STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
UNISYS CORPORATION,
Petitioner,
vs.
DEPARTMENT CHILDREN AND FAMILY SERVICES,
Respondent,
and
DELOITTE CONSULTING LLP,
Intervenor.
)
)
)
)
)
) Case No. 05-3144BID
)
)
)
)
)
)
)
)
)
)
)
RECOMMENDED ORDER
In accordance with duly issued notice, this cause came on for formal proceeding and hearing before P. Michael Ruff, duly-designated Administrative Law Judge of the Division of Administrative Hearings. The hearing was conducted in
Tallahassee, Florida, on September 29 through October 30, 2005. The appearances were as follows:
APPEARANCES
For Petitioner: Donna Holshouser Stinson, Esquire
David K. Miller, Esquire Broad and Cassel
Post Office Drawer 11300 Tallahassee, Florida 32302
For Respondent: Donna Blanton, Esquire
Jeffrey Frehn, Esquire
Radey, Thomas, Yon and Clark, P.A.
301 South Bronough Street, Suite 200 Tallahassee, Florida 32301
For Intervenor: Thomas Panza, Esquire
Diane Lindstrom, Esquire Panza, Maurer & Maynard, P.A. 3600 North Federal Highway
Fort Lauderdale, Florida 33308 STATEMENT OF THE ISSUES
The issues to be resolved in this proceeding concern whether the intent to award a contract by the Department of Children and Family Services (DCF) or (Department) for programming and programming analysis support services for the Florida Online Recipient Integrated Data Access System (the Florida System) to Intervenor, Deloitte Consulting LLP (Deloitte), is in accordance with the governing statutes, rules, and policies applicable to the Department's procurement, and to the specifications in the Request for Proposals (RFP). It must also be determined whether the decision by DCF to disqualify the Petitioner, Unisys Corporation (Unisys), for allegedly being unresponsive to the specifications and terms of the RFP in a material way, is clearly erroneous, contrary to competition, arbitrary, or capricious.
PRELIMINARY STATEMENT
This cause began when DCF announced its intent to award the Florida System contract (RFP06U05DP4) to Deloitte. This was the
second RFP issued in this current procurement effort. The first RFP had been cancelled by DCF after Deloitte had been disqualified as non-responsive and the Agency sought to avoid a situation where only one responsive vendor (Unisys) was left in the RFP procurement process, for reasons of promoting competition. When the current RFP award was announced, Unisys timely filed a protest and Petition challenging the proposed award to Deloitte. Deloitte timely filed a Petition to Intervene in the proceeding, which was granted. The third vendor that submitted a proposal to the subject RFP, Spherion Atlantic Enterprises, LLC (Spherion) did not intervene in this protest proceeding.
The Petition was ultimately transmitted to the Division of Administrative Hearings and the undersigned Administrative Law Judge for conduct of a formal proceeding.
The cause came on for hearing, as noticed, on the above dates. The parties entered into a Stipulation of Fact, officially recognized at the hearing and their Stipulation included 14 Joint Exhibits which were admitted into evidence at the onset of the hearing as Joint Exhibits 1 through 14. Unisys presented the testimony of David Sheppard, Charles Cliburn, and Dan Bowman. Additionally, Unisys offered and had received into evidence 44 Exhibits, including Exhibits 1 through 18, 24
through 36, and 39 through 54, 56, and 58. These Exhibits
included the deposition testimony of David Sheppard, Robert Fagan (the Assistant Secretary of DCF) Connie Reinhardt, Gary Sharpe, Phyllis James, Valerie Kendrick, and Pat Salapa.
Additionally, Thomas Walker and Kevin King, Deloitte principals, and Anthony Bender, a former State of Indiana procurement officer, testified by deposition. DCF introduced the testimony of David Shepard and Robert Fagan, as well as DCF Exhibits 8 through 12, and Exhibit 14. Deloitte did not present any witness testimony or introduce any exhibits.
Upon concluding the proceeding, the parties elected to have the matter transcribed. The parties also elected to submit proposed recommended orders after the Transcript was filed.
Because of the office disruptions caused by Hurricane Wilma, the parties stipulated to an extension of time for submission of their proposed recommended orders until November 15, 2005.
Ultimately they filed their Proposed Recommended Orders on November 9, 2005, by agreement.
FINDINGS OF FACT
The Florida System is a computerized public assistance and child support enforcement system. It contains approximately six million lines of programming code and is very complex. It supports the state entitlement system which, among other functions, determines eligibility for benefits under the Medicaid program, temporary assistance for needy families, and
food stamp programs. The child support enforcement component of the System records collections of child support payments by the circuit courts. The System is vital to the client population and the public of Florida and it is vital that it be properly maintained. Essential services could be disrupted if such is not the case, causing serious problems for the client populations for state and federal programs that are related and for the tax-paying public, regarding these multi-billion dollar programs.
The RFP to be issued would result in a contract for a period of 36 months. It included a 45-day start-up period, a support phase of the contact extending 36 months and a final 45- day period for transition to a new vendor, upon the approach of the conclusion of the contract.
The RFP required each vendor to submit a technical proposal and a separate cost proposal. The technical proposal represented 650 points out of a possible 1000 points. The cost proposal represented 350 points out of 1000 points. The proposed project staff requirements of the three technical criteria received the greatest weight of 350 points. The other technical criteria: corporate experience (150 points) and technical approach (150 points) also compared the availability of qualified staff, which was an important part of the contract.
Unisys was the incumbent contractor. It submitted a proposal and response to the first RFP (RFP09), as did the other two vendors, Deloitte and Spherion. The Department disqualified Deloitte and Spherion's initial proposals. It did not disqualify the initial Unisys proposal, but decided to reject all proposals for that RFP and to issue a new RFP. The Department did not wish to award a contract to Unisys since it would be an exceptional or sole source purchase under these circumstances. It appeared that re-issuing the RFP at that time could result in more competitive bidding by attracting more than one responsive vendor.
In that earlier procurement, Spherion's proposal had been disqualified because it did not include the proposal bond manditorily required by the RFP. Deloitte's proposal was disqualified because Deloitte attached exceptions or conditions to its supplemental proposal sheet submitted as part of its proposal. It thus failed a fatal criterion in the RFP which required agreement to all terms and conditions.
The DCF procurement officer, David Shepard, announced the decision to reject all bids, to the vendors, via telephone. He advised a representative of Deloitte that its proposal was rejected for including conditions attached to its supplemental proposal sheet. He told a Spherion representative that its proposal had been rejected for failure to include the proposal
bond. He told a Unisys representative that its proposal had not been disqualified, but that Deloitte and Spherion had been disqualified for failure to meet fatal criteria. Mr. Shepard also advised Unisys that the Deloitte proposal had been "conditioned". Beyond that he was reluctant to provide competing vendors more detailed information about the other vendors' proposals because a new RFP was contemplated.
In preparing the new RFP the Department intentionally highlighted the requirement in the document advising vendors that "any qualification, counter-offer, deviation from or condition to the terms, condition or requirements of the RFP may render the proposal non-responsive." This language was moved to a more prominent place in this second RFP and put in "bold-faced type" with space surrounding it. This change was made because of Deloitte's disqualification for conditioning its proposals by including "exceptions" when it responded to the first RFP. The Agency wanted to emphasize and highlight this prohibition on qualifications, counter-offers, deviations or conditions to the requirements of the RFP so proposing vendors would clearly know that this was a serious requirement.
When the new proposals were submitted in response to the second RFP (the subject RFP), the Department made a determination that all three proposals had passed the certain "fatal criteria" identified in the RFP. Thus the technical
proposals were all reviewed and scored by the five member evaluation team.
