STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

)

) INTER-TEL, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 86-4702BID

) STATE OF FLORIDA DEPARTMENT ) OF GENERAL SERVICES, )

)

Respondent. )

and )

)

TEL PLUS FLORIDA, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Final hearing on the above-styled consolidated cases was held on January 20, 1987, in Tallahassee, Florida, before Mary Clark, Hearing Officer of the Division of Administrative Hearings. The parties were represented as follows:

For Petitioner/Intervenor David P. Rankin, Esquire

Tel Plus Florida, Inc.: 4600 West Cypress, Suite 410

Tampa, Florida 33607

For Petitioner F. Alan Cummings, Esquire

Inter-Tel, Inc.: Post Office Box 589 Tallahassee, Florida 32301

For Respondent William P. Beck, Esquire Department of General Office of General Counsel Services: Department of General Services

Room 452, Larson Building Tallahassee, Florida 32399-0955

BACKGROUND

This consolidated proceeding arose in the Florida Department of General Services (DGS) bid project number 298-730-310-W, relating to electronic telephone systems. Both Petitioners filed formal written protests after notice of DGS' intended decision to reject all bids.

As required by Rule 221-6.06 F.A.C., DGS provided a copy of the protests to all other bidders. See Notice of Bid Protest Proceeding filed on December 17, 1986. Petitioner, Tel Plus, intervened in case #86-4702B1D, and the two protests were consolidated. No other bidders sought to participate in the proceeding.

At the final hearing, DGS presented the testimony of Cherri McClellan, Roger Fisher, Florian (Sam) Houston, and H. P. Barker; Tel Plus presented the testimony of Jim Begue and John Kent; and Inter-Tel presented the testimony of John Behum and Jack Chmielewski. The parties stipulated to the admission of ten joint exhibits, including the basic bid documents, responses by the parties, evaluations of the bids and postings. In addition, Tel Plus submitted six exhibits and Inter-Tel submitted three exhibits.

After the hearing, and by the agreed-upon deadline, each party filed proposed recommended orders and memoranda of law. These very thorough and well- drafted submittals have been considered in the preparation of this recommended order and have been incorporated here to some extent. A specific ruling on each proposed finding of fact is found in the attached appendix.

ISSUES

The issues in this proceeding are: 1) whether either of the Petitioners' bids were responsive to the Invitation to Bid #298-730-310-W; 2) whether either Petitioner should be awarded portions of the bid; and 3) whether DGS should reject all bids. The parties' positions on these issues are summarized:

DGS argues that its intended action to reject all bids is compelled by its rules governing the competitive bid process. It contends that Tel Plus was initially considered non-responsive but was deemed the responsive low bidder on some portions of the bid after it agreed to substitute equipment. DGS contends now that substitution is improper. Inter-tel was consistently considered non- responsive by DGS because of alleged non-compliant data in its technical literature. DGS concedes that, but for this non-compliance, Inter-Tel would be lowest responsive bidder in various categories.

Tel Plus argues that its bid was responsive as it proposed to provide equipment previously required in DGS' specifications for other bids. Tel Plus claims that its equipment is equivalent to the equipment now required in the DGS specifications and DGS should have known that. Tel Plus argues that the transposition of numbers in the model number of the equipment was a typographical error which can be corrected after the bid opening. In the alternative, Tel Plus argues that it should be able to substitute equipment as DGS has allowed substitution in the past. Further, the equipment in issue is a small component of the overall system and, comparing its price to the price of the whole, it is a non-material change in the bid.

Inter-Tel claims that its bid was responsive as the technical literature it submitted was merely an installation manual providing an optimum range of temperatures provided. Its equipment allegedly meets the specifications, and the company should have been permitted to explain its bid as the prior practice of DGS was to allow such explanations.

FINDINGS OF FACT

1. The Invitation to Bid (ITB)

   
   

   1. On May 7, 1986, the Department of General Services (DGS) mailed ITB No. 298-370-310W to approximately 100 vendors. The ITB sought bids for various sizes of electronic key telephone systems that would then be available for purchase by state agencies and others entitled or required to participate in the state purchasing system administered by DGS.

      
      

   2. The ITB specified technical requirements for seven sizes or configurations of systems. An addendum to the ITB divided the state into four geographical service areas. The vendors were invited to bid on any or all of the configurations for each of the service areas; a total of twenty-eight separate awards was, therefore, possible.

