STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MORPHOTRUST USA, )
)
Petitioner, )
)
vs. )
) DEPARTMENT OF HIGHWAY SAFETY ) AND MOTOR VEHICLES, )
)
Respondent, )
)
and )
) SOLUTIONS THRU SOFTWARE, INC., )
)
Intervenor. )
Case No. 12-2917BID
)
RECOMMENDED ORDER
Pursuant to notice, a final hearing in this cause was held in Tallahassee, Florida, on October 10, 11, 16 and 17, 2012, before the Division of Administrative Hearings by its designated Administrative Law Judge Linzie F. Bogan.
APPEARANCES
For Petitioner: J. Stephen Menton, Esquire
Rutledge, Ecenia and Purnell, P.A.
119 South Monroe Street, Suite 202 Post Office Box 551
Tallahassee, Florida 32301
For Respondent: Douglas Sunshine, Esquire
Department of Highway Safety and Motor Vehicles
Neil Kirkman Building, Room A-432 2900 Apalachee Parkway
Tallahassee, Florida 32399
For Intervenor: Maria Elena Abate, Esquire
Sharlee H. Edwards, Esquire Colodny, Fass, Talenfeld,
Karlinsky and Abate, P.A.
23rd Floor
100 Southeast 3rd Avenue
Fort Lauderdale, Florida 33394 STATEMENT OF THE ISSUE
Whether Respondent's intended award of a contract to Intervenor, pursuant to Invitation to Negotiate 024-12 (ITN), is contrary to Respondent's governing statutes, Respondent's rules and policies, or the specifications of the ITN?
PRELIMINARY STATEMENT
On April 17, 2012, Respondent, Department of Highway Safety and Motor Vehicles (Respondent, Department or DHSMV), issued the ITN in question, which is entitled "Automated Driver License Testing System [ADLTS]." DHSMV issued four Addenda to the ITN, each of which contained amendments, modifications, and explanations in response to proposed vendor questions.
Responses to the ITN, in the form of a Statement of Qualifications and Services Offered, were submitted on May 31, 2012, by Petitioner, MorphoTrust USA (Petitioner, MorphoTrust, or Morpho), and Intervenor, Solutions Thru Software, Inc. (Intervenor or STS). Demonstrations were held from July 9 through 13, 2012, for the responders. Best and Final Offers (BAFO) were due to the Department by August 3, 2012. Morpho and STS each timely submitted its BAFO for consideration and review
by the Department. On August 13, 2012, the Department posted notice of its intent to award a contract to STS pursuant to the ITN. On August 16, 2012, Morpho timely submitted notice of its intent to protest the proposed award. Morpho timely filed a formal written protest, and on September 7, 2012, Morpho's Formal Written Protest and Petition for Administrative Hearing was forwarded to the Division of Administrative Hearings (DOAH) for assignment of an Administrative Law Judge to conduct the final hearing. STS was allowed to intervene in the proceedings
before DOAH.
The parties filed a Joint Pre-hearing Stipulation and stipulated to certain facts. The stipulated facts are reflected verbatim in numbered paragraphs 1 through 14 of the Findings of Fact, as set forth below.
On October 8, 2012, Respondent and Intervenor filed a Joint Motion in Limine to Exclude Arguments and Evidence Challenging the Terms and Conditions of the ITN and/or Not Contained in MorphoTrust's Original BAFO and Price Proposal. The motion in limine was denied without prejudice to the Department and Intervenor's ability to raise objections to specific questions during the course of the hearing and to address the legal issues in their proposed recommended order(s).
On October 9, 2012, Morpho filed a Motion to Amend Formal Written Protest and Petition for Administrative Hearing. There was no opposition to the motion and, accordingly, it was granted.
The final hearing occurred on October 10, 11, 16, and 17, 2012, as scheduled. At the hearing, Morpho presented the testimony of two of its employees: Jenny Openshaw and Cagney Shattuck. Morpho also called the Department's procurement officer, Jon Kosberg, and STS employee, John Van der Heiden.
DHSMV presented testimony from Dana Reiding, who was accepted as an expert, and Jeffry Pairin. STS presented the testimony of its president, Jim Sodero. Additionally, DHSMV and STS offered into evidence deposition testimony of DHSMV employee, Barbara Peacock, and the post-hearing deposition testimony of Jenny Openshaw.
Joint Exhibits 1 through 18, 24, and 25 were admitted into evidence, as was Exhibit L which was attached to the amended petition. Exhibit 24 is a video of the negotiation sessions conducted between the Department and Morpho as part of the procurement process. The parties delineated the portions of the video that they wished to be considered, and consistent with the request, the designated portions were reviewed.
An eight-volume Transcript of the hearing was filed with DOAH on November 7, 2012. All parties timely filed proposed recommended orders which have been considered in the preparation of this Recommended Order.
FINDINGS OF FACT
Petitioner is a state agency authorized to enter into contracts for commodities and services subject to the procurement requirements of section 287.057, Florida Statutes [2011].1/
On April 17, 2012, the Department released the ITN which sought proposals to provide an ADLTS.
The Department received and evaluated responses to the ITN from three vendors, including MorphoTrust and STS.
On May 15, 2012, the Department issued Addendum 1 to the ITN, which answered questions vendors submitted regarding the ITN and replaced pages 31, 39, and 40 of the ITN.
After completion of the first stage of [the] process of contractor selection where the Department evaluated the Statement of Qualification and Services Offered (SQSO) submitted by the vendors, the Department released the results of the initial evaluation process and proceeded to enter into negotiations with MorphoTrust and STS.
The Department conducted ITN negotiation meetings with the representatives of MorphoTrust on July 10, 2012, and the representatives of STS on July 12, 2012.
On July 18, 2012, the Department issued Addendum 2 to the ITN, which replaced pages 16, 23, 40, and 42.
On July 26, 2012, the Department issued further instructions to MorphoTrust and STS, including a request for
their [BAFO]. At this time, the Department issued Addendum 3 to the ITN, which replaced pages 15, 40 and 42.
On July 31, [2012], the Department issued Addendum 4 to the ITN, which replaced page 16 of the ITN.
MorphoTrust did not protest the terms, conditions, and specifications contained in the ITN, including any provisions governing the methods for ranking bids, proposals, or replies, awarding contracts, reserving rights of further negotiation, or modifying or amending any contract within 72 hours of the issuance of the ITN or any addendums thereto.
On August 10, 2012, the evaluation team held a public meeting to evaluate the BAFOs submitted by MorphoTrust and STS.
On August 13, 2012, the Department issued its intent to award the ADLTS contract to STS pursuant to the ITN.
On August 16, 2012, MorphoTrust submitted its notice of intent to protest the intent to award the ADLTS contract to STS.
On August 27, 2012, MorphoTrust filed its Formal Written Protest and Petition for Administrative Hearing.
Section 1.1 of the ITN provides as follows:
The Department of Highway Safety and Motor Vehicles, hereinafter called the Department, requests written proposals be submitted for an [ADLTS], which is to be provided at no cost to the Department. The [DHSMV] manages Florida's driver licensing program. Florida law requires a first-time driver to pass knowledge and skills exams prior to issuance of a driver license. The Department seeks
to improve the integrity and efficiency of its licensing system by selecting a Contractor to provide a Driver License Testing System for use in State Driver License Offices, Tax Collector Offices and by Third-Party Test Administrators.
Section 3.1 of the ITN provides as follows:
The [DHSMV] manages Florida's driver licensing program. Florida law requires a first-time driver to pass knowledge and skills exams prior to issuance of a driver license. The knowledge and skills exams are designed to protect the public from hazards posed by unqualified motor vehicle operators. There are two (2) basic types of licenses--operator (Class E) and commercial (Classes A, B, and C). In Florida, Class E driver licenses are issued to drivers operating vehicles less than 26,001 pounds.
