C. Wright Administrative Building 600 Southeast Third Avenue, 11th Floor Fort Lauderdale, Florida 33301
Board of Broward County, Florida (Respondent or Board) may require bidders to comply with specifications and conditions for a bid solicitation that pertains to audiovisual, photographic equipment and related supplies, and computer peripherals as set forth in, and identified as, Invitation to Bid No. 27-040N. The Petitioner, Audio Visual Solutions Corporation (Petitioner), timely filed a challenge to the bid specifications and conditions for the subject acquisition.
On or about April 19, 2006, the Board issued Invitation to Bid (ITB) No. 27-040N for the procurement of audiovisual, photographic equipment and related supplies, and computer peripherals. The purpose of the bid solicitation was to seek prices on the equipment with delivery to various Board locations (schools, offices, and other centers operated by the Respondent) within Broward County, Florida. The Petitioner timely challenged the bid specifications. Thereafter, the parties met to attempt to resolve the disputed language of the specifications. A number of the issues raised by the Petitioner were resolved by the parties. Further, the parties agreed that prior to the referral of the case to the Division of Administrative Hearings (DOAH), they would attempt to amicably resolve the issues identified by the Petitioner.
to DOAH on June 5, 2006.
On June 12, 2006, a telephone conference call was conducted with the parties who stipulated that to afford adequate time for preparation for the hearing and to pursue continuing efforts of discovery and settlement, the case should be set for hearing for August 3, 2006. By notice entered June 12, 2006, the case was scheduled for hearing and an Order of Pre-hearing Instructions was entered.
The parties filed a Joint Pre-Hearing Stipulation in accordance with that order on July 28, 2006. Portions of the Joint Pre-hearing Stipulation have been utilized in the preparation of this Recommended Order.
At the hearing, the Petitioner presented testimony from Barry C. Jackson, the founder, owner and president of the Petitioner corporation. The Respondent offered testimony from Robert N. Waremburg, the School Board’s director of supply management and logistics; and Donnie Carter, the School Board’s deputy superintendent for operations. The parties submitted a joint package of exhibits numbered Joint Exhibits 1-9 that was received in evidence.
The transcript of the proceeding was filed with the Division of Administrative Hearings on August 11, 2006. The parties stipulated that they would file their Proposed Recommended Orders no later than September 11, 2006. Both
parties complied with that agreement. Both Proposed Recommended Orders have been considered in the preparation of this Recommended O`rder.
The Petitioner is a corporation that deals, resells and provides audio, video, and conferencing equipment to various entities throughout the state. The Petitioner represents a number of trade names in the electronics industry and serves educational and governmental markets in the State of Florida. The Petitioner holds contracts to provide electronic equipment to the Respondent at the present time.
As part of its ongoing operation, the Petitioner routinely responds to bid invitations and solicitations such as the one at issue. The Petitioner’s standing to challenge the specifications in the instant matter is not disputed.
In the instant matter, the Petitioner received the ITB for the Respondent’s bid No. 27-040N and began a detailed review of the general, special, and other specifications set forth in the ITB. The Petitioner determined it would evaluate the overhead expenses required, labor and documentation, invoicing, delivery, and other specifics that would play a part in pricing the products for response to the ITB.
At all times material to the allegations of this protest, the Respondent was the entity charged with the
responsibility of acquiring goods and services to support the operation of the public schools in Broward County, Florida.
Respondent was the appropriate entity with whom the protest should have been filed as it was the procuring entity for
ITB No. 27-040N. The Respondent bears the ultimate burden for
all procurement necessary to operate the public schools for Broward County, Florida.
The review process used by the Petitioner in this case is the same process it has utilized in the past when it has successfully obtained contracts with the Respondent. The bid evaluation Petitioner performs is necessary to determine whether the ITB is within the scope of its operations.
On or about April 24, 2006, the Petitioner forwarded a Notice of Intent to Protest regarding certain Special Conditions of the subject ITB. The Petitioner filed its notice within 72 hours of receipt of the ITB.
On May 4, 2006, as the wording for the disputed Special Conditions remained unresolved, the Petitioner filed a Formal Written Protest to contest the conditions and specifications of ITB No. 27-040N. The Respondent has not disputed the timeliness of the instant protest.