The separate cost proposals from each vendor were opened at a later date. DCF determined at that time that Unisys included with its cost proposal a list of fifteen enumerated "assumptions" which the Agency ultimately determined to be "qualifications, counter-offers, deviations from or conditions to, the terms, conditions or requirements of the RFP." Because of these "assumptions" the Unisys proposal was found to be non- responsive and was not scored.
The Agency determined the other two vendors, Deloitte and Spherion, to be responsive to the RFP. Deloitte was determined to have the highest score. Therefore, DCF proposed to award the contract to Deloitte, on July 27, 2005.
Unisys timely filed a Notice of Intent to Protest and a Petition protesting the proposed award, requesting a formal administrative proceeding and hearing. Deloitte intervened in that proceeding.
The Department filed a Motion for Summary Recommended Order with the Administrative Law Judge contending that the Unisys proposal was non-responsive as a matter of law, and, therefore, that no standing existed for Unisys to challenge the award to Deloitte or to challenge other aspects of the procurement process. That Motion was denied without prejudice
on September 23, 2005, because the elicitation of evidence as to material, relevant facts was deemed necessary. Deloitte filed a similar Motion on September 19, 2005, ruling on which is subsumed in this Recommended Order.
Responsiveness
"Fatal criteria" were delineated in both this RFP and the previous one. The purpose of including "fatal criteria" in an RFP is to determine responsiveness to the criteria the Department has published. Fatal criteria are sometimes referred to as "initial screening criteria" or "responsiveness criteria." A vendor which does not meet all identified fatal criteria is disqualified upon opening its proposal for the RFP. It is not scored. If its proposal passes the initial fatal criteria screening it is sent to the evaluators to be scored. All mandatory requirements in an RFP are not necessarily fatal criteria. The only RFP requirements that result in automatic disqualification are those formally identified as fatal criteria.
Both of the RFPs which are involved in the issues in this proceeding include "non-fatal criteria," which are criteria that are reviewed and scored by evaluators. Vendors that do not satisfy the non-fatal criteria may be scored poorly in the competitive evaluation, but are not disqualified unless they fail to meet one or more of the identified fatal criteria.
Certain changes were made when the second RFP was issued as compared to the first RFP. Some of the fatal criteria in the first RFP were changed or deleted in the second, including a requirement which had been a fatal criterion in the first RFP that a vendor provide resumes for all its proposed staff, including references and other information. The requirement that providing such was mandatory was retained in the second RFP, but it was made a non-fatal criterion. The DCF kept the requirement that a vendor had to provide sufficient personnel to successfully perform the project, but made it a non-fatal criterion in the second RFP. Mr. Shepard explained the change in the context of looking in the first RFP proposal for every name of 117 proposed staff members and checking to see if a corresponding resume had been supplied became extremely burdensome and it was ". . . very difficult to have a repeatable process on it, so we eliminated it."
The vendors were noticed of the change in the fatal criteria through the publication of the second RFP. All vendors had an opportunity to challenge the specifications and none challenged the specification as to the changes in the fatal criteria between the two RFPs. All vendors had an opportunity to ask questions in the question-and-answer period related to the second procurement, concerning the changes to the fatal criteria. No one asked about the changes.
Unisys has contended that the Spherion proposal should be disqualified as non-responsive to the second RFP because it did not include the proper number of resumes. Inclusion of the proper number of resumes was no longer a fatal criterion for the second RFP, however. Spherion was scored poorly by the evaluators for failing to fully comply with the non-fatal criterion regarding sufficient support personnel. Although Unisys contends that a procurement manual (CFOP75-10) purports to require the rejection of any proposal which is incomplete or has significant inconsistencies or inaccuracies, the manual was not in effect at the time of the procurement at issue. The procurement officer, Mr. Shepard, was unaware of its existence and none of the vendors were then aware of it, including Unisys. Mr. Shepard, for the Agency, felt that he had to inform the vendors on what basis they would be evaluated and could not use anything against the proposals in a negative way when he had not disclosed a particular evaluation criterion.
Unisys also contends that Spherion is non-responsive as to the second RFP because in its signed proposal sheet (SPS) wherein it agrees to all terms and conditions to the RFP it included a statement saying it "has a contract in place with the State of Florida to date. We will abide by the terms and conditions already agreed upon." The procurement officer
Mr. Shepard professed not to know what the statement meant, but
he did not view it as a condition, saying that it is non- specific and contains no specific terms or conditions. He believes that it did not affect the price of the Spherion proposal and therefore is not a material irregularity in any event.
Unisys also raises the alleged non-responsiveness of Deloitte because in its technical proposal it uses the statement that "in the cases where other background checks are required, the Deloitte consulting will be responsible for obtaining such background checks based on costs negotiated with the Department." Mr. Shepard professed to not understand what the phrase meant regarding "negotiating costs," but noted that, in compliance with the RFP, Deloitte had agreed to be responsible for background checks. He thus considered the phrase a minor irregularity that did not affect the price of the Deloitte proposal and thus was not a disqualifying indicia of non- responsiveness.
In the first RFP Spherion was disqualified for violating fatal criterion number ten relating to inclusion of a proposal guarantee or performance bond. Deloitte was disqualified in that procurement for violating fatal criterion number twelve relating to a completed and signed "supplemental proposal sheet." The Agency felt that the proposal of Deloitte
contained conditions, even though the SPS was properly signed by a representative of Deloitte.
The supplemental proposal sheet requires a vendor to agree to comply with all terms and conditions of the RFP. The vendor must not only sign a statement to that effect, but also place the initials of an authorized person beside the statements showing that the vendor understands and agrees with each individual provision of the RFP. Although Deloitte's representative signed the SPS and provided the necessary initials, it also attached "exceptions" to that sheet which resulted in the proposal being rejected in the first RFP process.
In the second procurement Unisys was found non- responsive for violating fatal criteria relating to the supplemental proposal sheet (fatal criterion number nine in the second RFP). Mr. Shepard felt that it was a conditioned proposal. His handwritten note beside fatal criterion number nine stated, "opened cost proposal. Cost proposal included potential conditions . . . final decision was a conditioned proposal." Although Unisys had submitted a signed and initialed SPS (attachment K), the assumptions included with its proposal were determined by the Agency to actually modify the signed SPS. Ultimately, after conferring with its counsel, the Agency Assistant Secretary and Secretary determined that Unisys in its
proposal was conditioned in a way as to violate the requirements of the RFP, determined it was non-responsive, and thus disqualified.
The Unisys Assumptions
The vendors in the procurement at issue were precluded from submitting with their proposal any contract terms, conditions or exceptions that did not conform with the terms and conditions provided in the specifications in the RFP. They are warned in bold type that "that any [p]roposal containing terms and conditions conflicting with this requirement shall be rejected . . .". In a separate RFP provision they are cautioned that "[a]ny qualification, counter-offer, deviation from or condition to the terms, conditions or requirements of the RFP may render the proposal non-responsive." See Joint Exhibit 1, Sections 7.2D and 2.9, in evidence.
Unisys, like all vendors, was required to and did submit a signed supplemental proposal sheet, but Unisys' corporate representative testified that he nevertheless included the assumptions with the cost proposals because he was not sure that the Department had the same understandings of certain terms and conditions in the RFP as Unisys did. As he stated, " . . . that was why we asked to clarify."
If any vendor, including Unisys did not understand the import of the various terms and conditions in the RFP
specifications, or a particular term, the RFP provided an opportunity for vendors to seek clarifications through various means, including written questions, prior to bid submission and opening. Moreover, if a contract term or specification was deemed improper, unclear or otherwise inappropriate the vendors had an opportunity, prior to submitting proposals, to challenge the specifications of the RFP themselves. During the ten days between the issuance of the second RFP and the deadline for submission of proposals Unisys did not challenge the specifications nor submit any questions to the Agency concerning the subject matter of the assumptions which it placed in its proposal.