Applicants must pass two (2) knowledge
exams--road signs and road rules in order to obtain a learner's permit and must pass a driving skills exam to become fully licensed.
The Department uses an aging web-based automated testing system for the administration of both Class E and commercial driver license knowledge exams in its fifty four (54) State Driver License Offices. In addition, one hundred and fifty six (156) county Tax Collector Offices in fifty two (52) counties also use the Department's automated testing system.
Skills exams administered by State and Tax Collector Examiners are documented by hand, with pass/fail scores manually determined and entered into the driver license issuance system. In addition, six (6) Third-Party Contractors administer Class E knowledge exams online. The Department maintains the test databank and has established procedures for Third-Party Administrators to retrieve randomly generated test questions per applicant via web service.
Currently, all operator skills exams are administered through State or Tax Collector Offices, with the exception of any teenager who completes a driver education program through their local high school. Driver education graduates are not required to complete additional skills exams. Driver education is currently offered in approximately fifty (50) of the sixty seven
(67) school districts and a few private high schools. The majority of Commercial Driver License (CDL) skills exams are administered by third-parties, with less than ten percent (10%) of CDL skills exams administered by State Examiners.
Over the next several years, we anticipate the following changes to our business environment.
By 2015, all but three (3) of the sixty seven (67) counties will receive driver license services via the Tax Collectors. The Department will maintain driver license offices only in Broward, Miami-Dade, and Volusia counties; approximately twenty-six percent (26%) of all driver license transactions are conducted in these
three (3) counties.
More third-parties will offer Class E knowledge exams online. DHSMV started this program in July 2011. Seven (7) providers offer exams online now, but several others have applied.
Some third-parties will offer Class E knowledge exams in a proctored setting. This option has been on the table since July 2011 and one vendor currently offers proctored exams.
DHSMV will provide an opportunity for third-parties to administer Class E driving skills exams. The Department has delayed implementation of this opportunity until the conclusion of this ITN. DHSMV will expect
third-parties administering Class E driving skills exams to use the system sought here, at their own expense.
The Department will encourage Third- party administrators of CDL driving skills exams to use the system sought here, at their own expense. While we do not expect to mandate the use of this system for existing CDL Third-party administrations, there is a possibility that federal mandates may eventually recommend and/or require it.
Section 3.2 of the ITN provides as follows:
The Department seeks to improve the integrity and efficiency of its licensing system by selecting a Contractor to provide a NO-COST SOLUTION to the Department for a driver license testing system for use in State Driver License Offices, Tax Collector Offices and by Third-Party Test Administrators. This would include the system, web application and system maintenance, at no-cost to the Department. Third Party Administrators must be provided a consistent methodology for accessing and consuming the web-based tests questions and answers from the Awarded Contractor.
The system must consist of:
A web-based application for the administration of Class A, B, C, and E driver license knowledge exams in driver license and Tax Collector Offices. The Prospective Contractor must agree to provide this at no cost to the Department.
A web-based application for the administration of Class E driver license road signs and road rules exams by
third-parties. This system must also be accessible by Driver Education Licensing and Assistance Program (DELAP) administrators at no cost to the School Districts or the Department.
A knowledge bank of at least
five-hundred (500) questions for Class E road signs and road rules, plus CDL knowledge exam questions meeting American Association of Motor Vehicle Administrators (AAMVA) specifications. This must be provided at no-cost to the Department.
A tablet-based solution for the administration of Class E driver license skills exams. Bonus points will be given to Prospective Contractors who provide this solution at no cost to the State for use by State and Tax Collector Offices. All
Third-Party Administrators of Class E driver license skills exams will be required to adopt this solution. Third-Party Administrators can be charged for this solution.
A tablet-based solution for the administration of Class A, B and C driver license skills exams. Third-party CDL skills exam administrators will not be mandated to adopt this solution at this time, but will be encouraged to do so.
Section 3.3 of the ITN provides as follows:
[ADLTS] is a centrally administered testing system that supports testing centers in State and Tax Collector Driver License Offices located throughout Florida. The purpose of the system is to perform driver license testing and other testing in a
user-friendly Intranet and Extranet environment. The test information is stored centrally in Tallahassee offices of [DHSMV]. The system is a web-based system that is used to display and control all driver license testing, Administrative, Supervisor, Examiner and Extranet functions.
The administrators of the ADLTS system control user accounts, testing office information, creating new exam categories,
creating new questions, retiring questions and printing reports.
In July 2011, the Department implemented a new third-party test administration program for Class E knowledge exams. The Department maintains the test databank and has established procedures for Third-Party Test Administrators to retrieve randomly generated test questions per applicant via web service. Any student who fails an exam is given the opportunity to retest with the Third Party Administrator two (2) additional times for each exam type (road rules and road signs). The Third Party Administrator is required to collect a statutory fee of ten dollars ($10.00) for each retest that is remitted to DHSMV electronically. Each exam is assigned a unique identifying number for tracking and auditing purposes.
As part of this program, the opportunity exists for third-parties to administer the driver license knowledge exams in-person in a proctored setting. The Department does not currently provide a user interface application for third-party testers who administer exams on-line or in a proctored setting. Anyone wishing to offer these services must develop their own application to access the Department's web services. We have delayed implementation of this portion of the program until completion of this ITN, as we anticipate mandating that third-party administrators of Class E driving skills exams use the tablet testing system sought herein, at their own expense.
All contractual language and current business rules for the Third Party Administration of Class E knowledge exams are available at http://www.flhsmv.gov/ddl/tpdlts.html.
Approximately fifty (50) of the sixty seven (67) Florida school districts and several private high schools conduct both
Class E knowledge and road tests for their enrolled driver education students through the Driver Education Licensing and Assistance Program (DELAP). The tests administered are the same as the Class E licensing tests given in driver license offices by Department and Tax Collector DL examiners. However, DELAP testers give the knowledge tests on paper forms generated by ADLTS, as they do not have direct access to the Department's electronic testing system.
Commercial driver licensing (CDL) in-vehicle skills tests are conducted primarily by about two-hundred and thirty (230) third party businesses and agencies that have the necessary resources. Testing authority is granted by the Department through contracts. Some charge a fee for their services while others test only their own employees and do not. Test procedures are prescribed by federal regulation, following the AAMVA 2005 Model CDL Testing System.
Section 4.1 of the ITN provides as follows:
The Awarded Contractor will provide a
web-based driver license testing system that will be used by Driver License Examiners in offices operated by the Department and Tax Collector Offices at no cost to the Department or County Tax Collectors. In addition, the Awarded Contractor must make available the same web-based solution for purchase by Third-Party Test Administrators. The testing system will include administrative and reporting functions.
The awarded Contractor must also provide an option for purchase of a mobile tablet-based hardware/software solution for the administration of driving skills exams that will update the central testing database.
The mobile solution will incorporate Global Positioning System (GPS) tracking technology for driving exam routes and time. The commercial driving skills exams must be
generated in accordance with Federal Motor Carrier Safety Administration regulations and provide for subsequent updates upon release by AAMVA. Bonus points will be given to Prospective Contractors that offer this solution at no-cost to the Department.
The Awarded Contractor will provide a minimum five-hundred (500) question databank of road signs and road rules Class E exam questions, plus CDL knowledge exam questions meeting American Association of Motor Vehicle Administrators (AAMVA) specifications that comports with Florida traffic and licensing laws. The Awarded Contractor may use the Department's existing bank of questions as the basis for the new databank. Currently, road signs and road rules exams are administered as two (2), twenty (20) question tests, but the Department will consider proposals to modify this testing model. For example, the Department would consider proposals for
one (1) Class E knowledge exam that including both road rules and road signs questions and increases the total number of questions asked. Currently, approximately ninety five percent (95%) of applicants pass the road signs exam on their first attempt. Approximately forty eight percent (48%) of applicants pass the road rules exam on their first attempt. Please refer to the attached AAMVA Guidelines (Attachment VII) for knowledge and Skill Test Development.
