vs. ) CASE NO. 95-1427BID
Intervenor. )
) INACOM, INC. d/b/a INACOM )
vs. ) CASE NO. 95-1844BID
Intervenor. )
Pursuant to notice, this cause came on for hearing before Diane Cleavinger, a duly designated Hearing Officer in Tallahassee, Florida, on April 17, 1995, May 1, 1995 and May 8, 1995.
For Petitioner, Harry R. Detwiler and John M. Alford AmeriData, Inc.: Alford & Detwiler
For Intervenor, Davisson F. Dunlap, Jr. Vanstar Pennington & Haben Corporation: 215 South Monroe Street
For Respondent, O. Earl Black, Jr. and Terry A. Stepp Department of Office of the General Counsel Management Department of Management Services Services: 4050 Esplanade Way, Suite 260
The issues in this case are whether the process utilized by the Department of Management Services in its award of the IBM portion of the client/server computer contract was fatally flawed so as to impair the competitive bidding process and whether Petitioner failed to timely protest the specifications regarding negotiations for "balance of line" items.
On November 21, 1994, Respondent, the State of Florida Department of Management Services, (DMS) issued Invitation to Bid No. 9-250-040-B, Client Server Systems. The purpose of the bid was to establish a twelve month contract for the purchase of client server systems by all State of Florida agencies and other eligible users. The bid included microcomputers, network/file servers, workstations and workstation servers and peripherals by product line (IBM, Dell, Gateway, Hewlett Packard, NEC, etc.).
Bids were submitted by National Data Products, Inc., (NDP), AmeriData, Inc., (AmeriData), Mainline Information Systems, (Mainline), Vanstar Corporation, (Vanstar), Inacom, Inc., (Inacom) as well as others.
The original bid opening date of January 10, 1995 was extended to January 11, 1995. Vanstar was found to have submitted the lowest bid on microcomputers for IBM products and AmeriData was found to be the second low bidder on microcomputers for IBM products. Mainline was found to be the low bidder on the NEC portion of the ITB. NDP had also submitted a bid on NEC.
After the initial posting of the intended bid awards, one aspect of the Hewlett Packard portion of the bid was determined to have been improperly evaluated. Therefore, with regard to the Hewlett Packard line of products, there was a re-posting of the bid after proper evaluation. The re-posting led to a separate time frame for protesting the Hewlett Packard part of the bid.
Subsequently an additional protest was filed by Inacom, the second low bidder on the Hewlett Packard portion of the ITB.
Informal resolution conferences were held. Following such conferences, formal protests were filed by NDP, Inacom and AmeriData. All of the cases were consolidated for hearing. Mainline and Vanstar were granted intervenor status
in the consolidated cases. Subsequently, Inacom and NDP withdrew their protests and the issues involving Inacom in Case No. 95-1844BID and NDP in Case No. 95- 1426BID, as well as the issue dealing with Mainline were dismissed. Thus, the only parties remaining in this matter are AmeriData, the protestor, Vanstar, the intended awardee, and DMS.
At the hearing, the AmeriData offered the testimony of four (4) witnesses and introduced three (3) exhibits into evidence. The Respondent, DMS, offered the testimony of four (4) witnesses and introduced six (6) exhibits into evidence. The Intervenor Vanstar offered the testimony of two (2) witnesses and introduced one (1) exhibit into evidence.
Petitioner, Respondent and Intervenor filed Proposed Recommended Orders on June 12, 1995. The parties' proposed findings of fact have been considered and utilized in the preparation of this Recommended Order, except where such findings were not shown by the evidence, or were immaterial, irrelevant, cumulative or subordinate. Specific rulings on the parties' proposed findings of fact are contained in the Appendix to this Recommended Order.
During the summer of 1994, the Department of Management Services (DMS) began to develop an invitation to bid (ITB), to establish a state contract for the purchase of client server systems. The contract included microcomputers, network/file servers, workstations, workstation servers, and peripherals. The future contract would replace the current state contract between AmeriData and DMS. The process utilized by DMS to establish the ITB included meetings with state users and representatives of the microcomputer vending community. In particular, the pricing methodology for the ITB was developed from user conferences, vendor meetings and pre-bid conferences.
DMS had many goals it wished to achieve under the new ITB for computers. These goals included making a wider range of products available to the user agencies, obtaining computer products at better prices than under the current contract, making a more diverse line of commodities available, obtaining the participation of third party vendors and making third party vendor products available. In particular, DMS wanted to enable agencies to purchase integrated "computer systems" consisting of computers with standard and upgradable components at the same discount price as a computer alone when those components are simultaneously purchased with the computer as a system or as computer system bundles.
