Findings Of Fact The Department of General Services, Division of Purchasing, is the state agency responsible for establishing standards and specifications and term contracts for purchase by the State of commodities used in volume. Generically, term contracts are established for fixed periods of time, usually one year, with no predetermined quantities or guarantees of purchase. The current ITB contemplates $38,000,000 in annual expenditure. During the fixed period, vendors agree to sell commodities at the prices established through the competitive bidding process. Term contracts permit concentration of the State's entire purchasing power so as to obtain price advantages through anticipated large volume purchases, through reduced administrative costs, and through standardized terms and conditions of sales, warranties, and service. History of DGS and Department of Education collaboration in drafting of a term contract for microcomputers dates back at least to 1982. Purchases have, of course, been made under those contracts. Continuity in successive state microcomputer term contracts serves the significant purposes of supporting microcomputer equipment already in place with various governmental users (the "embedded State base") and supporting expansion of that embedded base by meeting users' emerging needs. On October 30, 1987, DGS issued Invitation to Bid 462-250-040B, microcomputers. Potential bidders (including among them both manufacturers and dealers) were notified of a bidders' conference to be held on November 16, 1987, and were asked to submit written questions concerning the ITB by November 9, 1987. At the November 16, 1987 conference, written answers to the pre-submitted questions were read aloud and distributed to all in attendance. Caber had submitted written questions, but no Caber representative attended the conference. On November 17, 1987, an Addendum to Invitation to Bid 462-250-040B was issued, incorporating selected suggested changes, thereby completing Invitation to Bid 462-250-040B (hereafter, "ITB-462"). A simultaneous bid submittal deadline and bid opening was scheduled for 2:00 p.m., December 3, 1987. Caber timely filed its Notice of Protest on November 23, 1987, within 72 hours (excluding weekends and holidays) of receipt of completed ITB-462. Following uneventful and unsuccessful informal procedures, Caber timely filed its Formal Written Protest on December 2, 1987. Pursuant to Section 120.53(5)(c), Florida Statutes, and Rule 13A-1.006(3)(d), Florida Administrative Code, DGS stopped the bid solicitation process at that point, one day prior to the bid submittal/bid opening deadline of December 3, 1987. At the time of Caber's filing its Formal Written Protest, Apple, along with approximately 72 other dealers and manufacturers had already submitted bids. IBM was en route to DGS with IBM's bid, but IBM's bid submittal was refused by DGS because of the statutory "freeze." MCA had filed no Notice of Protest, no bid, and no Formal Written Protest. The purpose of ITB-462 was to establish a 12 month term contract for the purchase of microcomputers, which term contract could be extended for each of two successive 12-month terms. As a term contract, all state agencies would be required to purchase microcomputers from the contract. The state university system, counties, municipalities, local school districts, and political subdivisions would have the option of doing so. The format of ITB-462 reflects major substantive changes in DGS' policies for the microcomputer term contract from what those policies had been previously. Last year, when intended awards by DGS under its last previous (1986) microcomputer bid solicitation (ITB-545) for the proposed 1987 term contract were protested by Caber, DGS had decided to reject all bids arising thereunder and to rewrite ITB-545 to correct certain flaws. The DGS' decision to reject all bids under ITB-545 was upheld over Caber's protest in consolidated cases Caber Systems, Inc. et al. v. DGS, et al., DOAH Case No. 87-0836BID and Microage Computer Stores, Inc. v. DGS, DOAH Case No. 87-0837BID. As a result of the flaws in ITB-545 revealed during that formal protest, DGS finally abandoned ITB-545 entirely, extended the 1985 microcomputer contract (hereafter, "contract 621" or "621") for one year to January 26, 1988, embarked on serious reevaluation of its users' needs, and commenced the drafting process that resulted in the ITB-462 format which is the subject of the instant specification protest. In order to assure that the new specifications would meet the needs of its embedded base, DGS consulted the Department of Education (DOE), other state agencies, the Information Resources Commission (IRC), user groups such as the Government and Education Microcomputer User Group (GEMUG), and various manufacturers of microcomputers. DOE operated partly as a conduit for user need information from school boards and the state university system. IRC acted partly as a conduit for user need information from other state agencies and partly as a consultant providing technical information and bid specification evaluation to DGS. The format of ITB-462 contains four tables. Table I identifies 353 microcomputers of 21 manufacturers arranged by brand and model and includes product descriptions supplied by the respective manufacturers. Table II consists of forms for bidders to list microcomputer options and accessories. Table III consists of forms for bidders to list microcomputer software. Table IV contains a set of separate generic specifications of IBM compatible clones. Tables I through IV were combined with DGS' General Conditions and Certain Special Conditions. The Special Conditions of ITB-462 provide that, in the case of Table I, brand name and models, "[n]o additional micro- computer brand names and models will be considered for this bid;" and that third party components (products of one manufacturer installed in the larger system or computer of another manufacturer) are not acceptable for Table I unless they are used by the manufacturer in normal production and supported by the manufacturer for warranty and maintenance service, and they further provide that: EVALUATION AND AWARD Any contract resulting from this bid shall be awarded for specific microcomputers listed in Table I by brand name and model number to the low qualified bidder. A single award shall be made for each IBM- compatible clone configuration listed in Table IV to the low qualified bidder for that configuration. Options, `Accessories and Operating System/Programing Language/Utility Software placed on any contract resulting from this bid shall be limited to those products applicable to microcomputer models awarded to each low qualified bidder. Technical Specification 3.2 of the Specifications Nos. 250-040 and 250-041 of the ITB identifies fourteen "acceptable" hardware options/accessories and provides that these "are the only peripherals or components that are acceptable for this bid and any award." Unlike prior microcomputer ITBs, there is no place in Table I of ITB- 462 for a vendor to bid systems that are equivalent to (meet or exceed) any brand system listed in Table I. The list of 353 systems in Table I is designated a Qualified Product List (QPL). DGS intends to make one award to the lowest responsive bidder for each system. Responsiveness of bids will be determined by ascertaining that a bid is in the proper form, properly executed, and correctly identifies the item bid. Award by low price will be faster than the evaluation process that had been employed with the 1986 ITB-545, which took far in excess of the time allotted. Improving the former evaluation process and attaining a speed factor were identified and evaluated as positive goals in the course of the ITB-545 bid protest and in the drafting process for ITB-462. DGS intended that there should be no technical evaluation (i.e. benchmarking) for Table I of ITB-462 because the QPL has eliminated that need. Microcomputer Models were selected for inclusion in the ITB-462 Table I QPL based on four criteria listed specifically in the ITB itself as "placement on the current microcomputer contract, review of contract exceptions, demand by State contract users, and experience of prior usage by the State." DGS formulated the four criteria as a means to achieve the objective of supporting the State's embedded base of microcomputers and applied a volume of usage measurement to all four criteria. Although Caber and MCA urged that meeting just one of these four criteria was insufficient to get on the QPL and that there was in place an unpromulgated "50 sales" threshold rule or policy with regard to volume of usage, the credible competent substantial evidence as a whole does not support their inference. Rather, the evidence shows that DGS personnel wanted to apply a "50 sales" policy but abandoned it in favor of merely requiring hard proof through sales reports or sales receipts, purchase orders, or similar documentation or by user requests that there was a current embedded base of more than one sale of one model by each potential supplier. This is reasonable for a term contract. Each of the four criteria has the same intent and purpose, that is, to determine the true current embedded base. Caber originally protested that DGS should be precluded from requiring any proof of volume sales by way of sales reports and similar documentation without first promulgating a formal rule or enunciating a clear policy. The agency has wide discretion in how it implements its statutory duties, and requiring proof of volume usage is a reasonable method of determining the true current embedded base and serving it. Requiring proof of the true current embedded base does not exceed DGS' statutory authority and is not arbitrary or capricious. It is reasonable for DGS to require potential suppliers to prove past sales instead of merely accepting, without further proof, self-serving letters from them alleging that they have made such sales. DGS cannot legitimately ignore that if potential suppliers' allegations of sales are taken at face value, some potential suppliers will be tempted to falsify their claim of sales in the hope of gaining an advantage. Also, as set out in Finding of Fact 19, infra, such proof has been anticipated and provided for in prior contracts. Neither Caber or MCA filed a Section 120.54 or 120.56, Florida Statutes, rule challenge, with regard to either a volume policy of "50 sales" or the policy above- described. In the course of formal hearing and in their posthearing proposals, however, Caber and MCA suggested unequal application of the policy of volume usage and the number needed to be proved. Although it was shown that an indefinite volume usage scale was applied, to various manufacturers, Caber and MCA were unable to show that any legitimate party to this instant protest was treated unequally. See, infra. Findings of Fact 22-26 and the Conclusions of Law. During the course of the 621 contract, DGS had, pursuant to General Condition 25, revised that contract on at least a quarterly basis, to reflect, among other things, deletions of discontinued products and additions of new products by actual sales to the state. 4/ Therefore, DGS did not question volume of current usage of recently added suppliers or require those suppliers which had been recently added to the 621 contract revisions to demonstrate anew a need for their products by State users so as to get on the ITB-462 QPL. Rather, DGS broadened the ITB-462 QPL by all models of any manufacturer listed on the 621 contract revisions up to the date of mailing ITB-462. If DGS already possessed proof of volume usage by the embedded base either by proof of sales or by user requests, it added any supplier listed on the basic 621 contract to the ITB-462 QPL, without further inquiry or proof requirements. However, if DGS had reason to question the volume of current usage by the State embedded base of products from suppliers listed on the basic 621 contract, DGS then required those particular suppliers to come forward with proof of current true volume usage of their products by the State embedded base, before DGS would add that particular supplier's products to the ITB-462 QPL. DGS only questioned volume of current State embedded base usage of the products or potential suppliers listed on the basic 621 contract if two situations converged. First, DOE, IRC, and the state contract users would have to have given no indication that a 621 listed supplier's products were still in demand and DGS would have to have had no independent record of sales above a single unit single sale. No potential supplier in this dual category is a legitimate party to this Section 120.53, 120.57, Florida Statutes, ITB-462 protest, and none submitted to DGS satisfactory proof of sales to an embedded state user base sufficiently in advance of the ITB-462 mailing to be placed on the ITB-462 Table I QPL. See, infra., Findings of Fact 22-26 and the Conclusions of Law. If a brand/model could not qualify under the first of the four ITB-462 QPL criteria, "listing on the revised 621 contract," DGS would still place it on the ITB-462 QPL if it met one of the other three criteria. Criterion one was not demonstrated to be arbitrary or capricious either in concept or in application to any party with standing in this proceeding. Together with the other three criteria, it is a reasonable component of a method of achieving the agency's statutory goal of competitive bidding, and does not exceed the agency's statutory authority. Criterion two, "review of contract exceptions", refers to DGS' role in approving or disapproving State agencies' requests to acquire microcomputers and equipment which is not on a state contract. See, Rule 13A-1.008(4), Florida Administrative Code. DGS personnel reviewed the 621 contract exceptions that had been granted previously, but did not consider a contract exception for a single unit sufficient to qualify a brand/model for the ITB-462 Table I QPL. However, Table IV, the IBM clone category, was drafted in response to DGS' review of contract exceptions. DGS demonstrated that this standard was reasonable. Caber and MCA did not affirmatively demonstrate any significant competitive bidding benefit or any substantial and compelling embedded user base that was overlooked in requiring more than a single unit exception, nor did they show that a multiple unit standard was unreasonable, arbitrary, capricious, exceeded statutory authority or showed favoritism. Criterion three, "demand by state users", refers to oral and written requests from State contract users for certain products. DGS reasonably added Datamaxx brand products to the 462 Table I QPL as a result of such a request from the Department of Health and Rehabilitative Services, and Caber and MCA failed to demonstrate any significant competitive bidding benefit or substantial and compelling embedded user base that was overlooked in this process or that Datamaxx should be deleted from Table I due to any overreaching of statutory authority, unreasonableness, arbitrariness, capriciousness, or favoritism employed by DGS. Criterion four, "experience of prior usage by the State" was a catchall category by which DGS sought to ultimately capture all potential suppliers needed by its embedded base. In practice, it overlapped criterion one and was not arbitrary or capricious and did not exceed the agency's statutory authority. DGS again would not accept a single unit sale as proof of a significant embedded users base. DGS' initial knowledge of volume sales can come from sales reports and purchase orders and from DGS personnel's oral and written contact with various state agencies. Also, suppliers on contract 621 are required to furnish to DGS quarterly sales reports and the contract notifies them in advance that furnishing these quarterly sales reports will be considered in awarding future contracts, but there has not been uniform supplier compliance with that 621 contract requirement, and DGS admits its figures in this regard are not entirely accurate. If no contract user had specifically requested a microcomputer product, rather than simply striking those suppliers which had not properly provided adequate sales documentation under contract 621, DGS allowed listed suppliers to submit proof of a current embedded base of state users of their products in the form of