The RFP does not allow for negotiations between a winning vendor and the Department. Once the contract is awarded by announcement by the Agency, pursuant to the RFP, and until the contract is signed, the only discussion between the vendor and the Agency may be about technical errors. Any negotiations about the terms and conditions of the RFP with the winning vendor would be unfair to other vendors who submitted proposals based solely on the terms and conditions published in the RFP, and who had no such opportunity for "after-proposal negotiations" with the procuring Agency. The Department considered the Unisys assumptions, especially their placement in the cost proposal as opposed to the technical proposal, part of
an effort to gain negotiating opportunity at the end of the evaluating process, an opportunity not provided to the other vendors. The Department believed that the assumptions were not included in the body of the technical proposal in order to make sure that the technical proposals would be evaluated and scored. Then, once Unisys had a score on the technical proposal, it had a cost proposal modified by the assumptions, which the Agency believed was an effort by Unisys to obtain some leeway to negotiate after award and before the final contracting process.
In fact, the preamble language Unisys used to propose its list of assumptions states as follows: "The following are assumptions that Unisys has made for this proposal. We would like the opportunity to discuss these assumptions at contract negotiations." (emphasis supplied).
The RFP does not allow for negotiations after the posting of a contract award. Even if the Department were to ignore the clear request to enter contract negotiations regarding the assumptions, the Agency still took the position that the assumptions proposed were beyond the specifications of the RFP, in fact altered the proposal and, if accepted, would have altered the terms of the RFP and the contract contemplated in it and by it. In fact, the persuasive evidence, including the testimony of Mr. Fagan and Mr. Shepard, establishes that the proposal by Unisys was based on those fifteen assumption items
being considered and implemented in the ultimate contract, should Unisys be awarded the contract.
Some of the fifteen assumptions, as shown by the persuasive, credible evidence clearly deviate from the express terms and conditions of the RFP, which the RFP prohibits. Assumption seven provides:
We assume that applicable RFP terms regarding recovery against the performance bond are clarified to the extent that the Department will not seek liquidated or any other damages against the performance bond unless the contract is terminated for default and the vendor and the Department have been unable to settle any resulting claim.
This assumption, if accepted in the contracting process, would limit those circumstances where the Department would be able to make a claim against the performance bond of Unisys. Pursuant to the plain language of this assumption the Department would be precluded from seeking damages from the performance bond, unless there was actual default by Unisys which resulted in contract termination. The RFP, however, places no such restriction on when the Department may make a claim against the performance bond of a vendor. The RFP in fact, expressly authorizes DCF to file for remuneration against the performance bond based upon any failure to perform by the vendor, regardless of whether the contract is terminated. The RFP specifically provides that if the vendor is given an
opportunity to cure a material breach, which would keep the contract in effect, that DCF may still obtain compensation for the results of that breach by preceding against the vendor's performance bond. See Joint Exhibit 1, Section 3.21, in evidence. In fact there are a number of circumstances provided for in the RFP where DCF may make a claim against a performance bond despite the continuation status of the contract. For instance, Section 3.5.C.2.a authorizes the recovery of damages from the performance guarantee where an individual fixed price contract, rather than the entire contract, is terminated due to the vendor's failure to meet the project's completion date. So too, Section 3.9.E provides "any and all occurrences of any dishonesty or deception on the part of the vendor's employees, with regard to Department confidential information, shall cause the Department to suffer damages and the Department shall be entitled to . . . recovering from the vendor, the actual damages the Department sustains up to the insured limits of the vendor's performance guarantee." In his testimony at hearing Unisys corporate representative acknowledged that if the Department accepted assumption seven proposed by Unisys, that the contact would not allow DCF to seek damages against the performance bond unless the contract was actually terminated. This is clearly contrary to the language in the RFP.
Assumption twelve provides:
We assume that the last sentence of paragraph two under 3.18 ['vendor agrees that any and all work performed exceeding the mutually agreed to time estimates in the ISSR maybe deemed by the Department to be gratuitous and not subject to charge by the vendor'] applies only to fixed price projects.
Fixed price projects are defined in the RFP as "one unique activity where the vendor shall establish a fixed price for providing the deliverables . . . ." Unlike fixed price projects, the RFP provides that work tasks assigned to a vendor pursuant to a Information Systems Services Rquest (ISSR) will be performed and paid for on an hourly rate basis. In this regard the ISSR must identify the "vendor's and the Department's agreed-upon estimated work hours and anticipated completion date." Although the DCF must pay for any hours worked up to the total work hours estimated in the ISSR, the RFP provides that DCF is not obligated to pay for any hours worked beyond that estimate. In fact, Joint Exhibit 1, Section 3.18, in evidence, provides in relevant part:
The vendor agrees that any and all work performed exceeding the mutually agreed to time estimates in the ISSR's maybe deemed by the Department to be gratuitous and not subject to charge by the vendor.
Pursuant to this quoted sentence from the RFP the agreed-upon estimated work hours in the ISSR operates as a limit
to the number of hours that a vendor can bill DCF for a particular job or task. However, the plain language of the Unisys assumption materially alters this RFP provision by changing the word "ISSRs" to "fixed price projects," which would make the sentence read, if it were adopted, as follows:
The vendor agrees that any and all work preformed exceeding the mutually agreed to time estimate in the fixed price projects deemed by the Department to be gratuitous and not subject to charge by the vendor. (emphasis supplied.)
Thus this assumption proposed by Unisys clearly amounts to the substitution of one defined term for another which would change the liability of the proposer, Unisys, with respect to that specific provision. Unisys's own corporate representative acknowledged in his testimony that the change identified by this assumption would mean that Unisys would be paid more under the operation of the contract. If this word substitution were adopted in the contracting process, the estimated work hours that must be agreed to and included in each ISSR would become meaningless, as the ISSR would no longer serve the function of limiting the number of hours that could be billed for hourly rate work.
Assumption five provides:
Pursuant to the Department's changes to Section 3.12, time is of the essence applies only to failure to meet completion dates for
startup and transition tasks and not the contract as a whole.
Most of the performance under the contract will be provided during the support task days of the contract. This will represent 36 of the 39 months of the basic contract period. A completion date is provided in the RFP for each support task assigned to the vendor, either through an ISSR or fixed price project. The RFP at Section 3.12 (Joint Exhibit 1 in evidence) emphasizes the importance of completing on a timely basis, where it states:
The vendor agrees . . . to proceed diligently to complete the start-up and support tasks in accordance with the requirements set forth in this RFP . . . time is of the essence in this RFP . . .
This ”time is of the essence" phrase is qualified in the case of the start-up phase and transition task during which the vendor would have to work with another company that may prevent the timely performance of a particular task. Because of this possibility the RFP provides that a vendor's failure to meet a completion or a start-up or transition task will not be a default if it is due to the failure of another company to timely perform its obligation.
The RFP also gives DCF numerous remedies, including termination of the contract, in the event performance is untimely by the vendor. This assumption posed by Unisys
attempts to limit the "time is of the essence" requirement to the start-up and transition task and thus limit Unisys's potential liability for failing to meet deadlines during the support phase, the majority time period of the contract term. Numerous parts of the RFP emphasize the importance of timely completion of various tasks. See Joint Exhibit 1 Section 4.5, Section 3.5C.2 and Section 3.7.D and Section 3.15.A, in evidence. Unisys's corporate representative witness testified that assumption five was included because Unisys was confused about a change in the "time is of the essence" language made during the question-and-answer period after the first RFP was issued. (Not at issue in this case.) However, Unisys did not use the question and answer period during this second RFP process to seek clarification of the earlier change or of the meaning of the "time is of the essence" requirement, if indeed it was confused. Various sections of the RFP cited above which emphasize the importance of timely performance show that timely performance is important and a material part of the RFP. The Unisys proposal, at assumption five, will have the effect of changing the requirement of the RFP regarding time being of the essence for completion of support tasks, seeking rather to limit the time is of the essence requirement to only start-up and transition tasks. This would significantly limit Unisys's
potential liability for failing to meet the deadlines during the support phase.