This effort resulted in the drafting of an Invitation to Bid dated September 26, 1994, which was circulated to known vendors for question and comment.
The ITB of September 26, 1994 called for bids for statewide support levels I and II for microcomputers, desktop, deskside and portable (Tables 2.1 and 2.2) and for network/file servers (Table 3.0). These items were to be bid as percentage mark-up from dealer cost. Workstation and workstation servers (Table 4.0) and peripherals, (monitors, printers, plotters, network cards, etc.) (Tables 5.1 through 5.9) were to be bid as percentage discounts from the manufacturer's suggested retail price (MSRP). Additionally, if vendors desired to submit a price list for the balance of a vendor's product line, such "balance of line" peripherals were to be offered under the same pricing schedule (a single whole number discount from the MSRP) as the peripherals category (monitors, printers, etc.) which described the balance of line item.
The term "balance of line" as used in the ITB was intended to allow a product line vendor to submit a price list on the manufacturer's line of peripherals as well as third party peripherals. In other words, a vendor offering the IBM line of microcomputer systems under tables 2.1, 2.2 and 3.0 could submit a price list for the IBM line of peripherals (monitors, printers, plotters, etc.) under a balance of line price list for tables 2.1, 2.2 and 3.0, and submit a price list for third party peripheral products (Epson printers, Samsung monitors, etc.), under tables 5.1 through 5.9.
The initial ITB generated many questions. DMS prepared written responses to the questions it received from various prospective bidders.
On November 9, 1994, DMS held its Client/Server System Pre-Bid Conference. The conference was attended by various company representatives who were prospective bidders. The prospective bidders included representatives John Reneger and Lytt Noel from Vanstar Corporation, Dale Kennedy from AmeriData, and Mark Holt and Roy Wade from IBM.
At that Pre-Bid Conference the attendees were given 41 pages of questions and the responses to those questions that had been prepared by DMS. Based on questions and comments raised at the November 9, 1994, Pre-Bid Conference, DMS issued Addendum number 2 on November 21, 1994. Addendum number
to the ITB contained the bid specifications, attached copies of the pre-bid attendance list, copies of the pre-bid questions and answers, and a list by item of ITB changes. It also contained a document entitled Complex Issues for
Follow-up. Later, Addendum number 3 was issued on December 21, 1994, and Addendum number 4 was issued January 10, 1995. Addendum number 3 added two more eligible bidders of products. Addendum number 4 changed the bid opening date to January 11, 1995.
On January 11, 1995, the bids were opened. Later the bid tabulation with proposed awards was posted. Vanstar bid two percent cost plus on the product line for IBM microcomputers and offered twelve percent cost plus as its prices for balance of line peripherals. AmeriData bid four percent cost plus for the IBM product line of microcomputers and offered four percent cost plus as its prices for balance of line peripherals. Because Vanstar was the low bid for IBM microcomputers, DMS proposed to award the contract to it.
Addendum number 2 was the final substantive addendum to the initial ITB. For purposes of this case, Addendum number 2 was virtually identical to the initial ITB. However, Addendum number 2 changed the pricing methodology for the balance of line items in Paragraph 2.0, on page 19 of the Specifications for the Client Server Systems from discount off manufacturer's suggested retail price to "the same pricing schedule (cost plus) as the microcomputer systems," for that product line. In this case, the microcomputer systems were for the IBM product line.
The ITB clearly stated that the balance of line price lists would not be considered in the evaluation or award of the bids. In fact, in response to a specific question on balance of line, DMS in Section T-1, page 25, stated that balance of line items would not be used for evaluation purposes. The ITB specified that DMS intended to negotiate the balance of line items if the price submitted by the vendor was determined to not be competitive. The ITB generally stated how the negotiations would take place. However, the ITB did not define what competitive prices were. On the other hand, it was clear that a contract
for balance of line items may not be awarded. The ITB provided on page 10 of the Special Conditions, under balance of line:
The Balance of Line price list provisions of this bid/contract are provided for the convenience and benefit of the contract users as well as the awarded vendors. The Division of Purchasing will review and compare balance of line price lists to
determine if prices are competitive. Should it be determined by the Division of Purchasing that the balance of line price lists of the awarded contractor are not competitive, the contractor will be given an opportunity to resubmit a negotiated competitive price list.
If the contractor is unable or chooses not
to reduce prices for Balance of Line products, the Balance of Line will not be awarded.