receipts, invoices, sales records, and similar documentation. DGS expected the supplier listed to make initial contact with DGS to supply this volume usage information, but where first contact had been initiated by such a potential supplier, DGS would actively continue to solicit such proof. DGS reasonably and logically required that the proof be submitted sufficiently in advance of the mailing of the ITB-462. If DGS already had proof or an embedded user base through proof of sales or had contract user requests for suppliers listed on contracts predating contract 621, DGS also added those potential suppliers to the ITB-462 QPL without requiring further proof. This broadening of the ITB-462 QPL could fall in either criterion three or four and demonstrates no offense against competitive bidding even if it does not precisely fit criterion one. In every application of the criteria, the intent of DGS' actions has been to responsibly broaden the QPL, not limit it. Caber's protest suggests adding specific name brands to the ITB-462 Table I QPL: Toshiba, Wyse, Tandon, NEC, and Convergent Technologies. DGS had not included these brands in the QPL because DGS had no requests and no independent proof of an embedded base, and because these brands submitted no documentation of volume usage prior to the ITB-462 mailing. At no time prior to the conclusion of formal hearing in this cause was Caber an authorized dealer for Tandon, NEC or Convergent Technologies, and therefore Caber could not have bid products of those brands by December 3, 1987, the bid submittal/opening date. Nor did Caber have any standing to represent these manufacturers during the crucial 72 hour "window" provided for filing notices of protest. Caber's connections with these manufacturers is "hopeful" at worst and speculative at best. Caber is an authorized dealer for Toshiba and Wyse. At formal hearing, Caber proved up a one unit sale of a Toshiba product under a contract exception, but Caber's principal witness stated that a similar single unit bid would not be in Caber's best interest. At formal hearing, Caber presented no proof through supporting sales receipts, invoices, or similar sales documentation of any Wyse sales to an embedded state user base. NEC does not sell directly, but only through third party dealers. Its products appear on the expired 621 contract but neither NEC nor its dealer, who is the supplier listed on the 621 contract, filed a protest or sought to intervene in this proceeding. NEC knew about the required proof of sales, but submitted no supporting documentation of sales to an embedded state user base when requested to do so by DGS prior to the ITB-462 mailing, and prior to that date there was no direct request for NEC products by contract users. Intervenor MCA is the sole authorized distributor of Convergent Technologies products in Florida. MCA sells such microcomputers to state contract users through an arrangement with Integrated Microsystems, Inc. Integrated Microsystems is listed on the 621 contract as providing Convergent Technologies equipment. MCA provided quarterly sales reports to Integrated Microsystems but neither MCA nor Integrated Microsystems filed them with DGS. Neither MCA nor Integrated Microsystems met DGS' deadline for submitting similar documentation of such sales prior to the mailing of ITB-462, although MCA had requested that Convergent Technologies be added to the ITB-462 QPL. Neither MCA, Integrated Microsystems, Inc., or Convergent Technologies timely filed a Notice of Protest or Formal Written Protest. MCA made a conscious decision not to do so. Neither Integrated Microsystems, Inc. nor Convergent Technologies sought to intervene. Caber and MCA proposed that if ITB-462 is not modified to allow addition by name brands or equivalent bids for Table I models, then it should be modified to allow potential suppliers reasonable notice and opportunity to submit proof of State user demand for any brands/models not currently listed on Table I. Implementing such a proposal would only be providing an additional chance for these potential suppliers to submit the proof DGS required prior to the ITB mailing and which was not supplied then. Pursuant to General Condition 25, DGS intends to add new brands to the new microcomputer contract resulting from ITB-462 by competitive bidding. DGS intends to develop criteria for addition to the Table I QPL to be published and mailed to potential vendors in the future. Once a microcomputer meets the criteria, there will be an ensuing bid and award. DGS then plans to continue to add replacement models without competitive bidding when they meet or exceed specifications at the lower prices. New brands will then be added by specific make and model only. If DGS is required to fulfill its intention, the protestants' goal will be achieved without sacrificing additional time in getting out ITB-462 and the goal of further expansion of the embedded base will be served quarterly within the contract's life. In drafting ITB-462, DGS worked closely with DOE and the Information Resources Commission (IRC) beginning approximately in June 1987 and provided each with a draft or "specimen" copy of the ITB at a conference held October 7, 1987 and requested their comments at a conference held October 16, 1987. The IRC is the centralized management authority for all information technology (computer) use within State agencies. With the exception of the Department of Community Affairs, no state agency suggested equivalency bidding, and the IRC did not recommend this substantial change in the specimen ITB-462 format when it presented its review of agencies' needs and its own recommendations to DGS. DOE expressed no need for an "all other" or "equivalent" category/goal because it was felt that Table I contained a broader range of models which would meet the majority of their users' needs and the Table IV clones would meet any state needs not met by Table I. DGS' position was that reopening Table I to "all other" or "equivalent" categories would be to return to the 1986 ITB-545 format that Caber previously protested and that DGS had abandoned because it was vague and because it was impractical to administer. Caber and MCA proposed that DGS develop specifications (an "all other" category) which bidders would attempt to meet by assembling their own systems of components. Specifically, Caber and MCA proposed deleting the provisions of the Special Conditions of ITB-462 which prohibit bidding of equivalents, and allowing potential vendors to bid models that are "equivalent" to (meet or exceed the specifications of) Table I models, either by creating a new Table V form on which vendors may bid a model equivalent to any specified model on Table I or by creating a set of "other low qualified bid" categories involving generic specifications based on Table I models. However, Caber and MCA did not affirmatively demonstrate any compelling competitive bid advantage to the State's embedded user base in doing so. Neither did they present any substitute specifications by which an "equivalent" goal/category could be successfully bid, evaluated, and awarded, whether it be added to existing Table I or placed in a "created" Table V. The 1986 ITB-545 bid protest resulted in part from a failed attempt to draft generic specifications and Caber and MCA only suggested in the present formal hearing that DGS should advertise for someone to come forward and write such specifications and other methods more reminiscent of a "request for proposal", (RFP) than of a firm specification for an ITB to meet a known embedded user base with definite parameters of need. Evaluation by benchmarking to establish functional equivalency would be necessary to implement Caber's and MCA's proposals even if generic specifications could be drafted, due to the myriad combinations possible. The alternatives to benchmarking proposed by the Caber and MCA witnesses are impractical and demonstrably not in the best interests of the State, based on time considerations associated with benchmarking literally hundreds of potential combinations, time considerations rendered even more compelling by the termination of the 621 contract on January 26, 1988. Moreover, Caber's and MCA's suggestions that the State rely solely on default provisions of the ensuing contract clearly would not be in the best interests of the State in that such a practice would inherently subvert all the price benefits sought through term contracting. Moreover, as it stands now, a degree of equivalent bidding is permitted in Table IV of ITB-462. Although third party components (products of one manufacturer installed in the larger system or computer of another manufacturer) may be bid in other tables, DGS has excluded them from Table I by the following language, Third party components are not acceptable within a system designated by a manufacturer's model number on Table I unless they are used by the manufacturer in normal production and supported by the manufacturer for warranty and maintenance service. The purposes behind this exclusion are to avoid the same problems inherent in bidding equivalents and the necessity for benchmarking of all possible variations, and because manufacturers will generally not provide maintenance contracts on altered equipment, because of the need for contract users to know exactly what they are getting, because of enunciated safety reasons, and because of the need for specificity in bid solicitations, administration, and award. By their prehearing stipulation, Caber, MCA, DGS, IBM, and Apple stipulated that the Manufacturer's Certificate called for in ITB-462 should be modified so as to delete the following language "AND IS OFFERING EQUIPMENT THAT IS IN COMPLETE COMPLIANCE WITH THE BID SPECIFICATIONS." No reason was shown why this stipulation should not be accepted and given effect, provided all the potential bidders have an opportunity to resubmit bids to comply with ITB-462 as reformed on this point. An IBM-compatible clone is a computer marketed by a manufacturer other than IBM, having an operating system that will run IBM programs and which has the capability to be expanded with IBM-compatible devices. DGS established such a category in Table IV to meet demonstrated needs of an embedded base of State microcomputers which perform the same functions as IBM equipment but which can be obtained at significantly lower prices. The clone category specifications are already at least "semi-generic" or "semi-equivalent" in that any combination of components which meets those specifications is acceptable to DGS, regardless of manufacturer or dealer. Third party components are acceptable in the IBM- compatible clone systems, provided that all such components are warranted by the bidder and maintenance subsequent to the warranty period is available from the bidder. There are hundreds of manufacturers of IBM compatible clones in the microcomputer marketplace today, and there are many third party components offered for use in IBM computers and/or IBM compatible clones of widely varying features and prices. There has never before been an IBM clone category awarded on a State contract, but a clone category involving two models was proposed in the ITB-545 abandoned last year, and the new ITB-462 contemplates that there will be a single award to the lowest bidder for each of the four IBM compatible clone configurations in its Table IV. There is nothing in the specifications which would prevent Caber from bidding many models on Table IV. Determining compliance of clones with the ITB-462 specifications as now drafted will involve DGS performing benchmark testing of at least two systems in each configuration, or at least 8 tests. DGS has allotted 10 days to perform these tests and it is estimated that it will take one person approximately one day to test each clone. The purpose of the benchmark test is to certify that the computers bid are IBM compatible and actually work as represented. Benchmarking is done by setting up the machines, formatting disks, and running the application's software to ensure that the machines can create, retrieve, update, and manipulate files, and can generally perform all the functions of IBM compatible machines. Caber and MCA propose that there be multiple awards for each configuration. The majority of state agencies do not favor multiple awards for the clone category because the four configurations on Table IV represent the basic equipment they need. DOE opposed multiple awards for itself and its constituency. IRC did not recommend multiple awards for clones. Multiple awards are the least desired method of contracting in State government and are reserved for situations where a specification cannot be written. DGS was able to draft specifications for the clone configurations that the State embedded base of users indicated were most needed. DGS' intent in the Table IV category was to capture the single lowest bid through competitive bidding, not to produce a catalogue of manufacturers/dealers willing to do business with State users, which latter goal seems to be the thrust of the ITB amendments proposed on this point by Caber and MCA, who demonstrated no cost advantage to the State in making multiple awards for clones. Multiple awards for clones would result in the benchmark testing criticized in the orders of consolidated cases Caber Systems Inc. et al. v. DGS, et al., DOAH Case No. 87-0836BID and Microage Computer Systems Stores, Inc. v. DGS, DOAH Case No. 87-0837B1D. Again, Caber and MCA witnesses proposed several alternatives to benchmarking the literally thousands of configurations possible under their proposal. All proposed alternatives were overwhelmingly discredited by credible testimony as impractical and subject to enormous time delays. Historically, DGS has not limited the number or type of related options/accessories that a winning bidder could have placed on the microcomputer term contract. ITB-462 limits the number and types of options/accessories to 14 acceptable items. The Special Conditions restrict the options to the models with which they function, require bidders to identify the options' list prices, percentage discounts, and net delivered prices in Table II. In developing the list of acceptable options, DGS drew on what it had learned from the last bid protest and considered the volume of State usage of the options, prices of the items, and the need to support equipment in place. Information supporting the usage of the options which were eventually listed included sales reports, purchase orders, sales summaries, and input from State users. The IRC, DOE, and GEMUG concurred in the limited list of options which finally resulted. DGS proved a reasonable need for these items by an embedded State user base. Caber and MCA did not demonstrate any need by an embedded State user base which was left unmet by DGS' procedure or which is not otherwise addressed by other existing State contracts or by the state contract exception provisions. In the case of certain accessories/option additions proposed by Caber and MCA, the cost of such proposed additions fell below the vanishing point for unit price savings through volume purchases.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that DGS enter a Final Order providing: That MCA be dismissed as an intervenor in this cause. That Caber's Petition as it addresses products of Tandon, NEC, and Convergent Technologies be dismissed. That ITB-462 be amended to delete the following language in the Manufacturer's Certificate: "and is offering equipment that is in complete compliance with the bid specifications," and amended in no other way. That a date certain for completion of bid submittals (and resubmittals as necessary for those bidders who responded before the statutory freeze) be established, which date will allow sufficient time for all those eligible to submit bids that comport with the ITB-462 as amended pursuant to paragraph 3. That the Division of Purchasing develop procedures to be included in the contract resulting from ITB-462, providing for additions to the Table I QPL at every General Condition 25 revision and requiring that copies of these procedures be published and mailed to all potential vendors prior to the first revision of the ensuing contract. DONE and RECOMMENDED this 29th day of April, 1988, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of April, 1988.
