STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BELL ATLANTIC BUSINESS )

SYSTEMS SERVICES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-3527BID

)

DEPARTMENT OF LABOR AND )

EMPLOYMENT SECURITY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its designated Hearing Officer, Joyous D. Parrish, held a formal hearing in the above-styled case on July 19, 1994, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Gregory P. Borgognoni

RUDEN, BARNETT, McCLOSKY, SMITH, SCHUSTER & RUSSELL, P.A.

701 Brickell Avenue, Suite 1900

Miami, Florida 33131

For Respondent: Edward A. Dion, General Counsel

Department of Labor and Employment Security Suite 307, Hartman Building

2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUES

The central issue in this case is Petitioner's challenge to the request for proposal (RFP) which the Department of Labor and Employment Security (Department) has identified as RFP 94-052-SH. Such protest relates to four specific areas of the RFP.

PRELIMINARY STATEMENT

This case began on May 26, 1994, when the Petitioner, Bell Atlantic Business Systems Services, Inc. (Bell), filed a notice of protest seeking to challenge the terms set forth in RFP 94-052-SH. More specifically, Bell alleged that provisions of the RFP were drafted in such a manner as to arbitrarily limit competition among the prospective bidders. Thereafter, Bell timely filed a formal written protest and petition for formal hearing that alleged it would be adversely affected by the terms of the RFP.

The matter was forwarded to the Division of Administrative Hearings for formal proceedings on June 28, 1994. While the petition set forth eleven grounds for the challenge, remaining at issue for the hearing were the following provisions: the "value added services" provision found in section 4.6; the stocking sections setting forth the parts list for items to be stocked in the Tallahassee area; the retrieval of engineering changes section; and the staffing criteria.

At the hearing, Petitioner presented the testimony of the following witnesses: Michael Yu, the area operations director for Bell; Pamela A. Abdulaziz, an account executive for Bell; and William C. Zimmerman, the computer operations manager for the Department. The Petitioner's exhibits numbered 1 and

2 were admitted into evidence. Mr. Zimmerman also testified on behalf of the Respondent, and its exhibits numbered 1 and 2 were received into evidence.

The transcript of the proceedings was filed on August 2, 1994. Specific rulings on the parties' proposed findings of fact are included in the appendix at the conclusion of this recommended order.

FINDINGS OF FACT

1. On May 16, 1994, the Department issued RFP 94-052-SH seeking contractor submittals for the maintenance of its Information Management Center (IMC) including IBM, Xerox, and Storagetek mainframe peripherals and standalone printers. The request did not include the mainframe processor.

   
   

2. After receiving the RFP and other documents, Petitioner timely filed a notice of intent to challenge provisions of the RFP.

   
   

3. On June 6, 1994, Bell timely filed a written formal petition protesting the provisions of the RFP which it alleged favored one prospective bidder over others.

   
   

4. Prior to hearing, seven of the eleven challenges to the provisions were resolved by the Department and Bell. Consequently, no findings of fact are submitted as to those provisions.

   
   

5. Section 4.4 of the RFP provides, in pertinent part:

   
   

   Staffing--In accordance with the requirement of this Request For Proposal, the proposer shall provide documentation describing the staffing infrastructure to support the

   requirements listed in this RFP. Documentation should include at a minimum:

   * * *

   c. Proposals shall include, 1) the number of experienced, trained staff that will be working on this contract, and 2) the number of additional experienced, trained staff that will be available in the Tallahassee area for backup.

   
   

6. More specific than the foregoing, Section 6.2 of the RFP provides:

   
   

   The Contractor shall have Customer Engineers specifically trained for each piece of equipment included in the RFP or maintenance bid located

   at the IMC in Tallahassee, Florida. These Customer Engineers shall be available to be onsite,

   24 hours each day, 7 days each week. There must

   be a sufficient number of primary Customer Engineers and backups to maintain a minimum staffing level of

   one primary CE and one backup trained on each component listed in the RFP. Each primary and backup CE must be trained on the equipment to which they are assigned.

   Training shall be completed before the individual is assigned to service the equipment covered by this proposal. [Emphasis added.]

   
   

7. The services specified by this RFP project should require no more than one person devoting two hours per day. Based upon the terms of the RFP, the "number of additional experienced, trained staff that will be available in the Tallahassee area for backup" should be construed to be those who are available for this project, as opposed to those who may be located in Tallahassee but are assigned to other projects. As the language is clear, this provision is not arbitrary or vague.