The Awarded Contractor is responsible for project planning, coordination, implementation, installation and maintenance, as applicable and must provide the name and qualification of the proposed project manager as part of the bid response. Any changes to the project manager after the ITN is awarded must be requested through the Department in writing. The Department will designate a project manager that will be the primary contact for the ITN.
The Awarded Contractor will have access to personal identification data protected by the Florida and federal laws, including the Driver's Privacy Protection Act. The Prospective Contractor must describe in the bid response the security protocols related to employee background checks, training and monitoring.
Section 4.2.8 of the ITN provides, in part, that "[a]t implementation, the system must provide replacements for the current test types which include[:] Class E General Knowledge, Road Signs . . . [and] Class E skill [testing]. "
Section 4.2.13 of the ITN provides, in part, as follows:
With the [BAFO], the Prospective Contractor must submit a price schedule to include a description of each item available for purchase and a purchase or use price. The pricing model may be per item, per license, or per use. While this will be a no-cost contract to the Department and Tax Collectors, price to third-parties will be considered during the evaluation process.
An advertising plan must also be submitted by Prospective Contractors. (emphasis added).
Section 8.1 of the ITN provides as follows:
The Department will appoint an Evaluation Committee. The committee shall complete the evaluation of all valid proposals, in accordance with the criteria set forth in this section. Award will be to the highest scoring proposal, considering the technical proposal scoring and all costs for the five- year contract period, evaluated as described in Section 8.19 of this solicitation. (emphasis added).
The reference in section 8.1 of the ITN to "Section 8.19" should be to "Section 8.9." The ITN does not contain a section 8.19.
Section 8.9 of the ITN provides as follows:
Price will be evaluated by the present value methodology required by Section 287.0572, Florida Statutes, and Rule 60A-1.063, Florida Administrative Code, to determine the lowest cost proposal. The lowest cost proposal will be awarded 15 points. Lowest total cost (LC) divided by proposal being considered (PC) times maximum points score
(15) equals points awarded.
Formula: LC/PC x 15=score.
Section 1.5 of the ITN provides as follows,
The Department has established certain mandatory requirements which must be included as part of any proposal. The use of the terms "shall," "must," or "will" (except to indicate simple futurity) in this solicitation indicates a mandatory requirement or condition.
The words "should" or "may" in this solicitation indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature will not itself cause rejection of a proposal.
Section 1.9 of the ITN provides, in part, that "[a]ny addenda or written answers supplied by the Department Procurement Officer to participating proposer's written questions become part of this solicitation."
Section 1.34 of the ITN provides as follows:
The contract resulting from this solicitation process shall consist solely of the purchase order issued by the Department to the successful proposer, this solicitation and any addenda thereto, and the proposal, including any license/use agreement submitted by the successful proposer as part of its proposal except to the extent of any conflict with Florida law or terms and conditions of the proposal. In the event of a conflict among any of the documents referenced herein, the following priority shall apply, with the language of each listed document governing the documents listed below it:
The purchase order
Any addenda to the solicitation
The solicitation
The awarded proposal including any agreements. Any agreements which include, but are not limited to installation, licensing, maintenance, software, etc. must be submitted with the proposal and agreed to by the Department during negotiations.
Attachment I to the ITN is "State of Florida PUR 1000, General Contract Conditions (PUR 1000)." PUR 1000 is incorporated into the ITN by reference. PUR 1000,
paragraph 4.(e), is entitled "Equitable Adjustment." This paragraph provides as follows:
The Customer may, in its sole discretion, make an equitable adjustment in the Contract terms or pricing if pricing or availability of supply is affected by extreme and unforeseen volatility in the marketplace, that is, by circumstances that satisfy all the following criteria: (1) the volatility is due to causes wholly beyond the Contractor's control, (2) the volatility affects the marketplace or industry, not just the particular Contract source of supply, (3) the effect on pricing or availability of supply is substantial, and
(4) the volatility so affects the Contractor that continued performance of the Contract would result in a substantial loss.
Paragraph 1.(b) of PUR 1000 defines "Customer" to mean: [T]he State agency or other entity
identified in a contract as the party to receive commodities or contractual services pursuant to a contract or that orders commodities or contractual services via purchase order or other contractual instrument from the Contractor under the Contract. The "Customer" may also be the "Buyer" as defined in the PUR 1001 if it meets the definition of both terms.
Question 19, Addendum 1, and the answer related thereto read as follows:
Question 19: "Bonus points will be given to Prospective Contractors that offer this solution at no-cost to the Department." Please define if "the Department" includes the Tax Collectors. If not, may the mobile skills test solution be sold to the Tax Collectors as well as the Third-Party Administrators?
Answer to Question 19: Bonus points may be given up to a maximum amount of fifteen (15) points. The maximum amount of bonus points will be given if the mobile skills test solution is provided to both the Department and its Tax Collector agents at no cost. A lesser amount of points will be given if the solution is provided to the Department at no cost, and no bonus points will be given if the solution is not provided at no-cost.
Question 37 from Addendum 1, and the response thereto, provide as follows:
Question 37: Where is the Supplemental Cost Sheet shown in the ITN?
Answer to Question 37: Please ignore the Supplemental Cost Sheet. There is only a Price Proposal Form (Section 9.0). Please utilize additional space in a Word, Excel or PDF format for pricing structure, if needed. Please seem amended pages 39 and 40 attached to this addendum.
Question 39 from Addendum 1, and the response thereto, provide as follows:
Question 39: May the awarded contractor charge a standard user/license fee to each third party administrator for the knowledge test and perhaps the eventual tablet skills test?
Answer to Question 39: Yes, the Awarded Contractor may charge a standard user/license fee to each Third Party Administrator.
Question 82 from Addendum 1, and the response thereto, provide as follows:
Question 82: In regards to the Pricing Proposal Form on page 42 of the ITN, can this
form be modified to better present our pricing strategy to the State of Florida?
Answer to Question 82: Yes, this form can be modified utilizing Word, Excel or PDF to format a proposed pricing structure.
Addendum 2 added to Section 3.2, subsection 4, the underlined language as noted:
A tablet-based solution for the administration of Class E driver license skills exams. Bonus points will be given to Prospective Contractors who provide this solution at no cost to the State for use by State and Tax Collector Offices. If the tablet-based solution has a cost to the State and Tax Collector Offices associated with it, the price from Section 9.0 "Price Proposal" shall be utilized. All Third-Party Administrators of Class E driver license skills exams will be required to adopt this solution. Third-Party Administrators can be charged for this solution.
Addendum 2 amended Section 9.0, which sets forth the Price Proposal Form to read as follows:
Tablet Cost, Per Tablet For Third Party Administrator A $ Annual Cost to Access System for Third Party Administrator,
Per Administrator B $
Total Cost A+B=C $
Note: Price Proposal Scoring is only calculated from a per-unit cost. The quantities will vary, based on need.
Addendum 3 established the final Price Proposal Form as follows:
Initial Term
Tablet Cost, Per Tablet for Third Party Administrator A $
Cost To Access System for Third Party Administrator B $ Additional Features C $
Initial Term Total Cost A+B+C=D $
Renewal Term
Tablet Cost, Per Tablet for Third Party Administrator E $ Cost To Access System for Third Party Administrator,
Per Test F $
Additional Features G $
Renewal Term Total Cost E+F+G=H $
Total Cost D+H=I $
Note:
The quantities will vary based on need.