The Issue Did Respondent Department of Labor and Employment Security (Department) properly reject the response submitted to the Department's Request For Proposal No. RFP 96-033-VA, For Computer Hardware and Related Equipment Maintenance Including Operating Software (RFP) by Petitioner Knaus Systems, Inc. (Knaus)? Did the Department provide Knaus with a clear point of entry to challenge the Department's decision, and, if so, did Knaus timely file its notice of protest or formal written protest?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: On January 29, 1996, the Department issued an RFP which requested a Vendor Technical Proposal (technical proposal) and a Vendor Cost Proposal (cost proposal). Knaus was on the Department's bidder's list and received a copy of the RFP around the end of January, 1996. Knaus is engaged in the business of selling and servicing computer hardware, and currently has nine contracts with the State of Florida in response to requests for proposals. As required by Rule 60A-1.002(9)(a), Florida Administrative Code, the original RFP contained the Department of Management Services' Form PUR 7033, revised 1/9/95, (cover sheet), which in pertinent part provides: PROPOSALS WILL BE OPENED 3:00 P.M., MARCH 19. 1996 and may not be withdrawn within 30 days after such date and time. POSTING OF PROPOSAL TABULATIONS Proposal tabulations with recommended awards will be posted for review by interested parties at the location where proposals were opened and will remain posted for a period of 72 hours. Failure to file a protest with- in the time prescribed in Section 120.53(5), Florida Statutes shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. Posting will be on or about MARCH 21, 1996 In pertinent part, Sections 2 and 5 of the RFP provide: 2.1 RFP Submission Date Vendors shall submit their proposals on or before the date and time indicated in Section 5.9 and to the location indicated in Section 5.12 of this Request For Proposal. * * * 2.5 Addenda All addenda to this Request For Proposal will be in writing, with content and number of pages described, and sent to all Vendors known to be in receipt of this Request For Proposal. The Vendor must acknowledge receipt of all addenda in in writing and submit with the Proposal. * * * 5.1 Bid Evaluation and Award Proposals which do not meet the requirements specified in this Request for Proposal will not be considered for award. Please return your sealed bid response in the enclosed self-addressed envelope labeled: BID: RFP 96-033-VA TIME: 3:00 p.m. DATE: March 19, 1996 The Proposal number must be clearly marked on the outside of the vendors submittal. Failure to identify a Proposal in the above prescribed manner shall result in automatic disqualification of the Proposal. * * * 5.9 Calendar of Events Listed below are the important date and times by which actions noted must be taken or completed. If the Department finds it necessary to change any of these dates or times, the change will be accomplished by addendum. Date/Time Event February 13, 1996 Written Vendors Inquiries Due February 22, 1996 Pre-proposal Conference (Vendor attendance is mandatory) February 28, 1996 Addenda issued by Department March 19, 1996 Opening of Vendor 3:00 p.m Technical Proposals April 2, 1996 Opening of Vendor 10:30 a.m. Cost Proposals April 4, 1996 Posting of RFP Award * * * Responsiveness and Rejection of Proposals All proposals must be in writing. A responsive proposal is an offer to perform the scope of services called for in the Request For Proposal. A Proposal may be rejected if it fails to meet the general requirements and mandatory specifications as stated in this Request for Proposal. . . . Submission of Proposals Sealed proposals must be received by the Department of Labor and Employment Security at the address noted below, on or before the date and time shown in Section 5.9 "Calendar of Events". . . . * * * The vendor must submit both a technical proposal for evaluation and a cost proposal. Both proposals must be in a separate sealed envelope and clearly marked on the outside stating technical proposal or cost proposal Both proposals must be delivered as stated above. * * * Proposals, including amendments, may be mailed or hand-delivered, but in either case must be received no later than 3:00 P. M. on March 19, 1996. . . . NUMBER OF COPIES: 1 original and 5 copies for each category bid SUBMIT TO: Vonnie Allen -- DLES Computer Maintenance, Department of Labor and Employment Security, 2012 Capitol Circle S.E. 104 Hartman Building, Tallahassee, Florida 32399-2169 DEADLINE: March 19, 1996 at 3:00 p.m * * * 5.16 Posting of Recommended Award Proposal tabulation with recommended award will be posted for review by interested parties at the Department's Office of Purchasing on or about the date noted on the cover sheet of this RFP, and will remain posted for a period of seventy-two (72) hours, not including weekends or holidays. [Emphasis supplied] In accordance with the initial RFP, the technical and cost proposals were to be submitted in separate sealed envelopes within a single envelope to the Department on or before 3:00 p.m. on March 19, 1996, which was also the date for opening the technical proposals. All vendors, including Knaus, understood that for their response to the RFP to be timely both the technical proposal and the cost proposal had be received by the Department on or before 3:00 p.m. on March 19, 1996, the time and date scheduled for opening the technical proposals set out in Section 5.9. The date (March 21, 1996) shown on the cover sheet of the RFP for posting proposal tabulations with recommended awards is different from the date (April 4, 1996) shown in Section 5.9 of the RFP for posting RFP award. It is unclear whether these are two separate events requiring separate dates or a conflict as to the posting date. In accordance with the terms of the RFP, the Department conducted a mandatory Pre-proposal Conference on February 22, 1996. Knaus was represented at this conference. Questions raised by Knaus and other vendors at this conference necessitated an amendment to the RFP. On March 13, 1996, the Department issued Addendum [No.] 1 to the RFP, a copy of which was received by Knaus. In pertinent part, Addendum [No.] 1 provides: March 13, 1996 Addendum: [No.] 1 Bid: [No.] 96-033-VA Opening Date/time: March 19, 1996, changed (Technical) to April 2, 1996 April 2, 1996 changed to April 16, 1996 (Cost) Dear Sir or Madam: The subject Request for Proposal is hereby amended as follows: * * * 5.1, 5.9, 5.12 RFP Technical Opening is to be changed from 3:00 p.m. on March 19, 1996 to 3:00 p.m. on April 2, 1996. The Cost Opening is to be changed from 10:30 a.m. April 2, 1996 to 10:30 a.m. April l6, 1996. Addendum [No.] 1 did not amend or delete the requirement of the RFP that the technical and cost proposals be sealed in separate envelopes and both envelopes to be placed in the self-addressed envelope furnished with the RFP and submitted to the Department. All vendors, other than Knaus, relying only on the RFP and Addendum [No.] 1 concluded that both the technical and cost proposal were to be submitted on or before the opening of the technical proposal and therefore, submitted their technical and cost proposals on or before 3:00 p.m. on April 2, 1996. None of the vendors, including Knaus, submitted their response to the RFP on or before March 19, 1996, the original submittal date for responses and the original opening date for technical proposals. The Department received Knaus' technical proposal on April 1, 1996, and Knaus' cost proposal on April 5, 1996. On April 11, 1996, Vonnie Allen, the Department's Purchasing Specialist, telephoned Anthony J. Knaus, President and Chief Executive Officer for Knaus, to advise him that the Knaus proposal was non-responsive because the Department had not received both the technical and cost proposal before the opening of the technical proposals at 3:00 p.m. on April 2, 1996. During this telephone conversation, Anthony Knaus expressed his understanding of Addendum [No.] 1 as not requiring receipt of the cost proposal by the Department before the opening of the technical proposal at 3:00 p.m. on April 2, 1996. After his conversation with Vonnie Allen on April 11, 1996, Anthony Knaus wrote Allen a letter advising her that based on Addendum [No.] 1 that Knaus intended to file a protest in regards to the RFP. On April 15, 1996, Anthony Knaus again wrote Allen a letter in regards to the April 11, 1996, telephone conversation advising Allen that he had not received written notification from the Department of Knaus' noncompliance with the RFP but that Knaus would proceed with the protest. The letter further advised Allen that Knaus intended to file a formal protest. On April 19, 1996, Barbara Chance, Purchasing Director for the Department, wrote Knaus a letter advising Knaus that its response to the RFP was non-responsive due to the cost proposal not being submitted as stated in the RFP, and returning Knaus' certified check that had been submitted with its proposal. No further explanation of the basis for this determination was included in the letter. Likewise, there was no notice of Knaus' right to challenge the Department's determination as required by Section 120.53(5)(b), Florida Statutes, and Rule 60A-1.001(7) and (8), Florida Administrative Code. On April 23, 1996, the Department issued what is titled "NOTIFICATION [No.] 2" concerning Cost Opening Date which advised Responsive Vendors that the cost opening had been moved to 9:00 a.m. on April 24, 1996, and such opening was to be held at the Hartman Building, 2012 Capital Circle, Southeast. The letter further advised the Responsive Vendors that posting of the intended award would be "approximately Thursday, April 25, 1996 at 9:00 a.m.". Since the Department did not consider Knaus a responsive vendor, Knaus did not receive a copy of "NOTIFICATION [No.] 2". Knaus was never advised by the Department of the change in dates for the posting of intended award prior to or during the time of posting. On April 25, 1996, Dennis H. McVeen, General Manager for Knaus, wrote the Department's General Counsel concerning Barbara Chance's letter of April 19, 1996, and requested that Knaus be advised of the exact deadline for filing its protest. The Department never responded to this letter. The Department did not respond to any of Knaus' letters, and has yet to advise Knaus of its right to contest the Department's determination that because Knaus' cost proposal was not received by the Department on or before the opening of the technical proposal at 3:00 p.m. on April 2, 1996, Knaus' response to the RFP was non-responsive . On April 25, 1996, the Department posted the bid tabulations for the RFP, which, in pertinent part, states: "FAILURE TO FILE A PROTEST WITHIN THE TIME PRESCRIBED IN SECTION 120.53(5). FLORIDA STATUTES, SHALL CONSTITUTE A WAIVER OF PROCEEDINGS UNDER CHAPTER 120, FLORIDA STATUTES." The Bid Tabulation indicated a Posting Time/Date from 8:00, 4/25 until 8:00, 4/30. The Bid Tabulation does not indicate whether 8:00 was a.m. or p.m. However, Allen testified that it was intended to be a.m. Knaus was listed on the Bid Tabulation as to "Technical only" and was shown as NR or non-responsive. The Department has not fully evaluated Knaus' response to the RFP. Knaus obtained a copy of the Bid Tabulation sometime after 8:00 a.m. on April 30, 1996, which was after the time for posting. Obtaining a copy of the Bid Tabulation was the result of Knaus' own efforts and cannot be attributed to any efforts on the part of the Department. Knaus filed its Petition For Administrative Proceedings, Notice of Protest and Formal Written Protest on May 13, 1996, with the Department. Knaus did not file a Notice of Intent to Protest or Formal Protest addressed to the specifications contained in the RFP or Addendum [No.] 1. There was no evidence that Knaus gained any advantage by submitting the cost proposal after the technical proposals were opened. There is sufficient evidence to establish facts to show that Knaus knew or should have known that the RFP as amended by Addendum [No.] 1 required that both the technical and cost proposal be submitted together on or before April 2, 1996.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is recommended that the Department of Labor and Employment Security enter a final order that Knaus' failure to timely submit its cost proposal was a minor irregularity and is waived, and directing staff to reevaluate all responses, including Knaus', under the RFP, as amended. RECOMMENDED this 24th day of July, 1996, at Tallahassee, Florida. WILLIAM R. CAVE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of July, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 96-2365BID The following constitutes my specific rulings, pursuant to Section 120.59(2), Florida Statutes, on all of the proposed findings of fact submitted by the parties in this case. Knaus' Proposed Findings of Fact. Proposed findings of fact 1 through 37, 44, 45 and 47 are adopted in substance as modified in Findings of Fact 1 through 25. Proposed findings of fact 38 through 43 go to the weight of the testimony of witness and are not considered as proposed findings of fact. Proposed finding of fact 46 is neither material nor relevant. Proposed finding of fact 48 is covered in the Preliminary Statement. Department's Proposed Findings of Fact. 1 Proposed findings of fact 1 through 14 and 16 through 21 are adopted in substance as modified in Findings of Fact 1 through 25. 2. Proposed finding of fact 15 is neither material nor relevant. COPIES FURNISHED: Douglas L. Jamerson, Secretary Department of Labor and Employment Security Suite 303, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security Suite 307, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Daniel H. Thompson, Esquire Berger and Davis, P.A. 215 South Monroe Street, Suite 804 Tallahassee, Florida 32301
The Issue The Petitioner charges Respondent with contracting to do commercial contracting work for which he was not registered. The Respondent asserts that he was in a partnership with Otis Allen who was qualified to do commercial work and who pulled the permit for the work in question. The issue is whether Respondent violated Section 489.117, Florida Statutes; if he and Allen did the Mosser job as partners. Both parties have submitted posthearing Proposed Findings of Fact. A ruling has been made on each proposed finding of fact in the Appendix to this Recommended Order.
Findings Of Fact At all times relevant hereto, Respondent, Marvin L. Gill, held a registered residential contractor's license, number RR 0053369, issued by the State of Florida, Department of Professional Regulation, Construction Industry Licensing Board. (Tr. 18, 59; Petitioner's Exhibit 1) At all times relevant hereto, the Respondent was not a registered commercial contractor. At all times material hereto, Marvin L. Gill was qualifying agent for Gill Built Homes. (Tr. 18, Petitioner's Exhibit 1) At all times relevant hereto, Otis Allen, a registered commercial contractor, was not a partner or member of the corporation known as Gill Built Homes. (Tr. 68-69, 101-102) On or about August 8, 1984, Marvin L. Gill, entered into a contract with Walter Mosser to construct a storeroom at the Sunset Lounge, which was a cocktail lounge. (Tr. 18, 69, 99-100; Petitioner's Exhibit 2) Said contract designated Marvin L. Gill, d/b/a Gill Built Homes, as the contractor for the project and Walter Mosser as the owner of Sunset Lounge. (Petitioner's Exhibit 2) The duties of Marvin L. Gill, as contractor, were to provide all labor and material, in accordance with the plans and specifications, to construct a room addition to the lounge owned by Mr. Mosser. (Tr. 99+, Petitioner's Exhibit 2) (Ultimate fact) The Sunset Lounge is a commercial structure and the room addition project did not fall within the realm of residential construction. (Tr. 141+) The contract price was $17,500. Said price was to be paid pursuant to a draw schedule listed in the construction contract and these progress payments were to be given to the contractor, Marvin L. Gill. (Tr. 105, 106; Petitioner's Exhibit 2) A check in the amount of $1,750 was made out to Marvin L. Gill on August 8, 1984. A check in the amount of $1,800 was made out to Marvin Gill Co. on August 27, 1984. A check in the amount of $3,500 was made out to Marvin Gill and Otis Allen on September 6, 1984. A check in the amount of $5,250 was made out to Marvin Gill and Otis Allen on September 27, 1984. All these checks were payments for work done on the lounge addition by Mosser or at his direction. See Exhibit 5A-D. The contract provides that the contract shall begin immediately after the contractor has secured the necessary permits which he shall use his best efforts to obtain. (See paragraph 4, Contract; Petitioner's Exhibit 2) The contract designates the contractor, Marvin L. Gill, as the individual solely responsible for all construction under the contract. Further, Marvin L. Gill was responsible for supervision and direction of the work to be done as well as "provide and pay for all labor, materials and equipment, including tools, construction equipment/machinery and all other facilities and services necessary for the proper completion of work on the project in accordance with the plans and specifications." (See paragraph 5, Contract, Petitioner's Exhibit 2) The addition was begun and work was done in a workmanlike fashion. The project was stopped for good cause by Respondent when Mosser refused to make further payments. The addition was approximately 75% finished when work ceased; however, the Respondent and Allen had received only $7,000. The construction contract does not state that the contractor, Marvin L. Gill, was working as a partnership or joint venture for the Sunset Lounge project. The contract does permit assignment of the contract. (Tr. 67-68; Petitioner's Exhibit 2) Otis Allen pulled the building permit on the Mosser job. Allen and Gill had discussed a partnership in which they would work together and share profits and responsibilities. Checks were made out to Gill and Allen. Allen and Gill worked together on this project as though they were in a partnership. Gill testified they had a partnership. They did not register their partnership.
Recommendation Based upon the foregoing, it is recommended that Respondent be fined three hundred dollars ($300.00). DONE AND ORDERED this 16th day of May 1986 in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of May 1986. COPIES FURNISHED: Mr. Fred Seely Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32201 Mr. Fred Roche Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Nancy M. Snurkowski, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Marvin L. Gill 2501 N. 20th Street Zephyrhills, Florida 33599 APPENDIX The following constitute my specific rulings pursuant to Section 120.59(2), Florida Statutes (1985) on the proposed findings of fact submitted by the parties. Rulings on Proposed Findings of Fact Submitted by Petitioner 1-11. Adopted. Rejected as duplication finding of fact 5. Adopted with some reorganization of sentences. Rejected as conclusion of law; factual assertion included in paragraph 1. Adopted with some reorganization of sentences. Rejected as conclusion of law. Rulings on Proposed Findings of Fact Submitted by Respondent The majority of this pleading is a recitation of testimony, not a finding of fact. These are the major "facts" stated or suggested in Respondents pleadings: Allen and Gill had a partnership. Allen was a commercial contractor. Allen and Gill shared responsibilities for the job. Mosser received an addition 75% complete for approximately $7,000. Allen pulled permits on the job and worked on the job. The project was abandoned because of non-payment by the owner. The work was done in a workmanlike fashion.
