STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROCHE DIAGNOSTIC SYSTEMS, )

)

Petitioner, )

)

vs. ) CASE NO. 96-5570BID

) DEPARTMENT OF CORRECTIONS, )

)

Respondent, )

and )

) BEHRING DIAGNOSTICS, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

A formal hearing was held in this matter on December 18, 1996 in Tallahassee, Florida, before Suzanne F. Hood, Administrative Law Judge with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Jonathan Sjostrom, Esquire

Donna E. Blanton, Esquire Steel Hector and Davis LLP

215 South Monroe Street, Suite 601 Tallahassee, Florida 32301-1804

For Respondent: Scott E. Clodfelter, Esquire

Bureau of Legal Services Department of Corrections 2601 Blairstone Road

Tallahassee, Florida 32399-2500

For Intervenor: Lawrence P. Stevenson, Esquire

Holland and Knight

315 South Calhoun Street, Suite 600 Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

The issue is whether Respondent Department of Corrections acted in a manner contrary to its governing statutes, rules or policies, or the bid specifications in giving notice of its intent to award the contract for Invitation to Bid No. 96-DC- 6847R to Intervenor Behring Diagnostics, Inc.

PRELIMINARY STATEMENT

By letter dated November 8, 1996 Petitioner Roche Diagnostic Systems (Roche) protested Respondent Department of Corrections’s (Department) award of a contract arising from Invitation to Bid (ITB), Number 96-DC-6847R - Urinalysis Drug Testing, to Intervenor Behring Diagnostics, Inc. (Behring). The Department referred this protest to the Division of Administrative Hearings on November 22, 1996.

The undersigned issued a Notice of Hearing scheduling this matter for formal hearing on December 4, 1996. Roche filed a Motion for Continuance of the formal hearing on November 27, 1996. The undersigned granted continuance and rescheduled this matter for hearing on December 18, 1996.

Behring filed a Petition for Leave to Intervene and for Summary Recommended Order on November 27, 1996. The undersigned entered an Order Granting Intervention and Denying Summary Recommended Order on December 11, 1996.

Roche filed a Request to Amend Petition together with an Amended Petition to Protest Intended Award of Contract on

December 10, 1996. There being no opposition to this request, it was granted by order dated December 11, 1996.

During the hearing on December 18, 1996 Roche presented the testimony of two witnesses. No other party called any witnesses.

The parties jointly submitted a composite exhibit containing documents numbered 1-11 and 15-18. These documents were admitted into evidence without objection. Roche submitted one document in the composite exhibit, number 19, which was admitted over objection as demonstrative evidence.

The transcript of the proceeding was filed on January 6, 1997. Each of the parties filed proposed findings of fact and conclusions of law on January 16, 1997.

FINDINGS OF FACT

1. On February 19, 1996 the Department issued an ITB for the provision of automated drug testing equipment, an automated data management system, and drug assays for the analysis of urine specimens collected at the Department’s major institutions and community facilities. After receiving and reviewing bids from Roche, Behring, and Abbott Laboratories (Abbott), the Department issued a Notice of Intent to Reject All Bids on April 10, 1996.

2. On April 30, 1996 the Department issued ITB 96-DC-6847R for the same services. The same three vendors, Roche, Behring and Abbott, submitted bids which were opened on June 5, 1996.

3. On its face, Roche’s bid of $.60 per test was the lowest cost of the three bids. Behring submitted a bid of $.90 per test.

4. The Department’s evaluation committee correctly determined that bids submitted by Roche and Abbott were not responsive to the bid specifications. Roche’s bid was not responsive because: (1) it failed to include the cost of a printer at each site as part of the equipment package; and (2) it failed to indicate the vendor’s unconditional willingness to provide litigation support at no cost to the Department in defense of a legal challenge to the vendor’s technology.

5. The bid specifications clearly required that printers be included as part of the computer hardware. Roche did not list printers anywhere in the narrative portion of its bid response.

6. Roche’s response stated that it covered all items pertaining to the system hardware portion of the bid. The response indicated that Roche would provide the Department with Antek-LabDAQ report management software and listed specific items of hardware that would be included. But Roche did not list a printer.