Assumptions nine and eleven in Unisys's proposal provide respectively as follows:
We assume that the RFP attachment C, Section
21 (limitation of liability) is clarified so that in the event the Department does not issue any purchase orders under the contract, to substitute 'amounts paid' under the contract for 'purchase order'.
We assume that to comply with attachment C, Section 21, the Department will provide a PO to Unisys or if not, the language will be changed to refer to the contract.
The RFP itself contains no provision limiting a vendor's potential liability to DCF in the event of contract breach. Although Section 21 of the PUR Form (RFP attachment C) is entitled "limitation of liability," this provision is inapplicable to this contract because Section 21 only purports to limit liability where a claim is made under a purchase order. It is undisputed that no purchase orders will be issued pursuant to this RFP.
PUR Forms attached to the RFP at issue in this case are standard forms that are required by state purchasing rules to be attached to all competitive procurements. They are subordinate to the RFP, and certain provisions of the PUR Forms are not applicable to all procurements. An order of precedence in PUR Form 1001 (attachment D to Joint Exhibit 1 in evidence)
makes it clear that the RFP supersedes the PUR Forms. Section
21 of attachment C is not applicable to the RFP at issue in this
case.
If the language in assumptions nine and eleven were
adopted in the contract, DCF would be required to either to issue purchase orders, which ordinarily would not be done in this RFP, or to change the language of Section 21 by substituting the phrase "amounts paid under the contract" for "purchase order." Thus if Unisys assumptions nine and eleven were adopted it would have the effect of limiting Unisys's liability by applying the limitation of liability related to purchase orders to the entire RFP. Such was not the intent behind nor in accordance with the terms of the RFP.
Unisys assumptions one and thirteen are also related.
They provide:
We assume that the parties will reach mutually acceptable clarifications to the RFP and final terms and conditions for the contract.
We assume that any direct conflicts if any, between the Department contract documents will be resolved during negotiations.
The agreement between the parties will consist of multiple documents, including the contract document, the RFP, and the winning bidder's proposal. To the extent that any of these documents is in conflict, assumption thirteen would compel
the Department to resolve the conflict through negotiations with Unisys. This is contrary to Section 2.13 of the RFP which does not make such conflicts subject to negotiation, but rather states that "[a]ny ambiguity or inconsistency among those documents shall be resolved by applying the 'order of precedence'" specified in the RFP. These two assumptions basically incorporate a negotiation phase into the RFP that was not provided for by the RFP. Unisys asserts an order of precedence for resolving ambiguity or inconsistency among the documents and contract terms in its assumption eight, which
provides:
We assume that the contract terms will be clarified with an order of precedence assigned to each component (contract terms, proposal, PUR Forms, or RFP).
This assumption attempts to rewrite Section 2.13 of the RFP which establishes instead the following order of precedence:
The contract document;
The RFP and its appendices (e.g. the PUR Forms and attachments C and D); and
The vendors proposal.
Assumption eight, which prioritizes the documents differently (i.e. contract terms, proposal, PUR Forms, and RFP), would materially change the order of precedence by making the Unisys proposal, including the deviations from the RFP it
contains, more important in order of precedence than the RFP itself.
Assumption eight also assigns the generic PUR Form, which contains the general conditions that are incorporated into all state procurements, a higher priority than the special conditions in the RFP that the Department developed for this particular contract. This conflicts with the PUR Form itself, which states that the general conditions in the PUR Form are subordinate to the special conditions and technical specifications in the RFP. See Joint Exhibit 1, attachment D, paragraph 4 in evidence.1/
Unisys assumption six provides:
We assume that the Department is responsible for daily backup of all the production data basis and will perform backups to protect the integrity of the data.
Under the RFP, the vendor is responsible for repairing damaged data. Assumption six, however, would shift partial responsibility for this task to the Department or create a potential reason or excuse for any failure by Unisys to repair damaged data by imposing on the Department a duty to protect the data by daily back-ups. Assumption number six thus seems to provide that Unisys would guarantee repair of damage data only if DCF assumes responsibility for the daily back-ups and, if it did not, no liability or obligation for damaged or lost data or
its repair would be assumed by Unisys. This assumption is thus at odds with the RFP to the extent that it adds such a contract term that was not contemplated by the RFP
Unisys assumption ten provides:
We assume that the documentation library and all information provided by the Department is correct, current and complete.
The RFP, however, explicitly states that "the Department does not warrant that the information is indeed complete or correct. The Department disclaims any responsibility for the accuracy or completeness of the material information, documentation and data in the documentation library."
Past Agency Practices
Witnesses for Unisys stated, in essence, that it is their company's policy to include assumptions in responses to RFPs. They introduced evidence concerning two prior procurements by RFP in 1997 and in 1998 to which Unisys responded with assumptions in its RFP proposals. They contend that it is Agency policy to allow for such assumptions in responses to RFPs using these two past procurements as examples. One of those procurements, the 1998 Florida System RFP resulted in a contract between Unisys and the Department. The other procurement, the 1997 "SACWIS" procurement never resulted in a contract because the Agency did not receive enough money from
federal funding and legislative funding to meet the price of the awardee, which was Unisys.
In the 1998 Florida System procurement RFP three assumptions were placed in the cost proposal submitted by Unisys. The first of them provided that the proposer, Unisys, wanted to negotiate the "indemnity provisions including a reasonable limitation on liability provision." The Department standard contract which was attachment "A" to that RFP, however, specifically provided for the negotiations that Unisys requested in this assumption. The contract stated that "where any contract which may result from this request for proposal contemplates software licensing, software maintenance services, or software developmental services, the language in Section 1.F., indemnification in the standard contract may be subject to change through negotiation." Thus this assumption did not change the terms and conditions of the RFP involved in that procurement because it simply requested something that was already explicitly allowed by the RFP, that is, negotiation.
The second assumption in that procurement states that the wording of paragraph 3.20.B(3) in the RFP is "unclear" and that Unisys "assumes that the Department does not intend for the proposer to indemnify the proposer's subcontractors." The reference paragraph in that RFP had contained a mistaken sentence which stated that the successful proposers "shall
indemnify its affiliated companies and sub-contractors . . ." That assumption did nothing more than identify a mistake, it did not change the terms and condition of the RFP.
The final assumption as to that 1998 procurement RFP stated that Unisys "assumes that language along the lines of the clarification provided for question two on page four of addendum one will become a permanent part of the contact." This assumption did not change the terms and conditions of the RFP, either, because addenda to the RFP are normally incorporated into a contract.
The assumptions made by Unisys in response to the 1998 RFP are not the same as the assumptions in the procurement at issue because none of them changed the terms and conditions of the RFP. Notably, the 1998 assumptions acknowledged this fact by inclusion of the following statements:
By stating the assumption below Unisys is not taken any exceptions or making any deviations to or from the terms or conditions of the RFP or the standard contract. Our acceptance of the terms and conditions are specifically included at tab
8 . . . We have however made certain assumptions to allow pricing of the proposal where a clear determination of the potential impact for a certain statement could not be ascertained.
No similar statement was included with the assumptions made by Unisys in its current procurement RFP proposal.