Findings Of Fact American Asphalt, Inc., a bidder fully qualified to bid on this project, did not include a printed hard copy (paper copy) along with its bid diskettes when it timely submitted its bid on State Project No. 92130-3423 before 10:30 a.m. on July 28, 1993. (Prehearing Stipulation) The bid blank included with this bid (Exhibit R8) showed on the front of the document the total amount of the bid as $2,526,335.16 which is $201,662.70 below the next lowest bid. However, the various items to be included in the bid which totalled the amount shown on the front were left blank on Exhibit R8. A hard copy run from the bid diskette included with the bid package was filed with the Department at 10:38 a.m. on July 28, 1993, eight minutes after the deadline for bid submissions, and a copy was admitted into evidence as Exhibit P1. The total of the items listed on Exhibit P1 and on the diskette is $2,526,335.16, the same as shown on the front page of Exhibit R8 timely submitted with the bid. In October 1988, the Department instituted Contract Electronic Bidding (CEB) where the Department supplies bid proposal forms and a computer diskette designed to operate on IBM personal computers or IBM compatible computers. The only entries into the CEB program by the bidder that are permitted are the company name, vendor number, base codes, reason code, addendum number, and the unit or lump sum prices for items that must be bid in order to produce an official bid item list (Exhibit R2 Section 2-2). The CEB program is intended to simplify the bidding process for both the Department and bidder. Changes made in unit prices while using this program are immediately reflected in the overall bid. Diskette Bidding Instructions (Exhibit R6) was received by Petitioner with its bid package. Item 1 under instructions for submission of computer generated bids provides: The printed hard copy returned form (sic) contractor is the only acceptable bid and must be accompanied by the diskette from which it was printed. Supplemental Specifications (Exhibit R4) which accompanied the standard bid specifications submitted with the bid package provides in pertinent part: The computer-generated bid item sheets that are submitted must be printed from the diskette that is returned. When a diskette other than the one furnished by the Department is utilized to generate the official bid, the diskette submitted must have a label attached indicating the Contractor's Name, Vendor Number, Letting Date, Revision Date (if applicable) and the State Project Number. When a bid is submitted with hard copy but without a diskette or a diskette unreadable or containing a virus, the Department prepares a diskette from the hard copy which can be entered into the Department's mainframe computer. Last minute changes to a bid may be made by the bidder on the hard copy by interlining or whiting out the changed figure and writing in the new figure which must be initialled by the bidder. When such an altered bid is received, both of the Department's first and second checkers of the bid initial the change. Because the bid submitted by Petitioner did not contain a completed hard copy at the time specified for bid opening the Technical Review Committee voted unanimously and the Contract Awards Committee voted two to one to recommend the apparent low bid submitted by American Asphalt, Inc. be declared irregular for failure to turn in a completed computer generated bid item sheet with their bid package; and that the bid be awarded to the next lowest bidder (Exhibit R9 and R10). Item 3-1 of the standard bid specification (Exhibit R3) provides in pertinent part: Until the actual award of the contract, however, the right will be reserved to reject any and all proposals and to waive technical errors as may be deemed best for the interest of the State.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That a final order be entered rejecting American Asphalt, Inc.'s challenge to the award of State Project No. 92130-3423 to Hubbard Construction Company. DONE AND RECOMMENDED this 2nd day of December, 1993, in Tallahassee, Leon County, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of December, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-5855BID Petitioner's proposed findings are accepted except: 15. Rejected. See Hearing Officer Conclusion of Law #20.-21. 17. Rejected. See Hearing Officer Conclusion of Law #22. Respondent's proposed findings are accepted. COPIES FURNISHED: Charles G. Gardner Assistant General Counsel Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 James W. Anderson, Esquire SAVLOV & ANDERSON, P.A. Post Office Drawer 870 Tallahassee, Florida 32302 Ben G. Watts, Secretary Attn: Eleanor F. Turner, Mail Station #58 Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams, General Counsel Department of Transportation 562 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458
The Issue The matters for consideration in this case concern Petitioner's challenge to Respondent Department of Labor and Employment Security's award of a contract for delivery of computer services to the bidder, Respondent Appalachian, to the exclusion of petitioner. The contract is also known as a Request For Proposal and is identified as RFP WC-82-1. In particular, Petitioner contends that the award of contract was improper because Petitioner was the low bidder; the RFP was inadequate; there was insufficient dialogue after the bidders' conference; the agency failed to evaluate SDC's primary and alternate proposal and an informal hearing of February 3, 1982, resulted in a recommended order rejecting the award of the bid to Appalachian. WITNESSES AND EXHIBITS Petitioner presented as witnesses Russell Kelly, Consultant to Petitioner in the fields of systems analysis and management analysis; Leon Weaver, Management Review Specialist with the Department of Labor and Employment Security; Dr. Benjamin A. Johnson, Medical Director, Office of Medical Services, Department of Labor and Employment Security; and George Cannon, Medical Analyst, Department of Labor and Employment Security. Respondent Department presented Michael Johnson, Chief of the Bureau of Purchasing, Department of Labor and Employment Security. Respondent Appalachian also called Russell Kelly as its witness. The parties presented six (6) joint exhibits. Joint Exhibit No. 1 was the RFP WC-82-1; Joint Exhibit No. 2 was addenda to the RFP; Joint Exhibit No. 3 was the Petitioner's Bid; Joint Exhibit No. 4 was Appalachian's Bid; Joint Exhibit No. 5 was a Notice of Intent to Award the contract to Appalachian and Joint Exhibit No. 6 was the protest of award made by Petitioner dated November 30, 1981. Those exhibits were admitted. Petitioner had marked for identification its Exhibit No. 1, a memorandum of November 16, 1981, referring to the evaluation and award of the RFP and Petitioner's Exhibit No. 2, memoranda of November 13, 1981, related to activities in the project review. Respondent Appalachian offered three (3) exhibits. Appalachian's Exhibit No. 1 was admitted, and contains excerpts of bid tabulation related to the Appalachian bid and the primary and alternate bids of Petitioner. Appalachian's Exhibit No. 2, admitted into evidence, is a memorandum from Russell Kelly to George Cannon on the subject of suggested criteria for evaluation of Workers Compensation bids. Appalachian's Exhibit No. 3 was purportedly a memorandum on the subject of the RFP from Wynn Rubenstein to Mike Johnson. Exhibit No. 3 by Appalachian was denied admission. Respondent Department offered no exhibits. As part of the presentation, and in keeping with the stipulation of counsel, the definitions of the terms "claim" and "record" at pages 45 and 46 of the deposition of William J. Ringel, Claims Manager for Petitioner, as taken on May 12, 1982, was allowed as part of the record of the hearing. The second set of requests for admissions propounded by Respondent Appalachian to Petitioner, Nos. 7 through 10, together with last response, was also allowed as part of the hearing record.
Findings Of Fact In December, 1980, the State of Florida, Department of Labor and Employment Security, Division of Workers Compensation, Office of Medical Services, began preliminary steps to ascertain the cost related to the preparation and microfilming of forms and for the key entry or key verification of data related to reimbursement plans for medical services delivered under the Florida Workers Compensation Program. The Office of Medical Services hoped to use that data as a basis for a Utilization Review Program and providing management information and research data in the operation of the Florida Workers Compensation Program. In particular, a Request for Quotations (RFQ) was sent to various computer systems delivery firms to gain a general estimate of the cost for the provision of the aformentioned services. On the topic of key entry or key verification of data sought by the RFQ, the two (2) forms which were the subject of the entry or verification activity, were the Standard Health Claim Form; BCL-9 (AMA OP-409/HCFA 1500) and the Uniform Hospital Billing Form, BCL-90 (UB-16) The Department had no exact information to be given the firms offering quotations about the exact number of BCL-9s and BCL-90s which might be key entered or verified; however, they had a rough approximation that the forms would range from 1 million to 1.2 million per year, in the aggregate. This estimate was premised upon a survey performed on the number of those forms received by the Department in a twenty-one (21) day period in the fall of 1980. Petitioner and Respondent Appalachian offered their preliminary quotations in response to RFD. In the process of the RFD phase, Petitioner's consultant, Russell Kelly, examined the response of Appalachian to RFQ, and made William J. Rigel, Claims Manager for Petitioner, aware of the Appalachian rendition. Representatives of Petitioner also reviewed responses filed by firms who are not parties to this action. Subsequent to the receipt of the invitation, the Department determined to invite bids for delivery of the aforementioned services. This invitation to bid was through the Request for Proposals, RFP-82-1. The bid process was on a competitive basis as described in the RFP and a proposed contract was made a part of the bid package. The RFP, as initially drawn, may be seen as Joint Exhibit No. 1, admitted into evidence. The primary criteria for the award of the bid was premised upon the cost of delivery of service and the ability of the vendor to deliver those services. 1/ (A discussion of the necessary qualifications of offeror/vendor may be found at pages 9 and 10 of the initial RFP at 3.0). The time table related to the bid circumstance may be found at page 10 of Joint Exhibit No. 1 at 3.1. As can be seen, it was anticipated that work would commence some time in October, 1981. The delivery of services under the contract, as perceived by officials with the Departments at the time the Request for Proposals was prepared, would be for a period of three (3) or four (4) months, sufficient funds existing to pay for that period of time. This belief was grounded on the information submitted by those firms participating in the RFQ process, and general estimates related to volume of work to be performed. The specific terms of the contract on the subject of the contract period, as initially envisioned, is found on page 4, at 1.5 of Joint Exhibit No. This provision indicates that the expected period of the contract was three (3) months, with a possible extension of the time of contract upon agreement of both parties. It also states that the contract resulting from the RFP would be subject to availability of funds and that if the monies for the contract were not available for the remainder of the proposed contract term that the Department would notify the contractor, causing the contract to become null and void. The volume of work anticipated in the RFP, as first drawn, may be found on page 10, at 4.1 in Joint Exhibit No. 1. This section is entitled Form Transmittal and bidders are directed to that section through a statement found at 1.5 which instructs the bidder to see Section 4.1 to ascertain the anticipated volume of work. In pertinent part, 4.1 states: Data from two forms are to be key entered and key verified by the contrac tor: The Standard Health Claim Form, BCL-9 (AMA OP-409/HCFA 1500) and the Uniform Hospital Billing Form, BCL-90 (UB-16). Both are attached as Appendix It is anticipated that key entry will be for a minimum of three months volume. Estimated volume per month is 85,000 BCL-9 forms, and 15000 BCL-90 forms. Total estimated volume is 255,000 BCL-9 forms and 45,000 BCL-90 forms. The Department is responsible for preparing the forms in batches of 50. Each batch will be comprised of only one type form. . . . Whereas reference at 1.5 to volume was stated as volume, the specific reference at 4.1 uses the term "estimated" volume. The terms "anticipated" and "estimated" are deemed to be synonymous. This provision labelled "Form Transmittal" also indicates that an opportunity is given to prospective bidders to review actual coded forms of the type at issue, which had been received by the Department and both the Petitioner and Appalachian availed themselves of the opportunity to review batches of BCL-9 and BCL-90 forms. In the original RFP, on page 5 at 2.3, the opportunity is afforded to offerors/bidders to submit written questions and answers concerning the RFP and the deadline for those questions and answers was August 24, 1981, as established on page 10 at 3.1.1. The contact person for questions and answers was Mike Johnson, Purchasing Officer, Department of Labor and Employment Security. Edit criteria for BCL-9s and BCL-90s in the original RFP are found on pages 13 and 14 at 4.7. In the initial RFP, Joint Exhibit No. 1, on page 16, at 5.0, offerors are provided information on the subject of cost estimates. In particular, the section states: Offerors are to prepare cost estimates for key entry per 1,000 documents. Estimates shall be separable as to BCL-9 and BCL-90. For purposes of estimating, volume, Offeror shall anticipate approxi- mately 255,000 BCL-9 and 45,000 PCL-90 forms distributed fairly evenly over a three month period. Depending upon avail- ability of funds volume of forms and dura- tion of work may be extended beyond three months at the pleasure of the Department. Cost estimates are to be separable as to microfilming and key entry. Forms which have been successfully entered into the Medical Utilization data tapes shall be returned in the same batches as they were received by Contractor. Forms which were not key entered due to visual scan rejection or failure of fatal edits shall be returned to the Bureau of Records separately and appropriately marked. This section speaks of "documents" and "forms" when referring to BCL- 9s and BCL-90s. For the purpose of the original RFP, the terms "document" and "form" when related to BCL-9s and BCL-90s and found to have the same meaning. Consequently, when a cost estimate is requested on the topic of cost to key enter 1,000 "documents," it could also mean cost to key enter 1,000 "forms." In the initial RFP, on page 6A, at 13.1, the statement of estimated quantity of BCL-9 and BCL-90 "forms" was given as being 85,000 BCL-9s and 15,000 BCL-90s. Although the comment was made that the State would not guarantee those volumes on a monthly basis, the Department did promise to attempt to maintain a monthly average that was consistent with the estimated volume. The expectation of 85,000 BCL-9s and 15,000 BCL-90s per month for a three (3) month period was carried forth on Appendix III, known as the Cost Summary Sheet, to the original RFP, a copy of which may be found in the Joint Exhibit No. 1. This Cost Summary Sheet was prepared for the utilization of the offeror/bidder. The Cost Summary Sheet indicates that the estimated volumes that are found there are for evaluation purposes in formulating a bid. It cautions the offerors that the actual volumes in the contract may be substantially different. The Cost Summary Sheet also speaks in terms of cost per 1,000 "records" for key entry/key verification of Form BCL-9 and Form BCL-90 per 1,000, on an anticipated volume, for the three (3) month period of 255,000 and 45,000 "records" respectively. In relating the prior discussions of various sections to the original RFP in which BCL-9s and BCL-90s are referred to as "forms" or "documents"; the term "records" is found to be synonymous with the former terms, in view of the fact that the numerical estimates are consistent when referring to each of the several terms. Therefore, an offeror/bidder, when confronted with the initial RFP, was being told that "forms," "documents" and "records" were interchangeable terms. Nonetheless, it was "records" in the cost of key entry/key verification per 1,000 that was requested in the bid process. In keeping with 2.3 of the RFP at page 5, the bidders' conference on the subject of RFP was conducted on August 20, 1981, and Petitioner was represented in the course of that conference. This was the first occasion where questions were raised about the RFP and represented the last opportunity provided in the bid instructions. Among other subjects, the question of extension of the, contract beyond a three (3) month period and discussion of the terminology related to BCL-9s and BCL-90s as it pertained to unit bidding per 1,000 were discussed. At the bidders' conference, Russell Kelly indicated the Petitioners' feeling that the contract period should be extended to twelve-months to allow a reasonable amortization of development cost inherent in the Petitioner's delivery of the services. Kelly also expressed concern about Petitioner's understanding of the terms in the original RFP "form" and "record," and whether they were indeed synonymous when related to BCL-9s and BCL-90s. In that context, "form" was referred to by Kelly as a "claim form." At the time of the bidders' conference, George H. Cannon, Medical Analyst for the Workers Compensation Program within Respondent Department, considered Kelly's remarks and determined to address the questions of contract life and use of terms related to the unit bidding. (Cannon was the principal project coordinator.) Around September 11, 1981, by telephone call and by memorandum, Russell Kelly contacted George Cannon on the topic as found in Appalachians' Exhibit No. 2, admitted into evidence, dealing with the award of contracts on the basis of a point scheme. Cannon rejected this communication in view of the pendency of the bid evaluation and review process. (After the bid opening Kelly also contacted the Department's secretary and other officials within the Department to try to attempt and show them that Petitioner was the more appropriate bidder. This contact occurred prior to the notice of bid award of November 17, 1981.) Following the bidders' conference an addendum dated September 23, 1981, was made to the original. RFP WC-82-1. A copy of this addendum may be found as part of Joint Exhibit No. 2. This addendum extended the time for submitting proposals to October 19, 1981, at 3:00 p.m. EST. At 1.5 in the addendum the terms of the contract were changed from the original statement of terms by deleting the wording of the original 1.5 and inserting the language: Any contract resulting from RFP WC-82-1 will be subject to the availability of funds. By distributing RFP WC-82-1 and any adenda or related materials, the Department in no way guarantees that a contract will be awarded. If the State deems at any time during the term of the contract that monies lawfully applicable to the contract shall not be available for the remainder of the term, the State shall promptly so notify the contractor by certified mail and the giving of