MARY A. BARBER, d/b/a DATA PHONE, )
vs. ) CASE NO. 96-3138BID
Respondent. )
Pursuant to notice, this cause came on for formal hearing on July 17, 1996 in Tallahassee, Florida, and on July 31 through August 1, 1996 in Deland, Florida, before Suzanne F. Hood, Administrative Law Judge with the Division of Administrative Hearings.
For Petitioner: James R. Tanner, Esquire
For Respondent: C. Allen Watts, Esquire
Cobb, Cole and Bell, P.A. Post Office Box 2491
The issue is whether Respondent acted fraudulently, arbitrarily, illegally or dishonestly in rejecting all bids.
On May 10, 1996, Respondent Volusia County School Board (Respondent) issued Bid Request No. 2E-625 for telephone cabling equipment and services, returnable June 4, 1996. Petitioner Mary A. Barber d/b/a/ Data Phone and four other vendors submitted bids. After an initial tabulation, Respondent's staff decided to recommend that Respondent accept American Phone Wire and Repair as the lowest acceptable bidder. Respondent's staff posted the tabulation with its recommended action on June 5, 1996.
Petitioner filed a Notice of Protest of the proposed award on June 7, 1996.
On June 11, 1996, Respondent's staff withdrew its recommendation and posted a recommendation that Respondent reject all bids and issue a new Invitation to Bid. Petitioner filed a second Notice of Protest on June 12, 1996 and formal protests on June 21, 1996 (pro se) and June 24, 1996 (by counsel).
On July 3, 1996, Respondent referred this matter to the Division of Administrative Hearings in accordance with Section 120.53(5), Florida Statutes. The undersigned issued a Notice of Hearing scheduling the case for formal hearing on July 17, 1996.
This matter came on for hearing as scheduled in Tallahassee, Florida. At the conclusion of the first day of hearing, the parties needed additional time to complete the presentation of testimony and exhibits. On July 18, 1996, the undersigned entered an Order Providing Notice of Hearing for Additional Proceedings in Deland, Florida on July 31 and August 1, 1996.
During the hearing, Petitioner testified on her own behalf. She presented testimony from Thomas W. Sims, Linda Romine, Robert McDonald, Diane Rehm, Olga Buckley, and Chester Rodriguez, and offered 14 exhibits which were accepted into evidence. Respondent presented testimony from Thomas Sims. Respondent introduced an exhibit binder containing 23 tabbed sections of documents which were admitted into evidence. Respondent introduced one additional exhibit.
The final portion of the transcript was filed with the Division of Administrative Hearings on August 12, 1996. Thereafter, Respondent filed proposed findings of fact and conclusions of law on August 22, 1996. Petitioner did not file a proposed recommended order.
Petitioner is Mary A. Barber doing business as Data Phone, a sole proprietorship.
Respondent is the School Board of Volusia County, a collegial public body which governs the School District of Volusia County, a constitutional district existing under Article IX, Section 4, of the Constitution of Florida.
Prior to 1994, Respondent did not obtain telephone cabling services through the competitive bidding process. Instead, Respondent secured these services through a letter agreement with J. P. McCarthy doing business as American Phone Wire and Repair (American Phone), a sole proprietorship. Pursuant to that agreement, American Phone charged a minimum service charge of
45 dollars for the first hour of each service call.
In 1993, Respondent's purchasing department noticed that the volume of telephone cabling services warranted competitive bidding. Respondent's telecommunications division and purchasing department initially developed specifications for the award of a contract based on a set of specifications from Pinellas County, Florida. They also consulted with the existing vendor, J. P. McCarthy. The early drafts of the specifications provided for a minimum charge per service call. However, the final specifications did not reference a minimum charge.
On September 30, 1994, Respondent issued its Bid Request E-540 for telephone cabling equipment and services. In due course, Respondent awarded a contract to American Phone, with an initial expiration date of June 30, 1996. Section 3.11 of the bid specifications provided that the contract was subject to extension for two additional one-year periods, by mutual agreement of the parties.
American Phone fulfilled its contractual obligations to Respondent through the services of J. P. McCarthy and the subcontractors that he engaged including Petitioner. Mr. McCarthy died in December 1995.
In January 1996, Petitioner inquired as to Respondent's intentions regarding the extension of the contract, or the invitation of new bids, at the initial expiration of American Phone's contract on June 30, 1996. Respondent informed Petitioner that it would rebid the contract at the end of the initial term of the existing contract.