Regarding the 1997 SACWIS procurement, Unisys also
submitted a list of assumptions with its proposal. These, however, as shown by Mr. Shepard, did not rise to the same level as the assumptions in the instant RFP situation. Neither
Mr. Shepard, nor other witnesses were able to identify if any of the assumptions in that 1997 procurement ever changed the terms and conditions of the RFP because a complete text of the 1997 RFP was not available. No contract resulted from that procurement because the Agency did not receive sufficient funding to implement a contract. Subsequent negotiations to reduce the costs associated with the procurement were halted by the Agency's general counsel because those negotiations "got into areas that were not permitted by the RFP." Moreover,
Mr. Shepard for the Agency, in his testimony in this case, acknowledged that if any of the assumptions submitted by Unisys in the 1997 procurement changed the terms and conditions of the RFP, then the Agency would have been in error if it did not reject them as non-responsive.
Unisys contends that the Spherion proposal was non- responsive because Spherion only supplied 37 of the required 117 resumes identifying the personnel it would use to operate the contract. The failure of Spherion to include all resumes and identify all sub-contractors gave it a competitive advantage according to Unisys because Unisys had to obtain agreements from all sub-contractors on price in order to formulate a cost
proposal for its response to the RFP. By obtaining most of its staff after an award was made, Spherion would be in a more favorable competitive position, in making its proposal, allowing it to, in effect, "bid shop" for sub-contractors at decreased prices after it had secured the bid award. Unisys thus maintains that the failure to submit all the required resumes was a material deviation from the specifications of the RFP. Unisys also cites that part of Spherion's proposal where it announced that it "has a contract in place with the State of Florida to date. We will abide by the terms and conditions already agreed upon." Mr. Shepard for the Agency stated that he simply disregarded this condition expressed in attachment "K" by Spherion because he did not know what it meant. It would appear that it could be interpreted to mean that Spherion was proposing to abide by terms and conditions already agreed upon in some other unidentified contract with the Agency or with the "State of Florida" (Agency unspecified), which could mean interpreting terms and conditions which came from outside the specifications of this subject RFP. If that were the case it would possibly portend a material deviation from the specifications of this RFP.
Unisys contends that if Spherion were deemed to be unresponsive, because of these two reasons, that would leave only Deloitte as a responsive proposing vendor, if Unisys's
position that it was responsive and should be awarded the contract were rejected by the Agency. It maintains that, in order for this to then be a competitive procurement, a new RFP would have to be issued to allow the Department to have at least two qualified, responsive vendors to consider.
Moreover, Unisys contends that, in addition to Spherion, that Deloitte should be treated the same as the Unisys proposal was treated by the Agency in terms of intolerance for alleged deviations from the RFP. It contends that the RFP at Section 3.7G required background checks to be conducted on all contract personnel, at the expense of the contractor. Deloitte indicated that it would conduct such background checks, but "based on costs negotiated with the Department." In response to this contention, at hearing, Mr. Shepard, for the Agency, dismissed this assertion in the proposal by Deloitte as a "minor irregularity" because it wasn't clear to him, stating:
It could easily be interpreted to say that the scope of the background checks needs to be negotiated with the Department so they can figure out what it is going to cost them to do that. I mean, there are just a couple of ways you could interpret this language.
In given that, I could not come to the conclusion that this was a material deviation from the requirements.
The proposal by Deloitte clearly says costs "negotiated" (emphasis supplied) not "scope." Unisys thus contends that it is disparate and in effect arbitrary for the Agency to be
willing to overlook the inconsistency thus expressed in Deloitte's proposal by interpreting it as being as unclear or at most a minor deviation when it would allow Deloitte, through that proposal, to present an issue that must be negotiated with the Agency before background checks for any staff to be assigned to the job could be performed. This is contrasted with the Agency interpretation of the Unisys proposal regarding "discussion" of assumptions and regarding conducting "negotiations" as being unallowable conditions and material deviations from specifications.
Parenthetically, it is noted that, if this aspect of the Deloitte proposal and the above-discussed aspects of the Spherion proposal concerning the "other state contract" and the fact that its proposal was deemed responsive even though it was not held to the requirement of supplying all 117 resumes of proposed subcontractors (which might allow it "bid shop" subcontractors after an award) were deemed to allow Spherion or Deloitte a competitive advantage or to affect the cost of their proposals, then the argument that these apparent irregularities are material irregularities or departures from the specification of the RFP, might have some merit. However, because of the findings and conclusions below concerning the responsiveness of the Unisys's proposal, and the effect such has on Unisys's standing in this proceeding, these issues regarding Deloitte's
and Spherion's proposals cannot, at law, be definitively addressed so as to decide in this proceeding that all proposals should be rejected and the procurement effort be repeated.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding. §§ 120.569, 120.57(1), and 120.57(3), Fla. Stat. (2005).
Subsection 120.57(3)(f), Florida Statutes (2005), provides that a protesting party opposing a proposed Agency action or award has the burden of proof to establish that the Agency decision is "contrary to the Agency's governing statutes, the Agency's rules or policies, or the solicitation specifications." The standard of proof is "whether the proposed Agency action was clearly erroneous, contrary to competition, arbitrary, or capricious." Id. See also State Contracting and Engineering Corp., v. Department of Transportation, 709 So. 2d 607, 609 (Fla. 1st DCA 1998). That case also stands for the proposition that a proceeding such as this is for the purpose of evaluating the action taken by the Agency.
Unisys Proposal-Responsiveness
The most pivotal question to be resolved in determining whether the proposed Agency action is in conformance with the above-cited legal authority is whether it has been
correctly determined that the Unisys proposal was non-responsive because of the inclusion of the list of "assumptions" in the cost proposal portion of its vendor proposal in response to the RFP.
Section 287.057(2), Florida Statutes, governs awards pursuant to RFPs. This statute requires that an RFP include "all contractual terms and conditions applicable to the procurement" and that the contract be awarded to the vendor who is deemed responsive. A vendor who is not responsive to the bid specifications has no entitlement to award. Marpan Supply
Company v. Department of Management Services, 196 WL 1060376 at
*9 (DMS Final Order, November 22, 1996) holding that " . . . Respondent has no legal authority to consider a bid from any bidder other than a responsive bidder. Respondent's attempt to do so is ultra vires and illegal."
A "responsive vendor" is defined by Section 287.012(26), Florida Statutes, as a vendor who has submitted a proposal " . . . that conforms in all material respects to the solicitation." A "responsive proposal" in turn is defined at Section 287.012(25), Florida Statutes, to mean a proposal "submitted by a responsive and responsible vendor that conforms in all material respects to the solicitation." The opinion of the Second District Court of Appeal in Harry Pepper and Associates, Inc., v. City of Cape Coral, 352 So. 2d 1190, 1193,
provides that a proposal that deviates from bid specifications is materially non-conforming and thus not responsive if that variance "affects the amount of the bid by giving the bidder an advantage or benefit not enjoyed by the other bidders."
In the Harry Pepper case the low bidder for a water treatment project (Gulf) had listed a brand of pumps in its initial bid that was inconsistent with the brand provided by the Agency's bid specifications. The City accepted that bid despite its non-conformity when Gulf agreed, after bid submission, to comply with the specifications. The court, however, concluded that the variance in the initial submission was material and that the Agency (City) lacked the discretion to waive this material deviation. The court reasoned that it would be conducive to favoritism to allow this bidder to qualify after its bid was submitted, stating:
The test for measuring whether a deviation in a bid is sufficiently material to destroy its competitive character is whether the variation affects the amount of the bid by giving the bidder an advantage or benefit not enjoyed by the other bidders. Here, there is no doubt that the difference between the conforming and non-conforming pumps was material, yet Gulf was permitted to modify its bid. Further, the inclusion of non-conforming pumps was an advantage not enjoyed by other bidders, who were required to specify only approved equipment.