such notice shall cause the contract to then become null and void upon the date notice is received by the contractor and the contract shall thereupon be considered can- celled by mutual consent. A contract resulting from RFP WC-82-1 shall be for a duration of twelve (12) months subject to the availability of funds. Upon satisfactory completion of the twelve (12) months contract, the Department reserves the right to renew the contract for a period not to exceed an additional twelve (12) months. The Department recog- nizes the significant monetary outlay which contractor will have to make to implement this project. Although funds cannot be guarantees for the entire period of the contract, the Department has requested and has good reason to anticipate the release of monies sufficient to fund an entire twelve (12) month period of work depending, of course, upon unit cost of performing the work outlined in RFP WC-82-1. As can be seen, this change to the contract increased the contract period to twelve (12) months, subject to availability of funds, with the right to rescind the contract if the funds are unavailable and upon notice. The opportunity was also afforded to renew the contract for another twelve (12) months. Edit criteria were also adjusted by the September 23, 1981, change Appendix III on page 5 of the addendum of September 23, 1981, Joint Exhibit No. 2, dealt with the terminology involved in cost estimates for BCL-9s and BCL-90s. The information in Appendix III in the addendum was not in substitution of the original Appendix III, but was in addition to the original Appendix III. It added the following language: For purposes of estimating cost the following applies: Data from each BCL-9 and BCL-90 shall be key entered according to the Record Definition and Explanation of Data Elements Appendix A. (Record Definition and Explanation are included as part of this addendum.) Each form shall constitute at least two records. A header record (entitled CLAIMIN HEADER) will be created from each form. Note that procedure specific data is not included in the CLAIMIN HEADER record. Each form shall also generate at least one Detail Record. A Detail Record shall be created for each procedure reported in Item 24 of BCL-9 and Column 38 of BCL-90. The same layout is to be used for both BCL-9 and BCL-90 data. The Explanation of Data Elements indicates the differences between each type form. From a review of this language BCL-9s and BCL-90s are referred to as "forms." Contrary to the circumstance as existed in the initial RFP, the term "record" is not synonymous with "form." Each "form," whether a BCL-9 or BCL-90, is constituted of at least two "records." One class of record is a "header records," also called CLAIMIN HEADER, and a second class of record is entitled "detail record." A separate "detail record" is expected for each procedure afforded in select portions of BCL-9s and BCL-90s. The Respondent instructed the offerors to key enter information from the BCL-9s and BCL-90s in keeping with the "record definition" and explanation of "data elements" as found in the Appendix A which is attached to Appendix III. The "record definition" lists the possible information to be placed in the "header record" and "detail record" for BCL-9s and BCL-90s. This information to be key entered from data or data elements is further explained on those topical pages entitled "Explanation of Data Elements Header Record" and "Explanation of Data Elements Detail Records." Although it was indicated that the cost summarization format originally found in the RFP would be used by bidders, in the face of the changes made by the September 23, 1981, addendum it was obvious that the estimates of volume related to BCL-9s and BCL-90s would be increased twofold, in that the terms "form" and "document" were no longer synonymous with the term "record," there being at least two "records" for each "document." This would mean that the bidders should reasonably have recognized that the volume estimates found in the original Appendix III could be increased at least twofold in attempting to ascertain cost per 1,000. Nevertheless, the bid proposal per 1,000 "records" remained the critical item. In any event the bidders were proceeding with the realization as expressed in the Cost Summary Sheet that the volumes expressed therein might be substantially different from the actual contract volume. At the time the addendum of September 23, 1981, was made with its additions to Appendix III, neither the Petitioner nor the Respondent Department had the knowledge of exactly how many "records" would be involved with each BCL- 9 and BCL-90 form other than the fact that there would be at least two "records," and this minimum estimate was to serve as a basis for bid proposals. Petitioner and Respondent Appalachian bid on RFP WC-82-1. A copy of Petitioner's bid may be found as Joint Exhibit No. 3 and Appalachian's bid as Joint Exhibit No. 4. Using the Cost Summary Sheet, Appalachian made a bid of $98.70 and $92.80 per 1,000 "records" for BCL-9s and BCL-90s respectively. At page 18 of its bid under the title "Alternate Price Proposal," following the restatement of the explanatory note on the form Cost Summary Sheet given to the bidders by the Department, the Petitioner offered a bid per 1,000 "records" of $186.50 for both BCL-9s and BCL-90s. At page 17 of its bid the Petitioner had also made bids of $373.00 per 1,000 BCL-9s and BCL-90s, related to single physician invoices and single patient invoices, which it concluded to be a "record." Eased upon the additional information provided in the September 23, 1981, addendum at Appendix III, this definition of invoice comports with that definition of "form" and not "record," and the bids are to be made on a basis of cost per 1,000 "records." In its bid on the microfilming aspects of the project, Appalachian bid $24.85 per 1,000 on an estimate of 325,000 pages per quarter, and in both its bids at pages 17 and 18 of its bid proposal, Petitioner bid $92.00 per 1,000 for 1,300,000 pages per year of microfilming. Before the RFP had been prepared, the aforementioned RFQ research had been conducted and members of the Respondent Department had conferred with the State of Florida, Department of General Services, on the substance of the subject RFP. An evaluation committee was formed and that evaluation committee, after receipt of the bids from Petitioner and Appalachian, together with others, reviewed those bid proposals and visited the facilities at Appalachian in keeping with the provision 2.5 on page 6 of the original RFP, Joint Exhibit1 No. That visit led to the conclusion that Appalachian was an acceptable offeror. Petitioner was also found to be an acceptable offeror, and its bid proposal at page 18 of Joint Exhibit No. 3 was regarded as responsive. Following the visit to the Appalachian facilities to inspect the ability of Appalachian to deliver services, its bid was also deemed to be responsive. No other bids were found to be responsive. The bid proposal at page 17, offered by Petitioner, was not found to be acceptable because it was a bid offering on cost per 1,000 "forms" and not per 1,000 "records," and could not be compared to the Appalachian bid. Petitioner has suggested in the hearing that the proposal at page 17 may be considered as an alternate proposal even if it is determined to be inconsistent with the request made by the RFP. This position is asserted in view of the language on page 8 at 2.14, which states: Special consideration will be given to proposals which provide innovative methods to accomplish the desired end results expressed in this RFP in ways which the Department has not enumerated and which results in cost savings. The Department did not find the bid per 1,000 "forms" as opposed to per 1,000 "records" to be worthy of special consideration. The Department was correct in their understanding and their rejection of the bid at page 17. After reviewing the bid proposals a decision was made to award RFP WC- 82-1 to Appalachian, and this was made known by correspondence from Mike Johnson, Purchasing Director, State of Florida, Department of Labor and Employment Security, Division of Administrative Services. The date of that correspondence is November 17, 1981, a copy of which may be found as Joint Exhibit No. 5. This letter indicates Appalachian's bid per 1,000 "records" on BCL-9s and BCL-90s as well as the microfilm services and gives an estimated annual cost. Based upon the initial projections of BCL-9 and BCL-90 "forms" to be expected per quarter, and the fact that the addendum of September 23, 1981, indicated that there would be two "records" per "form", minimum, the estimated annual cost is flawed. It assumes a volume of 1,020,000 "records" for BCL-9s and 180,000 "records" for BCL-90s, which is the estimate related to numbers of "forms" and not "records." In fact, there would be an additional estimated annual cost of $100,674.00 per year for BCL-9s and $16,704.00 for BCL-90s, at least, there being two "records" per "form" minimum. On November 30, 1981, Petitioner made known its protest to the award of the bid in favor of Appalachian, which subsequently brought about the formal hearing, which is the subject of this Recommended Order. An informal hearing was conducted on February 3, 1982, pursuant to Subsection 120.57(2), Florida Statutes, without the participation of Appalachian and for reasons as set forth in the record of the proceedings before the Division of Administrative Hearings in the above-styled case, that action was set aside and the formal Subsection 120.57(1), Florida Statutes, hearing conducted.
Findings Of Fact On September 4, 1984, the Department issued its initial Request for Proposal (RFP), RFP No. 2695-84, for office automation equipment to be used in a one-year pilot project at nine locations within the Neil Kirkman Building, Tallahassee, Florida. Under the terms of the RFP the Department had the option, based on the success of the pilot project and contingent upon future legislative fundings, to expand the system over a four year period to 254 locations statewide. Pertinent to this case is an understanding of the nature of the Request for Proposal (RFP) procedure. Under Section 287.057(3), Florida Statutes, where, as here, an agency determines that the use of competitive sealed bidding, an Invitation for Bids (IFB), is not practicable, contractual services shall be procured by an RFP. Section 287.057(3) provides: A request for proposals which includes a statement of the services sought and all contractual terms and conditions applicable to the procurement of contractual services, including the criteria, which shall include, but need not be limited to, price, to be used in determining acceptability of the proposal shall be issued. . . . To assure full understanding of and responsiveness to the solicitation requirements, discussions may be conducted with qualified offerors. The offerors shall be accorded fair and equal treatment prior to the submittal date specified in the request for proposals with respect to any opportunity for discussion and revision of proposals. The award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the state, taking into consideration the price and the other criteria set forth in the request for proposals. . . . Whereas consideration of an IFB is controlled by cost, consideration of an offer to an RFP is controlled by technical excellence as well as cost. System Development Corp. v. Department of Health and Rehabilitative Services, 423 So.2d 433 (Fla. 1st DCA 1982). Of further import to a resolution of this case, is a provision of the RFP which states: The Bidder's Equipment Agreement Form, Licensed Software or Services Form, or any other Form provided by the bidder, shall not be used since the bidder's proposal and the State's acceptance thereof shall constitute the complete agreement. Bids containing terms and conditions conflicting with those contained in this Request for Proposal may be rejected. The foregoing provision of the RFP, as well as Section 287.057(3), Florida Statutes, renders it clear that upon the State's acceptance the bidder's offer establishes the terms of the contract. Consequently, a responsive and unambiguous proposal is imperative under the RFP procedure. The RFP required that vendors submit their sealed technical and cost responses separately. If technically responsive, the vendor's cost response would be opened and evaluated; if not responsive, the cost response would be returned to the vendor unopened. The RFP granted vendors the opportunity to suggest changes to the RFP and to submit written inquiries. A bidders' conference, held September 26, 1984, was attended by twenty prospective bidders, including Petitioner. Petitioner submitted one written question regarding the bid bond, but submitted no further written inquiries regarding the RFP. The other vendors submitted approximately 160 questions. By Addenda I, dated October 1, 1984, the Department provided its written response to vendor inquiries, as well as certain changes to the RFP. Three subsequent addenda were also issued. The RFP, and addenda, constitute the bid document. Petitioner acknowledges receipt of all addenda. By October 19, 1984, the deadline established in the RFP, seven proposals and thirty no-bids had been filed with the Department. An evaluation committee consisting of Randolph Esser, chief of the Bureau of Information Services for the Department, and primary drafter of the RFP, Randy Walford, the Department's Systems and Programming Manager, and James K. Knerr, a data processing procurement consultant with the Department of General Services, reviewed the technical proposals of the seven vendors. The committee found the technical proposals of five vendors, including Petitioner, to be non-responsive. Accordingly, their cost proposals were returned unopened. The technical proposals of two vendors, Honeywell and Mohawk Data Systems (MDS), were found responsive. On October 24, 1984, the cost bids of Honeywell and MDS were opened. The committee found the cost proposal of MDS to be non-responsive. Accordingly, since only one bidder remained, the bid process was terminated. During the committee's review of the technical responses, it used a checklist which had been prepared by Mr. Esser to facilitate the committee's evaluation of the responsiveness of the various proposals. The checklist consisted of a list of bid requirements, according to RFP page number, followed by a "yes" or "no" space to be checked, as appropriate, if the proposal contained, or failed to contain, a particular requirement of the RFP. If the bidder's response was found technically unqualified, a narrative sheet was attached to the checklist explaining any shortcomings the committee had identified at that time. The committee did not purport to undertake an analytical critique of each vendor's proposal. The checklist and narrative sheet were collectively referred to as a "Technical Qualification Summary." Although the committee members considered the checklist an internal working document designed solely to assist them in evaluating the vendor's technical proposals, a copy of the Petitioner's checklist was released by the Department to Petitioner. Petitioner contends it relied on this checklist in preparing its responses to the rebid, and since the deficiencies found in its rebid were not reflected on the checklist for its initial bid, that the Department should be estopped from raising such deficiencies. On October 31, 1984, the Department issued its rebid, RFP No. 2695-84 (Rebid), which is the subject of these proceedings. The rebid documents were identical to those which comprised the initial bid documents with three exceptions. First, the deadline for filing bids was changed to November 19, 1984. Second, the special provision of the RFP which provided for a bidders' conference and the submission of proposed written changes was deleted. General Condition 5, however, which permitted a vendor to submit written inquiries up to ten days before the bids were opened, remained. Finally, accompanying the rebid documents, was a cover letter to the vendors from Merelyn Grubbs, the Department's chief of the Bureau of General Services. That letter, dated October 31, 1984, provided: Due to failure to receive responsive competitive proposals to this Department's Request for Proposal No. 2695-84 filed October 19, 1984, a rebid is being released. Attached is information reflecting the reasons bidders were found to be non- responsive. Bidders are encouraged to carefully examine their proposals submitted in response to the original Request For Proposal and to rectify any oversights within their responses. The Department will not accept changes to the Request For Proposal or contract. The attachment to Ms. Grubb's letter consisted of a composite of the narrative sheets prepared by the committee on each technically non-responsive proposal. The checklists were not, however, distributed with the rebid documents. On November 19, 1984, the deadline established in the RFP-Rebid, six proposals and fifteen no-bids had been filed. The evaluation committee, comprised of the same membership as the initial committee, first reviewed the technical proposals of the six vendors. The committee found the technical proposals of four vendors, including Petitioner, to be non-responsive, and their cost proposals were duly returned unopened. Petitioner's cost proposal was delivered to it on November 30, 1984. On November 21, 1984, the cost proposals of Honeywell and MDS, who were found technically responsive, were opened and each was fully evaluated. Honeywell emerged the apparent successful bidder. On November 29, 1984, after Honeywell had successfully passed a benchmark test for the proposed equipment, the Department posted its recommended award of the bid to Honeywell. On December 3, 1984, Petitioner filed its notice of intent to protest the award to Honeywell. Petitioner's Petition for Formal Hearing was filed with the Department December 12, 1984, and with the Division of Administrative Hearings on January 16, 1985. As part of its technical evaluation of the six rebid vendors, the committee again utilized its "Technical Qualification Summary," which consisted of the checklist and narrative previously described. The rebid evaluation was performed without reference to the initial technical evaluations or bid responses. The initial and rebid RFP required that a proposal include eleven separate tabs, each tab to describe specifically designated aspects of the proposal. Failure to meet any of the mandatory requirements of the RFP subjected the bid to rejection. On the technical evaluation of the initial bid, Petitioner was found non-responsive by the committee as to Tab 5 (Equipment Maintenance), Tab 6 (Application Support), Tab 7 (Training Support), and Tab 9 (Benchmark). The evaluation of Petitioner's rebid found Petitioner non-responsive as to Tab 4 (Licensed Software), Tab 5, Tab 6, Tab 7, and Tab 10 (Manuals). Petitioner's rebid varied from its response to the initial bid as to Tabs 5, 6, 7 and 9, with minor changes to Tabs 1, 2 and 3. Petitioner did not alter its response to Tabs 4 and 10. Rebid, Tab 4 -- Description of Licensed Software Special condition 4 of the RFP-Rebid required that the vendor include a complete description of each Licensed Software package bid under Tab 4. Petitioner's Tab 4 was found non-responsive because it did not include a description of the UNIX System V Application Processor which it had described in the Management Summary (Tab 1). Tab 1, Management Summary, was required to contain a brief synopsis of the vendor's proposal. Petitioner's Tab 1 proposal specifically stated: IMS (Petitioner) believes the proposed configuration, consisting of a megaframe acting as both a shared