The above language in the ITB was intended to serve as a Notice of Intent to Negotiate. However, DMS did not post the Notice of Intent to Negotiate in the office of the Division of Purchasing as required in Rule 60A- 1.018(2), Florida Administrative Code. Additionally, the evidence did not show compliance with any of the other provisions of the Rule 60A-1.018(2), Florida Administrative Code.
The procedure of negotiating the balance of line item with the awarded contractor was further clarified in the question and answer section of Addendum No. 2. On page 19, at P-6, in response to a question requesting explanation of the balance of line items, DMS stated that the Division of Purchasing would review and compare balance of line items to determine whether they were competitive and, if the prices were not competitive, DMS could negotiate with the contractor who was awarded the bid on the microcomputers.
At page 8, question E-1, DMS further stated in part that "if the Balance of Line price list submitted as part of Sections 2.1 and 2.0 as specified is not competitive for similar items bid in Section 5.0, then "Balance of Line" prices will be negotiated or excluded from the award for that bidder." Moreover, if the negotiations, should fail, no negotiations will be conducted with any other bidder and no contract for the balance of line items would be entered into.
There was no requirement in the ITB that a vendor submit balance of line price lists. The ITB at page 9 stated in part "vendors who bid and are awarded microcomputer systems may offer a Balance of Line." (Emphasis supplied). In short, the balance of line price list was not a bid under the ITB but served to supply information to DMS on the prices of peripherals which would most likely be used for comparison with other bidder's prices on the same peripherals. The award of any balance of line/peripheral contract was not part of the award of ITB 9-250-040-B, but was to be part of a separate process involving negotiation with a specific vendor. AmeriData was aware that submitting a price list for balance of line items was optional and, if it submitted a price list for balance of line items, the information would not be used to evaluate the winning bid for microcomputers under the ITB.
The type of negotiations for balance of line identified in the ITB is unique and has never been attempted by DMS in the past. DMS admitted that in
selecting this method it did not consider the fact that approximately ten to eleven million dollars out of twenty million dollars in sales or about 50 percent of the sales volume for IBM products from the 1994 contract were for IBM peripherals.
Additionally, because the process is new, DMS at the time of hearing, had not decided the specifics of how the negotiations would be conducted, but believes there will be more steps and methodology involved in the actual negotiations, if it occurs, with the successful bidder than are actually documented in the ITB. DMS believes that any negotiations must be in compliance with Rule 60A-1.018(2), Florida Administrative Code, Negotiations After Bid which establishes parameters on the procedures for negotiating contracts for the purchase of commodities or contractual services. However, DMS also believes that the negotiations, if they occur, will be a more informal process than the negotiations mandated under Rule 60A-1.018(2), Florida Administrative Code. In any event, whatever negotiations DMS proposes should comply with Florida Statutes and Rules beginning with the posting of Notice in the office the Division Rule 60A-1.018(2)(b), Florida Administrative Code, the development of a vendor list with rankings Rule 60A-1.018(2)(c), Florida Administrative Code, etc.
Given the preliminary status of the negotiation procedure, its brief outline in the ITB and the posting of the ITB cannot form the basis of an intent to negotiate.
DMS did not receive any written objections to DMS's plan to award the contract on the bids received for microcomputers under 2.1 without regard to the price list for balance of line items. Likewise, DMS did not receive any written objections to the proposal to negotiate balance of line items with the winning bidder on the microcomputers. However, since the balance of line price lists were not a bid and were not "specifications" in a bid which enable a bidder to receive the bid award, the 72 hour protest time for bids does not apply. On the other hand, since the negotiation procedure is separate from the bid award, the procedure is not properly part of a bid protest under Section 120.53, Florida Statutes. Additionally, protestations of the negotiation procedure should comply with Rule 60A-1.018(2)(b), Florida Administrative Code, which permits protests of the agency's decision to negotiate once a Notice of Intent is posted. The Notice has not yet been posted. Therefore, consideration of the scanty and tenuous plan for negotiations outlined in the ITB is not ripe for consideration.
Throughout the ITB, there are predominantly two pricing schemes utilized for microcomputers, peripherals and balance of line items. The two pricing schemes are calculated as a percent discount from the manufacturer's suggested retail price or as a percent discount from the dealer's cost.
For example, in the section of the bid, on pages 24 and 25 relating to printers, DMS requires that a person submitting a bid for balance of line items be bid "at the same discount or greater discount rate as the printers." In Section 5.5 relating to input devices, DMS likewise requires that the balance of line be submitted "at the same discount or greater discount rate."
