STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

E. L. COLE PHOTOGRAPHY, INC., )

)

Petitioner, )

)

vs. ) Case No. 97-1397BID

) DEPARTMENT OF CORRECTIONS, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tarpon Springs, Florida, on July 30, 1997, before Arnold H. Pollock, an Administrative Law Judge with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Matthew M. Carter, II, Esquire

610 North Duval Street Tallahassee, Florida 32301

For the Respondent: Scott E. Clodfelter, Esquire

Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500 STATEMENT OF THE ISSUES

The issue for consideration in this case is whether Petitioner, E. L. Cole Photography, Inc., was properly denied award of Bid Number 97-DC-7059, to provide photographic film to the Department.

PRELIMINARY MATTERS

Sometime prior to March 6, 1997, the Department of Corrections advised Petitioner herein that it was not the successful bidder in Department procurement 97-DC-7059, which was awarded to Ace Office Supply, another bidder. Petitioner filed a protest. After a series of continuances, this hearing ensued.

At the hearing, Petitioner presented the testimony of Eddie Lee Cole, Sr. Respondent presented the testimony of Bonnie S. Holcomb, a purchasing specialist, and introduced Respondent’s Exhibits 1 through 7. No transcript of the proceedings was furnished. Petitioner’s counsel filed a Memorandum of Law with the Division of Administrative Hearings prior to hearing and requested the Judge consider it in the preparation of the Recommended Order herein. Counsel for Respondent did not object. Both counsel indicated they would not be submitting any further matters for consideration.

FINDINGS OF FACT

1. At all times pertinent to the issues herein, Respondent, Department of Corrections, was an agency of the State of Florida, with authority to procure goods, supplies, and services from vendors through the process of competitive bidding. Sometime prior to February 14, 1997, the Department sent out Invitations to Bid soliciting bids for the providing of photographic film. Both Kodak 135 mm color-and black-and-white film and five

   different types of Polaroid instant camera film were needed for use by the agency, state-wide. Bids were to be submitted in time for the scheduled bid opening on February 25, 1997. This was a procurement reserved for minority bidders. The bids were opened, as scheduled, on February 25, 1997.

2. Petitioner was one of seven bidders. The low bidder, Laube Photo, was disqualified because it was not a certified minority business. Of the remaining six bidders, Ace Office Supply submitted a bid of $3,151.00 on Item 1, the Kodak film; and a bid of $175,250 on Item 2, the Polaroid film. Ace’s total bid was $178,601.00. Petitioner’s bid was $3,793.20 on the Kodak film; and $181,425.00 on the Polaroid film, for a total of

   $185,218.20. All the bids from the other bidders were higher than that of Petitioner. Based on the figures submitted, Ace Office Supply was the low responsive bidder. It’s certification as a minority bidder was confirmed by the agency’s minority office.

3. In its protest submitted on March 6, 1997, Petitioner addressed the warranty which pertains to the film to be supplied. Petitioner questioned whether that warranty would cover film proposed to be furnished by Ace, which Petitioner contends would be gray market product.

4. Special Condition 16 of the Invitation to Bid provides in pertinent part:

   A warranty is required on all items purchased against defective materials,

   workmanship and failure to perform in accordance with required industry performance criteria, for a period of not less than ninety (90) days from date of acceptance by the purchaser. Any deviation from this criteria must be documented in the vendor's bid response or the above statement shall prevail.

   Neither Ace nor the Petitioner indicated any deviation from the warranty requirements. Therefore, the warranty stated applies to product supplied by either bidder.

5. Petitioner also challenged the difference between the bids as relates to the description of the commodity to be provided. Though not required to do so by the Invitation to Bid, Petitioner listed the catalogue number of each item and enclosed with the bid pertinent pages from the manufacturers' catalogues reflecting the commodity and the catalogue number. Ace listed only the commodity and the product number as opposed to the catalogue number. Both methods are acceptable, however. The use of the product description by Ace was no more than a minor irregularity which did not affect the price, nor did its use give Ace an unfair advantage. By the same token, Petitioner's use of the incorrect catalogue number in one instance was also an irregularity, but it, too, was considered minor. From both submittals, it was clear that the product offered was the product sought, and the price for each item was clearly stated.

6. The specifications contained in the bid solicitation in issue were not prioritized in importance. Price, quality, and warranty were all important. The warranty requirement was

   inserted to ensure against the provision of substandard product. Both Ace and Petitioner provided the requisite warranty, and

   Ms. Holcomb presumed both bidders would have honored it. The only area of difference between the bids was in price.