Throughout the pre-hearing process, the parties met and continued efforts to resolve the disputed points. As set forth in the Joint Pre-Hearing Stipulation, disputes regarding Special Conditions 22, 23, 28, 29, 31, 32, 33 and 34 were resolved during the School Board Bid Protest Meeting or immediately prior to the formal hearing. The findings and resolutions set forth regarding the challenge to each of those Special Conditions are set forth in the Joint Pre-Hearing
Stipulation and are adopted here by reference.
At hearing, left unresolved were the Petitioner’s challenges to Special Conditions 3, 18, 20, and 27 of ITB No. 27-040N. In the ITB at issue, “SBBC” refers to the Respondent.
The Petitioner challenged Special Condition 3 for several reasons. That provision stated:
AWARD-For Bid Items 1 through 38: In order to meet the needs of the school system and SBBC, each ITEM shall be awarded to one primary and up to two alternate responsive and responsible bidders meeting specifications, terms and conditions. The lowest awardee in an item or group shall be considered the primary vendor and should receive the largest volume of work. SBBC reserves the right to procure goods from the second and third lowest bidders if: a) the lowest bidder cannot comply with delivery requirements or specifications; b) the lowest bidder is not in compliance with delivery requirements or specifications on current or previous orders; c) in cases of emergency; d) it is in the best interest of SBBC to do so regardless of reason.
For Bid Item 39: In order to meet the needs of SBBC, awards will be made to all bidders who submit a catalog and offer a discount or net pricing from the most current vendors catalog/price sheet. These bidders shall then be in a favorable position to compete for the Board’s business, and those who offer lowest net prices for those items, that comply with the specifications and otherwise meet requirements, should obtain the largest volume of business.
After award of this bid, any bidder
receiving an award who violates any specification, term or condition of this bid can be found in default of its contract, have its contract canceled, be subject to the payment of liquidated damages, and be removed from the bid list and not be eligible to do business with this School Board for two years, as described in General Conditions 22, 23 and
53. (Emphasis in original).
At hearing, the Respondent agreed that the words “regardless of reason” in the first section of Special Condition 3 would be deleted. The other concerns regarding this provision were not resolved. Thus, for the items to be procured the remaining terms of this provision would be applicable.
The ITB sought responses for various items of equipment by unit price. For example, Item 1 of the ITB identified the equipment sought as “Multi-Media Projector: UltraPortable Low-End.” The bid summary sheet provided that an approved model for the item would be an Epson E3. Further, the quantity listed was for 2000. A bidder would be expected to provide the unit price, the total price (presumably applying that unit price to the volume sought), and then disclosing what percentage the unit price has been discounted off the manufacturer’s list price. For each of the 38 items identified by the ITB, a bidder would be required to provide all of the requested information. As to Item 38, the bidder was required to include quotes for multiple components of the
item.
The Petitioner maintains that Special Condition 3 does not conform to the Florida Administrative Code. Specifically, Petitioner believes that an award to multiple bidders violates Florida Administrative Code Rule 6A-1.012.
The Petitioner also believes that Special Condition
3 violates a policy of the Broward County Purchasing Policy rules.
Specifically, Petitioner argues that Respondent’s policy set forth in Purchasing Policy 3320 requires a single award.
Essentially, the Petitioner contends that multiple awardees are not acceptable as the Respondent is required, by law, to award the contract to the lowest and best responsible and responsive bidder. When multiple awards are made the Respondent is not selecting the lowest and best. Therefore, for each item identified the Respondent should select the lowest and best responsible and responsive bid.
Similarly, as it relates to Special Condition 3, Item No. 39, an award will be made to all bidders who submit a catalog and offer a discount on pricing from the most current vendor’s catalog/pricing sheet. Again, if all bidders are accepted, no one bidder will be identified as the lowest and best responsive and responsible bidder. Additionally, since some vendors use the same catalog, the lowest (or greatest percentage discount) bidder is not well served since all bidders will know the percentages (once the bid is opened). Disclosing the percentage will not assure that the Respondent will receive the item at the lowest possible price since the Respondent is not obligated to use the catalog of the lowest priced bidder. Further, a vendor using a catalog that has prices that are higher (for the same item) can offer a higher percentage discount and not affect the overall net to them.
For every purchase the Respondent would have to compute
the item price and apply the discount before the real cost could be known.
The Petitioner challenged Special Condition 18. In pertinent part, that provision stated:
VOLUME DISCOUNT: Through history, it is known that SBBC purchases the same item in high volume. In order for SBBC to leverage a pricing advantage, bidders are to provide, on the bid summary sheet, the lowest net price for purchasing a minimum of one. Additionally, SBBC will release quotes to awardees for volume purchasing and request the best and the lowest net price for ordering the quantity of items indicated on released quotes. The awardee that offers the lowest cost will be awarded that quote.