In the portion of the ITB relating to microcomputers in Sections 2.0 and 2.1, the ITB requires that the balance of line be offered under the same pricing schedule (cost plus) as the microcomputer systems category of the bid. Under tables 5.2 and 5.5 of the ITB the price lists for balance of line are to be computed using the same percentage rate. In short, the language permits a
different percentage mark-up to be submitted on balance of line items as on microcomputers as long as the same pricing scheme or schedule is used, i.e., cost plus as opposed to discount off MSRP.
However, Roy Wade, the IBM segment owner for government in the State of Florida, who attended the pre-bid conference and worked with AmeriData on its bid, had several conversations with AmeriData about whether the same percentage had to be used for both microcomputers and balance of line. In fact, there was a difference of opinion in the IBM office as to whether you could use the same or different percentages on the balance of line items and the microcomputers. Mark Holt, in the IBM office and who also attended the pre-bid conference, was of the opinion that a bidder could use different percentages in the balance of line items and the microcomputers. Roy Wade was of the opinion that the same percentage had to be used.
Mr. Wade, at the request of AmeriData, met with Mr. Melvin of DMS at Mr. Melvin's office to seek oral clarification regarding pricing of the balance of line items. Mr. Wade testified that Mr. Melvin told him the same percentage mark-up had to be bid. However, Mr. Melvin did not recall making such a statement to Mr. Wade, and did not remember meeting with Mr. Wade during that time period.
The normal procedure for visitors to the DMS Division of Purchasing is to sign in. The sign in log does not show any entry for Mr. Wade for this period. In fact, the only date, relevant to this proceeding, for which Mr. Wade signed in was January 5, 1995. During the hearing Mr. Wade stated that it was not uncommon for him to fail to sign in. However, in his deposition Mr. Wade stated that during this time period he visited DMS 5 to 10 times, but failed to sign in on only "a couple" of occasions.
Mr. Wade stated that after his meeting with DMS, he again discussed the percentage issue with AmeriData. Mr. Wade relayed what Mr. Melvin had allegedly told him. Mr. Wade encouraged AmeriData to get verification directly from DMS. After this conversation, AmeriData met with DMS personnel on December 21, 1994, on another issue. AmeriData did not ask any questions regarding whether the same percent mark-up had to be used for balance of line and microcomputers.
Later around January 5, 1995, AmeriData had a telephone conversation with Mr. Comer of DMS. During the conversation, Mr. Comer allegedly told AmeriData that the same percentage had to be bid. However, Mr. Comer has no recollection of such a statement. Mr. Comer also testified that he was not aware of the percentage issue in January, 1995.
Given the discrepancies in the testimony regarding these oral conversations, these oral conversations are simply too vague to credit any alleged statements made by DMS personnel during those conversations, especially since IBM, which entered a separate bid on products under Section 4.0 of the specifications through Mark Holt, bid a separate percentage for balance of line items.
Moreover, as indicated earlier, the ITB contains no language specifically stating that the same percentage must be used for balance of line items as for items contained in Tables 2.1, 2.2 and 3.0. While there is language that states that bidders must bid a single whole number percentage mark-up (cost plus) on page 18, the language referring to the balance of line items states only that "such balance of line peripherals shall be offered under
the same pricing schedule (cost plus) as the microcomputer systems category of this bid/contract." (Emphasis supplied)
However, even if the alleged oral statements by DMS personnel are given credit, the ITB, as provided in all DMS bids, also contained a set of general conditions, Paragraph 7 of which states as follows:
Any questions concerning conditions and specifications shall be directed to this office for receipt no later than ten (10) days prior to the 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. (Emphasis supplied)
AmeriData, was aware of this provision, but never submitted a written question to DMS regarding the ITB in question. Likewise, at no time did Mr. Wade or AmeriData seek any written clarification from DMS. In short, any oral statements made by DMS regarding the percentage issue is not binding. AmeriData was not justified in relying on such oral statements and should have sought written clarification from DMS.
Finally as indicated earlier, the price lists for balance of line items were not part of the bid evaluation process. Therefore, it is irrelevant whether the percent mark-up for balance of line should be the same. The balance of line percent mark-up does not play a role in the award of ITB 9-250-040-B. The information only goes to the negotiation procedure which is separate from the award of ITB 9-250-040-B. Such optional information submitted for a separate procedure cannot be used to invalidate the award of a bid where that optional information plays no role in the bid evaluation process.
As indicated earlier, with regard to regular items bid under Tables 2.1, 2.2 and 3.0, bidder's were to bid a percentage mark-up from dealers cost.