7. Roche’s bid response stated that the LabDAQ system would print reports. Roche included copies of a sample report sheets. Roche submitted other information describing the LabDAQ system that contained pictures of a printer. It also submitted a magazine article reviewing the LabDAQ system which listed an

   “Okidata printer” as part of the required hardware. However, the article noted that the software could be purchased separately.

   Submittal of this information was insufficient to indicate that Roche’s bid included the cost of a printer.

8. Roche’s failure to include a printer in its bid was a material deviation from the bid requirements.

9. The ITB clearly required the vendor to provide unequivocal litigation support at no cost to the Department if someone challenged the provider’s technology in a court action. This was a material requirement in the ITB.

10. Roche responded that “upon request from the State and if deemed necessary Roche will provide documentation, affidavits and sworn testimony to substantiate the performance of the technology incorporated in the OnLine system.” (Emphasis added.) This ambiguous response was not an absolute commitment for Roche to provide the litigation support required by the specifications.

11. In one section of Roche’s response it stated that it was “not aware of any past or present lawsuits that have been filed in connection to the COBAS MIRA Plus or the OnLine reagents.” In another section, Roche responded that a federal district court upheld drug testing results provided from a COBAS/Online system. These inconsistent statements may have resulted in a minor deviation from the bid specification. However, they are sufficient to further undermine confidence in Roche’s bid as submitted.

12. During the hearing, Roche presented testimony that it intended for its bid of $.60 per test to include both printers and unconditional litigation support. This testimony constitutes an inappropriate attempt to amend Roche’s bid response. It does not change the fact that Roche’s bid, on its face, was not responsive as submitted.

13. On the other hand, Behring’s bid was responsive to the specifications. It contained only one minor irregularity that provided no advantage to Behring. Roche has presented no evidence to the contrary.

14. The Department’s evaluation committee did not complete the scoring process to compare the three vendors’ scores. Such a comparison is unnecessary where there is only one responsive bidder.

15. By letter dated August 26, 1996 the Department again informed the vendors that it intended to reject all bids and issue a new request for proposals in September. Even though the Department had determined that Behring was the only responsive bidder, the letter did not address the responsiveness of any of the bids. The letter stated that the Department anticipated making changes to the specifications that would require a more structured response, i.e. revise the ITB to include a checklist for every required item which the bidder would cross-reference in

    its bid response. There is no evidence that the Department anticipated making changes to the substance of the specifications.

16. On or about September 5, 1996 Behring sent the Department a Notice of Intent to protest the rejection of all bids and subsequently filed a timely formal written protest. In its formal protest, Behring referred to the Department’s conclusions in a memorandum dated August 23, 1996 that Behring was the only bidder to submit a conforming bid. Roche did not file a protest of the decision to reject all bids.

17. On or about September 26, 1996 the Department sent Roche notice of Behring’s protest and enclosed a copy of Behring’s formal protest in Division of Administrative Hearings Case Number 96-4475BID. Roche did not intervene in the bid protest.

18. The final hearing in the bid protest was scheduled for final hearing on October 23, 1996. The day before the hearing, representatives of the Department and Behring met to discuss the possibility of settling the case.

19. Shortly before the settlement conference, the Department’s counsel called a Roche representative, Betty Bennett, and informed her that Behring had requested a meeting to attempt to resolve the protest. He was unable to make contact with an Abbott representative. No one from Roche attended the meeting.

20. The Department did not issue any formal written notice that it intended to settle the case with Behring. The Department did not know prior to the meeting what the parties would discuss. The Department did not attend the meeting expecting to “negotiate a contract.”

21. At the meeting, Behring initially took the position that the Department should award the contract to Behring at $.90 per test and not seek further competitive bids. The Department took the position that the contract should be subject to additional competitive bidding to determine what the result would be with more than one competitive bid.

22. After further discussion, Behring offered to lower its bid price. The Department’s representatives left the room to discuss the offer. Upon their return, Department representatives made Behring a lower counteroffer.

23. Behring and the Department eventually arrived at an oral settlement under which the Department would award the contract to Behring at a price of $.77 per test and Behring would dismiss its protest.

