STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COIN LAUNDRY EQUIPMENT CO., INC.,)

)

Petitioner, )

)

vs. ) CASE NO. 96-0962BID

) THE UNIVERSITY OF WEST FLORIDA, )

)

Respondent, )

and )

)

WEB SERVICE COMPANY, INC., )

)

Intervenor, )

and )

) SOLON AUTOMATED SERVICES, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane Cleavinger, on April 9, 1996, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Bruce A. McDonald, Esquire

McDonald, Fleming, Moorhead and Ferguson

Post Office Box 30009 Pensacola, Florida 32503-1009

For Respondent: M. J. Menge, Esquire

Shell, Fleming, Davis & Menge

226 South Palafox Street Pensacola, Florida 32501

For Intervenor: Eric P. Littman, Esquire (WEB Service Eric P. Littman, P. A.

Company, Inc.) 1428 Bricknell Avenue, 8th Floor

Miami, Florida 33131

For Intervenor: Guy W. Norris, Esquire (Solon Norris, Koberlein and Automated Anderson, P. A. Services, Inc.) CNB Bank Building

Post Office Drawer 2349 Lake City, Florida 32056

STATEMENT OF ISSUES

The issue in this case is who submitted the best and lowest responsive proposal on Request for Proposals Number 95/96-13RFPCST.

PRELIMINARY STATEMENT

This case concerns the University of West Florida's attempt to secure a contract for washer/dryer vending services for its University campus and dormitories. Three bids were eventually submitted and opened pursuant to a Request for Proposals (RFP) number 95/96-13RFDCST issued by the University of West Florida (University). After two evaluation committee reviews, the University intended to award the contract to WEB Service Company, Inc. (WEB).

Thereafter, Coin Laundry filed a formal bid protest. The protest was forwarded to the Division of Administrative Hearings for the purpose of conducting a formal hearing.

Prior to the hearing, WEB Service Company, Inc. and Solon Automated Services, Inc. (Solon), who had both submitted proposals on RFP 95/96-13RFPCST, filed Petitions to Intervene which were granted. The parties also submitted a prehearing statement which contained several stipulated facts. The parties stipulated as follows:

1. The existing contract for the furnishing and maintenance of washers and dryers on the University's Pensacola campus was entered into between the University and Coin Laundry on July 11, 1989.

   
   

2. The washers and dryers that are presently installed and being installed by Coin Laundry and are presently being serviced by Coin Laundry.

   
   

3. On or about February 8, 1995, the University issued an RFP for the installation and servicing of new washers and dryers on the University's Pensacola campus.

   
   

4. Coin Laundry and WEB were the only vendors to submit proposals to the University in response to RFP 94/95-35RFPCST Washer/Dryer vending program.

   
   

5. The committee appointed by the University to evaluate the proposals submitted by Coin Laundry and WEB recommended that the contract be awarded to WEB.

   
   

6. Coin Laundry protested the award of the contract to WEB.

   
   

7. The University revised its RFP and again solicited proposals for the furnishing and servicing of washers and dryers in RFP 95/96-13RFPCST Washer/Dryer Vending Program.

   
   

8. Coin Laundry, WEB and Solon were the only vendors to submit proposals to the University in response to RFP 95/96-13RFPCST Washer/Dryer Vending Program.

   
   

9. In the initial evaluation by the University of the three responses to RFP 95/96-13RFPCST Washer/Dryer Vending Program, the proposals of Coin Laundry and Solon were rated with equal scores of 291 and the proposal of WEB was rated with a score of 259.

10. Based on the fact that Solon scored higher than Coin Laundry for responsiveness of service and revenue to the University, the Director of University Purchasing recommended that the contract be awarded to Solon.

    
    

11. Coin Laundry informally protested the award of the contract to Solon.

    
    

12. The University's Vice President for Administrative Affairs appointed another committee to evaluate the three proposals submitted by Coin Laundry, WEB and Solon.