resource processor and a UNIX System V-based applications processor, provides the DHSMV with the latest in computer technology while offering substantial expansion capability in both memory and processing power. [Emphasis supplied.] UNIX is an item of software necessary to operate the UNIX applications processor. Petitioner's president, Russell Kelly, and senior consultant, William Childers, testified that the applications processor and UNIX software were only included in the proposal as an option. Therefore, Petitioner argues, Tab 4 was not unresponsive for failing to include UNIX as an item of software. Whatever Petitioner's "intent" may have been, Tab 1 clearly describes the UNIX System V application processor as part of the "proposed configuration," and UNIX is an item of software necessary to operate the application processor. Rebid, Tab 5 -- Equipment Maintenance The RFP contemplated an ultimate system comprised of 145 "locations" within the Neil Kirkman Building, Tallahassee, Florida, and 100 remote "locations" throughout the State of Florida. Consequently, the RFP required that a vendor's proposal include an agreement to provide on-site maintenance statewide. Petitioner's proposal provided: IMS will provide, in accordance with the RFP, on-site maintenance at all DHSMV locations for the Host Office Automation equipment, workstations and peripherals. [Emphasis supplied.] Petitioner's proposal was found non-responsive because it did not specify on- site maintenance was available for remotely located equipment. The "Host Office" was the Neil Kirkman Building. Therefore, the clear import of Petitioner's proposal was that it would provide on-site maintenance for the proposed 154 "locations" -- the automation equipment, workstations and peripherals -- to be located in Tallahassee. Petitioner's proposal did not specify on-site maintenance at the proposed 100 remote "locations." Petitioner asserted that its proposal contemplated on-site maintenance at all Department locations statewide. While that may have been Petitioner's intention, the language it selected to convey its proposal limits on-site maintenance to the Neil Kirkman Building. Rebid, Tab 6 -- Application Support Special Condition 6 of the RFP, Application Support, required that the: Bidder shall present and explain the methods and procedures to be employed by the bidder. "Addenda I" further defined application support to mean: . . . that any software acquired from the successful bidder and installed as a result of this RFP shall be supported by that bidder regardless of the type of software provided. . . . If third party software is involved, bidder shall be the State's primary contact for problem resolution. Petitioner's proposal provided: The Department shall be responsible to appoint a coordinator who will instruct the DHSMV remote sites on the unpacking and installation of the NGEN microcomputer, letter quality printer and modem. These personnel should be capable of loading the software at each remote site. Petitioner's Tab 6 was found non-responsive by the Department since it failed to describe any application support. Petitioner sought to avoid the import of its failure to respond to Tab 6 by suggesting that such failure was not material because certain matters of a support nature could be gleaned from other sections of its proposal. While a detailed review of Petitioner's proposal does reveal some items which could be considered application support, Petitioner's response was not in substantial accord with the RFP mandatory requirement that bids be submitted in the Tab format. Rebid, Tab 7 -- Training Support The RFP, and addenda, required that 12-15 persons be trained. Petitioner's proposal provided: IMS will provide user training in Tallahassee during the Pilot Project for 12 to 15 people. This training will cover the following aspects of the system: Word Processing two 4-hour sessions with 4 persons per session Multiplan two 12-hour sessions R : base two 8-hour sessions Workstation Software Overview one 16-hour session Workstation Operations two 2-hour sessions During years 2 through 4 IMS will conduct the above training courses once every four months at a location mutually agreed upon by the State and IMS. Except where indicated differently, sessions will be held for a maximum of 12 people. [Emphasis supplied.] Petitioner's proposal was found non-responsive since it failed to agree to provide training support for the required 12-15 persons. Specifically, Petitioner's proposal limited word processing training to 8 persons, not the 12- 15 required for the nine workstations/microprocessors to be installed. Rebid, Tab 10 -- Manuals Special condition 10 of the RFP required that: The bidder shall list all the Equipment and Licensed Software manuals required. Petitioner's response did contain a list of all manuals. However, Petitioner also inserted in Tab 10 a three-page "Software Licensing Overview " which, among other things, required a CTIX object code license agreement be signed before UNIX could be delivered. The RFP precluded the signing of any agreements not previously approved by the State. Accordingly, Petitioner's Tab 10 was found technically non-responsive. Petitioner asserted that Tab 10 was responsive and that the "Software Licensing Overview" was merely supplemental information for the UNIX "option." However, since UNIX was not clearly an "option," the Department was justified in interpreting the additional requirements set forth in the "Software Licensing Overview," as additional terms and conditions which it was precluded from accepting.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the relief requested by Petitioner, Integrated Microsystems, Inc., be denied, and its petition dismissed with prejudice. DONE AND ENTERED this 15th day of March 1985 at Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of March 1985. COPIES FURNISHED: Gary R. Rutledge, Esquire Sparber, Shevin, Shapo & Heilbronner, P.A. 315 South Calhoun Street, Suite 348 Tallahassee, Florida 32301 Judson M. Chapman, Esquire Paul A. Rowell, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32301 W. Douglas Smith, Esquire Office of General Counsel Honeywell Information Systems, Inc. 6 West Druid Hills Drive, Northeast Atlanta, Georgia 30329 Leonard R. Mellon, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32301
The Issue Whether Petitioner's conduct, omissions or actions in failing to execute and provide required documentation regarding roadway maintenance contracts awarded by Respondent, warrants a finding that Petitioner is "non-responsible" for a two-year period and prohibited from contracting with the state for that period of time.
Findings Of Fact The undersigned makes the following findings of relevant and material facts: M&B bid on Department Contract E7J12 let on October 9, 2013. M&B bid on Department Contract E1N43 let on January 16, 2014. M&B bid on Department Contract E3082 let on August 13, 2015. M&B bid on Department Contracts E6K44, E6K45, E6K46, and E6K51 let on January 28, 2016. M&B bid on Department Contract E4R75 let on February 5, 2016. M&B does not have a certificate of qualification from the Department, nor is it required to have one. The Department is the state agency responsible for coordinating the planning of a safe and efficient state transportation system. To accomplish that, the Department relies on qualified contractors to provide roadway mowing and other landscaping maintenance services in order to meet Florida's transportation needs. Jonathan McIntyre owns and operates M&B, a company that provides mowing and landscaping maintenance services for the Department. The company was previously owned by his father. The company has been a contractor for the Department for over 30 years and has adequately performed many mowing and landscaping maintenance contracts for the state. "One hundred percent" of M&B's business is derived from mowing and landscaping maintenance contacts with the Department, and the state is its exclusive client. During the hearing, Alan Autry, manager of Contract Administration for the Department, provided an overview of the bidding process. The bidding process begins with a bid solicitation notice which is also known as the advertisement. The solicitation outlines the requirements for bidders and includes project specific information. It also establishes when bids will be received. Resp. Ex. 46. The next step in the bidding process is for the Department to receive and open bids on the date and time identified in the solicitation. Depending upon the nature of the bid, a technical review is done. Once the contract is awarded, the vendor is notified and sent an award letter along with the contract and other pertinent documents for execution. The award letter identifies the date for which the signed contract along with other documents are to be returned to the Department for review to ensure conformance with the solicitation and specifications. Subsequently, the Department has a specific timeframe to execute and enter into the agreement. After being awarded several maintenance contracts as the low bidder, the Department issued a Notice of Intent to Declare Non-responsible ("Notice") to M&B on March 28, 2016, concerning its failure to "execute" eight contracts that had been awarded.1/ A noteworthy document that must be returned to the Department, along with the signed contract, is a payment performance bond, also known as a contract bond (a document that is signed by or executed by the vendor, and the vendor's surety). Other documents that must be promptly returned include a contract affidavit and insurance confirmation, such as policies and certificates as required by the contract specifications or "specs." Resp. Ex. 46–48. According to contract specifications 3-6 and 3-7, if the Department does not receive the executed documents from the vendor within ten days, excluding weekends and holidays, the Department may annul the contract, award it to another vendor, or perform the work by other means. Resp. Ex. 47. The solicitations for the contracts in this case expressly incorporated contract specifications 3-6 and 3-7. Resp. Exs. 1, 5, 10, 16, 22, 28, 35, 40. The contracts at issue in this case are considered "low bid" contracts, meaning that the award of these contracts is made to the vendor that submits the lowest cost bid in response to the solicitation, without further inquiry or analysis. Resp. Ex. 48. Concerning Department Contract E7J12, M&B was the initial lowest bidder. The Department awarded the contract to M&B; however, M&B failed to return a signed contract form, contract bond, contract affidavit, and/or sufficient insurance documentation within the ten-day time period. Resp. Exs. 3, 4, 4b. Concerning Department Contracts E1N43, E3082, E6K46, and E4R75, M&B was also the initial lowest bidder. The Department awarded the contracts to M&B; however, M&B failed to return a signed contract form and required documents within the allotted time period. Resp. Exs. 7–9, 12-15, 30-33, 42–45. Concerning Department Contracts E6K44, E6K45, and E6K51, M&B was not the initial lowest bidder according to preliminary bid tabulations. However, the initial lowest bidder (another company) was found to be non-responsive, and M&B subsequently became the lowest bidder and was awarded those contracts as well. However, M&B also failed to return the executed contract and accompanying documents to the Department within the ten-day period. Resp. Exs. 18-21, 24-27, 36–39. There was no dispute regarding the calculation of the ten-day timeframe for M&B to sign the contract(s) and return the required contract documents. McIntyre admitted during testimony to never signing these contracts or obtaining bond approval "certificates" in a timely fashion for the subject contracts. In enforcement actions like this, the Department considers several factors to determine the appropriate length of time to declare a contractor non-responsible. The Department considers the severity of the situation and makes an evaluation on a case-by-case basis. Maintaining the integrity of the bidding process is also a focus of concern. Typically, the Department will impose six months to a year of non-responsibility per incident. Resp. Ex. 48. Throughout all the evidence and testimony presented, it was clear to the undersigned that a lack of contract work performance or anticipated work performance by M&B was not the ground(s) for finding M&B "non-responsible." Rather, it was M&B's failure to (1) sign the subject contracts and (2) provide required supporting documents that formed the basis for finding M&B non-responsible. Despite his candid testimony that he did not sign or timely provide the supporting documents, M&B raised several defenses claiming there was not sufficient cause to hold M&B "non-responsible." McIntyre explained that a series of events with the Department regarding another maintenance contract prevented him from complying with the bonding requirement. He argued that other conduct of the Department, inextricably intertwined with these contracts, belies any finding that M&B was at fault, or non-responsible.2/ More specifically, M&B asserted that the failure on the part of M&B to "execute" the 2016 contracts cited in the Department's Notice was caused by the Department's failure to timely pay M&B for five months of work which M&B had completed for the Department on a prior contract, Department Contract E4Q26. Stated differently, M&B argued that it did not obtain required performance bonds on the subject contracts let in 2016 because M&B did not have the funds needed to pay the performance bonds on those contracts. This in turn was due to the Department's failure to pay M&B for five months of work it had completed for the Department on a prior contract, Department Contract E4Q26.3/ As a part of this defense, evidence was presented that on March 8, 2016, M&B, through its counsel, sent a letter to the Department demanding payment that was overdue on Department Contract E4Q26. Pet. Ex. 1. This included a claim for payment for five months of work M&B had already completed for the Department. After M&B retained counsel and demanded payment, the Department, on March 28, 2016, mailed notice to M&B that the Department was declaring M&B "non-responsible." McIntyre testified that when M&B bid on the subject contracts in 2016, he anticipated that the Department would have timely and regularly paid it the monies the Department owed it on Department Contract E4Q26. The undersigned finds that based on his longstanding relationship with the Department and its practice of paying M&B each month on Department Contract E4Q26, this reliance was not unreasonable. By all accounts and the reasonable inferences drawn from the evidence and testimony of McIntyre, M&B would have been in a solvent financial position to post performance bonds on the subject contracts let in 2016, but for the fact that the Department had delayed monthly payments for work M&B had performed on Department Contract E4Q26. There was no persuasive or credible evidence presented to dispute this. Likewise, there was no persuasive evidence presented to show or suggest that there were any performance issues related to Department Contract E4Q26 which would have justified a material or significant offset or deduction of what was due to M&B on that contract. When Autry was reviewing the file and evaluating the enforcement options available to the Department, he was not aware that counsel for M&B had already written the Department and asserted that M&B had not been paid for five months of work M&B had performed on a prior contract, Department Contract E4Q26. The Department's ongoing monthly payment for work M&B had completed on Department Contract E4Q26 was interrupted and significantly delayed because of problematic language in the E4Q26 contract prepared by the Department. More specifically, the Department had been paying M&B for work on Department Contract E4Q26 on a monthly basis, for seven months. At some point, the Department was audited by the Department of Financial Services and learned that monthly payments were not permitted under that contract's language, as written. In a legitimate and good faith effort to correct the payment delay, the Department drafted and requested that M&B sign a supplemental contract that it felt would have corrected the payment delay. As it turned out, when it submitted the supplemental contract to M&B, nearly all 12 months of the work under Department Contract E4Q26 had been completed, and only a few weeks remained on that contract. McIntyre, not being particularly skilled at understanding supplemental contracts, was skeptical and concerned that signing a supplemental contract could jeopardize his ability to insist on getting all the money he was due on Department Contract E4Q26. While McIntyre grappled with how to respond to the supplemental contract proffered by the Department, Michael E. Sprayberry was aware and mulling over the March 8, 2016, letter from M&B's counsel demanding that the Department pay M&B $66,666.65 owed for the five months of work it had completed. In M&B's counsel's March 8, 2016, letter to the Department, which attached M&B's Invoice No. 8 for $66,666.65, he asked for an explanation as to why payment was not being made to M&B and why the Department was asking M&B to sign a supplemental contract when the contract had been completed by M&B. The Department failed to provide any detailed explanation before issuing its Notice on March 28, 2016. Other important events are worth noting. Prior to issuance of the Notice declaring it non-responsible, M&B had obtained four necessary Bond Approval Advisories dated March 10 and 14, 2016, which verified that all the subject contract bonds were pre-approved by the insurer and were ready to be issued pending receipt of the premium payments. Pet. Composite Ex. 4.4/ Payment to M&B on Department Contract E4Q26 in the amount of $48,102.65 finally came from the Department on May 16, 2016. Pet. Ex. 5.5/ Sprayberry acknowledged that the Department quit paying M&B after the seventh month on Department Contract E4Q26, which was a 12-month contract. Sprayberry testified that the Department was "very surprised" when the Department of Financial Services directed the Department to discontinue paying M&B because of the language of the contract entitling M&B to be paid monthly.6/ Sprayberry forthrightly acknowledged that M&B should have been paid on contract #E4Q26 and that he had difficulty understanding the language of the contract which prompted the Department of Financial Services to suddenly direct the Department to stop paying M&B on a monthly basis. See generally Pet. Ex. 6. Sprayberry also acknowledged that the "snafu" the parties experienced with the payment provisions of Department Contract E4Q26 was, indeed, "a problem" that "we need to get solved." Insofar as the interruption in monthly payments under Department Contract E4Q26 was concerned, Sprayberry went on to add that the Department was "very surprised" by the audit response by the Department of Financial Services and "didn't count on that." He went on to explain that the Department was also certain that "McIntyre didn't count on that" (meaning the abrupt discontinuation in monthly payments). Once M&B was paid the monies that the Department owed on Department Contract E4Q26, M&B was awarded two additional Department contracts for which it timely returned all required documents and the performance bonds.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation reconsider its preliminary decision and reverse its determination that M&B was non-responsible. DONE AND ENTERED this 5th day of December, 2016, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE 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 5th day of December, 2016.