      
      

   3. Specifications in the ITB required a powerline surge protector, a small device which plugs into an electrical outlet and protects the electronic system against voltage surges through a powerline. In the past, DGS bid specifications for similar equipment required a model TII 428 surge protector or equivalent. However, agencies were experiencing extensive and expensive damage to electronic equipment, so DGS' Division of Communications investigated other equipment and determined that a model PTS-120 HP was more efficient. The technical specifications in the ITB here at issue required a PTS-120 HP "or an approved equivalent". (Joint exhibit #1, p. 68, paragraph 3.6)

      
      

   4. Another requirement of the technical specifications related to the environment for the key service unit (KSU), the heart of the electronic key telephone system. Paragraph 3.7 required that the KSU "... shall be fully operable during the following environmental conditions:

      
      

      Temperature 40 degrees F to 100 degrees F (4 degrees C to 38 degrees C)

      
      

      Relative Humidity 20 percent to 80 percent (Joint Exhibit #1, p. 69)

      
      

   5. These environmental conditions are significant because the KSU is heat sensitive and the equipment is commonly installed in closets or equipment rooms that are neither vented nor climate-controlled.

      
      

   6. The ITB included at least two provisions relating to the bidder's responsibility to provide technical literature.

      Paragraph 5 of the General Conditions provides: MANUFACTURERS' NAME AND APPROVED EQUIVALENTS:

      Any Manufacturers' names, trade names, brand

      names, information and/or catalog numbers listed in a specification are for information and not intended to limit competition. The

      bidder may offer any brand for which he is an authorized representative, which meets or exceeds the specifications for any item(s).

      If bids are based on equivalent products, indicate on the bid form the manufacturer's name and number. Bidder shall submit with his bid, cuts, sketches and descriptive literature and/or complete specifications. Reference to literature submitted with a previous bid will not satisfy this provision.

      
      

      The bidder shall also explain in detail the reason(s) why the proposed equivalent will meet the specifications and not be considered an exception thereto. The State of Florida reserves the right to determine acceptance of item(s) as an approved equivalent. Bids which do not comply with these requirements are subject to rejection. (emphasis added)

      Included in the Special Conditions, page 6, is this provision: Technical Literature

      Technical literature is a requirement of

      this bid to accommodate an evaluation to assure products offered meet or exceed the specification attached hereto. Bidder shall furnish with his bid, for all equipment offered, technical information consisting of two sets of manufacturers specifications, graphs, charts, sketches, photographs, circuit diagrams, instruction manuals, station user guide and attendant user guide pamphlets and equipment lists. Failure to provide such data with the bid may result in rejection of the bid.

      
      

      (Joint Exhibit #1)

      
      

   7. There were no questions or protests from the vendor community regarding the change in specifications related to the powerline surge protector. (transcript, p. 82) Approximately fifteen bids were received and were opened by DOS on July 7, 1986. (transcript, p. 20)

      
      

2. Tel Plus Bid

   
   

   1. Tel Plus Florida, Inc. (Tel Plus) bid on each of the seven configurations for the four service areas. The equipment list provided for each configuration in its bid consistently listed "T11248 Surge Protector", rather than the PTS 120 HP called for in the ITB specifications. Although Tel Plus submitted some technical literature, (its general description, installation and service manual for "Tel Plus 816 Electronic Key Telephone System"), no technical literature nor explanation was submitted for the surge protector. (Joint exhibit #2, Inter-Tel Exhibit #1)

   2. Tel Plus intended to include the TII 428 surge protector throughout its bid; the model designation "248", was a typographical error. (Transcript, p. 129-133)

      
      

3. Inter-Tel Bid

1. Like Tel Plus, Inter-Tel bid each of the seven configurations, state- wide in all four service areas. (Joint Exhibit #3)

   
   

2. Inter-Tel's technical response to ITB specification 3.7 relating to KSU operating temperatures stated:

   
   

   Comply. Environmental conditions listed are assumed to be for KSU interior.

   Installation manuals list ambient conditions with free air circulation.

   
   

   (Joint Exhibit #3, Technical response, p. 2.)