    
    

13. In the second committee's evaluation of the proposals received in response to RFP 95/96-13RFPCST, Washer/Dryer Vending Program, WEB was the highest rated vendor with a score of 329.5, followed by Solon with a score of

    298 and Coin Laundry with a score of 264.

    
    

14. Coin Laundry filed a formal bid protest.

    
    

15. WEB and Solon have filed petitions to intervene in the bid protest proceedings.

    
    

    At the final hearing, Petitioner, Coin Laundry Equipment Company, Inc., presented three witnesses. Respondent, the University of West Florida, presented the testimony of three witnesses. Intervenor, WEB Service Company, Inc., presented one witness. Intervenor, Solon Automated Services, Inc., presented one witness. Additionally, the parties offered 22 joint exhibits into evidence. The joint exhibits were numbered joint exhibit 2-23.

    
    

    After the hearing, Petitioner and Respondent filed Proposed Recommended Orders on April 30, 1996. Intervenor, WEB filed its Proposed Recommended Order on May 2, 1996. Intervenor Solon filed its Proposed Recommended Order on April 30, 1996. The parties' Proposed Findings of Fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence or were immaterial, cumulative or subordinate. Specific rulings on the parties' proposals are contained in the Appendix to this Recommended Order.

    
    

    FINDINGS OF FACT

    
    

    1. Around February 8, 1995, the University began what would turn out to be an agonizing proposal process to contract for the installation and servicing of new washers and dryers for its campus in Pensacola, Florida, by issuing RFP 94/95-35RFPCST.

       
       

    2. WEB and Coin Laundry were the only two company's to submit proposals on RFP 94/95-35RFPCST.

       
       

    3. The RFP required that the proposals be reviewed by an evaluation committee. The evaluation committee appointed by the University to evaluate the proposals submitted by Coin Laundry and WEB recommended that the contract be awarded to WEB.

       
       

    4. However, for various reasons, Coin Laundry, the current contract holder, filed a formal protest of the University's announced intention to award the contract to WEB.

    5. By mutual agreement between the University, Coin Laundry and WEB, the University agreed to withdraw RFP 94/95-35RFPCST and issue a new RFP. Coin Laundry withdrew its bid protest.

       
       

    6. The University revised its specifications for the washer/dryer vending program and issued a new Request for Proposals 95/96-13RFPCST for the Washer/Dryer Vending Program.

       
       

    7. Proposals submitted in response to RFP 95/96-13RFPCST were originally scheduled to be opened on November 7, 1995. The RFP also set forth certain specifications and evaluation criteria. Those specifications included, among other matters:

       
       

       1. A statement of four factors for evaluation of proposals. Those factors were 1) equipment offered, degree of responsiveness of service, and promotional incentives; 2) price to student; 3) revenue to the University; and 4) references for the proposer. Each category was given a point score which could differ between categories. Each factor's points was weighted based on a numerical multiplier ranging from zero (0) for proposals which were deemed by the reviewer as unacceptable or having no information, one (1) for proposals which did not meet the factors requirements, two (2) for proposals which fell short of the factors requirements, three (3) for proposals which met the factors specifications, four (4) for proposals which exceeded the factors specifications, and five (5) for proposals which far exceeded the factors specifications. The highest average cumulative score for any proposal could be

          100 points.

          
          

       2. A requirement that the successful contractor shall pay to the University a flat percentage commission based on a narrow range or projected average total revenue. The revenue was to be estimated by the University. If actual revenue exceeded the University's estimate the additional revenue would carry a separate percentage rate payable to the University at the end of each twelve (12) month period.

          
          

       3. The washing machine required must be a "two-cycle machine that includes delicate setting for sensitive fabrics in order to slow the agitation speed."

          
          

       4. All washers and dryers were required to be of the same manufacturer and model number.

          
          

    8. Based on several inquiries and complaints primarily from Coin Laundry, the University amended the specifications of RFP 95/96-13RFPCST in Addenda Numbers 1 and 2. The Addenda changed the opening date of the proposals to November 21, 1995, and made several changes to the RFP's specifications and evaluation criteria.