Page 11 of the ITB under the hearing Format for Submission of the Bids stated that bidders had to supply manufacturer's published price lists as well as an authorized dealer's list. It also stated that the bidders should provide the documents in letter quality text as well as with a computer diskette.
In response to the provision relating to the format in which the bids were to be received, a question was submitted to the Department on this issue. At page 10 of the question and answers under Question H-2 the following question appeared: "Are the price lists detailing the systems and individual items bid to be in the original manufacture's format or retyped by the bidder and submitted into Wordperfect format?" The Department answered this question in this manner: "Yes, manufacturer's suggested retail price (MSRP) list of manufacturer's costs list supplied by the manufacturer to each dealer/resaler must accompany the submitted document in hard copy. They are not required in Wordperfect disk format. However, the format for the bid/price sheets including product description and percentage mark-up or discounts should be submitted in Wordperfect format on diskette.
The bid requirements as clarified in the question and answer required that the manufacturer's price list be submitted with the bid in "hard copy" but
there was no similar requirement that the accompanying diskette be likewise, supplied in hard copy.
Section 6.0 of the ITB provides that inclusion of unacceptable products would result in a bid being declared non-responsive.
While operating system software was to be included in the bids, application software was not. Vanstar's bid contained certain items of application software which was included as part of the manufacturer's price lists included with its bids. Likewise, AmeriData's bid included items of application software, contrary to the terms of the ITB.
The purpose of these lists was to identify the products being bid.
Vanstar submitted an unsanitized hard copy of the dealer's price and the manufacturer's suggested retail price and also submitted in diskette format an additional list of items that had been sanitized to included only those items contained in the bid as well as additional information relating to items that were included in the balance of line.
The evidence did not demonstrate that inclusion of non-bid items in the manufacturers price list created any confusion as to the items being bid or had any material impact on the bid process. Therefore, these discrepancies from the ITB do not invalidate an otherwise legitimate bid award.
The evidence was clear that DMS intended the term "microcomputer," as used in the ITB to mean a "configured computer system" such that when purchasing peripherals as part of the purchase of a complete microcomputer system, the price for the configured system so purchased would be at the price the winning vendor bid for Table 2.1 microcomputers. Under DMS's interpretation a "microcomputer" would include the central processing unit (CPU), keyboard, disk drive, operating system, monitor and other peripherals purchased simultaneously with the computer. On the other hand at least two vendors, AmeriData and Vanstar, interpretated the term "microcomputer" to include the CPU with an operating system, storage device and an input device such as a keyboard but no monitor or other peripherals.
The term "microcomputer" or "computer" does have a common meaning in the industry and refers to the CPU, input device, storage device and operating system in a self-contained box. Items which might be connected to the industry defined computer would be peripherals, such as, monitors, fax/modems, network cards, printers, sound cards, video boards, etc. The evidence demonstrated that there is some question whether the term "microcomputer system" or "computer system" has a commonly understood meaning in the industry. The lay persons definition of the term "computer" and "microcomputer" varies depending on whether "system" is equated with the term "computer." To further obfuscate terminology, none of the above terms reflect the current state of marketing of computer systems, including IBM products, as basic integrated or bundled systems with components that can be upgraded, downgraded or added to for certain adjustments in price. It is this confusion in terminology that DMS found itself dealing with when it drafted the ITB at issue in this case and which continued throughout this proceeding.
The specifications in the first paragraph under Section 2.0, page 18, state under the heading REQUIREMENTS PROVISIONS, MICROCOMPUTERS -- DESK-TOP, DESK-SIDE, AND PORTABLE:
Components (such as monitors, keyboards, mouse and trackball, expansion boards, network interface cards, internal modems, multimedia, and storage devices purchased with and integrated with the microcomputer system prior to delivery) will carry the
same support level, requirements and provisions as the microcomputer system.
Support level does not refer to the components' status as part of a microcomputer system, but only to a components' guarantee of service or maintenance. This section was not viewed as definitional by DMS. However, the concept is important, since potential purchasers were used to ordering configured, or bundled systems and desired the peripherals to carry the same level of service as the CPU.
The questions and answers contained in the ITB seem to confuse matters further. In response to a question asking whether monitors would be required to be purchased from Table 5.1, DMS specifically stated that "(N)o, they can be included as part of the system configuration, part of "balance of line" for the awarded vendor, or can be included in Monitors Section 5.1. (Emphasis supplied) On the other hand, the answer to Question P2, submitted when balance of line was to be bid at a discount from MSRP, stated that full functioning systems are submitted on the bid sheets/price lists as cost-plus or percentage (mark-up) over manufacturer's cost, indicating that monitors, when bought as part of a full functioning system, were to be at the same price as the CPU.