24. The Department based its decision to settle the bid protest with Behring on the following: (a) the risk of losing the bid protest and being required to pay Behring $.90 per test;

    (b) the desire not to further extend the existing contract at the current price of $1.07 per test; (c) the risk that a third attempt to solicit competitive bids would result in another

    protest and further delay; (d) the fact that Behring had submitted responsive bids to the two previous solicitations; (e) the assumption that subsequent bids by Roche and Abbott would be higher when they included the omitted items that caused their rejection.

25. There is no persuasive evidence to indicate that the Department’s reasons for settling Behring’s bid protest were pretextual or otherwise invalid. The Department correctly concluded that it might have to pay Behring $.90 per test if it lost the bid protest regardless of the applicable standard of proof in that proceeding. The Department also was justified in assuming that Roche’s bid price would be higher when it included the previously omitted printers. For these and other reasons set forth above in the Findings of Fact, the Department’s decision to settle the case by negotiating a lower contract price with Behring was in the best interest of the state of Florida.

26. On October 23, 1996 the Administrative Law Judge in Case No. 96-4475BID entered an order closing the file of the Division of Administrative Hearings and relinquishing jurisdiction to the Department. The Department did not issue a Final Order setting forth the final disposition of the case.

27. By letter dated October 30, 1996 the Department informed Roche and Abbott that it had negotiated a satisfactory contract with Behring pursuant to Rule 60A-1.018(1)(b), Florida Administrative Code. This letter advised Roche that the

    Department intended to award the contract to Behring. In the letter, the Department gave Roche the opportunity to request a hearing pursuant to Chapter 120, Florida Statutes, to protest the intended agency action.

28. By letter dated November 8, 1996, Roche protested the notice of intended award to Behring. Without objection, Roche submitted an amended petition on December 10, 1996.

29. Behring filed a petition for leave to intervene on November 27, 1996. An order dated December 11, 1996 granted that motion.

    CONCLUSIONS OF LAW

    
    

30. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding pursuant to Sections 120.569 and 120.57, Florida Statutes (Supp. 1996).

31. The Department has announced its intention to award the contract at issue to Behring. Accordingly, Behring has standing to intervene in this proceeding.

32. Roche asserts error on the part of the Department in finding its bid to be non-responsive and in awarding the contract to Behring. Therefore, Roche has the burden of establishing its entitlement to relief in this proceeding. Section 120.57(3)(f), Florida Statutes (Supp. 1996); Florida Dept. of Transp. v. J.W.C. Co., Inc., 396 So. 2d 778 (Fla. 1st. DCA 1981). For the reasons set forth below, Roche has not met its burden.

33. Section 120.57(3)(f), Florida Statutes (Supp. 1996), provides as follows:

    (f) In a competitive-procurement protest, no submissions made after the bid or proposal opening amending or supplementing the bid or proposal shall be considered. Unless otherwise provided by statute, the burden of proof shall rest with the party protesting the proposed agency action. In a

    competitive-procurement protest, other than a rejection of all bids, the administrative law judge shall conduct a de novo proceeding to determine whether the agency’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the bid or proposal specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious. In any bid-protest proceeding contesting an intended agency action to reject all bids, the standard of review by an administrative law judge shall be whether the agency’s intended action is illegal, arbitrary, dishonest, or fraudulent.

34. Section 120.57(4), Florida Statutes (Supp. 1996), provides as follows:

    (4) INFORMAL DISPOSITION.—Unless precluded by law, informal disposition may be made of any proceeding by stipulation, agreed settlement, or consent order.

    
    

35. The Department made its decision to award the contract to Behring in settlement of Behring’s bid protest pursuant to Section 120.57(4), Florida Statutes (Supp. 1996), notwithstanding the Department’s letter dated October 30, 1996. Roche does not have standing to challenge that decision. Roche failed to preserve its right to be heard under Section 120.57(3)(b), Florida Statutes (Supp. 1996).

36. The Department informed the bidders on or about August 26, 1996, that it intended to reject all bids and issue a request for proposals in September. Having made that decision, the Department was not required to advise the bidders whether or not their current bids were responsive to the ITB. Roche did not file a protest to challenge that intended action.

37. On or about September 26, 1996 the Department advised Roche that Behring had filed a bid protest. Roche should have known that the bid protest challenged the Department’s decision to solicit bids for the third time. Nevertheless, Roche did not intervene in that proceeding to protect its interest.