       
       

    9. The final University specifications, as amended, stated among other things:

       
       

       1. A list of six factors against which the proposals would be evaluated. Those factors were 1) equipment offered (product quality); 2) responsiveness of service; 3) price to the student; 4) revenue to the University; 5) energy consumption documentation; and 6) references of the proposer. Again each factor's category was given a point score which could differ between categories. Each factor's points was weighted based on a numerical multiplier ranging from zero for the proposals which were deemed by the reviewer as unacceptable or having no information, one (1) for proposals which did not meet the factors

          requirements, two (2) for proposals which fell short of the factors requirements, three (3) for proposals which met the factors specifications, four

          (4) for proposals which exceeded the factors specifications, and five (5) for proposals which far exceeded the factors specifications. The highest average cumulative score for any proposal could be 135 points. Promotional incentives was deleted as a specific review factor. However, the deletion of promotional incentives did not mean that where such incentives impacted another review criteria, such as price to students, that the committee members could not use such incentives in assessing the weighted multiplier for that category. The deletion simply meant that proposers were not required to submit promotional incentives in order for the proposal to be responsive. At least two proposers understood that promotional incentives could still be submitted with the proposal.

          
          

       2. The revenue sharing provision clarified the earlier provision by including the University's estimate of the revenue in the amount of $40,000.00 and stating more clearly that the contractor could propose different percentage commissions on annual revenues up to $40,000 and annual revenues in excess of

          $40,000. The amended revenue sharing provision also provided a more sensible payment schedule for the amount due the University. The changes were not substantial and actually clarified what the earlier provision had implied.

          
          

       3. The washing machine was required to be a "two-cycle machine that includes delicate setting for sensitive fabrics in order to slow the agitation speed."

          
          

       4. All washers and dryers were required of the same manufacturer and model number.

          
          

       5. Coin and bill changers could be provided at the discretion of the contractor.

          
          

       6. The RFP issued by the University did not contain any provision for breaking a tie under the circumstances that existed, but the University did reserve the right to reject any and all proposals.

          
          

    10. None of the proposers protested the final specification of the RFP as amended within the time frame established for such protests in Section 120.53, Florida Statutes. Therefore, any objection to the specifications as such has been waived by the parties to this proceeding.

        
        

    11. The University's requirement that the washing machine furnished in response to 95/96-13RFPCST be a "two-cycle machine that includes delicate setting for sensitive fabrics in order to slow the agitation speed" was included in the Request for Proposal to ensure that the washing machine have at least two cycles -- one for delicate or sensitive fabrics and one for ordinary fabrics.

        
        

    12. The wording of the specification came from a letter sent to the University by WEB which purportedly described the workings of the delicate cycle of the Maytag washing machine WEB had proposed for the RFP. The terminology used by WEB in describing the agitation action of the Maytag machine was not an intentional misrepresentation of fact. However, the description did not describe the Maytag machines' actual operation.

        
        

    13. The University did not intend to require that the washing machine be a two speed washing machine since washing "cycles" are different from motor speed. Irrespective of the University's intent the specifications contained in the RFP

        clearly states that the machine's agitation action must slow in the delicate cycle. The method of slowing is not specified. However, the specification implies that the agitation action of the machine will continue in the delicate cycle and not stop.

        
        

    14. The washers and dryers that WEB proposed to furnished and install on the University's Pensacola campus in response to the RFP were made by the same manufacturer, Maytag. Coin Laundry and Solon submitted Speed Queen washing machines and dryers.

        
        

    15. The unrebutted expert witness called by Coin Laundry testified that the Maytag and Speed Queen washing machines proposed by all three bidders had more than two cycles and that all the machines had a delicate cycle for delicate or sensitive fabrics. The Maytag offered by WEB was more gentle than the Speed Queen machine in regards to all its cycles. The Speed Queen machine cleaned heavier soils better than the Maytag machine. However, both machines did an adequate job of cleaning most normal laundry loads.