No one suggests that Gulf could have been required to perform the contract with conforming pumps, as its bid specifically
stated that it would use Aurora, the non- conforming pumps. Therefore, Gulf had everything to gain and nothing to lose.
After everyone else's bids were open, Gulf was in a position to decide whether it wanted the job bad enough to incur the additional expense of supplying conforming pumps.
CF of Bobick v. Florida Keys Aqueducts Authority, 648 So. 2d 1263 (Fla. 3rd DCA 1995), wherein the court held that the Agency was not obligated to waive what apparently was considered a minor irregularity in a bid.
Other case authority supports the proposition asserted by the Agency in this case, that where a material deviation is found in a bid, due to a proposed revision to a contact term contained in the bid specifications, that the proposal can be found non-responsive. See City of Miami Beach v. Klinger, 179 So. 2d 864 (Fla. 3rd DCA 1965), wherein it was concluded that a bid for a lease concession agreement differed materially and substantially from that invited by the City where, the bid included an option for an additional five-year term on top of the five-year term specified in the invitation to bid.
In Sprint Pay Phone Services, Inc., v. Department of Corrections, 2001 WL 361423 at *6 (DOAH Recommended Order, April 6, 2001, Final Order adopting adopting Recommended Order in toto, April 24, 2001), the Department of Correction issued an RFP that included a liquidated damages provision (Section 7.30)
that did not limit the total amount of liquidated damages that could be assessed against the vendor. However, one of the bidders (Sprint) took the position that the "limitation of remedies" provision in the RFP (Section 7.32) effectively limited the liquidated damages that could be collected, and therefore proposed a $100,000.00 liquidated damages cap in its response to the RFP. The Administrative Law Judge in that case found in favor of the Department position that the Sprint proposal was non-responsive, notwithstanding Sprint's argument that it was merely trying to clarify an ambiguity in the RFP, stating as follows:
Mr. Jewel testified that the purpose of inserting this language in the proposal was to, 'point out to the Department of Corrections that our agreement to 7.30 had to be read in conjunction with the language in the agreement and [sic] 2.7.3.2.'
Mr. Jewell acknowledged that vendors had the opportunity to ask questions prior to the submittal of their proposals to the Department and that Sprint did not ask any questions regarding the relationship between Sections 7.30 and 7.32 of the RFP.
A letter written by Paul Eide, Customer Care Manager for Sprint, and faxed to the Department . . . after the opening of the proposals, stated in pertinent part:
In response to the RFP, we found the liquidated damages Section to [sic] vague and confusing to the exact dollar amount of a penalty situation. Our intentions were to point out the ambiguity and merely cap the amount so the winning vendor was not liable for an infinite amount of money. . . .
The evidence submitted by Sprint is not sufficient to establish that Sprint's proposal was responsive. Rather, the evidence establishes that Sprint chose to modify the supplemental proposal sheets even though those who submitted proposals were advised in Sections 5.1 and 6.1 that failure to meet any of the mandatory responsiveness requirements would render a proposal non- responsive and result in rejection of the proposal and that further evaluation would not be performed. (Emphasis supplied).
In BellSouth Communications, Inc., v. Department of Lottery, 1999 WL 1486711 (DOAH Recommended Order, December 13, 1999 Final Order adopting Recommended Order in toto January 18, 2000) the bidder (BellSouth) included "clarifications and modifications" of RFP contact terms in its proposal under the theory that they would be considered only as alternatives that would be subject to later negotiation. The Administrative Law Judge ruled that the Lottery reasonably and logically interpreted this response as conveying BellSouth's refusal to accept mandatory RFP requirements, rendering the BellSouth proposal non-responsive, stating:
[A] request for proposals must include 'a statement of the commodities or contractual services sought and all contractual terms and conditions applicable to the procurement of commodities and contractual services . .
. .' Section 287.057(2), Florida Statutes (1999). Thus, The flexibility inherent in a request for proposals does not extend to the scope of services to be performed under the
contract or to the terms and conditions that the agency determines will be included in the contract.
* * *
Bellsouth chose to include in its proposal clarifications and modifications to mandatory requirements of the Revised Request for Proposal even though it had notice that deviations from these mandatory requirements were material deviations and would render a proposal non-responsive. It is of no legal significance in determining the materiality of the deviations that Bellsouth considered its clarifications and modifications commercially reasonable and necessary to remedy ambiguities and potentially unenforceable terms in the Revised Request for Proposal.
* * *
Bellsouth made it apparent on the face of its proposal that it found the mandatory requirements in the specified sections unacceptable. If, as Bellsouth asserts, a responsive proposal is one that conforms in all material respects to the request for proposals, the Department could reasonably find Bellsouth's proposal non-responsive.
Id. at 17-18 (emphasis added).
In International Business Machines v. Department of
General Services, 1979 WL 63295 (Recommended Order, April 27, 1979, Final Order adopting Recommended Order in toto, May 15, 1979), the Agency issued an RFP for all on-line system for updating license, registration and title information. Attached to the RFP as attachment "A" was a contract that the successful vendor would be required to execute. The RFP allowed vendors to
propose minor changes to the RFP contract, but only if the changes were proposed prior to bid submissions. IBM, however, proposed changes to the contract in its bid response itself.
For instance, the IBM bid proposed providing remedial maintenance "promptly," rather than within one hour and requiring that the state exercise its right to defer equipment installation by giving 90-days' notice, as opposed to 30-days' notice. The Hearing Officer agreed with the Agency that these proposed contract terms changes, in addition to others contained in the IBM bid, constituted material deviations that rendered the bid non-responsive, stating:
A contractual requirement that responses to calls for remedial maintenance be given in one hour cannot be misunderstood. A contractual requirement that the response be "prompt" requires different things under different circumstances. It is not difficult to envision circumstances where a "prompt response" would be more than one hour. The State expressed a desire to eliminate any ambiguity with respect to response time. IBM's effort to insert ambiguity materially alters the terms of the RFP.
[T]he RFP provides that the State has the right to defer installation of equipment upon thirty days notice to the contractor. In its response to Paragraph 4b, IBM required that the State give it ninety days notice for delay in an installation date.
This is a material deviation from the provisions of the RFP. Unforseen circumstances could place the State in the position of having to defer installation of equipment. Increasing the Notice
requirement from thirty days to ninety days increases the potential exposure of the State to paying charges for equipment that it cannot use.
* * * Paragraph 2.0 of the RFP precludes
submission of recommended changes to Attachment "A" of the RFP unless the changes are proposed in advance of bid submissions.
. . . Proposed changes not submitted prior to bid submissions would render a bid unresponsive to the RFP.
Id. at *12, *14 (emphasis supplied).
The hearing officer in that case also noted that past practices of the Department to permit proposed changes to an RFP to be submitted in bid proposal "cannot vary the clear language of the RFP."
Courts have noted that bidders are entitled to rely on the provisions in the RFP in submitting proposals and that allowing one bidder to insert new issues after the proposals have been submitted for purposes of contract negotiations with the Agency is impermissible. See, e.g., State, Department of
Lottery v. Gtech Corp., 816 So. 2d 648, 653 (Fla. 1st DCA 2001), wherein the court opined:
[I]t seems clear to us that the pivotal issue before the trial court and in this appeal is whether the Lottery can treat the RFP process as little more than a ranking tool to determine a preferred provider and then negotiate a contract with that provider with little or no concern for the original
proposal of that preferred provider. . .
.[W]hat was at issue here was whether the Lottery and AWI were free to negotiate a contract without limitation once the competitive respondent Gtech was eliminated by virtue of its less-competitive response to the RFP. Given this view of the primary issue presented, no factual determination was required.