   
   

3. Inter-Tel does not have a document containing full systems specifications. For its technical literature back-up it submitted several pages from an installation manual and several volumes of its installation and field maintenance manual. (Transcript, p. 187-188; Joint Exhibits #3 and 9). Those submittals provide in pertinent part:

   
   

   1. Environmental Requirements

      3.05 The environmental requirements for the KSU are as follows:

      
      

      Requirements In Operation

      Temperature 32 to 80 F

      0 to 26.5 C

      
      

4. The manuals are guides to service personnel and contain recommendations to installers for climate conditions. The manuals do not include specifications of the temperature limits to which the equipment can be subjected and still operate. While some testimony was provided at the hearing that the equipment could operate at the extremes described in ITS specification 3.7, that information was not included anywhere in Inter-Tel's bid. (Transcript pp. 182-183, Joint Exhibits #3 and 8).

   
   

   1. Review and Disposition of Bids by DOS

   
   

5. After opening, the bids were reviewed by the staff of the Division of Purchasing, Bureau of Procurement, and were then sent to the Division of Communications for a technical evaluation. The Division of Communications had prepared the technical specifications for the ITB in this case. (Transcript pp. 18, 24.)

   
   

6. In his review of the bids, Roger Fisher, a communications engineer in the Division of Communications, found a problem with some of the vendors who submitted other than the designated PTS 120 HP surge protector on their equipment list and failed to provide technical literature to verify that it was "equivalent". He called approximately ten vendors and gave them the option of sending the technical literature or sending a letter stating that the specified equipment would be provided at no additional cost. (Transcript pp. 42, 43.)

7. In response to the phone call, Jim Begue of Tel Plus sent a letter dated August 28, 1986, stating that the PTS powerline surge protector would be provided at the same prices quoted in his company's bid. (Joint Exhibit #2B)

   
   

8. Inter-Tel was not contacted with regard to the discrepancy between its response, "comply", and its technical literature addressing temperature ranges for operation of the KSU. Inter-Tel's bid was determined to be non-compliant.

   
   

9. On September 23, 1986, the bid tabulations were posted and Tel Plus was designated the lowest responsive bidder in eighteen of the twenty-eight configurations. Inter-Tel was the lowest bidder on eighteen of the twenty-eight configurations, but as indicated above, was considered non-responsive. (Joint Exhibit #6)

   
   

10. The posting was withdrawn on September 24, 1986, because of some question with regard to the compliance of Tel Plus and other bidders' description of the "hands-free" features of their systems. It was determined that the systems were in compliance with the ITB. (Joint Exhibit #6 and #7)

    
    

11. On October 3, 1986, a second list was posted indicating that Tel Plus was the lowest responsive bidder in twenty-one of the twenty-eight configurations. Inter-Tel was still the lowest bidder in eighteen configurations and was still deemed non-responsive in all configurations. (Joint Exhibit #8)

    
    

12. Once more, DGS purchasing and communications' staff evaluated the process, and after meeting with the department attorney, decided that the contacts resulting in change of bid response were inappropriate. (Inter-Tel Exhibit #3, pp 12-13). The re-evaluation eliminated all but one responsive bidder. The bid was deemed non-competitive. On October 28, 1986, certified letters were sent to the bidders from William Monroe, Director of the Division of Purchasing, advising that all bids in response to Bid No. 298-730-310-W were being rejected pursuant to General Condition #8 of the ITB (reserving the right to reject all bids or waive minor irregularities or technicalities in bids received). The letter states, in pertinent part: .... Bidder confusion regarding ITB Protection, has resulted in non-responsive bids and unintentional procedural irregularities (Tel Plus Exhibit #1)

    
    

13. Both Tel Plus and Inter-Tel filed timely protests of that intended action.

    
    

    Were the Bids Responsive?

    
    

14. A small, inexpensive component in comparison to the entire electronic telephone system, the surge protector is nonetheless a highly significant piece of equipment, as it reduces the incidence of expensive damage to the larger system. Assuming that the inadvertent transposition of model numbers could be ignored, Tel Plus failed to provide with its bid any technical literature to substantiate that the surge protector it proposed was equivalent to the PTS 120 HP specified in the ITB. The company was unjustifiably presumptuous in its expectation that DGS would consider the two as equivalent since the TII 428 had been the specified model in the past. On the contrary, the change should have alerted bidders to some problem with the previous model. Reason dictates that if the two models were deemed "equivalent" by DGS the change in specifications would not have been necessary.