        
        

    16. On the other hand, the delicate cycle of the Maytag machine is accomplished by agitating the clothes at normal speed for a few minutes and then stopping agitation for a few minutes. The Maytag does not slow its agitation speed in the delicate cycle. The Speed Queen does slow its agitation speed.

        
        

    17. Based on the evidence at the hearing, the Maytag washer proposed by WEB does not conform to the specification of the University for a two-cycle machine that includes a delicate setting for sensitive fabrics in order to "slow the agitation and speed." Therefore, the WEB bid was not responsive to the RFP and should have been rejected by the University.

        
        

    18. Solon also offered to install, if the University required, a handicap accessible washing machine where the handicapped student resides in addition to the machines it had specified in its base bid. The handicap accessible machine offered by Solon was a Wascomat P.12.

        
        

    19. The evidence was unclear whether Speed Queen manufactured a handicap accessible machine at the time the proposals were submitted. The implication was that Speed Queen did not manufacture such a machine and it would be impossible to provide service to handicapped individuals with a machine manufactured by Speed Queen.

        
        

    20. The offer of the handicap accessible machine by Solon was only offered as an increase in service should such a service be required and could be scored under the service category contained in the evaluation criteria. Given these facts, the committee members who awarded more points for the handicap service did not abuse its discretion in awarding more points to Solon for its offer to provide handicapped equipment if needed.

        
        

    21. The three proposals received from Coin Laundry, WEB and Solon in response to the University's RFP were evaluated by a three person committee appointed by the University to review the proposals submitted in response to the RFP.

        
        

    22. The First Evaluation Committee rated the proposals of Coin Laundry and Solon with equal scores of 291. The proposal of WEB was rated last with a score of 259.

    23. The Director of Purchasing, Lee Monks, determined that the First Evaluation Committee's evaluation was competently and properly performed, and responsive to its task.

        
        

    24. The University's Purchasing Director recommended to John Martin, the Vice President of Administrative Affairs, that the contract be awarded to Solon.

        
        

    25. The Purchasing Director recommended Solon because the First Evaluation Committee rated Solon higher than Coin Laundry in the areas of responsiveness of service and revenue to the University.

        
        

    26. University Vice President, John Martin, preliminarily approved the Purchasing Director's recommendation to award the bid to Solon.

        
        

    27. Prior to publicly posting the intended award, however, the University notified Coin Laundry of the University's intended award of the contract to Solon. Thereafter, the University Vice President and Purchasing Director conducted discussions with Jay Jordan, President of Coin Laundry.

        
        

    28. Coin Laundry informally protested the proposed award of the contract to Solon.

        
        

    29. The University's Purchasing Director was "wary" of Coin Laundry's earlier protest of RFP 94/95-35, and was concerned that Coin Laundry would file another protest causing the selection of a laundry vendor under RFP-13 to continue to drag on.

        
        

    30. In response to the informal protest of Coin Laundry, the University representatives engaged in further discussions with Jordan.

        
        

    31. Thereafter, the University entered into an agreement with Jordan, on behalf of Coin Laundry, to re-evaluate the RFP proposals. Although Mr. Jordan thought that the agreement was to re-evaluate only the two tied proposals of Coin Laundry and Solon, excluding WEB's proposal from the second evaluation.

        
        

    32. The University did not notify Solon nor WEB of its decision to award the contract to Solon. Neither did the University notify Solon or WEB of Coin Laundry's informal protest, or of the University's discussions or agreement with Coin Laundry.

        
        

    33. As a consequence, Vice President, John Martin, reversed his preliminary decision to award the contract to Solon and appointed a second independent evaluation committee to evaluate the proposals of Solon, Coin Laundry and WEB, dismissing the results of the first committee's evaluation.