J. P. McCarthy's widow gave Petitioner the first opportunity to purchase American Phone after Mr. McCarthy's death. Petitioner believed that American Phone was not transferable because it was a sole proprietorship. Therefore, she elected not to purchase it.
In March 1996, Troy Masters, a former employee of Respondent, purchased the business of American Phone. The question whether American Phone was a sole proprietorship which died with its proprietor and therefore was not subject to purchase is collateral to these proceedings. There is no evidence indicating that American Phone is not currently a viable business entity.
On May 10, 1996, Chester Rodriguez terminated his employment with Respondent as a computer technician. That same day he became a partner in American Phone, consummating prior negotiations with Troy Masters.
Also on May 10, 1996, Respondent issued its Bid Request 2E-625 for telephone cabling equipment and services. Respondent sent Invitations to Bid to approximately 47 potential vendors including Petitioner. The general conditions of the bid specifications provided that "the Board may accept or reject any or all bids or parts of bids and may waive formalities, technicalities or irregularities. The judgment of the Board on such matters shall be final." Inter alia, the specifications provided:
CONTRACTOR QUALIFICATIONS Contractor shall have a minimum of four
(4) qualified technicians available to handle the Board's needs.
Contractor must have someone on staff who is an active member of Building Industry Consulting Service International, Inc. (BICSI). This staff member must be available for implementation in the design and installation of cabling as required by the Board. Membership and registration certificate must accompany the bid. Contractor must have a minimum of five (5) years Bell System or equivalent experience.
On June 4, 1996, at the appointed hour of 2 p.m., Olga Buckley publicly opened the sealed bids. Ms. Buckley is a buyer in Respondent's purchasing department. She opened the bids in alphabetical order according to the identity of the bidder as disclosed on the outside of the sealed bid envelope. Sealed bids with no identification were placed at the end of the stack.
Twenty-two of the sealed bids contained statements of "no bid." Ms. Buckley checked the other five bids for conformity to a bid checklist which Respondent had included in the specifications. Three of the five submitted bids did not contain all of the required items on the bid checklist. The two remaining complete bids belonged to Petitioner and American Phone. Each of these bids contained the names and resumes of at least four technicians which the bidder would employ or subcontract in order to perform the Respondent's assigned work.
American Phone's bid quoted twenty-five dollars ($25) per hour of technician time and a twenty (20) percent discount off the supply list. Data Phone's bid quoted twenty-eight dollars ($28) per hour of technician time.
After opening the bids, Ms. Buckley conferred with Robert McDonald, manager of Respondent's telecommunications division. They determined that American Phone had submitted the lowest acceptable bid. Support staff prepared the bid tabulation and recommended action in accordance with Ms. Buckley's and Mr. MacDonald's evaluation.
Next Linda Romine, Respondent's senior buyer, reviewed the bid responses and the bid tabulation for correctness. After Ms. Romine completed her review, the tabulation was posted on June 5, 1996 at approximately 3:56 p.m.
On June 7, 1996, Petitioner submitted a Notice of Protest. That same day Petitioner discussed the substance of her protest with Tom Sims, Respondent's Purchasing Director.
First, Petitioner claimed that the apparent low bidder, American Phone, had previously engaged in the practice of charging an initial forty-five dollar ($45) service charge for each service call, in addition to the hourly rate for technician time. As a result of this service charge, Petitioner claimed that the computation of the apparent low bid, based solely on the hourly rate, was inaccurate because American Phone intended to continue invoicing the service charge.
Second, Petitioner indicated her belief that the bid specification language in Section 2.0, pertaining to contractor qualifications, required the contractor personally to have a minimum of five (5) years Bell System or equivalent experience. She voiced her opinion that neither American Phone, as the contractor, nor its principals had the requisite experience.
Third, Petitioner expressed her view that the requirement for a contractor to belong to the BICSI was meaningless. She thought Respondent included this requirement to exclude all venders except J. P. McCarthy.