Additional Features can include any startup fees, maintenance or system enhancements. Please use additional space, if needed, to expand on Additional Features.
Addendum 4 removed from the ITN the requirement that the successful proposer supply a damages bond.
Deletion of Damages Bond Requirement
Section 2.5 of the ITN, labeled "DAMAGES BOND," as originally set forth provided as follows:
The proposer shall supply to the Department with the performance bond a bond for the payment of any liquidated damages as may become due and payable to the Department arising hereunder, in the face amount of 5% of the total cost for the project. The bond must be renewed annually no later than fourteen (14) business days prior to the beginning of the next contract or renewal period (if renewed). For the second and subsequent contract and renewal periods, the renewal bond amount must equal or exceed five
percent (5%) of the total price amount proposed for the corresponding contract or renewal period in the proposer's proposal.
Soon after issuance of the ITN, companies that were considering submitting a proposal were given the opportunity to tender questions regarding the ITN to the Department.
One of the questions submitted by MorphoTrust in response to the ITN states that "[g]iven the unique model that the state has requested in the ITN, would the state be willing to negotiate [an] alternative liquidated damage clause to better reflect the proposed solution?" The Department's response to the inquiry stated that this issue could "be discussed during the negotiation phase of the ITN process."
Intervenor STS, in response to the ITN, also posed a question to the Department regarding the bond requirements. STS's question and the Department's response thereto provide as follows:
As previously indicated, the Department, during the period July 9 through 12, 2012, met with representatives from MorphoTrust and STS to negotiate the proposal and view demonstrations. During the negotiation and demonstration sessions, representatives from MorphoTrust and STS informed the Department of their concerns about the apparent redundancy of the ITN requirement to have both a performance bond and a damages bond. According to MorphoTrust, the Department agreed to review the performance and damages bonding requirements.
Addendum 2 was issued by the Department and this addendum, among other things, changed section 2.5, Damages Bond, of the ITN to read as follows:
The proposer shall supply to the Department with the performance bond a bond for the payment of any liquidated damages as may become due and payable to the Department arising hereunder, in the face amount of five hundred thousand dollars ($500,000.00). The bond must be renewed annually, no later than fourteen (14) business days prior to the beginning of the next contract or renewal period (if renewed). For the second and subsequent contract and renewal periods, the renewal bond amount must equal five hundred thousand dollars ($500,000.00).
On July 24, 2012, Jim Sodero, on behalf of STS, sent an email to Jon Kosberg to reiterate his concerns about the bonding requirements. The email provides as follows:
Hi Jon,
Thank you very much for the opportunity to bid and demonstrate our product. We have reviewed your request for a BAFO, and are currently exploring our options.
Unfortunately, as we had mentioned during our demonstration, it is very likely your bond requirements prevent us from proceeding further.
We are once again looking for a bond company that will cover this 'no cost' proposal, but are having great difficulty. At the meeting you thought you might be able to offer the names of some companies that have done this in the past. We would very much appreciate any information you can provide.
Again, the bonding company's main concerns are that the State is not accepting a risk correspondent to the value of the bond.
There is some risk no question, but it is STS that will assume the greater risk of investing over 2 million dollars in equipment and manpower with the hope of financial recovery over a long term contract. They feel, and we have to agree, that the hardware investment itself should guarantee that this is a contract that we will not walk away from and will service to the best of our abilities.
Another way of looking at this is to remember that STS proposed a "free off-the-shelf" system with a proven track record that has provided millions and millions of exams in many jurisdictions over a period of 18 years. Again, I don't wish to minimize that the State has some risk, but asking for a bond on a proven product with an impeccable record would be like telling Microsoft that you wish a multi-million dollar bond to cover any potential risk of losing information in Microsoft Word, after they have given you the product at no cost.
Solutions Thru Software is extremely interested in this contract and at the prospect of working with the State of Florida, however at present we have a better chance than not of being forced to withdraw. This would be a terrible situation as Solutions Thru Software is the leading vendor in solutions such as this and has been doing so longer than any other company in the market.
One possible compromise may be to add Florida as a named beneficiary on our insurance policy as an alternative to a Bond.
Solutions Thru Software carries 2 million dollars in Liability, and we have had other customers accept this as a means of protecting their risk in the past.
Any assistance you can provide would be greatly appreciated. Of course time is of the essence. If we cannot find a bonding company by your August 1st deadline, then STS will be forced to submit a No-Bid in response to the BAFO.
Sincerely, Jim
The following day, on July 25, 2012, Mr. Sodero sent Mr. Kosberg another email regarding the bonding requirement. This email provides, in part, as follows:
The performance bond and damages bond continue to be issues. The companies that we are dealing with still believe this is a highly irregular request. To provide a quote from their latest email, "I'm not sure the Damages Bond will be something they'll want to consider. It's an odd request." We are proceeding with the application at any rate, and if you can provide other companies, we will proceed with the paper work for them as well.
Addendum 3 issued by the Department, among other things, modified the Calendar of Events section of the ITN. The original ITN provided that "best and final offers" were due no later than 2:30 p.m. (EST), on August 1, 2012. Addendum 3 changed the due date for "best and final offers" to August 3,
2012.
On July 27, 2012, STS sent additional emails to the
Department regarding the bonding requirements. The first email was sent at 8:15 a.m. (CST), by Jim Sodero to Jon Kosberg. The email states as follows:
Hi Jon,
I just thought I would let you know that I am currently writing up a formal request to have the bond request eliminated or modified as per section 2.7. . . If there are any requirements which restrict competition, the respondent may request, in writing, to the Procurement Officer identified in Section 1.3 that the specifications be changed . . .
The matter is not as to whether we can get a bond as it is looking like we will be able to. The problem is that we only have slightly over one week from the time the bond value was set, until the a [sic] guarantee of such bond must be provided with the BAFO.
We have also had our lawyers review section 5.6
5.6 WITHDRAWAL OF SQSO: Withdrawal of SQSO's may be requested within 72 hours (excluding State holidays, Saturdays, and Sundays) after the opening time and date. Requests received in accordance with this provision may be granted by the Department upon proof of the
impossibility to perform based upon an obvious error.
They identified two problems with this section. The first is that it is not clear as to whether the 72 hours if [sic] from the opening of the original bid, or the BAFO. The second is that they do not believe there is sufficient guarantee that an obvious error can be demonstrated given that we have been discussing this bond limitation since the onset of preparing this bid.
Please give me a call if you wish to discuss this prior to me sending out our formal request.
Jim
A few hours later, Jim Sodero, at 11:14 a.m.(CST), sent a second email to Jon Kosberg which states as follows:
Mr. Kosberg,
Re: Request for removal of Conditions that Restrict Competition
As per section 2.7, Solutions Thru Software wishes to identify a requirement which restricts our ability to compete in this RFP process. This is a concern that was identified when submitting our submission for the original RFP. Some clarification was provided by the State through the BAFO request, but unfortunately, as it stands, this concern still prevents Florida from receiving a full complement of competitive bids for this RFP.
The issue specifically concerns the bond requirements stated in sections 2.3 Proposal Bond, 2.4 Performance Bond, and 2.5 Damages Bond.
Although bond requirements are common in many government contracts, they are not common in the industry of knowledge testing.
This is due to the relatively low inherent risk assumed by the State. As the longest standing company in the business, Solutions Thru Software has not been required to obtain any bonds in our 18 years of impeccable service to the industry. As a "zero cost bid," the risk to the State of Florida is even less than is typical for the industry. For Florida, it is Solutions Thru Software who will finance and install literally millions of dollars in hardware and software for the purpose of knowledge testing for the State. The only risk to Florida is the potential of delay of service due to infrastructure failure, but no actual loss of service would exist as history has shown that the designed redundant system recovery is both seldom used and results in very short outages.