7. Both Petitioner and Ace have provided products to the Department in the past. There have been no complaints regarding either the product provided or the service provided by either supplier.

8. "Gray market” products are those made outside the United States by or under license of a manufacturer, which bear the brand name of the manufacturer, but which are not intended for sale in this country through the manufacturer's authorized distributors. They may or may not carry a full manufacturer's warranty. There is no reference to gray market goods in the Invitation to Bid, and Ms. Holcomb did not consider the possibility of gray market goods being furnished until Petitioner raised the issue in its letter of March 6, 1997. When

   Ms. Holcomb received this letter, she checked with the minority certification office which indicated it would not certify anyone who supplied gray market goods. Thereafter, Ms. Holcomb referred the matter to the Department's legal staff, and she is not aware of what that office did regarding the gray market issue. The evidence regarding the position of the minority certification office regarding gray market goods is hearsay evidence and may not be dispositive of that issue.

9. Mr. Cole, Petitioner's owner and a long-time photographer, raised the issue of gray market product because it has been his experience that when vendors bid inside of their commodities specialty field, a gray market product can be sold at a lower price resulting in a competitive disadvantage to other responsive bidders. Though cheaper in price, a gray market product may not carry the same manufacturer's warranty as does product sold on the authorized market. In addition, many gray market products do not meet the same quality standards of manufacture as authorized products.

10. Mr. Cole claims Ace would provide a gray market product based on the fact that the prices quoted by Ace are below the prices quoted by Petitioner. Cole submitted the manufacturers' price lists with his bid in the hope that all vendors would be bidding on the same product. Referencing the prices submitted by Ace in its bid, Mr. Cole concludes that the film to be supplied by Ace is not an authorized product. His experience indicates that gray market dealers' prices are similar to those quoted by Ace.

11. Mr. Cole admits there is nothing in Ace's bid to indicate it would not honor the ninety-day warranty called for in the Invitation for Bid. He also admits that gray market products could meet the warranty requirement, and there is nothing in the IFB which prohibits gray market film, notwithstanding the other

    evidence of record that the minority certification office would not certify providers who offered gray market goods.

12. It also must be noted that on at least two items called for in the IFB, Petitioner underbid Ace. This happened because Petitioner elected to take a loss on those items, but, Cole contends, Ace's use of gray market prices allowed it to underbid him overall. There is no independent evidence that the product to be submitted by Ace would be gray market product. In any case, the evidence shows that Petitioner substantially underbid four other responsive bidders in this procurement. Mr. Cole does not see that as a problem, since the price differential between Petitioner's bid and the next lowest bidder is not, in his opinion, disqualifying. This argument is not persuasive.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

14. Section 120.57(3), Florida Statutes, provides that any party affected adversely by an agency decision on a bid solicitation shall file a timely protest of that decision. If the protest cannot be amicably settled by mutual agreement, the agency must forward the protest to the Division of Administrative Hearings for a formal hearing before an Administrative Law Judge. This was done in this case.

15. 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 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 See Section 120.57(3)(f), Florida Statutes.

16. A review of the evidence presented at this hearing does not show that the Department's award decision was erroneous, contrary to competition, arbitrary, or capricious. Clearly, the agency used reason rather than whim in arriving at its decision. Both bidders were qualified and responsive. The price cited by the successful bidder, Ace, was, save for two sub-items, lower than that submitted by Petitioner. Ace's overall price was lower than Petitioner's overall price. Both bidders met the agency's warranty requirements. Even if Ace were to provide gray market product, and it has not been shown that it would have done so, there is no prohibition against that in the bid solicitation documents. In light of all the evidence of record, Petitioner has not met its evidentiary burden.

RECOMMENDATION

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

RECOMMENDED that the Department of Corrections enter a Final Order in this case awarding procurement 97-DC-7059, to provide photographic film to the Department, to Ace Office Supply.

DONE AND ENTERED this 29th day of August, 1997, in Tallahassee, Leon County, Florida.

ARNOLD H. POLLOCK

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6947

Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 1977.

COPIES FURNISHED:

Matthew M. Carter, II, Esquire 610 North Duval Street Tallahassee, Florida 32301

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

Tallahassee, Florida 32399-2500

Harry K. Singletary, Jr. Secretary

Department of Corrections 2601 Blairstone Road

Tallahassee, Florida 32399-2500

Louis A. Vargas General Counsel

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 of 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: 97-001397BID

Orders for Case No: 97-001397BID