        
        

    34. Normally, such one-party discussions as occurred between the University and Coin Laundry would serve to invalidate an award of a bid if the bid had been awarded to Coin Laundry. Such discussions without the participation of the other bidders or proposers serve to undermine the fairness of the RFP process. However, here Coin Laundry was not awarded the bid and did not, as will be discussed later, receive the benefit of the University's decision to re-evaluate all three proposals. Moreover, absent the discussions between the University and Coin Laundry, it was within the University's discretion, faced with the potential of a bid protest being filed by any of the proposers, to reasonably resolve the tied results of the first evaluation committee and appoint a second committee to evaluate the proposals and to submit all three proposals to the second committee.

    35. The second evaluation committee reviewed the same proposals from Solon, Coin Laundry and WEB as the first evaluation committee. The second committee had no knowledge of the first committee's evaluation results. The second committee again studied the proposals, contacted the proposers' references and made such other inquires as it deemed necessary to fulfill its responsibilities. The evidence did not demonstrate that the second evaluation committee did not follow the criteria set forth in the RFP.

        
        

    36. However, the second evaluation committee's results were dramatically different from the first evaluation committee's results.

        
        

    37. The second evaluation committee's results placed the third place vendor, WEB, in the first place, with Solon second and Coin Laundry third. Coin Laundry had never placed first under any of the three RFP versions for the washer/dryer vending services contract.

        
        

    38. Based on the second committee's results, the University intended to award the contract to WEB, the original last place bid.

        
        

    39. The University publicly posted an intended award of the contract to WEB. However, as indicated earlier, the WEB proposal was not responsive to the RFP. Therefore, the University's intended award of the contract to a non- responsive proposer is an arbitrary and capricious act. Once the WEB proposal is rejected, the bid should be awarded to the next proposal which is responsive to the RFP. In this case, the second place proposal was Solon's.

        
        

        CONCLUSIONS OF LAW

        
        

    40. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Sections 120.53, and 120.57(1), Florida Statutes.

        
        

    41. Rules promulgated by the Department of Education, relating to competitive bids and requests for proposals provide for the award of a contract to the lowest responsible and responsive offeror whose offer meets the requirements and criteria set forth in the formal Request for Proposals.

        
        

    42. In a bid or request for proposal protest proceeding, the Hearing Officer's sole responsibility is "to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly" in its decision to award the contract to the selected bidder or undermined the fairness of the public bidding process. Department of Transportation v. Groves-Watkins Constructors,

        530 So. 2d 912, 914 (Fla. 1988). The burden or proof in a bid or RFP protest rests upon the unsuccessful bidder or proposer seeking to establish entitlement to the award. Groves-Watkins, supra., Adlee v. Department of Health and Rehabilitative Services, 14 F.A.L.R. 4937, 4944 (Department of Health and Rehabilitative Services July 10, 1992), Balino v. Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977) and Intercontinental Properties, Inc. v. Department of Health and Rehabilitative Services, 606 So. 2d

        380 (Fla. 3rd DCA 1992).

        
        

    43. In this case, Coin Laundry must therefore prove that the University acted arbitrarily or capriciously in awarding the washer/dryer vending contract to some other vendor or undermined the fairness of the bid process in the intended award of the contract.

    44. Arbitrary means without fact or logic. Dravo v. Basic Materials Co., Inc. v. Department of Transportation, 602 So. 2d 632 (Fla. 2d DCA 1992). Capricious means without thought or reason Id. 22.

        
        

    45. The goal of the public bid process is to assure all bidders that the terms by which their bids or proposals are accepted, rejected or evaluated are known in advance through the bid or RFP specifications and criteria.

        
        

    46. A public agency may exercise reasonable discretion in determining who is the lowest reasonable and responsive offeror among those responding to a RFP. The discretion of a public agency must not be exercised arbitrarily or capriciously, but must be based on facts reasonably tending to support the conclusion reached by that agency. A public agency's decision, when based on an honest exercise of discretion, will not be interfered with even if it may appear erroneous and eventhough it may reach a conclusion on which reasonable men may differ, unless its action was arbitrary, capricious or the result of improper influence. Groves-Watkins, supra.

