Judges: D. R. ALEXANDER
Agency: Department of Financial Services
Latest Update: May 23, 1989
Summary: Award of bid disallowed and bid process reopened.
89-1718n
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
PR NEWSWIRE, )
)
Petitioner, )
)
vs. ) CASE No. 89-1718B1D
)
DEPARTMENT OF INSURANCE AND )
TREASURER, )
)
Respondent, )
and )
)
BUSINESS WIRE, )
)
Intervenor. )
)
RECOMMENDED ORDER
Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on April 17, 1989, in Tallahassee, Florida.
APPEARANCES
For Petitioner: Toni Gregory
34 Peachtree Street Suite 250
Atlanta, Georgia 30303
For Respondent: Robert F. Langford, Jr., Esquire
412 Larson Building Tallahassee, Florida 32399-0300
For Intervenor: John S. Holmes
901 Ponce de Leon Boulevard Suite 606
Coral Gables, Florida 33134 BACKGROUND
This matter began on March 9, 1989, when respondent, Department of Insurance and Treasurer, issued a letter advising petitioner, PR Newswire, that it intended to award a contract for newswire services to intervenor, Business Wire. Thereafter, petitioner filed its formal written protest on March 22, 1989, advising that it intended to challenge the agency's action. In brief, petitioner alleged that "erroneous information and misinterpretation was used in awarding this bid." The matter was forwarded by respondent to the Division of Administrative Hearings on April 3, 1989, with a request that a hearing officer be assigned to conduct a formal hearing.
By notice of hearing issued on April 5, 1989, the matter was scheduled for a final hearing on April 17, 1989, in Tallahassee, Florida.
Petitioner was represented at final hearing by a qualified representative, Toni Gregory, an account executive. It presented the testimony of Toni Gregory and Thomas Madden, southern manager. Also, it offered petitioner's exhibits 1-
10. All exhibits were received in evidence. Respondent presented the testimony of Ira M. Boykin, purchasing agent, and Kathleen Snoeblen, public information director. Also, it offered exhibits 1-15. All exhibits were received in evidence. Intervenor was represented at hearing by a qualified representative, John S. Holmes, Florida manager. Also, it offered intervenor's exhibits 1 and
Both exhibits were received in evidence.
The transcript of hearing was filed on May 1, 1989. Proposed findings of fact and conclusions of law were filed by respondent on May 5, 1989. 1/ A ruling on each proposed finding has been made in the Appendix attached to this Recommended Order.
The issue is whether respondent was arbitrary and capricious in awarding its wire services contract to intervenor.
Based upon all of the evidence, the following findings of fact are determined:
FINDINGS OF FACT
On February 10, 1989, respondent, Department of Insurance and Treasurer (Department), issued Invitation To Bid No. DIT-88/89-112 (ITB) to prospective bidders inviting bids for the provision of the following service:
The Florida Treasurer & Insurance Commissioner's Office, hereinafter referred to as "State," requires a wire service to ensure the timely distribution of the State's news releases. The State, therefore, invites all interested wire services to submit bids for a 2-year, fixed-rate contract.
The ITB provided further that bids were due by 2:00 p.m. on February 21, 1989, they would be opened at that time, and the posting of bid tabulations would occur the following day. Also, the ITB provided that the bid award would "be made to the lowest responsive bidder using the fixed rate for the first 400 words of each press release." There was no provision for a prebid conference but the Department advised prospective bidders that questions would be answered by telephone up to the time the bids were due. Whether any prospective bidder availed itself of this opportunity is not of record.
Petitioner, PR Newswire, and intervenor, Business Wire, are newswire services who, among other things, transmit client information by computer and printer to various media points (e.g., newspapers, television and radio stations) throughout the state. If the media point has the capability of receiving transmissions by computer, the newswire service utilizes a satellite, or computer link, to transmit the information to the media point. Some media points either do not have computer capability or choose not to use satellite service and thus receive a hard copy of the transmission via TELEX and other
similar machines. PR Newswire has had a contract with the Department for the last two years to provide this service. It will continue to do so pending the outcome of this bid dispute.
Bid proposals in response to the ITB were timely filed by petitioner and intervenor. Both firms submitted bids with a $40 charge for the first 400 words of each press release and a charge of $10 for each additional 100 words. This was not surprising since Business Wire offers a discounted government rate for its service and PR Newswire knew it had to submit a comparable rate to be competitive. Since the dollar amounts were identical, the Department relied upon advice from its legal counsel for a procedure to break the tie. Under this procedure, the two proposals were evaluated to determine which was the most "responsive." The evaluation process consisted of determining which firm had the greater capacity for "transmitting via computer links to the most Florida media markets listed in Exhibit A" of the ITB. Exhibit A is a three page listing of newspapers, wire services, and television and radio stations throughout the state. After this evaluation was made, the Department selected Business Wire as the lowest and most responsive bidder. This information was conveyed to PR Newswire by letter dated March 9, 1989. Upon receiving the letter, PR Newswire filed its formal protest alleging that the agency had misinterpreted certain information and relied on erroneous information in awarding the contract to Business Wire. The filing of the protest prompted this proceeding.
The Department issues press releases approximately three times per month. It desires such releases to be in the hands of the editor or news director within thirty minutes after the wire service receives the Department's release for dissemination. To operate within this time constraint, the wire service must transmit the information to the media point via computer. At the same time, the Department considers a hard copy coming off a teleprinter to be "unsatisfactory" and less likely to be used by, an editor or news director. This is because a hard copy is more likely to be lost or misplaced while a release sent via computer is generally retained on the media point's computer for at least twenty-four hours. For these reasons, the Department placed the following provision in the Special Conditions of the ITB:
b. The bidder must be capable of transmitting via computer links to the most Florida media markets listed in Exhibit A. Other distribution methods such as telecopiers (fascimile), telex messenger, etc., are unacceptable. (Emphasis in original)
The General Conditions of the ITB also contained the following relevant provision:
7. As the best interest of the State may require, the right is reserved to make award(s) by individual service, group of services, all or none, or a combination thereof, to reject any and all bids or waive any minor irregularity or technicality in bids received.