Further, it seems to us that to hold otherwise would to be to approve the use by the Lottery of the RFP process for ranking purposes only and would result in a disincentive for responding vendors to submit accurate and responsible responses to the RFP. We hold that Gtech was entitled to rely on the RFP process in submitting a responsive proposal under Florida's system of competitive bidding and that the Lottery now cannot ignore those laws in reaching a new agreement which may in the final analysis bear little resemblance to the proposal that earned AWI preferred provider status in the first instance.
Legal authority also supports the Department's position that it could not simply ignore the Unisys assumptions since doing so would give Unisys the option of abandoning its proposal before actually executing the contract. The Administrative Law Judge in Phoenix Mowing and Landscaping v.
Department of Transportation, 2001 WL 432180 (DOAH Recommended Order, April 25, 2001, Final Order adopting Recommended Order of May 21, 2001) refused to uphold an Agency award to a bidder that was allowed to correct an error in its bid after proposals were submitted. The Administrative Law Judge noted that the requirement ignored by the bidder involving submission of
security for the bid in the proper form, was underlined in the RFP and placed in "bold-face type to make it stand out." Id.
The judge determined that giving the bidder an opportunity to cure the defect or refuse to cure it, thus negating its bid, gave the bidder "an advantage not enjoyed by other bidders." He stated:
A bidder who has the option of taking a contract or not taking a contract after the bidder knows what the other bids are on a project has a competitive advantage over other bidders. If the bidder has bid too close to the profit margin, the bidder can refuse to cure the bid defect and avoid performance on the unprofitable contract. .
. . The bidder gets to opt to cure and perform, or not cure without penalty because technically the bid was never conforming and the bidder's security on the bid was never in jeopardy. The bidder gets a double benefit at not risk. [I]t is the
option to walk without penalty that matters, not the actual act of walking away from the deal. Because Willeby's bid was not responsive, he enjoyed the benefit of being able to take a second look and decide whether or not to accept the contract. That he chose to stand by his bid does not cure the fact that he gained a substantial competitive advantage over all the other bidders for this contract, including the Petitioner.
See also Mercedes Lighting and Electrical Supply, Inc. v. State Department of General Services, 560 So. 2d 272, 275 (Fla. 1st DCA 1990), wherein the hearing officer found that to allow Mercedes Lighting to correct a deficiency after bid opening would allow Mercedes an advantage not enjoyed by other bidders
because it could re-visit its bid, refuse to supply the required list and thereby disqualify itself and withdraw the bid, whereas other bidders who timely submitted their lists would not have the opportunity to re-visit or re-draw their bids, but would have to be held to the provisions of the invitation to bid.
In John G. Grubbs, Inc., v. Suncoast Excavating, Inc.,
594 So. 2d 346, 348 (Fla. 5th DCA 1992), the court held that a binding contract exists when a public body accepts a definite proposal of a particular bidder and notifies the bidder of such acceptance, even if a formal contract has not been signed. In this case, a contract award to Unisys, unlike to one of the other vendors, would not immediately result in a final contract because the assumptions would have to be addressed and the parties' positions reconciled through negotiation before there could be a final contractual agreement. If the terms are not worked out to Unisys's satisfaction, Unisys would have the option to abandon the contract or its proposal. As the court noted in Mercedes Lighting and the ALJ noted in the Phoenix
Mowing case, the right to walk away confers an unfair competitive advantage. Knowing it could negotiate after opening or posting of the proposals on some items might impel Unisys to price some items artificially low with the knowledge that it could make up its profit margin by changes arranged for in the hoped-for negotiation process, after proposal submissions.
The RFP in this case was submitted in accordance with Section 287.057(2)(a), Florida Statutes, and contained all the contract terms and, as a special condition stated unequivocally that vendors "shall not submit with any proposal any contact terms or conditions not in conformity with the terms and conditions set forth in this RFP." The RFP then added in bold print that any "[p]roposal containing terms and conditions conflicting with this requirement shall be rejected . . .". Section 2.9 of the RFP provided "[a]ny qualification, counter- offer, deviation from or condition to the terms, conditions or requirements of the RFP may render the proposal non-responsive."
Unisys, however, submitted a proposal that was predicated on contract terms in the form of "assumptions" that negated or conflicted with some of the terms contained in the RFP and thus violated the RFP. The Unisys proposal "assumed" for instance that the contract resulting from the RFP would (1) require DCF to pay Unisys for work that was in excess of the agreed-upon estimate (assumption twelve), (2) make any untimely performance by Unisys a non-material breach (assumption five),
(3) limit Unisys's liability (assumptions nine and eleven), (4) force DCF to recover damages via litigation rather than by making a claim against the performance bond except where the breach results in contract termination (assumption seven), and
(5) give the Unisys proposal priority over the RFP itself for
purposes of resolving conflicts between the two documents (assumption eight). The fact that Unisys identified these new contract terms in effect, as "assumptions that Unisys has made for this proposal," confirms that its proposal was based on these contract terms and their inclusion, and not the contrary terms stated in the RFP and was thus in violation of the RFP.
Those assumptions that actually embodied terms that differed from those of the RFP, referenced in the above findings would, as noted in the above findings, result in a more financially favorable contract for Unisys than the terms embodied in the agreement proposed in the RFP to all bidders. The deviation in the Unisys proposal would accord Unisys a financial benefit that the competing vendors did not enjoy, and necessarily affect the amount Unisys was bidding for the work. Unisys employment of these assumptions or interpretations in its cost proposal, as opposed to the technical proposal, shows that Unisys was relying on these assumptions in arriving at the price to include in its proposal. It is thus reasonable for the Agency to conclude that the variances in the Unisys proposal are material and that its proposal therefore, in these particulars, was non-responsive to the RFP.
Although the RFP's specifications admonish against including any additional terms and conditions in proposals, the assumptions contained in the Unisys proposal contained terms or
interpretations that deviated from the specifications of the RFP. Unisys reserved the right to negotiate further "clarifications" to the final terms. It is noteworthy that if Unisys had confusion or had items from the RFP's requirements or specifications which it deemed required clarification then it could have challenged the specifications within the time limit statutorily provided. Failing that, it could have sought pre- submittal clarifications. In any event the Department correctly determined that the above-discussed assumptions in the Unisys proposal constituted material deviations from the mandatory contractual terms contained in the RFP. Even if those deviations were waivable, if the Unisys proposal were accepted, the Department would have to include the modified contractual terms proposed by Unisys in any contract it might enter into with Unisys. If Unisys were the successful bidder, it could object to the inclusion of the contrary RFP terms in the contract on the basis that it had not accepted those terms by its proposal. Thus, under these circumstances, the Department did not act in violation of its governing statutes, rules, and solicitation specification by rejecting the Unisys proposal as being materially non-responsive.
Unisys understandably has submitted evidence concerning past policy or practice by the Agency of accepting responses to RFPs which contained assumptions or points of
clarification, asserting that this demonstrates arbitrariness because the Agency does not propose to accept such assumptions with regard to this procurement. The exemplar procurements occurred more than seven years ago in 1997 and in 1998, as referenced and discussed in the above findings of fact. One of them resulted in a contract. The three assumptions included in the procurement that resulted in a contract did not change the terms and conditions of that RFP, however. Even if those assumptions in that past RFP procurement did change the terms and conditions of the RFP and the Agency still accepted them in entering into and executing the resulting contract, a past error by the Agency by allowing Unisys or another vendor to include such assumptions in a proposal does not create a binding policy or practice applicable to the subject procurement. The plain language of the RFP involved in this proceeding controls and it prohibits the inclusion of any terms and conditions not in conformity with the terms and conditions set forth explicitly in the RFP. See International Business Machines supra. ("The Fact that the state's practice in the past has been to permit proposed changes to an RFP to be submitted in bid proposals . .