        
        

    47. The failure of a public entity to follow its own bid specifications is an arbitrary and capricious act and undermines the integrity of the bid process.

        
        

    48. In this case, the University selected a non-responsive bidder as its intended awardee. That action was arbitrary and capricious. Once, the intended awardee's proposal is rejected the award should be made to the second place responsive proposal. That second place responsive bid was Solon's.

        
        

    49. Finally, the fact that handicap machines, coin changers, and promotional programs were included in WEB's and Solon's proposals in addition to the minimum requirements of the RFP is not a disqualifying factor. Their inclusion did not cause confusion in the bid evaluation process and in fact fell within a reasonable interpretation of the RFP's evaluation criteria. Moreover, the fact that this bid was a request for proposals by its very nature permits a proposer to add extras to its proposals which are not precisely specified in the minimum RFP specifications. Specifications in an RFP are the minimum requirements which must be met for responsiveness. Unlike an ITB, RFP specifications tend to be open because an RFP is requesting that certain goals or programs be met by the proposal in quality as well as minimum responsiveness. In short, the agency generally does not know how to meet or fulfill some program or service it wishes to contract for. The RFP is the mechanism which allows an agency to specify the program or service it wishes to contract for and allows the proposers flexibility in meeting that program or service.

RECOMMENDATION

Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED:

That the University of West Florida enter a final order rejecting WEB's proposal as unresponsive and awarding the contract to Solon as the best, lowest and responsive bidder.

DONE and ENTERED this 5th day of July, 1996, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675 SunCom 278-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of July, 1996.

APPENDIX

1. The facts in paragraphs 2, 3, 6, 7, 9, 10, 11 and 13 of the University's Proposed Findings of Fact are adopted.

2. The facts in paragraphs 4, 8 and 12 of the University's Proposed Findings of Fact are subordinate.

3. The facts in paragraphs 1, 5, 14 and 15 of the University's Proposed Findings of Fact were not shown by the evidence.

4. The facts in paragraphs 1, 2, 3, 4, 5, 6, 9, 11, 16, 17, 21, 23, 28 and

1. of Coin Laundry's Proposed Findings of Fact are adopted.

   5. The facts in paragraphs 7, 8, 10, 12, 14, 15, 18, 20, 24, 25, 27, 32,

2. and 35 of Coin Laundry's Proposed Findings of Fact are subordinate.

1. The facts in paragraphs 13, 19, 22, 26, 29, 30, 31 and 36 of Coin Laundry's Proposed Findings of Fact were not shown by the evidence.

2. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8 9, 10, 11, 12, 13, 14, 15, 18, 19, 20, 21, 22, 23, 24, 25, 26, 28, 29 and 30 of Solon's Proposed Findings of Fact are adopted.

3. The facts contained in paragraphs 16, 17 and 27 of Solon's Proposed Findings of Fact are subordinate.

4. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 12, 16, 17,

   19 and 20 of WEB's Proposed Findings of Fact are adopted.

5. The facts contained in paragraphs 9, 10, and 11 or WEB's Proposed Findings of Fact are subordinate.

6. The facts contained in paragraphs 13, 14, 15, 18 and 21 of WEB's Proposed Findings of Fact were not shown by the evidence.

COPIES FURNISHED:

M. J. Menge, Esquire Shell, Fleming et al. Post Office Box 1831 Pensacola, Florida 32598

Bruce A. McDonald, Esquire McDonald, Fleming, et al. Suite 12 and 13

4300 Bayou Boulevard

Pensacola, Florida 32504

Eric P. Littman, Esquire Eighth Floor

1428 Brickell Avenue

Miami, Florida 33131

Guy W. Norris, Esquire Norris, Koberlein, et al. Post Office Drawer 2349

Lake City, Florida 32056-2349

Frank T. Brogan, Commissioner Department of Education

The Capitol

Tallahassee, Florida 32399-0400

Michael Olenick, Esquire Department of Education

The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400

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: 96-000962BID

Orders for Case No: 96-000962BID