The Issue The issue in this case is whether Respondent's intended award of a contract to Intervenor pursuant to Invitation to Negotiate No. 2011-18 is contrary to Respondent's governing statutes, Respondent's rules and policies, and the specification of the solicitation.
Findings Of Fact The Department issued the ITN, Revised Standards Tutorial, on December 17, 2010. The purpose of the ITN was to contract with one or more vendors "to provide assistance with the state's need to support teachers in the implementation, and students in the mastery of the English Language Arts and Mathematics Common Core State Standards (CCSS) and the Next Generation Sunshine State Science and Civics Standards." The Department sought to purchase, among other things, the following: [T]he development of a new robust web-based system that includes but is not limited to interactive adaptive student practice lessons for each of the Common Core State Standards and Next Generation Sunshine State Science and Social Studies Standards (Science grades 5, 8, Biology 1 and Civics) to address individual student needs and provide a means of individual progress monitoring for students, parents, and teachers; secure mini-interim assessment checks for students; student performance reports for teachers on the mini-interim assessment checks; and programming for parent, student, and teacher log-ins that provide different levels of access to support materials. The ITN required that the system developed would be the property of the Department during and after the contract and stated: All equipment, software and licenses, programming code and language, documentation and content (both instructional and informative) that is developed as part of this project will be the property of the Department during and after the grant period. All such items must be completely transferred to the Department prior to the end of the contract period, including any licenses to the extent that they have not expired. Any proprietary products owned by the Contractor must provide for a perpetual royalty free and non-exclusive license for use by the Department. Vendors were given the opportunity to ask technical questions about the ITN, and the Department posted the questions and the Department's responses on the vendor bid system on December 29, 2010. One vendor submitted the following question: "Will the DOE require a perpetual license to continued use of any content (assessments or lessons) after the end of the four- year contract if those materials are the vendor's proprietary, pre-existing materials that are provided for use in the Standards Tutorial?" The Department gave the following written response, which was included in Addendum No. 1 to the ITN. "All content and applications developed will be the property of the Department. All content, application code and documentation must be turned over to the Department upon deliverable completion." It is clear from the ITN and the first addendum that the Department required the materials developed pursuant to the contract to be the property of the Department. One of the main goals of the Department in issuing the ITN was to have a product that could be sustained after the contract period. When the ITN was developed, the Department was not aware of the variety of arrangements that might be possible in order to meet all of the Department's goals. However, the Department made the choice to go with ownership of the products developed for the contract and a perpetual, royalty-free non- exclusive license for products that were owned by the contractor and provided pursuant to the contract, but were not developed as a result of the contract. The Department could have worded the ITN so that the vendors would provide a solution for the sustainability component of the contract, but it did not do so. The method chosen by the Department to meet its sustainability needs became a requirement of the ITN. Sustainability was a material aspect of the contract, and, because the Department had specified the method to achieve sustainability in the ITN with no leeway for the vendors to propose a different methodology, the ownership of products developed pursuant to the contract became a material requirement of the ITN. Nothing prevented the Department from negotiating different methods of sustainability during negotiation, but in order to determine whether a vendor was responsive, the Department was bound by the ITN, no matter whether it inadequately reflected what the Department was seeking. The remedy to the flawed ITN would have been to change the specifications prior to the replies being submitted. The Department argues in its Proposed Recommended Order that the ITN did not call for ownership of the content or the software. This argument is disingenuous in light of the testimony of the Department's representative that the ITN contemplated complete ownership of the products developed pursuant to the contract. Section 7.1 of the ITN required that the vendor include completion dates for deliverables in its Reply and provided a list of deliverables for each year of the contract. The ITN stated that the Deliverable Completion date contained in the ITN was for "informational purposes only." The actual completion dates were to be negotiated. Section 3 of the ITN provides: "Award will be made to the responsible and responsive vendor that the Department determines will provide the best value to the state." Section 3.3. of the ITN defines a responsive bid as "a Reply submitted by a responsive and responsible vendor which conforms in all material respects to the solicitation." The term "Reply" is defined by the ITN as "the complete response of the Respondent[1/] to the ITN, including properly completed forms and supporting documentation." Section 4.11 of the ITN provides: As in the best interest of the state, the right is reserved to award based on all or none thereof, to a responsive, responsible Respondent. As in the best interest of the state, the right is reserved to reject any and/or all Replies or to waive any minor irregularity in replies received. Conditions which may cause rejection of Replies include, without limitation, evidence of collusion among Respondents, obvious lack of experience or expertise to perform the required work, failure to perform, or meet financial obligations on previous contracts. Section 5.2.2 of the ITN is entitled Mandatory Submittal Documents and requires that the vendors submit, among other things, a transmittal with their replies which contains the following: a statement certifying that the person signing the Reply is authorized to represent the Respondent and bind the Respondent relative to all matters contained in the Respondent's Reply the company's federal tax identification number a statement certifying that the Respondent has read, understands, comply [sic] and agrees to all provision of this ITN a statement that the Respondent is authorized to conduct business in Florida in accordance with the provisions of Chapter 607, F.S. In lieu of such statement, the Respondent alternatively must certify that authorization to do business in Florida will be secured prior to the award of the contract a statement certifying that the Respondent is registered on the MyFloridaMarketPlace website in accordance with the provisions by the state of Florida. In lieu of such statement, the Respondent must alternatively certify that registration authorization will be completed prior to the award of the contract. Once the replies were submitted, the ITN required that the replies be reviewed to determine if they met the mandatory submittal requirements. If it was determined that a reply met the mandatory submittal requirements, the reply would be evaluated by an evaluation committee. Section 8 of the ITN sets out the evaluation and negotiation process and provides: 8.1 REPLY EVALUATION AND NEGOTIATION PROCESS Using the evaluation criteria specified below, in accordance with Section 287.057, F.S., the Department shall evaluate and rank responsive Replies and, at the Department's sole discretion, proceed to negotiate with one or more Respondent(s) . . . : Section 8.2 of the ITN provides: The ITN is designed to assess the most points to the Respondent presenting the best solution for the required services. The Evaluation Committee will consider only those Replies, which are determined to meet the mandatory requirement review (See SECTION 5.2.2) first completed by the Department's Bureau of Contracts, Grants and Procurement Management Services. Each member of the Evaluation Committee will be provided a copy of each Technical Reply. Replies will be evaluated on the criteria established in the section above entitled "Criteria for Evaluation" in order to assure that Replies are uniformly rated. The Evaluation Committee will assign points, utilizing the technical evaluation criteria identified herein and the Procurement Office will complete a technical summary. Oral presentations (or seeking clarification) will be evaluated by the committee based on the criteria established in SECTION 5.2.1 above. During this stage Respondents will be asked to provide any clarifications needed by the evaluation committee to assist in evaluating their Reply. Information received in this stage will be added to the Respondent's Reply and evaluated as a part of the appropriate section above. Section 8.1 of the ITN provides that the evaluation of the prices would be done through a comparison of the prices submitted in the replies: "The maximum points will be awarded to the lowest acceptable Price Reply. Replies with higher costs will receive the fraction of the maximum points proportional to the ratio of the lowest Price Reply to the higher Price Reply." Section 8.1(E) of the ITN provides: In submitting a Reply Respondent agrees to be bound to the terms of this ITN, however, the Department reserves the right to negotiate different terms and related price adjustments if the Department determines that it is in the state's best interest to do so. Four vendors, including Infinity and Microsoft, submitted replies to the ITN by the deadline of January 10, 2011. Microsoft's Reply stated: The information contained in this document [the reply] (a) represents Microsoft's current statement of the features, functions, and capabilities of the products and services described herein, which is subject to change at any time without notice to you, (b) is for your internal evaluation purposes only and should not be interpreted as a binding offer or commitment on the part of Microsoft to provide any product or service described herein; and (c) constitutes Microsoft trade secret information and may not be disclosed to any third party. Any procurement that may result from this information is subject to negotiation and execution of a definitive agreement between [sic] and its chosen authorized Microsoft reseller incorporating applicable Microsoft commercial terms. Microsoft does not guarantee the accuracy of any information presented and assumes no liability arising from your use of the information. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT. The transmittal letter submitted by Microsoft stated: "[T]his letter certifies that Microsoft has read and understands the provisions of the ITN." The transmittal letter did not meet the requirements of the ITN that Microsoft certify that it complies and agrees with all provisions of the ITN. The reply submitted by Microsoft did not provide that all materials developed as a result of the contract would become the property of the Department. Microsoft intended to subcontract with Houghton-Mifflin-Harcourt (HMH) to develop the content, which includes the practice lesson plans for the students. Microsoft stated in its Reply: "The Department of Education will have a perpetual license to use these lessons; HMH will retain copyright and ownership of all lessons provided." Microsoft intentionally did not agree to provide complete ownership of the project deliverables to the Department when it submitted its reply. David Gallagher, Microsoft's representative and the person who submitted the reply on behalf of Microsoft, admitted at the final hearing that he did not have authorization to give the Department ownership of the project deliverables when he submitted Microsoft's reply. Section 5.2.3 of the ITN provided that prices were to be submitted on a form that was provided in the ITN. The price form contains the following language: We propose to provide the services being solicited within the specifications of ITN 2011-18. All work shall be performed in accordance with this ITN, which has been reviewed and understood. The below prices are all inclusive. There shall be no additional costs charged for work performed under this ITN. The price form submitted by Microsoft did not contain this language. Taking the evidence as a whole, it is clear that Microsoft did not intend to be bound by its reply and thought that anything that was contrary to the ITN would be worked out in negotiations. The Department appointed an evaluation team that met on January 18, 2011, to score each reply. Some of the evaluators made note in their evaluations that Microsoft's reply did not meet the requirements of the ITN relating to ownership of the project deliverables. The evaluation committee awarded the maximum number of points for price to Microsoft. The two top-scoring vendors, Infinity and Microsoft, were invited into negotiations. The Department submitted questions to both Infinity and Microsoft before the negotiations, and both vendors submitted written responses to those questions. The Department submitted the following question to Microsoft: Your proposal states "HMH will retain copyright and ownership of all lessons provided" (pp.3-25, 3-33). How does this meet the ITN requirement that "All equipment, software and licenses, programming code and language documentation and content (both instructional and informative) that is developed as part of this project will be the property of the Department during and after the grant period. All such items must be completely transferred to the Department prior to the end of the contract period, including any licenses to the extent they have not expired. Any proprietary products owned by the Contractor must provide for a perpetual royalty free and non-exclusive license for use by the Department." (p. 6)? Microsoft responded to the question of ownership, in part, as follows: Developments. Upon payment in full, we assign you joint ownership in all rights in any custom computer code or materials (other than products, fixes or pre-existing work) developed by us (or in collaboration with you) and provided to you in the course of performance of this contract ("developments"). "Joint ownership" means each party has the right to independently exercise any and all rights of ownership now known or hereafter created or recognized, including without limitation the rights to use, reproduce, modify and distribute the developments for any purpose whatsoever, without the need for further authorization to exercise any such rights or any obligation of accounting or payment of royalties, except you agree you will exercise your rights for your internal business operations only, and you will not resell or distribute the developments to any un-affiliated third party. These use restrictions shall survive termination or expiration of this contract. Each party shall be the sole owner of any modifications that it makes based upon the developments. * * * Educational-Digital Content & Assessments. We will grant a perpetual, royalty-free and non-exclusive license (except as set forth below) for all of the content and lesson instruction and assessments created as part of this project to the State of Florida. As such, we will retain copyright and ownership of this created material, while the State of Florida may leverage the material on an exclusive basis in the State of Florida anywhere within its offices, school facilities, and education programs, including use extended to staff, administration, teachers, students and parents. Much of the content, particularly in the Reading, Language Arts/Literature and Civics disciplines is integrated into the lessons from third-party sources. The ownership of material permissioned from outside our team is unavailable to be granted or transferred to the State of Florida. However as part of the sustainability plan for the Student Standards Tutorial, we will ensure that mechanisms are in place to allow for permission renewals as required by contract with third-party content owners for a period encompassing four years from the final delivery of the contract period. Although Microsoft was given an opportunity to clarify its position on ownership of the product deliverables developed for the contract, Microsoft's response was still not responsive to the requirements of the ITN. The Department appointed a negotiation team that met separately with Infinity and Microsoft on February 3, 2011. During the negotiation session, a Microsoft representative stated that it would be "impossible" for Microsoft to provide complete ownership of equipment and software, that there was no way that Microsoft could put in its best and final offer that the Department would have complete ownership, and that Microsoft did not want to be non-responsive but it did not know how to fix the problem. After the negotiation session with Microsoft, Regina Johnson (Ms. Johnson) and Mary Jane Tappen, who were members of the negotiation team, engaged in email communications regarding whether the Department could change the language of the ITN to allow the Department to accept the licensing proposal offered by Microsoft. Ms. Johnson noted that if the ITN language were not changed, Microsoft could be rejected for non-compliance. On February 7, 2011, after the negotiation sessions, Ms. Johnson sent an email to Infinity notifying Infinity that the Department would accept a license or co-ownership proposal, reflecting a change in the ITN specifications. Following negotiations, each vendor was given the opportunity to submit a Best and Final Offer (BAFO) by February 11, 2011. Both vendors submitted BAFOs. On February 16, 2011, the negotiators held an Intent to Award meeting. Following discussion, two negotiators voted for Microsoft, and one voted for Infinity. On March 1, 2011, Chancellor Frances Haithcock sent an Intent to Award memorandum to Commissioner Eric Smith (Commissioner Smith), explaining why Microsoft provides the best value to the state. Commissioner Smith signed that memorandum on March 4, 2011. On March 7, 2011, the Department posted the Intent to Award to Microsoft.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that the intended decision to award a contract to Microsoft pursuant to ITN 2011-18 is contrary to section 287.057 and the ITN. DONE AND ENTERED this 7th day of June, 2011, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL 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 June, 2011.