15. The ITS General Conditions, paragraph 6. provides access prior to bid opening by vendors with questions regarding conditions and specifications:

    
    

    6. INTERPRETATIONS: Any questions concerning the conditions and specifications shall be directed in writing to this office for receipt no later than 10 days prior to bid opening. Inquiries must reference the date of bid opening and bid number. No interpretation shall be considered binding unless provided in writing by the State of Florida in response to requests in full compliance with this provision.

    
    

    This provision was not utilized by Tel Plus.

    
    

16. The range of operating temperatures for the KSU is also significant, given the unit's sensitivity to heat and the adverse conditions sometimes existing at the installation site. Inter-Tel apparently also did not avail itself of the Interpretation's clause but rather attempted to clarify what it perceived as an unclear use of the specification terms, "environmental conditions". Its bid response qualifying its system's compliance only created additional confusion. Within the special conditions of the ITB, the purpose for requiring technical literature is unambiguous. See paragraph 5, above. The literature provided by Inter-Tel was in clear conflict with the ITB specification.

    
    

17. Both the Inter-Tel and Tel Plus bids suffered from the same basic infirmities: both bids included facially obvious material conflicts with the specifications; both bids failed to explain why those conflicts did not exist. Tel Plus was initially an opportunity to correct its bid.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the subject matter and parties in this proceeding. Sections 120.53 and 120.57(1) F.S.

    
    

19. The purpose of this proceeding is to formulate final agency action regarding Bid Number 298-730-310-W, rather than to simply review preliminary agency action taken earlier. McDonald v. Department of Banking and Finance, 346 So 2nd 569 (Fla. 1st DCA 1977). Therefore, the question is not whether DGS reasonably believed the bid responses were non-compliant at the time of review, but rather, as the facts are now known, whether the bid offers conform to the ITB. This does not mean, however, that facts adduced at the hearing can be utilized to supplement or change the protestors' bids. A bidder may not modify its bid after bid opening. Rule 13A-1.002(11) F.A.C. The responsiveness of the bids will be determined as of the time the bids were made public. Rule 13A- 1.001(13) F.A.C.

    
    

20. At the time that the bids were opened both Tel Plus and Inter-Tel bids were facially non-responsive to the ITB. No amount of explanation can now substitute for the technical literature that should have been submitted with the bids to resolve, if possible, the apparent conflicts.

21. DGS' prior practice of contacting bidders after bid opening to obtain an "explanation" or "clarification" comes perilously close to inviting a change in the bid, and, in the contact with Tel Plus in this case, actually did invite a change. Other bidders, such as Inter-Tel, were not given the same opportunity to supplement or correct their bids, and the initial action by DOS violated Rule 13A-1.002(10) F.A.C

    
    

    (9)[10] Right to Reject Bid Proposals- Correction of Commodity Bids, Proposals-- The agency shall reserve the right to reject any or all bids proposals and such reservation shall be indicated in all advertising and invitations to bid request for proposals. The agency shall reserve the right to waive any minor irregularities in an otherwise valid bid/proposal. A minor irregularity is a variation from the invitation to bid/request for proposal terms and conditions which does not affect the price of the bid/proposal, or give the bidder or offeror an advantage or benefit not enjoyed by other bidders or offerors, or does not adversely impact the interest of the agency. Variations which are not minor cannot be waived. A bidder or offeror may not modify its bid after bid proposal openings. Mistakes in an arithmetic extension of pricing may be corrected by the agency.

    (emphasis added)

    
    

22. The Department has wide discretion to reject all bids, but in exercising that discretion cannot act arbitrarily. Couch Construction Co., Inc. v. D.O.T. 361 So 2d 172, 175 (Fla 1st DCA 1978).

    
    

23. Here, DOS has acknowledged that its misguided application of a non- rule policy of contacting bidders has violated its promulgated rules and has jeopardized the fairness and integrity of the bid process. A return to the status quo at the time of bid opening leaves both Tel Plus and Inter-Tel with non-responsive bids, as found above. Their bids should be rejected.

    
    

24. When only one valid bid is received, with few non-relevant exceptions, the agency should issue another invitation to bid. Rule 13A-1.001(12) F.A.C., Rule 13A-1.002(3) F.A.C., Xerox Corporation v. State of Florida Department of General Services, DOAH Case No. 83-3018, Final Order issued September 7, 1984.