Throughout the bid process, vendors were encouraged to offer standard computer system configurations for the benefit of the potential purchasers. However, the ITB did not specify what had to be included in the configured systems and did not define configured system, bundled systems, microcomputer systems microcomputer, computer or computer system. The reason no precise definitions were developed in the ITB was that each manufacturer had different types of configured or bundled systems and it was up to each manufacturer to determine what was to be supplied with any particular system. Similarity and comparability between bids was achieved by requiring each vendor to bid by product line using the same manufacturer's product list and wholesale price.
Both Vanstar and AmeriData understood the term "microcomputer" not to include a monitor or other peripheral devices. However, both vendors were bidding the IBM product line and did not include any special vendor bundled systems. The IBM price list literature included with their bids sets forth what was included in the particular microcomputer system configuration being offered. For instance, the IBM product line includes the IBM VALUEPOINT PERFORMANCE SERIES SYSTEM. The Valuepoint Performance System includes: One 3.5" 1.44 MB diskette drive standard, 4MB or 8MB parity memory standard, 1MB video RAM standard, external L2 "write Back" cache capability (standard external L2 cache on select models), SelectaBus ISA/VESA Local Bus or ISA/PCI Bus technology, VESA Local Bus SVGA video, Advanced power management on all systems Most SpaceSaver and Desktop systems meet EPA Energy Star requirements for power processors based on Pentium technology, three year warranty, choice of 270MB, 364MB, or 527MB hard files, multimedia standard on many desktop units, two serial ports (9-pin); one parallel port, enhanced keyboard and point device ports and IBM mouse. The IBM PC 300 Series includes similar items but also includes certain items of installed software. The IBM PC 700 Series includes audio capability. No monitors are included as part of these computer configurations. The IBM Thinkpad (laptop) series contains monitors as well as pre-installed software.
Some configured systems include network cards. Some configured systems include CD-Rom drives. IBM's standard computer configurations are quite varied. Under Section 2.1 of the ITB, a purchaser could purchase a system that is fully configured by the manufacturer and that has devices that are needed in order to do multi-media. Some of the IBM systems include the bare minimum and some include items that would otherwise be considered extras.
A person ordering computers off of the manufacturer's price list could order different size processors, various diskette hard drives, various optical storage devices and keyboard options, without regard to the balance of line as long as those options were part of the manufacturer's standard configuration. Items not included in those standard configurations such as monitors in the Valuepoint performance line, would not be part of this bid award because they would fall under balance of line items.
In this case, there would normally be no problem since both bidder's bid the same product line with the same standard configurations. However, as indicated earlier DMS' intended definition of microcomputer goes beyond the specifications of this bid. DMS desires to include items under table 2.1 which are not part of IBM's standard configurations. For instance DMS believes monitors should be included as part of the Valuepoint performance series if a purchaser purchases the monitor simultaneously with the Valuepoint system. In fact, DMS and Vanstar have conducted some preliminary discussions as to what items outside and IBM standard configuration are included in its bid. DMS is in essence allowing and encouraging Vanstar to change its bid to include peripherals in its microcomputer bid after the bids were opened, albeit at the same percent mark-up from dealers cost as the microcomputers. Such after the fact changes are impermissible.
Moreover, irrespective of the definitions of computer, DMS's interpretation of the bid specifications flies in the face of its stated purpose for not defining terms. DMS elected not to specifically define terms, because it wanted to rely on manufacturer's, such as IBM, to define what would be included in its computer configuration. In this case, IBM defined those configurations. If DMS had desired to include peripherals outside a manufacturers standard configuration as part of a configured system when purchased simultaneously with a computer then the specifications needed to cover such simultaneous purchases. Neither the specifications nor the evidence support DMS's interpretation of this bid.
Clearly the term microcomputer, computer, computer system, etc. are very material terms in this ITB. The failure to clearly (not necessarily specifically) define that family of terms is fatal to this ITB since there was no mutual understanding between the parties on the IBM portion of the contract as to what was to be bid as a microcomputer. Therefore, all the bids should be rejected on the IBM portion of ITB 9-250-040-B.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Sections 120.53(5) and 120.57(1), Florida Statutes.
Pursuant to Chapter 287, Florida Statutes (1993) the Division of Purchasing of the Department of General Services is charged with planning and coordinating volume purchasing agreements and contracts by which State agencies
may purchase commodities, and with providing uniform rules and procedures to be used in procuring contracts and services.
