STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FIRST COMMUNICATIONS, INC.,

Petitioner,

vs.

DEPARTMENT OF CORRECTIONS,

Respondent.

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) Case No. 07-0630BID

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RECOMMENDED ORDER

A duly-noticed final hearing was held in this case by Administrative Law Judge T. Kent Wetherell, II, on February 22, 2007, in Tallahassee, Florida.

APPEARANCES

For Petitioner: J. Marshall Conrad, Esquire

Ausley & McMullen Post Office Box 391

Tallahassee, Florida 32302

For Respondent: Anthony B. Miller, Esquire

Susan P. Stephens, Esquire Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500 STATEMENT OF THE ISSUE

The issue is whether the proposed award of Invitation to Bid No. 06-DC-7727 to Communications Engineering Service Company is contrary to the Department of Correction’s governing

statutes, rules, policies, or the specifications in the Invitation to Bid for the reasons alleged by Petitioner.

PRELIMINARY STATEMENT

On January 4, 2007, the Department of Corrections (Department) posted notice of its intent to award Invitation to Bid (ITB) No. 06-DC-7727 to Communications Engineering Service Company (CES). Petitioner, First Communications, Inc. (First Communications), timely filed a notice of protest and, then, a formal written protest challenging the proposed award to CES. On February 6, 2007, the Department referred the protest to the Division of Administrative Hearings (DOAH) for a hearing.

At the hearing, First Communications presented the testimony of Christina Espinosa, and the Department presented the testimony of Gail Hillhouse. First Communications’ Exhibits (Pet. Ex.) A through I were received into evidence, as were the Department’s Exhibits 1 and 2.

The Transcript of the hearing was filed on March 6, 2007. The parties were given 10 days from that date to file proposed recommended orders (PROs), but the deadline was subsequently extended to March 23, 2007, upon the Department’s unopposed motion. The PROs were timely filed and have been given due consideration.

FINDINGS OF FACT

1. The Department issued ITB No. 06-DC-7727 on October 27, 2006. The purpose of the ITB was to solicit bids for maintenance and repair of radio equipment owned by the Department in each of its four regions.

2. The original deadline for submitting bids in response to the ITB was November 30, 2006, but the deadline was extended to December 15, 2006, through an addendum to the ITB.

3. First Communications, CES, and Motorola, Inc., submitted bids for Region I. Another company, Econo Communications, Inc. d/b/a Mobile Communications, also responded to the ITB, but it did not bid on Region I.

4. It was stipulated that First Communications’ bid was responsive to the ITB.

5. The Department determined that the bid submitted by Motorola was not responsive to the ITB. That determination was not challenged.

6. The Department determined that the bid submitted by CES was responsive, despite the issues discussed below.

7. CES was determined by the Department to be the lowest responsible bidder. The bid submitted by CES was $2,571 per month.1

8. First Communications was the next lowest bidder. Its bid was $3,408.85 per month,2 which is 32.6 percent higher than CES’s bid.

9. Section 4.3.1 of the ITB states that “it is essential that bidders follow the format and instructions contained in the Bid Submission Requirements (Section 5 with particular emphasis on the Mandatory Responsiveness Requirements).”

10. Section 5.1 of the ITB lists the “mandatory responsiveness requirements” for bids, and states that:

    The following terms, conditions or requirements must be met by the bidder to be considered responsive to the ITB. These responsiveness requirements are mandatory.

    Failure to meet these responsiveness requirements will cause rejection of a bid. Any bid rejected for failure to meet responsiveness requirements will not be further reviewed. (Emphasis in original).

    
    

11. Nearly identical language is contained in Sections 1.7 and 4.3.6.1 of the ITB, and in the ITB Review Manual used by Department staff in reviewing the bids submitted in response to the ITB. Indeed, the ITB Review Manual refers to the mandatory responsiveness requirements as “fatal criteria.”

12. The mandatory responsiveness requirement in the ITB that is most pertinent to this case is in Section 5.1.2,3 which states:

    It is mandatory that the bidder supply one

    1. original signed Bid and three (3) copies

       of the signed bid. . . . . (Emphasis in original).

       
       

13. The bid package submitted by CES did not include the original signed bid. It only included the three copies of the signed bid.