Our request for a RFP/BAFO modification is based on:
With 18 years of bond free service, it cannot be expected that STS would have a 'standing' bond in place or a history of successful bond completion.
As the total value of the bonds was not known until the release of the BAFO, it was impossible to be pre-approved for the bonds in question, leaving only 9 days to apply and be approved. The bonding companies we have spoken with have said that this timeline for a new bond is not possible.
The bonding companies have indicated that there is insufficient information on the surrender requirements for the bonds. In particular, they are confused as to the differences between the performance bond and the damages bond and why both must be renewed annually for the duration of the contract. In their opinion, the performance bond should cover the period between the onset of the contract and the
final sign off by the state that Solutions Thru Software has installed an operational system that satisfies the terms of the contract. At this point, the performance bond should be released and the damages bond put in place and renewed annually to protect the State for potential losses during operation of the system. If both bonds must remain in place, then they believe the State must clearly identify the types of problems that will result in the surrendering of each bond.
Although verbal assurance has been given that Solutions Thru Software 'should' have no difficulty in obtaining the performance bond, the bonding companies are more hesitant regarding the damages bond without further clarification being provided by the State. Given this situation Solutions Thru Software is very concerned with the risk of submitting the bid bond without receiving written assurance that the bid bond will be returned if the bonding companies are unwilling to accept the surrender conditions of the State.
The State has recommend[ed] that we continue with the bid process with plans of using the "72 hour" clause to pull our bid if necessary, but upon review of this clause, it is still unclear if failure to secure a bond can be demonstrated as an obvious error given that we have already pointed out this shortcoming through the RFP and BAFO process. It is also very unlikely that
72 hours will make the difference on the bond approval, as the first thing that they need is clarification from the State.
It is our opinion that the above points demonstrate an uneven playing field.
Bonds have not been a standard requirement in this industry in the past and it cannot be expected that all companies will have 'standing' bonds in place. The only
companies that will be able to respond to this RFP/BAFO will be companies that have other services that have required bonding, or possibly may have a track record that has warranted a need for bonding.
Solutions Thru Software respectfully request that the State of Florida takes one of the following actions:
Remove the bonding requirements
Modify the requirements to state that the performance bond will ensure an operational system meeting requirements and that it will be returned upon State sign- off. And, modify the requirement of the damages bond to be annually renewable bonds to cover the period of operation. And, extend the requirement date for submission of the performance bond and damages bond and provide in writing that failure to obtain these bonds will not result in forfeiture of the bid bond.
Thank you very much for your consideration of this request.
Jim
At approximately 11:30 a.m. (CST), on July 27, 2012, Jon Kosberg sent an email alerting prospective bidders to the fact that Addendum 3 had been posted the previous day.
Mr. Sodero, in response to Mr. Kosberg's email, sent his third email of the day to Mr. Kosberg at 2:56 p.m. (CST), and stated therein the following:
Thanks Jon,
I appreciate you forwarding Addendum 3 to us. However, our request for re-evaluation of the bond requirements still stands on the
grounds that it creates an uneven playing field. It does not address the concerns that our bonding companies have expressed to us. As well, it only allows companies that have other products that typically require bonds to be able to make the proposed deadline. That is, companies that have a precedent for this type of request or, they have substantial financial backing (i.e. millions if not billions of dollars) making their request to a bonding company much more palatable.
Jim
On Tuesday, July 31, 2012, at 3:19 p.m. (EST),
Mr. Kosberg sent an email to MorphoTrust and STS advising that Addendum 4 had been posted. This addendum deleted the requirement for a damages bond as previously required by section 2.5 of the ITN.
Less than an hour and a half after the posting of Addendum 4, Ms. Openshaw, vice-president of State and Local Sales for MorphoTrust, was speculating that the Department deleted the damages bonding requirement to assist STS. Specifically,
Ms. Openshaw stated, "I wonder if this addendum is because STS said they needed relief on some of the 'bondage' or they would not bid."
On Wednesday, August 1, 2012, Mr. Sodero emailed Mr. Kosberg regarding Addendum 4 and stated therein the following:
Hi Jon, we are still at the office getting this proposal out the door, but I wanted to
send you the latest from our bonding company, as we will have to remain diligent on this to meet the time line. We appreciate the changes you have made, however, they are still not meeting the main concerns of the bonding company.
In explaining why the Department decided to delete the requirement for a damages bond, Mr. Kosberg indicated that the Department "decided to look [at] what would be in the best interests of the Department," and through this process determined that,
[B]ecause of the unique model of this no cost solution and both vendors telling us that, you know, bonding may be redundant, we realized that we can achieve what we need in our requirement for bonding by holding strong to the performance bond and the proposal bond, while at the same point . . . remov[ing] the damages bond because of the redundancy, and we realized by removing that damages bond, we may ultimately realize better pricing for the third party administrator, because ultimately every requirement that we put in this ITN gets pawned off, you know, the price, to whoever may be paying for this particular type of service or item. (Transcript pg. 797)
Petitioner suggested that section 2.7 of the ITN precluded the Department from considering and acting upon STS's request to change the bonding requirements. Section 2.7 of the ITN provides, in part, that if a proposer believes that there are requirements in the ITN that restrict competition, the proposer may request in writing that the requirements be changed by the Department and that any "requests for changes to the
solicitation, must be received in writing by the Issuing Officer no later than the date and time specified in the Calendar of Events (May 1, 2012, at 4:00 p.m. Eastern Time)." Section 2.7 also states that "[a] respondent's failure to request changes by the date described above, shall be considered to constitute respondent's acceptance of Department's specifications."
As an initial matter, it is important to note that both STS and MorphoTrust voiced concerns about the ITN's bonding requirements well after May 1, 2012. While it is true that section 2.7 of the ITN directs that requests for changes to the solicitation must be received by the Department by some date certain, the requirements of section 2.7 must be read in conjunction with the other provisions of the ITN. Section 1.3 of the ITN provides, in part, that "[t]he Procurement Officer, acting on behalf of the Department, is the sole point of contact outside of official conferences and meetings with the agency's team, with regard to all procurement matters relating to this solicitation, from the date of release of the solicitation until the Department's Notice of Intended Award or Decision is posted." Also, Addendum 1 to the ITN makes it clear that the Department reserves the right to post addendums to the ITN as necessary.
In reading these provisions together, it is clear that the ITN process is one where proposers are allowed to voice concerns about "all procurement matters" relating to the
solicitation during the window of time between the date of release of the solicitation and the posting of the Department's Notice of Intended Award or Decision. The Department, in accordance with section 2.7, is always free to inform a respondent, as appropriate, that their failure to adhere to the established timeline constitutes "acceptance of the Department's specifications." It cannot, however, be said that
section 2.7 precludes, as a matter of law, the Department from deleting provisions of an ITN subsequent to the date by which proposers are to submit questions and recommended changes.
Generally, the Department is free to make changes to the provisions of an ITN prior to the submission of BAFOs as long as the changes do not favor, or create the opportunity for favoritism of, one bidder over another. See generally City of
Miami Beach v. Klinger, 179 So. 2d 864 (Fla. 3d DCA 1965).
The Department credibly explained its rationale for deleting the damages bond requirement, and there was no contrary credible evidence offered by MorphoTrust demonstrating that the Department's stated reasons are pretextural. Petitioner's argument that the Department impermissibly favored STS by deleting from the ITN the damages bond requirement is not supported by credible competent evidence.