Mr. Sims was unaware that American Phone had ever charged a forty-five dollar ($45) service charge. Between June 7, 1996 and June 10, 1996, Mr. Sims and his staff examined approximately 1000 invoices that American Phone submitted to Respondent under its previous 1994 contract. The purpose of this examination was to ascertain whether American Phone had charged a minimum service charge of forty-five dollars ($45) for each service call under the contract. The examination confirmed that American Phone had charged a minimum service charge under its 1994 contract, consistent with its practice under the previous letter agreement, even though the 1994 contract did not authorize a minimum service charge.
Mr. Sims then contacted Chester Rodriguez of American to inquire whether American Phone intended to charge forty-five dollars ($45) for each service call in addition to the hourly rate shown in its 1996 bid. As a result of his investigation, Mr. Sims determined that American Phone never intended its 1996 bid to include any minimum charge for service calls.
Mr. Sims determined further that, if the average number and length of service calls under the proposed 1996 contract was distributed similarly to the average number and length of calls under the existing contract, American Phone's bid, with a forty-five dollar ($45) service charge for the first hour of technician time, would still be approximately 8,000 dollars lower than the bid of Petitioner.
The greater weight of the evidence indicates that the forty-five dollar ($45) service charge formerly billed by American Phone was not in addition to the hourly rate for the first hour of technician time. Examination of American Phone's invoices from the preceding years reveals that approximately
12 percent of the invoices showed a minimum service charge but no hourly charges for the first hour. Eighty-eight percent of the service calls were more than one hour.
If vendors base their bid on a minimum service charge for the first hour of technician time, they will in all likelihood charge a lower rate for each subsequent hour of the service call. Revision of the bid specifications in this case to allow such bids would be to Respondent's advantage. It also would lead to a greater number of bidders.
Mr. McDonald had never seen the 1994 contract. He did not know that the 1994 contract did not authorize the minimum service charge. After his investigation, Mr. Sims advised Mr. McDonald that American Phone's 1994 contract did not authorize any minimum charge for service calls. Mr. Sims also informed Mr. Rodriguez that Respondent would not approve further invoices for such minimum charges under the existing contract. Any action that Respondent may take to correct the overpayment of invoices that American Phone submitted under the existing contract is not at issue here.
When Respondent developed the bid specifications concerning contractor qualifications, it construed the requirement of five years' Bell System or equivalent experience as applicable to the subcontractors or employees of the named contractor. During his investigation of issues raised in Petitioner's protest, Mr. Sims contacted several vendors by telephone seeking their interpretation of the language. Every vendor other than Petitioner construed the language similarly to Respondent.
During these conversations, Mr. Sims inquired whether the vendors thought the requirement for a contractor to be a member of BICSI was meaningful. The answers to this question were mixed. Mr. Sims got mixed answers when he asked the vendors how they would apply a minimum service charge and handle overtime hours.
Respondent's staff posted a revised "tabulation" on June 11, 1996 showing the same computations as the initial tabulation but with the notation that there was "no recommendation" among the vendors. The revised tabulation also stated that "[d]ue to clarification of specifications a re-bid will be submitted."
On June 12, 1996 Petitioner (through counsel) filed a Notice of Protest of the revised tabulation.
On June 13, 1996 Respondent held a pre-bid workshop with prospective vendors, including Petitioner, for the purpose of discussing revisions to the specifications following the decision to reject all bids under Bid Request 2E- 625B.
On June 21, Petitioner filed, pro se, a formal protest asserting that
(1) if American Phone bid included an undisclosed service charge of 45 ($45) dollars per call, her bid was actually the lowest; (2) American Phone did not have five years' Bell System or equivalent experience; (3) the principals of American Phone failed to show a minimum of three accounts serviced within the previous three years because they had only been in business since March 1996; and (4) the principals of American Phone were barred from any contractual relationship with Respondent by virtue of Section 112.3185(4), Florida Statutes.
On June 24, 1996, Petitioner filed, through counsel, a second formal protest. The second formal protest challenged the initial tabulation showing that American Phone was apparent low bidder, and the requisite experience of American Phone under the specifications, but omitted the remaining complaints of Petitioner's pro se formal protest of June 21, 1996.
On June 25, 1996 Respondent approved the recommendation of its staff to reject all bids with respect to Bid Request 2E-625, and to invite new bids under Bid Request 2E-625B, after revising the specifications.
Mr. Rodriguez served in the United States Air Force from 1982 to 1988. While he was in the armed services, Mr. Rodriguez obtained telephone communications skills and training in equipment repair. From 1988 to May 1996, he worked for Respondent as a computer technician. Mr. Rodriguez also worked on weekends, moonlighting, for American Phone for approximately a year and a half. He had five years of Bell System equivalent experience.