14. This omission was noted by Christina Espinosa, the procurement manager for the ITB who opened the bids on the afternoon of December 15, 2006. However, after Ms. Espinosa consulted with her supervisor and the Department’s legal staff, it was determined that the omission was not material and that CES should be given an opportunity to “cure” its failure to submit the original signed bid. As a result, Ms. Espinosa contacted CES and gave it 24 business hours to “cure” the deficiency.

15. CES delivered the original signed bid to the Department on the morning of December 18, 2006, which is three days after the bid submittal deadline in the ITB, but within the 24-business hour deadline given by Ms. Espinosa.4

16. CES did not have a representative at the bid opening, and there is no evidence that CES knew it was the lowest bidder, either when Ms. Espinosa gave CES an opportunity to “cure” its failure to submit an original bid on December 15, 2006, or when it submitted the original bid on December 18, 2006.

17. It is undisputed that the original signed bid submitted by CES on December 18, 2006, is identical in all respects to the three copies of the bid that were timely submitted by CES on December 15, 2006.

18. Ms. Espinosa reviewed the bid submitted by CES despite its failure to include the original signed bid. According to ITB provisions referenced above, that omission should have resulted in the bid being rejected and not further reviewed.

19. The CES bid included at least one other deviation from the specifications in the ITB. The bid stated in the “service delivery synopsis” that the turnaround time for the repair of fixed equipment would be 15 working days. A 15-day time period was referenced in the original ITB, but it was changed to eight days in an addendum.

20. Ms. Espinosa contacted CES about this discrepancy, and on January 3, 2007, CES advised Ms. Espinosa by e-mail that it “acknowledges the change in repair times from 15 days to 8 days.”

21. CES was not the only bidder that Ms. Espinosa contacted after the bids were opened to obtain clarification or information omitted from the bid. For example, she contacted First Communications to obtain copies of its articles of incorporation and business licenses that were not included in its bid; to get clarification regarding First Communications’

    use of subcontractors; and to confirm that First Communications acknowledged the eight-day turnaround time for repair of fixed equipment since its bid did not contain a service delivery synopsis.

22. Section 4.3.1 of the ITB authorizes the Department to “seek clarifications or request any information deemed necessary for proper review of submissions from any bidder deemed eligible for Contract award.” However, Section 4.3.1 also states that “no modifications by the bidder of submitted bids will be allowed.”

23. The ITB authorizes the Department to waive minor irregularities and non-material deviations in bids, and on this issue, the ITB states:

    1. Rejection of Bids

       
       

       The Department shall reject any and all bids not meeting mandatory responsiveness requirements. In addition, the Department shall also reject any or all bids containing material deviations. The following definitions are to be utilized in making these determinations.

       
       

       1. Mandatory Responsiveness Requirements: Terms, conditions or requirements that must be met by the bidder to be responsive to this solicitation. These responsiveness requirements are mandatory. Failure to meet these responsiveness requirements will cause rejection of a bid. Any bid rejected for failure to meet mandatory responsiveness requirements will not be further reviewed.

       2. Material Deviations: The Department has established certain requirements with respect to bids to be submitted by the bidder. The use of shall, must or will (except to indicate simple futurity) in this ITB indicates a requirement or condition which may not be waived by the Department except where any deviation there from is not material. A deviation is material if, in the Department’s sole discretion, the deficient response is not in substantial accord with this ITB’s requirements, provides an advantage to one bidder over other bidders, or has a potentially significant effect on the quantity or quality of terms or services bid, or the prices submitted to the Department. Material deviations cannot be waived and shall be the basis for rejection of a bid.

          
          

       3. Minor Irregularities: A variation from the solicitation terms and conditions which does not affect the price proposed or give the bidder an advantage or benefit not enjoyed by the other bidders or does not adversely impact the interests of the Department. A minor irregularity will not result in a rejection of a bid. (All emphasis in original).

    
    

24. The Department relies on these sections of the ITB as its authority to waive minor irregularities and non-material deviations in bids with respect to any provision of the ITB, including the mandatory responsiveness requirements.

25. On January 4, 2007, the Department posted notice of its intent to award the contract for Region I to CES.

26. In the same posting, the Department rejected all bids for the other three regions. The rejection of all bids for the other regions is not at issue in this case.