The Relevant ITN Specifications are not Ambiguous
Petitioner alleges that "the Department's proposed award is contrary to the statutory requirements for a competitive solicitation" and is "contrary to the bid documents" because "[t]he only two vendors who submitted BAFOs interpreted the required Price Proposal Form completely differently." In furtherance of the allegation, Petitioner contends that the proposers were confused throughout the procurement process about how they were going to "recoup the costs associated with the no cost contract" and that this confusion resulted in the proposers developing divergent assumptions and proposals that prevented the Department from being able to conduct "a comparable analysis of the proposals." Petitioner's allegations are without merit.
As an initial matter, Petitioner's assertion, that its proposal was "completely different" from that of STS because of confusion about the specifications of the ITN, is a challenge to the specifications of the ITN. This challenge to the allegedly ambiguities in the specifications is untimely given that Petitioner failed to initiate a written protest to the alleged ambiguous specifications within 72 hours of posting of the solicitation. § 120.57(3)(b), Fla. Stat.; Capeletti Bros., Inc.
v. Dep't. of Transp., 499 So. 2d 855 (Fla. 1st DCA 1986). Nevertheless, even if the merits of Petitioner's argument are
considered, the plain language of the bid specifications do not reasonably support Petitioner's claim of ambiguity.
It is well established that bid specifications "must be sufficiently specific to permit bidders to bid upon the same product, and factors thereof which are of such importance as to be given special consideration in determining the successful bidder should be so covered in the specifications as to detail to all bidders the standards anticipated, the tests the product must meet, and all factors upon which the product will be judged and the award made." Robinson's, Inc. v. Short, 146 So. 2d 108, 113 (Fla. 1st DCA 1962). In a competitive bid process, one of the main objectives is to be able to "make an exact comparison of bids." Clark v. Melson, 82 Fla. 230, 89 So. 495 (1921).
In support of its contention that the bid specifications were confusing, Petitioner cites to the Price Proposal Form as reflected in Addendum 3. According to Petitioner, the portion of the Price Proposal Form that addresses the "cost to access system" reasonably caused Petitioner to believe that "the system" to which the form referred was the "knowledge testing solution" only, and thus, resulted in Petitioner not including in its proposal a fee for skills testing. This conclusion by Petitioner is not reasonable given that throughout the ITN, the Department made it clear that "the
system" included the hardware, software, and other issues associated with the administration of driving skills exams.
Section 1.1 of the ITN indicates that the Department is looking "for an [ADLTS], which is to be provided at no cost to the Department." In section 3.1 of the ITN, the Department provides "background" information about the current test administration system in Florida for both knowledge and skills examinations for Class E operators.
Specifically, as to skills examinations, section 3.1 notes that applicants must pass both a knowledge and skills exam, that skills examinations currently "administered by State and Tax Collector Examiners are documented by hand, with pass/fail scores manually determined and entered into the driver license issuance system." Section 3.1 also notes that "currently, all operator skills exams are administered through State or Tax Collector Offices, with the exception of any teenager who completes a driver education program through their local high school." Section 3.1 of the ITN further notes that over the next several years, the Department "will provide an opportunity for third- parties to administer Class E driving skills exams" and that the Department "will expect third-parties administering Class E driving skills exams to use the [ADLTS] system sought [by the ITN] at their own expense." Section 3.1 clearly communicates a desire by the Department to include within the scope of the ITN
issues related to skills testing. This conclusion is further supported by other provisions of the ITN.
Section 3.2 of the ITN provides that the Department seeks a testing system that must include among other things "[a] tablet-based solution for the administration of Class E driver license skills exams." Section 3.3 of the ITN provides that the Department anticipates "mandating that third-party administrators of Class E driving skills exams use the tablet system sought [by the ITN]." Section 4.1 of the ITN provides that "the awarded Contractor must also provide an option for purchase of a mobile tablet-based hardware/software solution for the administration of driving skills exams that will update the central testing database." Section 4.2.8 of the ITN makes it clear that when implemented, "the system" must provide "replacements for the current test types, including Class E skills testing."
While it may be true that Petitioner was confused, it cannot reasonably be said that the source of Petitioner's confusion was the specifications of the ITN. Contrary to Petitioner's allegation, the evidence establishes that STS's interpretation of the Price Proposal Form was consistent with the specifications of the ITN and that the specifications of the ITN were sufficiently clear so as to allow MorphoTrust and STS to bid on the same product.
A more likely source of Petitioner's confusion about the scope of the ITN can be found in Petitioner's general unfamiliarity with the concept of combining knowledge and skill testing as part of a single solution. According to Petitioner, "[n]o jurisdiction in the United States has previously issued a competitive procurement requiring a solution combining knowledge tests and skills tests as part of a no cost solution." Whether this is a true statement or not, it is evident that the lens through which Petitioner viewed the ITN was one that focused on knowledge testing as being the only source for generating revenue from test fees. By contrast, STS, through its operations in Canada, has merged knowledge and skill testing as part of a no cost solution and saw the opportunity to do so in Florida based on the unambiguous specifications of the ITN.
Petitioner's next basis for challenging the proposed award is that "the Department's proposed contract award is not based on a reasonable comparison of the anticipated overall cost of the two vendors' proposals and the proposed contract award fails to reflect a determination of best value to the state."
Section 8.1 of the ITN provides that the "[a]ward will be to the highest scoring proposal, considering the technical proposal scoring and all costs for the five-year contract period." Section 8.9 of the ITN references the methodology for evaluation of costs for the five-year contract period and
provides that the lowest cost proposal would be awarded 15 points. Based on the formula, Petitioner was awarded 2.5 cost proposal points, and STS was awarded 15 cost proposal points. When totaling all scoring categories, MorphoTrust received 168.1 points, and STS received 191.6 points. The Department's consideration of the technical and cost aspects of the respective proposals resulted in the proper determination of the "best value" to the State as required by section 287.012(4).
As for the issue that the proposed contract award is not based on a reasonable comparison of the anticipated overall cost of the two vendors' proposals, Petitioner specifically alleges that the cost scoring system was flawed because the Department "did not recognize or incorporate the very significant pricing assumptions and cost differences of the vendors in evaluating the ITN responses." This allegation is not supported by credible competent evidence.
Any pricing assumptions made by the proposers to the ITN should have as its foundation the information found in the ITN. Sections 3.1, 3.2, 3.3, and 3.6 of the ITN are particularly instructive to proposers when developing their "assumptions" for purposes of creating a cost proposal. These sections of the ITN describe the Department's current state of affairs and where the Department desires to be in the future with respect to driver license testing. In particular, Section 3.6 provides very
specific information about the number of driver license examinations administered by type and how test volumes are likely to be impacted by future events.
MorphoTrust's written price proposal details an
$8,000.00 per entity, one-time tablet set-up fee, if there is a "minimum of 40 entities." In evaluating this assumption, it was noted by the Department that MorphoTrust's proposal is silent regarding what the fee would be if there are less than 40 entities. By comparison, STS's proposal reflects a per tablet cost of $2,219.50 regardless of the number of entities purchasing tablets. A MorphoTrust tablet costs nearly four times as much as a tablet offered by STS. MorphoTrust in its price proposal identified "knowledge testing tiers" where the price would be
$10.00 per test for testing volumes between 100,000 to 149,999;
$7.50 per test for testing volumes between 150,000 to 199,999; and $4.95 per test for testing volumes in excess of 200,000. By comparison, STS charges $4.42 per test for knowledge and skills tests respectively, with the price for each test decreasing if annual testing volumes exceed 500,000 tests per fiscal year.
Each of these assumptions, as well as others, was considered by the Department when evaluating the respective price proposals.