Recommendation

Based on the foregoing, it is RECOMMENDED:

That a Final Order be entered finding both Tel Plus and Inter-Tel bids non- responsive and rejecting all bids.

DONE and RECOMMENDED this 16th day of March, 1987 in Tallahassee, Florida.

MARY CLARK

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1987.

APPENDIX TO RECOMMENDED ORDER CASE NOS. 86-4701BID and 86-4702BID

The following constitute my specific ruling on each party's proposed findings of fact.

Findings of Fact by Tel Plus

1. Adopted in paragraphs #1 and #2.

2. Adopted in substance in paragraphs #7 and #10. The model number stated in Tel Plus' bid was TII 248, not 428.

3. Adopted in paragraph #14.

4. Adopted in paragraph #15.

5. Adopted in paragraph #6.

6. Adopted in paragraph #17.

7. Adopted in substance in paragraph #18.

8. Adopted in paragraph #19.

9. Adopted in paragraph #20.

10. Adopted in paragraph #21.

11. Adopted in part in paragraph #11, however the range is 320 to 80 F.

12. Rejected as contrary to the weight of evidence.

13. Rejected as contrary to the weight of evidence. The weight of evidence compels a finding of non-compliance.

Findings of Fact by Inter-Tel

1. Adopted in paragraphs #1 and #6.

2. Adopted in substance in paragraph #2.

3. Adopted in paragraph #17.

4. Adopted in substance in paragraph #16.

5. Adopted in substance in paragraphs #4 and #5.

6. Adopted in part in paragraph #10 (as to its response to 3.7); otherwise rejected as immaterial.

7. Adopted in part in paragraph #10 (as to its response to 3.7); otherwise rejected as immaterial.

8. Adopted in substance in paragraphs #11 and #12.

9. Adopted in part (as to the confusion) in paragraph #24; otherwise rejected as immaterial.

10. Adopted in part (as to the confusion) in paragraph #24; otherwise rejected as immaterial.

11. Rejected as immaterial. The policy, at least in this case, is highly questionable.

12. Adopted in paragraphs #14 and #16.

13. Adopted in part in paragraph #12 (as to evidence that the equipment could perform), otherwise rejected as immaterial.

14. Rejected as cumulative. The fact is addressed in proposed finding of fact #4.

15. Rejected as re-statement of, and commentary on the testimony.

16. Adopted in substance in paragraph #3.

17. Adopted in paragraph #7.

18. Adopted in paragraphs #14 and #15.

19. Adopted in substance in paragraph #20.

20. Adopted in paragraph #22.

21. (No paragraph #21 is provided).

22. Rejected as immaterial.

Findings of Fact by DGS

1. Adopted in paragraph #1 and #17-20.

2. Adopted in paragraphs #2-4.

3. Adopted in paragraph #5.

4. Rejected as immaterial.

5. Adopted in paragraphs #3 and 6.

6. Rejected as unnecessary and cumulative.

7. Adopted in paragraph #4.

8. Adopted in paragraph #4.

9. Adopted in paragraph #7.

10. Adopted in substance in paragraphs #14, 15, 17 and 20.

11. Adopted in paragraphs #12 and #16.

12. Adopted in paragraph #4, except for the "interpretation", which is immaterial.

13. Adopted in paragraphs #10 and #11.

14. Adopted in substance in paragraph #24.

15. Adopted in substance in paragraph #24.

COPIES FURNISHED:

Ronald W. Thomas Executive Director

Department of General Services Room 133, Larson Building Tallahassee, Florida 32399-1600

Susan Kirkland, Esquire General Counsel

Department of General Services

457 Larson Building Tallahassee, Florida 32399-1600

David P. Rankin, Esquire FREEMAN & LOPEZ, P.A.

4600 West Cypress, Suite 410

Tampa, Florida 33607

F. Alan Cummings, Esquire CUMMINGS & LAWRENCE, P. A. Post Office Box 589 Tallahassee, Florida 32301

William P. Beck, Esquire Office of General Counsel Department of General Services Room 452 Larson Bldg.

Tallahassee, Florida 32399-0955

Docket for Case No: 86-004701BID

Orders for Case No: 86-004701BID