27. First Communications timely filed a notice of protest and, then, a formal written protest challenging the intended award of the contract to CES.

28. The Department provided notice of this proceeding to CES, as required by the Order of Pre-hearing Instructions.

29. CES did not file a petition to intervene or otherwise seek to participate in this proceeding.

    CONCLUSIONS OF LAW

    
    

30. DOAH has jurisdiction over the parties to and subject matter of this proceeding pursuant to Section 120.57(3), Florida Statutes (2006).5

31. First Communications has standing to contest the proposed award of the contract to CES. See Preston Carroll Co. v. Florida Keys Aqueduct Authority, 400 So. 2d 524, 525 (Fla. 3d DCA 1981) (second lowest bidder has standing to challenge the proposed award of a contract).

32. First Communications has the burden of proof in this proceeding. See § 120.57(3)(f), Fla. Stat.

33. The scope of this proceeding and the nature of First Communications’ burden of proof are as follows:

    In a competitive-procurement protest, other than a rejection of all bids . . ., the administrative law judge shall conduct a de novo proceeding to determine whether the agency's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, or the 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.

    
    

    § 120.57(3)(f), Fla. Stat. See also State Contracting & Engineering Corp. v. Dept. of Transportation, 709 So. 2d 607, 609 (Fla. 1st DCA 1998) (purpose of a bid protest proceeding is to “evaluate the action taken by the agency" in relation to the standards in Section 120.57(3)(f), Florida Statutes).

34. It is not enough under Section 120.57(3)(f), Florida Statutes, for the protestor to show that the proposed award of the contract is contrary to the ITB; the protestor must also show that the proposed award is clearly erroneous, contrary to competition, or an abuse of discretion. See, e.g., Syslogic Technology Services, Inc. v. South Florida Water Management Dist., 2002 Fla. Div. Adm. Hear. LEXIS 235 (DOAH Jan. 18, 2002) (critically analyzing the standards in Section 120.57(3)(f), Florida Statutes).

35. Competitive bidding allows governmental entities to acquire necessary goods and services at the lowest possible cost, and it also protects against collusion, favoritism, and

    fraud in the award of public contracts. See generally Wester v. Belote, 138 So. 721 (Fla. 1931); § 287.001, Fla. Stat.

36. As a general rule, bids must strictly adhere to the requirements of the ITB. However, it is well-established that agencies have broad discretion to waive minor, non-material irregularities in bids if doing so will save the public money. See, e.g., Liberty County v. Baxter’s Asphalt and Concrete, Inc., 421 So. 2d 505 (Fla. 1982); Robinson Electrical Co. v. Dade County, 417 So. 2d 1032, 1034 (Fla. 3d DCA 1982) ("[T]he purpose of competitive bidding is to secure the lowest responsible offer and . . . the County may waive minor irregularities in effectuating that purpose.").

37. There is “a strong public policy in favor of awarding contracts to the low bidder, and an equally strong public policy against disqualifying the low bidder for technical deficiencies which do not confer an economic advantage on one bidder over another.” Intercontinental Properties, Inc. v. Department of Health and Rehabilitative Services, 606 So. 2d 380, 387 (Fla. 3d DCA 1992).

38. The determination as to whether an irregularity in a bid is material or not turns on “whether the variation affects the amount of the bid by giving the bidder an advantage or benefit not enjoyed by the other bidders.” Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So. 2d 1190, 1193

    (Fla. 2d DCA 1977). See also Tropabest Foods, Inc. v. Dept. of General Services, 493 So. 2d 50, 52 (Fla. 1st DCA 1986) ("[A]lthough a bid containing a material variance is unacceptable, not every deviation from the invitation to bid is material. It is only material if it gives the bidder a substantial advantage over the other bidders and thereby restricts or stifles competition.").

39. The ITB expressly incorporates these standards in Sections 4.3.6.2 and 4.3.6.3. And cf. § 287.012(25), Fla. Stat. (defining “responsive bid” as a bid that conforms “in all material respects to the solicitation” (emphasis supplied)).