. cannot vary the clear language of the RFP. Proposed changes not submitted prior to bid submissions would render a bid un- responsive to the RFP.")
Because the proposal submitted by Unisys was non-
responsive in the particulars found and concluded above, then, at law, Unisys does not have standing to challenge the procurement process as to the status of the other vendors, concerning their responsiveness or the intended award of the contract to Deloitte. See Sprint Payphone Services supra, (petitioner lacked standing to challenge award of contract to another vendor where it failed to meet threshold burden of showing that their own submission was responsive to the RFP); See also Robert Allan Weinberg v. Department of Juvenile Justice, 1995 WL 1053098 (DOAH Recommended Order filed June 15, 1995; Final Order September 6, 1995, adopting Recommended Order). The Hearing Officer in the Weinberg Recommended Order reasoned:
The only entities having standing to challenge a bid award are those who can potentially be a party to a contract with the State. Fort Howard Co. v. Department of Management Services, 624 So. 2d 783 (Fla.
1st DCA 1993); Westinghouse Electric Corporation v. Jacksonville Transportation Authority, 491 So. 2d 1238,m 1240-41 (Fla. 1st DCA 1986). A bidder whose proposal is not responsive to material items of the ITB cannot be a party to a contract with the agency because it has not met the Agency's specifications. Therefore, under the authority of these cases, such a petitioner would not have a substantial interest in the matter and thus would be unable to prove its standing to challenge the award to the contract . . . .
Responsiveness of Spherion and Deloitte
Inasmuch as Unisys does not have standing to challenge the other vendors' proposals, including the element of their responsiveness, the responsiveness of Spherion and Deloitte cannot be definitively determined in this proceeding. The responsiveness of the protestant is a jurisdictional threshold to determine the question of the other "bidder's" responsiveness. It is noteworthy, however, that the Department contends that it had no basis to reject the Spherion proposal because it did not contain the required number of resumes. The requirement that the vendor provide resumes for all proposed staff, including references, in the second RFP was changed from being a fatal criterion to a mandatory one. The Spherion proposal was evaluated pursuant to the non-fatal criterion relating to sufficient personnel. It was not rejected for non- responsiveness for that reason, but it was given a very low score. Thus the Agency took the position that Spherion gained no competitive advantage by failing to include as many resumes as the other vendors. Not every deviation from an RFP requirement is material. A deviation is material only if it gives a proposer a substantial advantage over other proposers and thereby restricts or stifles competition. Tropabest Foods,
Inc., v. State Department of General Services, 493 So. 2d 50, 52 (Fla. 1st DCA 1986).
Additionally, the reliance by Unisys on a manual that purports to require the Department to reject any incomplete proposal is improper. The manual was not in effect at the time of this procurement, the vendors were unaware of it, as was the Agency procurement officer. An Agency issuing a procurement document must evaluate the responses received solely on the criteria stated in that document, and prospective proposers are entitled to rely on the completeness of those terms in the RFP. See Aurora Pump v. Goulds Pump, Inc., 424 So. 2d 70, 75 (Fla. 1st DCA 1982).
The Department also determined that the statement in Spherion's Supplemental Proposal Sheet concerning Spherion's agreement to abide by the terms and conditions of an unidentified existing state contract was a minor irregularity, appropriately waivable pursuant to Section 2.9 of the RFP, according to Mr. Shepard, who apparently did not really understand the reference to the unidentified existing state contract. The Agency contends that statement did not give Spherion any competitive advantage. It also takes the same position regarding the statement in Deloitte's proposal that it would be "responsible for obtaining . . . background checks based on costs negotiated with the Department." Mr. Shepard determined that, in his view this was an ambiguous statement and
a minor irregularity that did not affect the price of the Deloitte proposal.
These issues, as noted above, regarding the responsiveness of Spherion and Deloitte cannot be definitively determined by the undersigned at law, because of the failure of Unisys to establish its standing to raise these issues. Nevertheless, parenthetically, it might be argued that the proposal of Deloitte to negotiate costs of background checks might amount to the same type of variance in terms or conditions as occurred in the case of the Unisys proposal. If costs were to be negotiated it might have some material effect on the price of the Deloitte proposal. The same might be argued concerning the Spherion supplemental proposal sheet statement concerning its agreement to abide by the terms and conditions of the unidentified existing state contract. The terms and conditions of an existing state contract Spherion apparently incorporated by reference in its proposal might constitute some sort of departure from the specifications of this RFP. The Spherion deviation from the RFP's terms and conditions regarding the provision of all the required resumes and the identity of all required staff may be as the Agency deemed it, a minor irregularity dealt with adequately by devaluation of the total points to be awarded to Spherion. It might alternatively be the case that Spherion would thus get a material competitive
advantage vis-a-vis other vendors by not having to identify by resume or otherwise all of its subcontractors or staff. This might enable it to secure an award and then "shop its bid" in order to obtain lower prices from previously unidentified staff or subcontractors and thus enhance the profitability it would have in its award and contract. Nonetheless, as determined above, at law the undersigned cannot determine these issues in this proceeding.
Unisys has also contended that even if it is not awarded the contract the Department should be required to reject all bids and conduct a third competitive procurement for this contract, based on its argument that non-responsiveness by Spherion leaves only one vendor and therefore a non-competitive situation. Since the undersigned, at law, has no ability to decide the question of the responsiveness of Deloitte or Spherion's proposals, this question need not be addressed.
Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore,
RECOMMENDED that a final order be entered by the Department of Children and Families awarding the Florida System contract at issue to Deloitte Consulting LLP.
DONE AND ENTERED this 2nd day of February, 2006, in Tallahassee, Leon County, Florida.
S
P. MICHAEL RUFF Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with Clerk of the
Division of Administrative Hearings this 2nd day of February, 2006.
ENDNOTE
1/ See Florida Administrative Code Rule 60A-1.002(7)(b), which provides as follows:
PUR 1000 contains standard terms and conditions that will apply to the contract which results from the solicitation event. The Agency shall attach additional contract terms and conditions specific to each particular solicitation. These additional terms are commonly referred to as "special conditions." In the event of any conflict between the PUR 1000 Form and any Special Conditions attached by the Agency, the special conditions shall take precedence over the PUR 1000 Form unless the conflicting term in the PUR Form is required
by any section of the Florida Statutes, in which case the term contained in PUR 1000 shall take precedence.
COPIES FURNISHED:
Donna Holshouser Stinson, Esquire David K. Miller, Esquire
Broad and Cassel
Post Office Drawer 11300 Tallahassee, Florida 32302
Donna Blanton, Esquire Jeffrey Frehn, Esquire
Radey, Thomas, Yon and Clark, P.A.
301 South Bronough Street, Suite 200 Tallahassee, Florida 32301
Thomas Panza, Esquire Diane Lindstrom, Esquire
Panza, Maurer & Maynard, P.A. 3600 North Federal Highway
Fort Lauderdale, Florida 33308
Gregory Venz, Agency Clerk Department of Children and
Family Services Building 2, Room 204B 1317 Winewood Boulevard
Tallahassee, Florida 32399-0700
John Slye, Acting General Counsel Department of Children and
Family Services Building 2, Room 204
1317 Winewood Boulevard
Tallahassee, Florida 32399-0700
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
10 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.
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 22, 2006 | Agency Final Order | |
| Feb. 02, 2006 | Recommended Order | Petitioner failed to show a proposal sufficiently responsive to the Request for Proposal specs to be deemed responsive. Therefore, Petitioner could not have standing to attack the responsiveness of the other two vendors whom Respondent found responsive. |