After the bids were opened and the tie was noted, the bids were sent to the Department's public information director, Kathleen Snoeblen, for further
evaluation consistent with legal counsel's advice. Based upon two conversations with a Business Wire representative and one with a representative of PR Newswire, but without making an independent check to verify the accuracy of their responses, Snoeblen concluded that Business Wire served 33 media points via computer link while PR Newswire served only 29. Using this as the yardstick for breaking the tie, Snoeblen recommended that Business Wire be given the contract. This advice was conveyed to the Department's Division of Administration by memorandum dated March 7, 1989. A proposed award of the contract to Business Wire followed. After proposed agency action was issued, there was no informal conference with the bidders in an attempt to informally resolve the matter.
After further review of the proposals, Snoeblen acknowledged at hearing that her original evaluation was incorrect and that Business Wire could only serve 31 media points via computer link rather than 33. However, this meant it still served two more points than PR Newswire.
At hearing, PR Newswire established that the Department's evaluation of media points was flawed. This was because a press release might be sent via computer to a primary media point which in turn distributed the same release to other media points in the area. In evaluating the bid proposals for purposes of breaking the tie, the Department counted as computer link points not only the original media point but also any secondary points listed by the bidder that received the release from the original point. For example, a feed sent by Business Wire to the Stuart News was then conveyed by that newspaper to the Port St. Lucie News, Stuart Mirror, and Hobe Sound/Port Salerno Mirror, all being smaller newspapers or "shoppers" ostensibly owned or controlled by the primary media point. However, the secondary points (including "shoppers") were considered computer link points within the meaning of the ITB even though the wire service had sent only one release to a single media point.
Neither bidder was aware of the procedure that would be used in the event of a tie. In addition, both petitioner and intervenor complained that there were definitional problems with the term "computer link" as used by the Department. Had petitioner known of these matters prior to its bid submission, it would have structured its proposal differently. More specifically, it would have concentrated on listing primary computer link points as well as secondary points so as to reflect a larger number of points that it served. In its proposal, PR Newswire did not list secondary points since it was under the impression that only primary points could be used. By not being given the opportunity to submit a responsive proposal, PR Newswire was placed at a competitive disadvantage in the bidding process.
CONCLUSIONS OF LAW
The Division of Administrative, Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).
As the party seeking to change the award of the contract, PR Newswire has the burden of proving its allegation that the agency acted improperly by awarding the contract to intervenor. Cf. Capeletti Brothers, Inc. v. State, Department of Transportation, 432 So.2d 1359, 1363-64 (Fla. 1st DCA 1983) (no error in requiring challenging party in a bid dispute to bear the burden of proving agency action incorrect)
In a bid challenge such as this, the scope of inquiry is limited to determining "whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988).
Unless bid documents are sufficiently specific and clear to assure fair competition to all bidders, the agency action may be construed as being arbitrary. See, e.g., Aurura Pump, Division of General Signal Corporation v. Goulds Pumps, Inc., 424 So.2d 70, 74 (Fla. 1st DCA 1982). In other words, the bidding specifications, and procedures to be used by the agency during the bidding process, must be clear and precise so as to place all bidders on equal footing.
The evidence discloses that an ambiguity existed as to a material term in the ITB, namely, "computer link." Had this ambiguity been clarified or mode definitively described in the ITB, at least one, if not both, bidders would have structured their proposals differently. Also, there was no written or oral notice to the parties concerning the manner in which the agency intended to break a tie. By failing to adequately disclose this information to prospective bidders, the Department placed at least one of the two bidders at a distinct disadvantage. Aurora Pump, supra. This being so, it is concluded that petitioner has sustained its burden of showing that the agency acted arbitrarily in awarding the bid to Business Wire. Groves-Watkins, supra. In view of the confusion on the part of both bidders, it is in "the best interest of the State" to reject both bids and relet the contract.
RECOMMENDATION
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered rejecting both bids and releting
Invitation To Bid No. DIT-88/89-112.
DONE AND ORDERED this 23rd day of May, 1989, in Tallahassee, Leon County, Florida.
DONALD R. ALEXANDER
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904)488-9675
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of May, 1989.
ENDNOTE
1/ Petitioner filed a letter responding to the proposed order on May 11 while intervenor filed a response to petitioner's letter on May 15, 1989. Neither "pleading" is authorized by DOAH rules.
APPENDIX
Respondent:
1. Covered in finding of fact 1. 2-3. Covered in finding of fact 3.
4. Covered in findings of fact 1 and 3. 5-6. Covered in finding of fact 6.
Covered in finding of fact 3.
Covered in background.
Rejected as being unnecessary.
Covered in finding of fact 3.
Covered in finding of fact 11.
Rejected as unnecessary.
Rejected as being subordinate to other findings.
Covered in finding of fact 7.
Rejected as being subordinate to other findings.
COPIES FURNISHED:
Ms. Toni Gregory
34 Peachtree Street Suite 250
Atlanta, GA 30303
Robert F. Langford, Jr., Esquire
412 Larson Building Tallahassee, FL 32399-0300
Mr. John S. Holmes
901 Ponce de Leon Boulevard Suite 606
Coral Gables, FL 33134
Honorable Thomas Gallagher Insurance Commissioner
The Capitol, Plaza Level Tallahassee, FL 32399-0300
Docket for Case No: 89-001718BID
Orders for Case No: 89-001718BID
