Bear Company employees, however, Canteen has recently resumed making a second trip each day.

    
    

24. Personnel at Sacred Heart Hospital where approximately nine Canteen machines had been installed said Canteen paid commissions promptly. Canteen had some six machines at Champion International, and only one or two at the Russell Corporation facility, but more were contemplated for Russell's new plant. Like Canteen, Pensacola Tom's Sales was unable to list three references with as many machines as UWF had in place.

    
    

25. Mr. Henderson visited the headquarters both of Livendco, where he found some 20 employees, and of Canteen, where seven or eight people were at work. He satisfied himself that either could perform the contract, and the evidence adduced at hearing convincingly established this fact.

    
    

26. After discussing the bids with UWF's vice-president for administrative affairs, John G. Martin, Mr. Henderson advised the bidders on July 14, 1986, of UWF's intention to contract with Hygeia Coca-Cola bottling Company and with Canteen.

    
    

27. Mr. Henderson's testimony that, in evaluating the bids, he ignored the remark Mr. Overley made when told about Canteen's failure to address the dormitory locations on the north side of the campus, was not contradicted.

    
    

28. At the Livingstons' request, Mr. Henderson arranged a meeting between them and Mr. Martin, after UWF had decided to award the contract to Canteen. At this meeting, Dan Livingston told Mr. Martin he thought Canteen would do a good job for UWF.

    
    

29. On August 5, 1986, long after UWF had announced its decision, Mr. Martin made a list he entitled "Significant Aspects of the University's Recent Vending/Concession Bid." Petitioner's Exhibit No. 7. Inadvertently, this document was not furnished to petitioner's counsel until the hearing. It contains a reference to promotional techniques Canteen proposed at an unspecified time, in discussions described as "not part of bid requirements." Petitioner's Exhibit No. 7.

    
    

    Other

    
    

30. William H. Bonifay testified on deposition that the Recreational Association of Air Products & Chemicals Employees he heads had substituted Pensacola Tom's Sales for Canteen because of "displeas[ure] with...[Canteen's] service." At p.6. When asked to name specific deficiencies in Canteen's service, he reported, "Nothing particularly noteworthy.... [A]ny time we asked Canteen to perform a function, they did, but it seemed...we were spending much of our time asking.... At p.7. This was a major contract, involving some 40 machines.

    
    

31. A little over three years ago when Linda Stacks began as an inventory clerk in a Gulf Power Company warehouse, she began purchasing food from a vending machine on the premises. At this location was a single machine, which

    belonged to Canteen, and contained stale chips and crackers. Some of the chips and some of the candy were out of date.

    
    

32. Chewing gum and mints seemed never to be replenished. Ms. Stacks complained to the man who occasionally restocked the machine, and also telephoned Canteen's offices to complain. She was relieved some three months back, when Canteen removed its machine and Livendco replaced it with one of its machines. Things have been better since.

    
    

    Taste Test

    
    

33. In response to complaints from members of the public, Gulf Power Company changed its policy of allowing construction workers to drive the power company's trucks to restaurants for coffee on their breaks. A member of the public driving by and seeing a power company truck parked outside a restaurant might not realize, seeing the same truck parked outside the same restaurant several hours later, that different employees were taking a coffee break.

    
    

34. Gulf Power's Charles Bobe had charge of making coffee available to the men on site, once they were forbidden to leave the job to obtain it. He decided a vending machine should be installed, but felt the men should choose between one of Canteen's machines and one of Livendco's machines, and asked both companies to install machines. The test did not go off without incident: both machines broke down, but both were repaired promptly. A majority of the men at Gulf Power voted in favor of installing the Livendco machine permanently.

    
    

35. The water in coffee vending machines should be hotter than 180 degrees

    F. but not as hot as 212 degrees F. If the water is not hot enough, flavor and aroma suffer. If the water boils, oil from the coffee cakes on the machinery, and affects the taste adversely. It is more difficult to keep coffee vending machines clean than just about any other vending machine, except machines vending milk.

    
    

36. As far as the evidence showed, however, the Livendco machine's victory (by an undisclosed margin) was not attributable to uncleanliness or any other problem with Canteen's machine. At least as likely an explanation is the different blends of coffee used in the different machines. Canteen was told to use Hill & Brooks coffee in its machine, and did so. Livendco used Maxwell House. The supplementary schedule referenced in UWF's specifications calls for Chase & Sanborn coffee.

    
    

    CONCLUSIONS OF LAW

    
    

37. Nothing in the evidence supports Petitioner's original contention that the contract specifications introduced unfairness or uncertainty on any material point into the bidding, or any other phase of the contract letting. The testimony of the man who prepared Livendco's bid conclusively established that Livendco's complaints about the specifications have no basis in fact.

    
    

38. Canteen's bid was not responsive in two respects. The bid did not list three "local businesses served by [Canteen]... [with] accounts of similar size as the University." Petitioner's Exhibit No. 3. Nor did Canteen's bid contain "a statement as to how [Canteen]...would plan to service" four of the six dormitories housing unmarried students on the northern part of the UWF campus. Neither of these omissions was material, however.

39. But neither was cured by oral modifications of the controlling written documents. Mr. Henderson's remarks about references at the pre-bid conference could not alter the written contract specifications (nor, as far as the evidence showed, were his remarks inconsistent with the written specifications.) Similarly, Mr. Overley's oral assurances after the bids had been submitted and opened were a legal nullity, ineffective to supplement Canteen's bid. Mr. Henderson's testimony that he disregarded Mr. Overley's "verbal addendum," although uncontroverted, is immaterial. Mr. Henderson's state of mind is not determinative.