40. First Communications argues that the Department’s decision to award the contract to CES is contrary to the specifications in Sections 4.6.3.1 and 5.1 of the ITB, which require the Department to reject and not further review bids that fail to meet the mandatory responsiveness requirements in the ITB. However, the Department’s duty to reject and not further review bids that fail to meet the mandatory responsiveness requirements must be read in pari materia with the Department’s authority in the ITB (and well-established case law) to waive minor irregularities in bids that do not give one bidder an economic advantage over other bidders.

41. The deficiencies in the bid submitted by CES -- e.g, the failure to include the original bid with the three copies

    submitted on February 15, 2006, and the reference to a 15-day turnaround time rather than the eight-day turnaround time -- did not confer an economic advantage on CES, and were not shown to be material deviations from the requirements of the ITB. Thus, the Department was authorized by the ITB and well-established case law to waive those deficiencies.

42. It is a closer question whether the Department exceeded its authority under the ITB by allowing bidders to “cure” omissions in the bids by submitting additional information after the bids had been opened. See § 120.57(3)(f), Fla. Stat. (“no submissions made after the bid . . . opening amending or supplementing the bid . . . shall be considered”). On balance, however, it is concluded that Department’s action in that regard was not clearly erroneous or an abuse of discretion in light of Section 4.3.1 of the ITB, which allows the Department to obtain clarification and additional information from the bidder when necessary for proper review of a bid; nor was the Department’s action in that regard contrary to competition because all of the bidders were treated equally. Notably, as was the case with CES, First Communications was given an opportunity to provide documents and information to the Department that were requested in the ITB but that were omitted from its bid.

43. In sum, the evidence fails to establish that the Department’s proposed award of the contract to CES is contrary to the specifications in the ITB viewed as a whole and, even if it is, the evidence fails to establish that the award is clearly erroneous, contrary to competition, or an abuse of discretion. Therefore, First Communications failed to meet its burden of proof under Section 120.57(3)(f), Florida Statutes.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Department issue a final order dismissing First Communications’ protest.

DONE AND ENTERED this 5th day of April, 2007, in Tallahassee, Leon County, Florida.

S

T. KENT WETHERELL, II 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 the Clerk of the Division of Administrative Hearings this 5th day of April, 2007.

ENDNOTES

1/ Motorola’s bid of $2,513.82 per month was approximately $70 lower than CES’s bid, but the Department found Motorola’s bid to be non-responsive.

2/ First Communications’ bid included the itemized costs used to calculate the “grand total,” but the bid did not include an amount on the “grand total” line. During the bid review process, the Department staff used the itemized costs to verify the “grand totals” presented by each of the bidders. As a result, the omission of a “grand total” in First Communications’ bid was not material. Accord Systea Scientific, LLC v. Dept. of Health, 2005 Fla. Div. Adm. Hear. LEXIS 1094 (DOAH June 29, 2005).

3/ One of the forms completed during the Department staff’s review of the bids indicated that the CES bid did not meet the mandatory responsiveness requirements in Sections 5.1.1 and 5.1.2; another form indicated that the CES bid did not meet the mandatory responsiveness requirement in Sections 5.1.2 and

5.1.3. Compare Pet. Ex. E with Pet. Ex. G. Section 5.1.1 required the bid package to be received by the deadline established in the ITB; Section 5.1.3 required the bid to include the original ITB Acknowledgement form or a copy of the form with an original signature. The inconsistency in the forms was not adequately explained at the hearing. However, it is clear from the totality of the evidence that the Department staff’s determination that the bid failed to meet Section 5.1.1 and/or Section 5.1.3 was based solely upon the fact that the original bid was not included with the three copies submitted by CES on December 15, 2006, as required by Section 5.1.2.

4/ December 15, 2006, was a Friday. December 18, 2006, was the following Monday.

5/ All statutory references in this Recommended Order to the 2006 version of the Florida Statutes.

COPIES FURNISHED:

James R. McDonough, Secretary Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

Kathleen Von Hoene, General Counsel Department of Corrections

2601 Blair Stone Road Tallahassee, Florida 32399-6563

J. Marshall Conrad, Esquire Ausley & McMullen

Post Office Box 391 Tallahassee, Florida 32302

Anthony B. Miller, Esquire Department of Corrections

2601 Blair Stone Road, Room B452 Tallahassee, Florida 32399

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.

Docket for Case No: 07-000630BID

Orders for Case No: 07-000630BID