This provision is offensive to the Petitioner because it allows the second bite of the apple. That is, by requiring the bidders to disclose their pricing for this ITB and then allowing all awardees to come back after-the-fact with a second “quote” does nothing to assure that the competitive pricing inherent in the bid process has been protected. Any awardee could, after seeing the pricing offered by the competition, know the discounts applied by the competition. This process according to the Petitioner defeats the purpose of finding the lowest bidder at a fixed point in time. The ITB responses merely create a pool of potential winners. So long as a bidder was lowest on one item, it will be assured an opportunity to “quote” on all purchases (and
will do so having the competition’s best numbers). Who would offer their best prices on all items in response to this ITB? No one. The bidder that offers (at whatever low price) the best price on any single item is designated an “awardee” and gets to try to defeat the competition on each “quote” subsequently announced. Moreover, the “quotes” are not guaranteed the same protections as the sealed bid process.
Consequently, the Respondent may purchase thousands of dollars of items without being assured that they were given the lowest and best price. The “quotes” may exceed $25,000.
Special Condition 20 was also challenged by the Petitioner for the same reason. That provision states, in pertinent part:
QUOTES: SBBC anticipates the procurement of bundled classroom solutions with installation. Therefore, SBBC reserves the right to solicit quotes for these solutions at any time during the contract period.
The quotes will only be released to awardees of this contract. The models that become components of the solution must be the same models that were awarded as a specific item. However, there is no guarantee that an awardee of a model of a component of the solution will be the awardee of the quote. SBBC is opening competition to all awardees of this contract to offer the best pricing for these solutions. Section 5, Additional Information, Bundled Classroom Solutions includes a form that bidder is to complete and return with the bid. Bidder is to state if it wants to receive quotes, and if it has the capability to provide the necessary licensing and certifications
associated with installation and wiring, not to include, high voltage electrical installation. Awardee of the quoted solution will be solely responsible for any issues related to the installation and minimum three [sic] warranty period of the bundle. Additionally, bidder must have an established working relationship with an SBBC awarded high voltage electrical company. This form is a questionnaire that is for informational purposes and will not be considered in determining award.
Special Condition 27 provides:
BALANCE OF LINE ITEM DISCOUNT (ITEM 39):
SBBC encourages all awardees for this item to offer SBBC additional discounts for volume purchases of like items. SBBC reserves the right to release quotes for large catalog volume purchases. Bidders are required to offer a balance of line single, fixed percentage discount for equipment ($1000.00 or greater) and supplies (under $1000.00) off bidders catalog for any Audiovisual, Photographic Equipment and Related Supplies, and Computer Peripherals not itemized on the Bid Summary Sheets. This percent must be stated in the Bid Summary Sheet. An omission from this entry will be considered as a 0% discount offered from catalog.
The single fixed percentage discount quoted by bidder shall apply to the catalog list price for all catalog items. This percentage discount does not include the itemized equipment listed on the Bid Summary Sheet. Items excluded from single fixed percentage discount should be listed on a separate piece of paper. These items will be excluded and should not be purchased. In the event a bidder handles catalog items that carry a little or no percentage, this fact shall be taken into consideration and percentages offered shall be a single fixed percentage discount for
each category (supplies and equipment) and catalog. Awardees may offer SBBC additional educational discounts at any time and invoice SBBC at a greater discount than their bid discount.
According to the Petitioner, bundled solutions have the possibility and the likelihood of exceeding $25,000. If so, the requirement for sealed bids by allowing only quotes would be circumvented.
The Respondent seeks to obtain the needed equipment at the lowest possible cost to the School Board. By using the “quotes” procedure it believes it will achieve a lower cost per item purchased. The “quote” procedure to be used does not, however, allow entities not within the “awardee” group to participate. If the purpose of the “quote” is to secure the lowest possible price at a fixed point in time (at a point in time future to the ITB opening), the possible savings available through another entity outside those within the “awardee” class is lost. Further, members of the “awardee” class have no incentive to provide their lowest price for all items bid in response to this ITB.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. § 120.57(3), Fla. Stat. (2006).