DMS has authority to negotiate contracts pursuant to Section 287.042(1)(a), Florida Statutes. Section 287.042(1)(a), Florida Statutes, states in pertinent part:
The division shall have the following powers, duties and functions:
To canvass all sources of supply, establish and maintain a vendor list, and contract for the purchase, lease, or acquisition in any manner, including purchase by installment sales or lease--purchase contracts which may provide for the payment of interest on unpaid
portions of the purchase price, of all commodities and contractual services required by any agency under competitive bidding or by contractual negotiation. Any contract providing for deferred payments and the payment of interest shall be subject to specific rules adopted by the division.
The authority to negotiate is codified in Rule 60A-1.018(2)(g), Florida Administrative Code. Rule 60A-1.018(2)(g), Florida Administrative Code, states:
When it deems it to be in the best interest of the State, the Division may authorize or require the use of alternative negotiation procedures.
Such alternative negotiation procedures shall be specified in writing and made available to prospective contractors prior to commencing negotiations with any vendor.
In this case the negotiation procedures which were outlined in the ITB were separate from the award of this bid and played no role in the evaluation criteria to award this bid. The exact procedures have not been finalized and Rule 60A-1.018(2) has not been complied with. 1/ In any event, since these procedures are not part of the bid award the procedures cannot be the subject of this bid protest.
Petitioner's burden in this proceeding is to prove that the actions of the agency were either illegal, dishonest, fraudulent, arbitrary and/or capricious in the award of this bid. Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So. 2d 505, 507 (Fla. 1982); Department of Transportation v. Groves-Watkins Constructors, 530 So. 2d 912, 193 (Fla. 1988).
The discretion afforded state agencies in soliciting and accepting bids is not unbridled and agency decisions can be overturned when the purpose of competitive bidding has been subverted. Wood-Hopkins Contracting Co. v. Roger Au and Son, Inc., 354 So. 2d 446 (Fla. 1st DCA 1978); Caber Systems v. Department of General Services, 530 So. 2d 325 (Fla. 1st DCA 1988). An agency's actions are considered to be arbitrary and capricious when they are not supported by facts or logic. Agrico Chemical Company v. Department of Environmental Regulation, 365 So. 2d 759 (Fla. 1st DCA 1979).
The entire scheme of bidding on public projects is to insure the sanctity of the competitive atmosphere prior to and after the actual letting of the contract. Harry Pepper & Associates, Inc., v. City of Cape Coral, 352 So. 2d 1190, 1192 (Fla. 2d DCA 1977). To accomplish this goal, it is fundamental that a bidder cannot be permitted to change its bid after the bids have been opened. Id.; Rule 60A-1.002(14), Florida Administrative Code. By definition, anything which affects the price of a bid, such as allowing Vanstar to include peripherals at two percent cost plus, is not a minor irregularity which is capable of being waived by DMS. Mercedes Lighting and Electrical Supply, Inc.
v. Florida Department of General Services, 560 So. 2d 272, 278 (Fla. 1st DCA 1990); Rules 60A-1.001(30) and 60A-1.002(13), Florida Administrative Code. The competitive character of a bid is destroyed if the bid modification affects the price of the bid or gives a bidder an advantage or benefit not enjoyed by the other bidders. Harry Pepper at 1193.
In determining whether a deviation is a minor irregularity, the test is not whether a bidder, in fact, gained an unfair advantage over its competitors, but rather whether the bidder conceivably could have gained an unfair bidding advantage. Baxter's Asphalt, supra., and Saxon Business Products, Inc., v. State of Florida Department of General Services, 4 F.A.L.R. 1102-A (Fla. Dept. of Gen Ser. 1982).
In this case, the fact that items were included in AmeriData's and Vanstar's bids other than called for in the ITB is clearly a minor irregularity. In the first place, both vendors submitted the price lists of the same manufacturer, IBM, and for the same products. The inappropriate products identified could not be purchased from this contract. Inclusion of these items does not affect any price and does not afford any unfair advantage over another bidder as a result of these items being shown on the manufacturer's price lists. Their inclusion did not cause confusion in the bid evaluation process.
Similarly, the fact that the price lists were not formatted in total compliance with the ITB specifications is immaterial. The evidence did not show any real or potential affect on price or that such an irregularity would afford an unfair advantage to one bidder over another. Therefore these discrepancies are immaterial and do not invalidate the award of the bid.