Although Mr. Rodriguez previously worked for Respondent, he was never employed in the Telecommunications Division which was the procuring division for the subject bid. He was never the supervisor nor under the supervision of Robert McDonald. Mr. McDonald never made a promise to Mr. Rodriguez or gave him any reason to expect that American Phone would receive a new or renewal contract from Respondent. Mr. Rodriguez had no expectation that Mr. McDonald would advocate the renewal of the existing contract with American Phone.
Before Mr. Rodriguez resigned his position with Respondent, he informed his superiors that he intended to acquire an interest in American Phone. He also told them that American Phone would bid on a contract with Respondent. Mr. Rodriguez's superiors informed him that he could not simultaneously be an employee of the Respondent and a vendor of services to the Respondent.
Troy Masters and Chester Rodriguez were employees of the Respondent until March and May, respectively, of 1996. They worked in the data processing under the supervision of the Manager of Technical Services in the Management of Information Services Division, Department of Central Services. Robert McDonald worked in the Telecommunications Division of the Department of Central Services. Petitioner presented no evidence that American Phone participated in competitive bidding for contractual services which were within the responsibility of Masters or Rodriguez while they were employees of Respondent.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties pursuant to Section 120.53(5)(e), Florida Statutes.
Section 237.02(1)(a), Florida Statutes, states that "[e]ach district school board shall develop and adopt policies establishing the plan to be followed in making purchases as may be prescribed by the state board."
The state board of education adopted Rule 6A-1.012, Florida Administrative Code, which provides in pertinent part:
(5). Except as authorized by law or rule, bids shall be requested [by a district school board] from three (3) or more sources for any authorized purchase or contract for services exceeding ten thousand (10,000) dollars. School boards, by rule, shall set this amount or a lesser amount and shall establish purchasing policy relative to purchases of a dollar value less than this formal bid threshold. The school board shall have the authority to reject any or all bids and request new bids.
Respondent adopted Policy 702 which provides that the School Board retains the ultimate approval of all contracts, and has "the authority to reject any or all bids and request new bids."
Respondent is a constitutional body existing under Article IX, Section 4, of the Constitution of Florida. It is not an "agency" of the executive branch of state government as defined in Section 287.012(1), Florida Statutes.
A public body has wide discretion in soliciting and accepting bids, and its decision, when based on an honest exercise of this discretion, will not be overturned even if it may appear erroneous and even if reasonable persons may disagree. Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So. 2d 505 (Fla. 1982); D.O.T. v. Groves-Watkins Construction, 530 So. 2d 912 (Fla. 1988).
Where an agency is authorized to reject all bids, judicial intervention to prevent the rejection of a bid should occur only when the purpose or effect of the rejection is to defeat the object and integrity of competitive bidding. Groves-Watkins, supra at 913.
Nonspecific bids inhibit competition. Board of County Commissioners
v. Melson, 89 So. 495 (Fla. 1921). Where the invitation to bid is so ambiguous that it may deter competition, the appropriate action for a public agency to take is to reject all bids, clarify the specifications and invite new bids. Caber Systems v. Department of General Services, 530 So. 2d 325 (Fla. 1st DCA 1988).
In this case, the bid specifications concerning contractor qualifications were ambiguous and needed to be clarified. In revising the bid specifications, Respondent needed to address other issues, including but not
limited to, a minimum service charge, overtime hours, and the necessity of requiring a contractor to belong to BICSI.
The sole question presented here is whether the Respondent acted fraudulently, arbitrarily, illegally or dishonestly. Groves-Watkins, supra at 914. The evidence fails to show such conduct by Respondent in this case.
Based upon the foregoing findings and conclusions, it is recommended that the protest of Petitioner in this matter be dismissed.
DONE and ENTERED this 11th day of October, 1996, in Tallahassee, Leon County, Florida.
SUZANNE F. HOOD
Filed with the Clerk of the Division of Administrative Hearings this 11th day of October, 1996.
C. Allen Watts, Esquire Cobb, Cole and Bell, P.A. Post Office Box 2491
James R. Tanner, Esquire
Frank T. Brogan, Commissioner Department of Education
All parties have the right to submit written exceptions within 15 days form the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