    
    

    References

    
    

40. The largest contract Canteen had with any of its references was with Armstrong World Industries, involving no more than 30 machines. Even if this single reference may be said to be comparable to UWF, none of the others are even arguably of "similar size." Livendco contends that this requires disqualification of Canteen's bid and award of the contract to Livendco.

    
    

41. But the purpose of the specifications is to ensure competitive bidding, not to render competition impossible. The requirement that references be furnished was a means to an end: each bidder had to demonstrate the ability to perform. Canteen succeeded in doing this. In fact, Dan Livingston himself told Mr. Martin Canteen would do a good job. "[T]he purpose of competitive bidding is to secure the lowest responsible offer and...[the contracting authority] may waive minor irregularities in effectuating that purpose." Robinson Electrical Co. v. Dade County, 417 So.2d 1032, 1034 (Fla. 3d DCA 1982) In these circumstances, Canteen's inability to furnish references with as many machines in place as UWF has is immaterial.

    
    

    Dormitory Machines

    
    

42. Of the six northside dormitories in which unmarried students reside, two were listed on a schedule included in the specifications. Canteen's bid included these locations, but neglected to "make a statement" as to the four others.

    
    

43. A statement was all that the specifications called for. If Canteen had announced in its bid that placing snack machines in the dormitories in question was not economically justifiable, it would have complied with the specifications. Its silence may be said to be the equivalent of such a statement. With respect to the canned drink vending machines, even a statement would have been superfluous, since the contract in dispute here excludes canned drinks.

    
    

44. Livendco undertook to put snack machines in these dormitories, but not to keep them there. Under the contract, in any event, the vendor has the right to withdraw a machine if its "records indicate a machine is operating at a loss," Petitioner's Exhibit No. 3, but this might not have occurred even if revenues dropped below $100 monthly, the point at which Livendco indicated it would withdraw a machine placed in any of the dormitories in question. An explicit contract condition provides, moreover, that "[n]ew installations will be requested as deemed necessary by the University Petitioner's Exhibit No. 3.

    
    

45. A comparison between Canteen's obligations under the contract UWF proposes to enter into with it and what Livendco's obligations would have been, if it had been awarded the contract, points up the insignificance of Canteen's failure to make a statement about the four northside dormitories. Canteen's

failure to make the statement the specifications solicited was immaterial in the circumstances of this case. "Although a bid containing a material variance is unacceptable...not every deviation from the invitation is material." Robinson Electrical Co. v. Dade County, 417 So.2d 1032, 1034 (Fla. 1st DCA 1982); Glatstein v. City of Miami, 399 So.2d 1005 (Fla. 3d DCA) rev. den. 407 So.2d 1102 (Fla. 1981).

RECOMMENDATION

It is, accordingly, RECOMMENDED:

That UWF award the contract for food and drink vending machines, other than canned drink vending machines, to Canteen.

DONE and ENTERED this 18th day of September, 1986 in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 1986.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2888BID

Petitioner's proposed findings of fact Nos. 1, 2, 3, 4, 5, 7, 12 and 13 have been adopted, in substance, insofar as material.

Petitioner's proposed finding of fact No. 6 is slightly inaccurate.

Although UWF had 64 machines in place it (apparently inadvertently) failed to list one or two of them. On the other side of the ledger can be counted the northside dormitories not already having machines.

Petitioner's proposed finding of fact No. 8 has been adopted, except for the last sentence, which is rejected as having no support in the evidence.

Petitioner's proposed finding of fact No. 9 has been adopted, in substance, except that the numbers of machines serviced may be slightly overstated.

Petitioner's proposed finding of fact No. 10 has been adopted, in substance, except that sixty-four ("six-four" as written) is not precisely accurate, see ruling on petitioner's proposed finding No. 6, and Mr. Henderson also testified at hearing that no reference came closer than 30-some machines to having as many as UWF.

Petitioner's proposed finding of fact No. 11 has been adopted, in substance, except that thirty should need "no more than thirty."

Petitioner's proposed finding of fact No. 14 relates to the Martin memorandum, prepared about a month after UWF announced its intention to award Livendco the contract. It has been adopted in substance, except for the final sentence. It is not clear what discussions the memorandum refers to, or when or in what context they occurred.

Petitioner's proposed finding of fact No. 15 is of questionable materiality but these matters are treated in the findings of fact under the heading "Other."

Respondent's proposed findings of fact A, B, C, D, E, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W and X have been adopted, in substance, insofar as material.

Respondent's proposed finding of fact F has been adopted, in substance, insofar as material, except that, as to F.3., the evidence was that Tom's Pensacola Sales did not have three local references with as many machines as UWF had.

Intervenor's proposed findings of fact have been adopted, in substance, in their entirety, although the $100 figure in intervenor's proposed finding No. 4 is approximate, and conservatively assumes historical revenues.

COPIES FURNISHED:

Charles C. Sherrill, Esquire

435 East Government Street Pensacola, Florida 32581

Stephen B. Shell, Esquire SHELL, FLEMING, DAVIS & MENGE

Seventh Floor, Seville Tower

226 South Palafox Place Pensacola, Florida 32598

Sam A. Viviano, Esquire

LEVIN, WARFIELD, MIDDLEBROOKS, MABIE, THOMAS, MAYES & MITCHELL, P.A.

226 South Palafox Street Pensacola, Florida 32598

Dr. James A. Robinson President

University of West Florida Pensacola, Florida 32514

Docket for Case No: 86-002888BID

Orders for Case No: 86-002888BID