MorphoTrust argues that the Department's evaluation of STS's proposal failed to consider the fact that STS intends to charge $4.42 for each of the two portions of the knowledge test
as opposed to a single charge of $4.42 for the entire knowledge test. In calculating the total cost of STS's proposal, the Department determined the cost to be $6,447.84 using a single knowledge test fee of $4.42. If STS's knowledge test fee is doubled to $8.84 to reflect the cost for charging for both portions of the knowledge test, then the total cost of the proposal, using the department's formula, increases to $6,452.00 dollars. The amount of $6,452.00, when compared to MorphoTrust's total cost of $38,659.90, is still the better value for the Department, third-party administrators, tax collectors, and ultimately the public. To the extent that MorphoTrust suggests that its pricing structure would have been different had it known that the ITN allowed for a per test fee for skills testing, this suggestion is without merit as explained elsewhere herein.
Petitioner did not Prove STS's Proposal is Non-Responsive
MorphoTrust alleges that STS's proposal should be rejected as non-responsive for three reasons. First, MorphoTrust contends that STS's BAFO proposal does not meet the mandatory performance bond requirements of the ITN. Section 2.4 of the ITN provides, in part, that "[t]he successful proposer shall supply no later than '14 calendar days of award,' a Performance Bond issued by an insurance company licensed by the State of Florida Department of Insurance." Because section 2.4 of the ITN uses the word "shall" in setting forth the performance bond
requirement, this requirement is considered a mandatory provision of the ITN, and the proposal must provide an explanation of how the requirement will be satisfied. Section 1.5 of the ITN provides that the Department "reserves the right to accept alternative means of accomplishing mandatory requirements, with reasonable assurance of satisfactory results, without addendum to this ITN."
STS proposed two options in its BAFO to satisfy the performance bond requirement. The two options provide as follows:
Performance Bond Costs Option 1. Bonding companies have given us an estimate of the expected yearly cost of the bond, however we would like to have additional conversations with the State on surrender conditions.
Solutions Thru Software will only charge the exact cost of the bond, without markup or handling fees. The following would be a one-time fee for the five year contract.
$TBD (estimated at 3%)
Performance Bond Costs Option 2. If the state prefers, the bond cost can be added onto the per test fee for an estimated additional. $TBD (estimated at 3%)
On August 10, 2012, after submission of BAFOs by the proposers, Mr. Kosberg sent an email to Mr. Sodero at STS and stated therein the following:
Jim,
Per our discussion I am clarifying the following: The option related to the Performance Bond that will be suitable for
the State would be to add the cost onto the per test fee, which you identified as an additional 3%, which totals $0.13 per test, bringing the per test fee from $4.29 to
$4.42 per test.
Mr. Sodero, in response to the inquiry from
Mr. Kosberg, confirmed that the "13 cents per test is a firm price to cover all bond costs . . . [and that STS] will honor the 13 cents per test cost and assume any financial risk should cost go beyond this point." In considering STS's proffer with respect to the performance bond requirement, it is clear that in its BAFO response, and its clarifying statement related thereto, that STS affirmatively represented that it was prepared to comply with the performance bond requirement. Simply stated, STS's proposal as to the performance bond requirement is responsive.
As the second ground for rejection of STS's BAFO as being non-responsive, MorphoTrust contends that STS impermissibly submitted a "post-scoring amendment" to its pricing proposal in violation of the specifications of the ITN. The alleged "post scoring amendment" occurred when STS clarified the extent to which the three-percent bond premium would impact its cost proposal.
Section 1.48 of the ITN provides that "[t]he Department reserves the right to contact any and all proposers for the clarification of responses to th[e] solicitation in accordance with the attached Form PUR 1001, Paragraph 15." Form PUR 1001,
paragraph 15, provides that "[b]efore award, the [Department] reserves the right to seek clarifications or request any information deemed necessary for proper evaluation of submissions from all respondents deemed eligible for Contract award." Contrary to the allegations, STS did not amend its BAFO in an improper manner as suggested by Petitioner, but, instead, merely clarified its BAFO in response to an inquiry from the Department as authorized by the ITN.
In its third ground for rejection of STS's BAFO as being non-responsive, MorphoTrust contends that "[t]he STS proposal should . . . be rejected because it modified the required Price Proposal Form to include a per test cost to be charged for 'skills testing.'" This ground, like the others, is also without merit.
Section 1.44 of the ITN provides, in part, as follows: "The proposal forms furnished must be submitted with your proposal. Forms to be filled out in pen or ink or typewritten with no alterations, changes or amendments made within." (emphasis added). As previously noted, section 1.5 of the ITN provides that "[t]he use of the terms 'shall,' 'must,' or 'will' (except to indicate simple futurity) in this solicitation indicates a mandatory requirement or condition." Consistent with section 1.5, the only relevant portion of section 1.44 that is mandatory is the requirement that "proposal forms must be
submitted with [the] proposal" because this is the only portion of section 1.44 that uses the mandatory term "must." As for the portion of section 1.44 that deals with the substance of the form, it is only noted therein that the pricing forms are "to be" filled out a certain way. "To be" is not identified in the ITN as imposing a mandatory requirement or condition. Additionally, even if the original ITN can be read as requiring that the pricing form not be altered, changed, or amended, the Department, in the answers to questions 37 and 82 in Addendum 1 to the ITN, authorized changes, amendments, and alterations to the pricing forms.
In response to question 37, the Department stated that "[t]here is only a Price Proposal Form [so] [p]lease utilize additional space in a Word, Excel or PDF format for pricing structure, if needed." Question 82 asks, "[i]n regards to the Pricing Proposal Form on page 42 of the ITN, can this form be modified to better present our pricing strategy to the State of Florida?" The Department, in reply to Question 82, responded "[y]es, this form can be modified utilizing Word, Excel or PDF to format a proposed pricing structure." Petitioner failed to present credible evidence demonstrating that STS altered the Price Proposal Form in a manner inconsistent with the requirements of the ITN.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569 and 120.57, Fla. Stat. (2012).
Section 120.57(3)(f) provides, in part, that:
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. . . .
MorphoTrust, as Petitioner, has the burden to establish the material allegations of its protest, to wit, that the Department's intended award of the contract to STS is clearly erroneous, contrary to competition, arbitrary, or capricious.
§ 120.57(3)(f); Dep't of Transp. v. J. W. C. Co., Inc., 396 So. 2d 778, 787 (Fla. 1st DCA 1981).
The nature of the de novo review in a bid protest proceeding has been established as follows:
[T]he phrase 'de novo hearing' is used to describe a form of intra-agency review. The judge may receive evidence, as with any formal hearing under section 120.57(1), but the object of the proceeding is to evaluate
the action taken by the agency. See Intercontinental Properties, Inc. v. State Department of Health and Rehabilitative Services, 606 So. 2d 380 (Fla. 3d DCA 1992).
State Contracting and Eng'g Corp v. Dep't of Transp., 709 So. 2d 607, 609 (Fla. 1st DCA 1998).
Agency action will be found to be "clearly erroneous" if it is without rational support and, consequently, the Administrative Law Judge has a "definite and firm conviction that a mistake has been committed." U.S. v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); see also Pershing Indus., Inc. v. Dep't of Banking and Fin., 591 So. 2d 991, 993 (Fla. 1st DCA 1991).
Agency action may also be found to be "clearly erroneous" if the agency's interpretation of the applicable law conflicts with its plain meaning and intent. Colbert v. Dep't of Health, 890 So. 2d 1165, 1166 (Fla. 1st DCA 2004). In such a case, "judicial deference need not be given" to the agency's interpretation. Id.
An act is "contrary to competition" if it runs contrary to the objectives of competitive bidding, which have been long held to be:
[T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in various forms; [and] to secure the best values for the [public] at the lowest possible expense.