38. The Department was not required to give Roche notice that it was going to attend a meeting to discuss settlement of Behring’s protest. As a non-party, Roche was not entitled to participate in the settlement discussions.

39. Section 120.57(3)(b), Florida Statutes (Supp. 1996), provides in pertinent part:

    (b) Any person who is adversely affected by the agency decision or intended decision shall file with the agency a notice of protest in writing within 72 hours after the posting of the bid tabulation or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after filing the notice of protest. . . . Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under this chapter.

40. Having waived a point of entry to bring its own proceeding, and having waived a second point of entry to intervene in Behring’s bid protest, Roche may not now collaterally attack the Department’s settlement agreement with Behring.

41. The Department’s letter dated October 30, 1996, purported to give Roche a point of entry to challenge the award of the contract to Behring. However, everything that occurred in this matter was a direct result of Behring’s bid protest. The letter could not separately bestow rights on Roche to which it was not entitled.

42. It logically follows that Roche does not now have standing to question: (1) whether the Department correctly determined that Roche’s bid was not responsive to the bid specifications; (2) whether the Department’s settlement negotiations with Behring conformed to the requirements of Section 287.057(4), Florida Statutes (Supp. 1996) or Rule 60A- 1.018(1)(b), Florida Administrative Code; and (3) whether the Department was required to enter a final order or consent order after settling the case with Behring pursuant to Section 120.57(4), Florida Statutes (Supp. 1996), in order to bring closure to this matter.1

RECOMMENDATION

Based on the foregoing Findings of Facts and Conclusions of Law, it is

RECOMMENDED that the Department of Corrections enter a Final Order awarding the contract for ITB No. 96-DC-6847R to Behring Diagnostic, Inc., and dismissing the protest of Roche Diagnostic Systems.

DONE and ENTERED this 12th day of February, 1997, in Tallahassee, Leon County, Florida.

SUZANNE F. HOOD

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 12th day of February, 1997.

ENDNOTE

1/ If one assumes that Roche has a right to be heard by virtue of the Department’s letter dated October 30, 1996, which purports to give a point of entry to challenge the award of the contract to Behring pursuant to Rule 60A-1.018, Florida Administrative Code, Roche still has no standing because: (1) Roche’s bid was not responsive; (2) the Department negotiated on the best terms and conditions with Behring and arrived at a contract which was in the best interest of the state; (3) the Department met the essential procedural requirements of Section 287.057(4), Florida Statutes (Supp. 1996) and Rule 60A-1.018, Florida Administrative Code.

The agency had already specified its needs and made them available to prospective contractors when it issued the ITB. Those needs would not have changed if the Department had issued a third ITB or a request for proposal. After reaching a satisfactory contract with Behring pursuant to Rule 60A-1.018(1)(b), Florida Administrative Code, the Department was not required to negotiate with Roche, a non-responsive bidder, or to document its discussions with vendors pursuant to Rule 60A-1.018(1)(c), Florida Administrative Code.

Section 287.057(4), Florida Statutes (Supp. 1996), requires an agency to document the reasons for determining that negotiating a

contract is in the best interest of the state. However, that section does not require such documentation at any particular point in time. The Department’s reasons are well documented in the record of this proceeding. Any deviation from the procedural requirements in Section 287.057(4), Florida Statutes (Supp. 1996), is harmless because Roche has had an opportunity here to raise all disputed issues.

COPIES FURNISHED:

Victoria L. Weber, Esquire Jonathan E. Sjostrom, Esquire Donna E. Blanton, Esquire Steel Hector and Davis

215 South Monroe Street, Suite 601 Tallahassee, Florida 32301

Scott E. Clodfelter, Esquire Department of Corrections 2601 Blairstone Road

Tallahassee, Florida 32399-2500

Lawrence P. Stevenson, Esquire Holland and Knight

315 South Calhoun Street, Suite 600 Tallahassee, Florida 32302

Harry K. Singletary, Jr., Secretary Department of Corrections

2601 Blairstone Road

Tallahassee, Florida 32399-2500

Louis A. Vargas, Esquire Department of Corrections 2601 Blairstone Road

Tallahassee, Florida 32399-2500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from 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.

Docket for Case No: 96-005570BID

Orders for Case No: 96-005570BID