   
   

8. Section 4.6 of the RFP provides:

   
   

   Value Added Services--The Contractor shall provide a detailed list of additional support services available through this contract. These services shall be considered as part of the contract and made available to the Department at no additional cost. The Department will evaluate the services based on their application to the Department's needs. Monthly equipment pricing should take

   into consideration any services listed in this section. Areas of interest include services such as:

   1. Machine monitoring for enhanced corrective and preventative services;

   2. Network Problem Resolution Assistance;

   3. Equipment relocation.

      
      

      For each service listed by the Contractor, the following information should be provided to assist the Department in the evaluation of these services:

      1. Detailed description of the functions, capabilities, and availability of the service including scope and delivery of benefits;

      2. The availability of acquiring the services outside the scope of this contract and, if applicable, the published cost of the service;

      3. If the service is being subcontracted, subcontractor information will be required as outlined in section 4.3;

      4. References of current customers who use the service.

      
      

9. The Department has not specified the types of "value added services" that must be included in the contract cost; nor has it disclosed, among the examples listed, the extent to which the vendor will be responsible for same. As there are literally hundreds of services which could be included, this

   provision fails to specify which are of importance to the agency. Moreover, by requiring that a vendor include in the contract price the amount necessary to provide the service, the contract price is arbitrarily inflated should a vendor not be required to provide the service. Additionally, a current vendor who can more accurately estimate the level a service will be used, has an advantage over those unfamiliar with past levels of utilization who are required to submit a contract price to include "value added services."

   
   

10. As the Department has nothing to gain by requiring that the "value added services" be included in the proposed contract price, and as a current vendor aware of the Department's past need for same has an advantage over others who may bid, this provision is arbitrary and without logic. If additional services are to be required, the Department should specify the services needed and an estimate of the level of use for such services. If the Department merely seeks a laundry list of the "value added services" which a vendor could provide, then the cost for same should be separated from the contract price so that all vendors compete on the same basis.

    
    

11. Section 7.21 of the RFP provides:

    
    

    At a minimum, critical replacement parts and parts which are required to meet minimum equipment failure downtime requirements as defined in section 7.40 shall be held in the Contractor's Service Center or warehouse in Tallahassee, Florida. This includes, but is not limited to replacement parts for communica- tions controllers and each type of Head Disk Assembly for all installed disk drives (see

    Appendix C-list of items that must be maintained in Contractor's Service Center or Warehouse in Tallahassee, Florida). All parts stocked in the Contractor's Service Center or warehouse must be deliverable to the IBM within thirty

    (30) minutes. High usage replacement parts must be identifiable, in part, based on recommendations by the OEM and approved by the Department.

    
    

12. The Department obtained the list of "critical replacement parts and parts which are required to meet minimum equipment failure downtime requirements as defined in section 7.40" from the equipment manufacturers. Such vendors are likely to compete for the subject RFP.

    
    

13. The Department intended such list to include any parts necessary to assure that the downtime of the system would be minimized. The Department did not consider the failure rate of such parts and, in the past, has not incurred problems with many of the items listed. In fact, fifty percent of the parts listed have no industry history for failure.

    
    

14. Additionally, the Department did not consider the price of the part in determining whether it should be warehoused in Tallahassee. As it relates to this provision, section 7.40 only requires that the maintained equipment is to have "diagnostics and corrective actions performed to eliminate equipment failure downtime as soon as possible but not to exceed two (2) hours." Whether that section requires a correction within two hours or that diagnosis and actions be begun within two hours is unclear. However, the cited section is the sole reference for the parts replacement list standard.

15. Curiously, the list of parts required does not include items which, by history, have a high rate of failure and which could result in downtime to the system; such parts include: a cooling fan, a blower fan for the assembly, and a battery backup for the solid state memory. These parts have a minimal cost and could be readily stocked in Tallahassee.

    
    

16. In contrast, the parts which are required by the RFP are relatively expensive. Collectively, the cost of such parts exceeds $60,000 and, given the estimate of the monthly price for this contract, it is less likely such parts would be warehoused in Tallahassee by a vendor who did not manufacture same.

    
    

17. As a result, this provision arbitrarily favors a vendor who manufactures the part since there is no showing that the part is necessary to minimize downtime.