Wester v. Belote, 138 So. 2d 721, 723-24 (Fla. 1931); see also
Harry Pepper & Ass'n, Inc. v. City of Cape Coral, 352 So. 2d 1190, 1192 (Fla. 2d DCA 1977). In that regard, public officials do not have the power "to make exceptions, releases and modifications in the contract after it is let, which will afford opportunities for favoritism, whether any such favoritism is practiced or not." Wester v. Belote, at 724. The public policy regarding exceptions and releases in contracts applies with equal force to the contract procurement.
Section 287.001 establishes the legislative intent that public procurement be intrinsically fair and open and that it also eliminate the appearance and opportunity for favoritism so as to preserve public confidence in the process, and provides as follows:
The Legislature recognizes that fair and open competition is a basic tenet of public procurement; that such competition reduces the appearance and opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically; and that documentation of the acts taken and effective monitoring mechanisms are important means of curbing any improprieties and establishing public confidence in the process by which commodities and contractual services are procured.
The stated legislative intent has been applied to determine whether an action is contrary to competition as follows:
Thus, from Section 287.001 can be derived an articulable standard of review. Actions that are contrary to competition include those which:
create the appearance of and opportunity for favoritism;
erode public confidence that contracts are awarded equitably and economically;
cause the procurement process to be genuinely unfair or unreasonably exclusive; or
are unethical, dishonest, illegal, or fraudulent.
SYSLOGIC Tech. Servs., Inc. v. So. Fla. Water Mgmt. Dist., Case No. 01-4385BID (Fla. DOAH Jan. 18, 2002; SFWMD Mar. 6, 2002).
An "arbitrary" action is "one not supported by facts or logic, or despotic." A "capricious" action is "one which is taken without thought or reason or irrationally." Agrico
Chemical Co. v. Dep't of Envtl. Reg., 365 So. 2d 759, 763 (Fla. 1st DCA 1978); see also Hadi v. Liberty Behavioral Health Corp., 927 So. 2d 34, 38-39 (Fla. 1st DCA 2006). If agency action is justifiable under any analysis that a reasonable person would use to reach a decision of similar importance, the decision is neither arbitrary nor capricious. Dravo Basic Materials Co., Inc. v. Dep't of Transp., 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992).
Chapter 287 establishes the various methods for the procurement of commodities and services by state agencies. The
Department utilized an ITN as the method for procurement of the contract at issue. Section 287.057(1)(c) describes that method of procurement as follows:
(c) Invitation to negotiate.--The invitation to negotiate is a solicitation used by an agency which is intended to determine the best method for achieving a specific goal or solving a particular problem and identifies one or more responsive vendors with which the agency may negotiate in order to receive the best value.
Before issuing an invitation to negotiate, the head of an agency must determine and specify in writing the reasons that procurement by an invitation to bid or a request for proposal is not practicable.
The invitation to negotiate must describe the questions being explored, the facts being sought, and the specific goals or problems that are the subject of the solicitation.
The criteria that will be used for determining the acceptability of the reply and guiding the selection of the vendors with which the agency will negotiate must be specified.
The agency shall evaluate replies against all evaluation criteria set forth in the invitation to negotiate in order to establish a competitive range of replies reasonably susceptible of award. The agency may select one or more vendors within the competitive range with which to commence negotiations. After negotiations are conducted, the agency shall award the contract to the responsible and responsive vendor that the agency determines will provide the best value to the state, based on the selection criteria.
The contract file for a vendor selected through an invitation to negotiate must contain a short plain statement that explains the basis for the selection of the vendor and that sets forth the vendor's deliverables and price, pursuant to the contract, along with an explanation of how these deliverables and price provide the best value to the state.
Section 287.012(25) defines a "responsive" submission to a solicitation as "a bid, or proposal, or reply submitted by a responsive and responsible vendor that conforms in all material respects to the solicitation." A "responsive vendor" is defined by section 287.012(26) as "a vendor that has submitted a bid, proposal, or reply that conforms in all material respects to the solicitation."
For the reasons set forth above in the Findings of Fact, Petitioner failed to meet its burden of establishing that the Department's intended award to STS is contrary to the Department's governing statutes, the Department's rules or policies, or the solicitation specifications. Accordingly, the Department's proposed action of awarding the contract to STS is neither clearly erroneous, contrary to competition, arbitrary nor capricious.
Because of the findings and conclusions set forth herein, it is not necessary for the undersigned to consider STS's allegations that MorphoTrusts' BAFO proposal is non-responsive and that MorphoTrust is non-responsible.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Department of Highway Safety and Motor Vehicles, enter a final order adopting the Findings of Fact and Conclusions of Law set forth herein and dismissing MorphoTrust's protest as untimely, as indicated, and otherwise unsubstantiated.3/
DONE AND ENTERED this 7th day of December, 2012, in Tallahassee, Leon County, Florida.
S
LINZIE F. BOGAN
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 7th day of December, 2012.
ENDNOTES
1/ All subsequent references to Florida Statutes will be to 2011, unless otherwise indicated.
2/ As for the language reserving in MorphoTrust "the right to terminate or renegotiate," Ms. Openshaw explained that the reservation language was intended to be read in concert with the equitable termination language found in ITN Attachment 1,
PUR 1000, paragraph 4(e). The equitable adjustment provision provides that "[t]he Customer may, in its sole discretion, make an equitable adjustment in the Contract terms or pricing if
pricing or availability of supply is affected by extreme and unforeseen volatility in the marketplace. . . ." PUR 1000 defines the "customer" as the "State agency or other entity identified in a contract as the party to receive commodities or contractual services pursuant to a contract." There is nothing in the equitable adjustment language that reserves to a contractor the unilateral right to terminate its contract with the Department, and the Department considered MorphoTrust's reservation when evaluating the company's pricing proposal.
3/ Motions for attorney fees and costs were filed prior to the entry of this Recommended Order. It would be premature to consider the motions prior to entry of the final order.
COPIES FURNISHED:
Julie L. Jones, Executive Director Department of Highway Safety
and Motor Vehicles
Neil Kirkman Building, Room B-443 2900 Apalachee Parkway
Tallahassee, Florida 32399-0500
Steve Hurm, General Counsel Department of Highway Safety
and Motor Vehicles
Neil Kirkman Building, Room A-432 2900 Apalachee Parkway
Tallahassee, Florida 32399-0500
Deana Metcalf, Director
Division of Administrative Services Department of Highway Safety
and Motor Vehicles
Neil Kirkman Building, Room B-431 2900 Apalachee Parkway, Mail Stop 20
Tallahassee, Florida 32399-0500
Jennifer Clark, Agency Clerk Department of Highway Safety
and Motor Vehicles
Neil Kirkman Building, Room A-430 2900 Apalachee Parkway, Mail Stop 61
Tallahassee, Florida 32399-0500
J. Stephen Menton, Esquire Rutledge, Ecenia and Purnell, P.A.
119 South Monroe Street, Suite 202 Post Office Box 551
Tallahassee, Florida 32301
Douglas Sunshine, Esquire Department of Highway Safety
and Motor Vehicles
Neil Kirkman Building, Room A-432 2900 Apalachee Parkway
Tallahassee, Florida 32399-0500
Maria Elena Abate, Esquire Sharlee H. Edwards, Esquire Colodny, Fass, Talenfeld,
Karlinsky and Abate, P.A.
23rd Floor
100 Southeast 3rd Avenue
Fort Lauderdale, Florida 33394
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 |
|---|---|---|
| Jan. 07, 2013 | Agency Final Order | |
| Dec. 07, 2012 | Recommended Order | Petitioner failed in its burden of establishing grounds for protest of DHSMV's intended contract award to Intervenor. |