Section 120.57(3), Florida Statutes (2006), provides, in pertinent part:
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, proposals, or replies, 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 solicitation 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 this case, the Petitioner has challenged the specifications of the ITB. As the party asserting the challenge, the Petitioner bears the burden of proof in this matter to establish that the challenge regarding ITB 27-040N should be sustained. The standard of review requires that the matter be considered from the advantage of whether the agency's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, and whether there was a reasonable basis in fact and law to support the decision. Thus, the Petitioner must show that the decision has no reasonable basis or that the procurement procedure shows a clear and prejudicial violation of applicable statutes or regulations. See State Contracting and Engineering Corporation v. Department of Transportation, 709 So. 2d 607,
609 (Fla. 1st DCA 1998). A proposal that is clearly erroneous, contrary to competition, arbitrary or capricious cannot be sustained under Section 120.57(3), Florida Statutes (2006). For purposes of this proceeding, an "arbitrary" action is "one not supported by facts or logic, or [is] despotic." A "capricious" action is "one which is taken without thought or reason or [is] irrational[]." Agrico Chemical Co. v. Department of Environmental Regulation, 365 So. 2d 759, 763 (Fla. 1st DCA 1978).
In this case, the Petitioner maintains that the challenged specifications are contrary to law or attempt to circumvent the laws or regulations governing procurements. To the contrary, the School Board maintains that it has wide discretion in this matter and should not be overturned even if reasonable persons might disagree. Scientific Games, Inc. v. Dittler Brothers, Inc. 586 So. 2d 1128 (Fla. 1st DCA 1991).
The pertinent provisions of the School Board policy on procurements was submitted as Joint Exhibit 2.
School Board Policy 3320 (Joint Exhibit 2) provides in pertinent part:
Except as authorized by law or rule, written solicitations shall be released to three (3) or more sources for any authorized purchase or contract for services exceeding the amount established in §287.017, Fla. Stat., for Purchasing Category 2. [This amount is currently
$25,000]. School boards, by rule, shall
set this amount or a lesser amount and shall establish purchasing policy relative to purchases of a dollar value less than this threshold. The School Board shall have the authority to reject any or all bids and request new bids. In acceptance of bids, the School Board shall accept the lowest and best bid from a responsive and responsible bidder.
Similarly, Florida Administrative Code Rule 6A- 1.012(6) provides:
(6) Except as authorized by law or rule, bids shall be requested from three (3) or more sources for any authorized purchase or contract for services exceeding the amount established in Section 287.017, Florida Statutes, for purchasing category two. School boards, by rule, shall set this amount or a lesser amount and shall establish purchasing policy relative to purchases of a dollar value less than this formal bid threshold. The school board shall have the authority to reject any or all bids and request new bids. In acceptance of bids, the school board shall accept the lowest and best bid from a responsive and responsible bidder. The school board is not required to request bids for purchases made from contracts of the Department of Management Services as referenced in subsection (4) of this rule. Bids are not required for purchases made through the pool purchase provisions of Section 229.79, Florida Statutes.
The foregoing provisions make it clear that purchases or contracts for services exceeding $25,000.00 are to be made pursuant to a written solicitation. In the instant case, the Petitioner maintains that purchases exceeding that amount may be made under Conditions 3, 18, 20, and 27. The
“quotes” allowed pursuant to these provisions defeat the solicitation requirement. Additionally, the Petitioner maintains that by awarding the same item to multiple awardees concurrently the intended action violates the rule and policy by not giving the award to the lowest and best responsive and responsible bidder.
To counter these arguments the School Board argues that it will allow sealed submissions from entities providing “quotes” and will vigorously discipline employees who inappropriately disclose information regarding “quotes.” Further, the School Board argues that purchases under
$25,000.00 do not require the solicitation of bids, and since “the unit cost” of the items to be acquired may be below
$5,000, bidding is not required.
It is concluded that the designation of multiple awards for a single item defeats the language of the School Board policy and applicable administrative rule. Further, it is concluded that the provision of taking “quotes” from all “awardees” does not assure that the School Board will receive the lowest and best price for an item. Finally, to allow the circumvention of the provisions of law requiring solicitations for purchases exceeding $25,000 cannot be supported by the facts or law of this case.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent enter a Final Order amending the specifications challenged to assure that the award of the items will be to a single lowest and best responsible and responsive bidder. The Petitioner’s challenge to the provisions must be sustained as a matter of law.
DONE AND ENTERED this 30th day of October, 2006, in Tallahassee, Leon County, Florida.