The evidence is clear that there was no requirement in the ITB that balance of line had to be bid or bid at the same percentage mark-up as Tables
- 3.0. To the contrary, the language of the ITB is clear that only the same pricing schedule, cost plus, was required. Moreover, the ITB only requested price lists for balance of line be submitted using specific pricing formulas. That there was no requirement that the percentage be the same is further indicated in the fact that IBM itself, in response to a bid on Table 4.0 items which utilizes the same pricing language, submitted a price list using a different percentage for the balance of line items than for the bid table item.
While there is testimony that Mr. Wade and Mr. Kennedy were given oral interpretations regarding pricing of the balance of line items, those conversations are to vague to be given weight.
Finally, the balance of line price list simply played no role in the proposed award of this bid and therefore cannot serve as a basis for invalidating an otherwise legitimate award.
However, the evidence did show that Vanstar was put in a position superior to that of AmeriData and the other bidders since Vanstar, unlike the
other bidders, was allowed an opportunity to amend what products it would provide under Table 2.1 at cost plus two percent after bids were opened. Vanstar conceded its options were either to accept DMS's interpretation of microcomputer and supply peripherals and CPU's at two percent cost plus or not continue with the contract award. Thus, Vanstar was given the opportunity to
change both the products and price after bid opening. These factors obviously go to the very heart of fair competitive bidding.
The facts in this case are analogous to those in Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So. 2d 1190 (Fla. 2d DCA 1977). In Harry Pepper, the public body desired to build a water treatment plant pursuant to its specifications which expressly identified the equipment to be used in the treatment plant. The lowest bidder responded with a type of pump which was not included in the specifications and was unacceptable to the public body. The low bidder subsequently amended its bid after the bid opening to supply a pump that would conform to the bid specifications and was awarded the contract. The Harry Pepper court overturned this decision, noting that "a bidder cannot be permitted to change his bid after the bids have opened, except to cure minor irregularities." Id. at 1192. The court further noted that:
No one suggests that Gulf (the low bidder) could have been required to perform the contract with conforming pumps, as its bid specifically stated that it would use Aurora, the nonconforming pumps. Therefore, Gulf had everything to gain and nothing to lose. After everyone else's bids were opened, Gulf was in a position to decide whether it wanted the job bad enough to incur the additional expense of supplying conforming pumps. Id. at 1193. (Emphasis added)
In this case, DMS gave Vanstar the opportunity to modify its bid by giving Vanstar the opportunity to provide peripherals at cost plus two percent under Table 2.1, even though Vanstar did not bid this in its original response to the ITB. This was an advantage not enjoyed by the other bidders. Just like the vendor in Harry Pepper, Vanstar, after all bids were opened, was in a position to decide whether it wanted the contract enough to incur the additional burden of supplying peripherals at cost plus two percent. As the testimony of Vanstar's representatives makes abundantly clear, Vanstar was asked to bring its bid into compliance with DMS's version of what products should be included at cost plus two percent. Mr. Renegar of Vanstar candidly testified that upon being given DMS's interpretation of what was to be included at cost plus two percent, Vanstar could either acquiesce or withdraw its bid. This is precisely the type of unfair advantage which cannot be allowed. Harry Pepper 352 So. 2d 11990; City of Opa-Locka v. Trustees of the Plumbing Industry Promotion Fund,
193 So. 2d 29 (Fla. 3d DCA 1966) (Bidder cannot bring its bid into conformance with the bid's specifications after the bids were opened.)
The evidence showed that DMS intended to make an award under Table 2.1 for CPU's monitors, networking cards and other peripherals purchased with the CPU. However, the ITB did not require that manufacturers configure their systems in such a manner. Vanstar and AmeriData prepared their bids based upon IBM configurations of microcomputers while DMS used its own unstated definition to create an expectation not reflected by the ITB. Contracts procured through competitive bidding "should be predicated upon adequate specifications which afford some reasonable basis for a comparison of bids, in order that bids, when
received, might be truly competitive in character by having them applied to the same things." Wester v. Belote, 138 So. 721, 724 (Fla. 1931). This failure to clearly define microcomputer is fatal to this bid since the specifications were not clear enough to permit a mutual understanding of the equipment to be bid on Wester, supra. Therefore, all bids should be rejected.
RECOMMENDED that a final order be entered rejecting all bids under the IBM portion of ITB 9-250-040-B.
DONE and ENTERED this 11th day of August, 1995, at Tallahassee, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 1995.
1/ The information gathered in the bid process on the vendors and prices for balance of line items may very well fulfill some of the requirements of Rule
60A-1.018(2), Florida Administrative Code. However, this issue is not addressed in this Recommended Order.
Harry R. Detwiler, Jr., Esquire John M. Alford, Esquire
William H. Linder Secretary
Paul A. Rowell General Counsel
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.