    
    

18. Section 7.31 of the RFP provides:

    
    

    The IMC currently utilizes real-time online retrieval of Engineering Changes for some components under maintenance contract in

    order to decrease EC procurement and installation time in a remedial maintenance situation. The contractor shall provide a similar method by which Engineering Changes can be acquired expeditiously.

    
    

19. The foregoing provision fails to acknowledge that a vendor, other than the manufacturer, can only implement engineering changes as coordinated with the OEM. This provision, if construed to recognize that limitation, would not, based upon the language, arbitrarily favor one bidder over another.

    
    

    CONCLUSIONS OF LAW

    
    

20. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

21. Petitioner has the burden of establishing, by a preponderance of the evidence, that the Department has acted arbitrarily in the drafting of specifications for the RFP. It is incumbent on agencies to draft RFPs such that all potential bidders are given an unambiguous document that accurately describes the project under consideration. Further, potential bidders should be afforded an opportunity to discuss the solicitation requirements and must be accorded "fair and equal treatment." See Section 287.057, Florida Statutes. As the Department acknowledges, the "laws of this state only require that offerors be given a level playing field upon which to compete, not that they be made equal by the terms of a department's RFP."

    
    

22. In this case, Petitioner has shown that the vendors have not been afforded a level playing field. Although a RFP does not have the same standard for review as an invitation for bids, it nevertheless may not be so arbitrary as to eliminate competition. As to the provisions dealing with "value added services" and the critical parts to be maintained in Tallahassee, the Petitioner has established that the Department has arbitrarily chosen criteria unsupported by the record or logic. Consequently, such provisions must be redrafted to afford all potential proposers fair and equal treatment.

RECOMMENDATION

Based on the foregoing, it is, hereby, RECOMMENDED:

That the Department of Labor and Employment Security enter a final order amending the provisions of RFP 94-052-SH to either delete the inclusion of the price of "value added services" from the contract cost or to specify more information as to the Department's need regarding such services; and to amend the critical parts list to those items that have an industry history for failure and thus contribute to system downtime.

DONE AND RECOMMENDED this 30th day of September, 1994, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH

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 30th day of September, 1994.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-3527BID

Rulings on the proposed findings of fact submitted by the Petitioner:

1. Paragraphs 1-9, 11-15, 20, and 22-27 are accepted.

2. The first sentence of paragraph 10 is accepted; the remainder rejected as incomplete or irrelevant as it is not clear what the intention of the phrase was.

3. The first sentence of paragraph 18 is accepted; the remainder rejected as argument.

4. Paragraph 19 is rejected as argument.

5. Paragraph 21 is rejected as irrelevant.

6. Paragraph 28 is rejected as argument.

Rulings on the proposed findings of fact submitted by the Respondent:

1. Paragraphs 1-3, 8 and 11 are accepted.

2. Paragraph 4 is accepted but is irrelevant.

3. With regard to paragraph 5, the last sentence is rejected as irrelevant; the remainder is accepted.

4. Paragraph 6 is rejected as irrelevant.

5. Paragraph 7 is accepted as to the statement of intent but is rejected as the cited provision does not accomplish the Department's stated goal and is therefore not supported by the weight of credible evidence; consequently, an amendment to the provision is necessary.

6. All references to the Comptroller's RFP are rejected as irrelevant to the extent such comments infer that the record in this case supports the cited provision. Accordingly, such references in paragraphs 9 and 10 are rejected.

7. Additionally, the inference in paragraph 9 that the critical parts list rationally relates to parts necessary to keep the system running is rejected as not supported by the credible weight of the evidence. The Department acknowledged or did not refute that many of the parts do not have an industry record for failure additionally, other parts were not listed which do have a failure history and which could cause the system downtime.

8. Except as noted above, paragraph 10 is accepted.

9. Paragraph 12 is accepted but is irrelevant.

COPIES FURNISHED:

Gregory P. Borgognoni

RUDEN, BARNETT, McCLOSKY, SMITH SCHUSTER & RUSSELL, P.A.

701 Brickell Avenue, Suite 1900

Miami, Florida 33131

Edward A. Dion General Counsel

Department of Labor and Employment Security

The Hartman Building, Suite 307 2012 Capital Circle, S.E. Tallahassee, Florida 32399-2189

Shirley Gooding, Secretary Department of Labor and Employment Security

303 Hartman Building 2012 Capital Circle S.E.

Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 94-003527BID

Orders for Case No: 94-003527BID