The Issue The issue in these cases is whether the Department of Juvenile Justice's (Department) proposed award of certain contracts to Bay Area Youth Services, Inc. (BAYS), based on evaluations of proposals submitted in response to a Request for Proposals is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact On July 2, 2003, the Department issued Request for Proposal (RFP) No. V6P01 for operation of IDDS programs in Judicial Circuits 1 through 20. The Department issued a single RFP and anticipated entering into 20 separate contracts, one for each circuit. Each contract was for a three-year period with the possibility of a renewal for an additional three-year period. The RFP was prepared based on a "contract initiation memo" generated within the Department and upon which the scope of services set forth in the RFP was based. The Department assigned one contract administrator to handle the procurement process. An addendum dated July 18, 2003, was issued to the RFP. As amended by the addendum, the RFP required submission of information in a tabbed format of three volumes. Volume I was the technical proposal. Volume II was the financial proposal. Volume III addressed past performance by the vendor. The addendum also allowed providers to submit some information in electronic format. The addendum requested, but did not require, that it be signed and returned with the submission. BAYS did not return a signed copy of the addendum in its proposal. Failure to sign and return the addendum was not fatal to the consideration of a proposal. The RFP set forth only two criteria for which noncompliance would be deemed "fatal" to a proposal. Failure to comply with a fatal criterion would have resulted in automatic elimination of a provider's response; otherwise, all responses submitted were evaluated. The proposals were opened on July 31, 2003. The contract administrator and staff reviewed the bids to ascertain whether required items were included, and noted the proposed costs on bid tabulation sheets. The first fatal criterion was failing to submit a properly executed "Attachment A" form to a submission. Attachment A is a bidder acknowledgment form. Both BAYS and JSP included a completed Attachment A in the responses at issue in this proceeding. The second fatal criterion was exceeding the Maximum Contract Dollar Amount. RFP Attachment B, Section XIII, provides in relevant part as follows: The Maximum Contract Dollar Amount will be the Annual Maximum Contract Dollar Amount multiplied by the number of years in the initial term of the Contract . . . . EXCEEDING THE ANNUAL MAXIMUM CONTRACT DOLLAR AMOUNT IS A FATAL CRITERION. ANY PROPOSAL WITH A COST EXCEEDING THE ANNUAL MAXIMUM CONTRACT DOLLAR AMOUNT WILL BE REJECTED. The information reviewed as to each provider's cost proposal was set forth in Volume II, Tab 1, which included RFP Attachment J. RFP Attachment J is a cost sheet where providers were required to set forth proposal costs identified as the "Maximum Payment" under their proposal. Attachment K to the RFP identifies the counties served in each circuit, number of available slots in each circuit, and the Annual Maximum Contract Dollar Amount for each circuit. JSP appears to have simply copied information from Attachment K onto Attachment J. The Department's contract administrator was the sole person assigned to review Volume II of the responses. Volume II included the cost proposal, the supplier evaluation report (SER), and the certified minority business enterprise (CMBE) subcontracting utilization plan. Neither BAYS nor JSP exceeded the Annual Maximum Contract Dollar Amount applicable to any circuit at issue in this proceeding. Both BAYS and JSP identified a Maximum Payment equal to the Annual Maximum Contract Dollar Amount as their proposal cost. Both BAYS and JSP received scores of 100 points for cost proposals in all responses at issue in this proceeding. JSP asserts that the instructions as to identification of the Annual Maximum Contract Dollar Amount were confusing and that its actual cost proposal was less than that set forth as the "Maximum Payment" on Attachment J. JSP asserts that it actually listed its cost proposal at the section identified on Attachment J as "renewal term dollar amount proposed." JSP asserts that the Department should have reviewed supporting budget information set forth in Attachment H to the RFP to determine JSP's cost proposal, and that the Department should have determined that JSP's actual cost proposal was less than that of BAYS. The Department did not review the budget information in Attachment H, but based its cost evaluation of the proposals on the total figures set forth on Attachment J. Nothing in the RFP suggests that underlying information as to cost proposals would be reviewed or evaluated. The evidence fails to establish that the Department's reliance on the information set forth on Attachment J was unreasonable or erroneous. The evidence fails to establish that the Department's scoring of the cost proposals was contrary to the RFP. The evidence fails to establish that JSP is entitled to have its cost proposal re-scored. One of the requirements of the RFP was submission of a "Supplier Evaluation Report" (SER) from Dunn & Bradstreet. The submission of the SER was worth 90 points. Dunn & Bradstreet transmitted most of the SERs directly to the Department, and the Department properly credited the providers for whom such reports were transmitted. The Department's contract administrator failed to examine BAYS submission for the SER, and BAYS did not receive credit for the SER included within its proposal. The failure to credit BAYS for the SERs was clearly erroneous. BAYS is entitled to additional credit as set forth herein. The RFP sought utilization of a CMBE in a provider's proposal. BAYS proposal included utilization of The Nelco Company, an employee leasing operation. The Nelco Company is a properly credentialed CMBE. Under the BAYS/Nelco arrangement, BAYS would retain responsibility for identification and recruitment of potential employees. BAYS performs the background screening and makes final employment decisions. BAYS retains the right to fire, transfer, and demote employees. The Nelco Company would process payroll and handle other fiscal human resource tasks including insurance matters. The Nelco Company invoices BAYS on a per payroll basis, and BAYS pays based on the Nelco invoice. JSP asserts that under the facts of this case, the participation of The Nelco Company fails to comply with the RFP's requirement for CMBE utilization. BAYS proposals also included utilization of other CMBEs. There is no credible evidence that BAYS utilization of The Nelco Company or of the other CMBEs included within the BAYS proposals fails to comply with the RFP's requirement for CMBE utilization. The Department assigned the responsibility for service proposal evaluation to employees located within each circuit. The contract administrator and staff distributed appropriate portions of Volume I of each proposal to the evaluators. The evidence establishes that the evaluators received the documents and evaluated the materials pursuant to written scoring instructions received from the Department. Some reviewers had more experience than others, but there is no evidence that a lack of experience resulted in an inappropriate review being performed. In two cases, the evaluators worked apart from one another. In one circuit, the evaluators processed the materials in the same room, but did not discuss their reviews with each other at any time. There is no evidence that evaluators were directed to reach any specific result in the evaluative process. JSP asserts that there was bias on the part of one evaluator who had knowledge of some unidentified incident related to JSP. The evidence fails to establish the facts of the incident and fails to establish that the incident, whatever it was, played any role in the evaluator's review of the JSP proposal. JSP also asserts that another evaluator had contact with JSP at some point prior to his evaluation of the RFP responses. There is no evidence that the contact was negative or was a factor either for or against JSP in the evaluation of the RFP responses. The RFP required that each provider's proposal include letters of intent from "local service resources" indicating a willingness to work with the provider and a letter of support from the State Attorney in the judicial circuit where the provider's program would operate. The RFP indicates that Volume I of a provider's response should contain five tabbed sections. The RFP provides that "information submitted in variance with these instructions may not be reviewed or evaluated." The RFP further provides that failure to provide information "shall result in no points being awarded for that element of the evaluation." JSP included letters of support in Tab 5 of Volume I. BAYS included letters of support in a tabbed section identified as Tab 6 of Volume I. JSP asserts that information included in Tab 6 of BAYS proposals should not have been evaluated and that no points should have been awarded based on the information included therein. The evidence fails to support the assertion. Based on the language of the RFP, submission of information in a format other than that prescribed is not fatal to a proposal. The Department reserved the authority to waive such defects and to evaluate the material. Here, the Department waived the variance as the RFP permitted, and reviewed the material submitted by BAYS. JSP asserts that BAYS proposal breached client confidentiality by inclusion of information regarding an individual who has allegedly received services through BAYS. Records regarding assessment or treatment of juveniles through the Department are deemed confidential pursuant Section 985.04, Florida Statutes (2003). The evidence fails to establish that an alleged violation of Section 985.04, Florida Statutes (2003), requires rejection of the BAYS proposals. There is no evidence that the information was released outside of the Department prior to the bid protest forming the basis of this proceeding. The evidence establishes that JSP misidentified the name of its contract manager in its transmittal letter. The evidence establishes that the misidentification was deemed immaterial to the Department, which went on to evaluate the JSP proposals. The results of the evaluations were returned to the contract administrator, who tabulated and posted the results of the process. On August 25, 2003, the Department posted a Notice of Intent to Award contacts based on the proposals submitted in response to the RFP. Insofar as is relevant to this proceeding, the Department proposed to award the contracts for Circuits 5, 6, and 20 to BAYS. The Department received four proposals from IDDS program providers in Circuit 5 (DOAH Case No. 03-3671BID). According to the Notice of Intended Contract Award, BAYS was the highest ranked bidder with 651.8 points. JSP was the second highest bidder with 642.6 points. White Foundation was the third highest bidder at 630.7 points, and MAD DADS was the fourth bidder at 442.8 points. The evidence establishes that BAYS included its SER in its Circuit 5 proposal. The Department neglected to examine BAYS submission for the SER, and BAYS did not receive credit for its SER. BAYS should have received an additional 90 points, bringing its total points to 741.8. The Department received two proposals from IDDS program providers in Circuit 6 (DOAH Case No. 03-3672BID). According to the Notice of Intended Contract Award, BAYS was the highest ranked bidder with 649.0 points. JSP was the second highest bidder with 648.8 points. The evidence establishes that BAYS included its SER in its Circuit 6 proposal. The Department neglected to examine BAYS submission for the SER, and BAYS did not receive credit for its SER. BAYS should have received an additional 90 points, bringing its total points to 739.0. The Department received two proposals from IDDS program providers in Circuit 20 (DOAH Case No. 03-3673BID). According to the Notice of Intended Contract Award, BAYS was the highest ranked bidder with 644.2 points. JSP was the second highest bidder with 620.6 points. The evidence establishes that BAYS included its SER in its Circuit 20 proposal. The Department neglected to examine BAYS submission for the SER, and BAYS did not receive credit for its SER. BAYS should have received an additional 90 points, bringing its total points to 734.2. MOTION TO DISMISS BAYS asserts that the Petitions for Hearing filed by JSP must be dismissed for failure to comply with Section 287.042(2)(c), Florida Statutes (2003), which requires that a protesting bidder post a bond or cash in an amount equal to one percent of the estimated contract amount by the time a formal written bid protest is filed. Item 8 of the RFP indicated that the bond or cash amount required was one percent of the total contract amount or $5,000, whichever was less. However, RFP Attachment "B," Section IX, indicates that it replaces RFP Item 8, and provides that the required bond or cash amount is one percent of the estimated contract amount. Pursuant to Section 120.57(3)(b), Florida Statutes (2003), JSP had 72 hours from the announcement of the bid award to file a Notice of Protest and an additional ten days to file a Formal Written Protest. The notice of intended bid award was posted on August 25, 2003. Accordingly, the written protest and appropriate deposits were due by September 8, 2003. The Department's Notice of Intended Award referenced the bond requirement and stated that failure to post the bond would constitute a waiver of proceedings. On September 8, 2003, JSP provided to the Department a cashier's check for $2,159.70 in relation to its protest of the award for Circuit 5. The contract amount was $647,910. One percent of the contract amount is $6,479.10. On September 8, 2003, JSP provided to the Department a cashier's check for $3,414.52 in relation to its protest of the award for Circuit 6. The contract amount was $1,025,857.50. One percent of the contract amount is $10,258.57. On September 8, 2003, JSP provided to the Department a cashier's check for $2,231.69 in relation to its protest of the award for Circuit 20. The contract amount was $669,507. One percent of the contract amount is $6,695.07. In response to JSP's insufficient cashier's checks, the Department, by letter of September 12, 2003, advised JSP of the underpayment and permitted JSP an additional ten days to provide additional funds sufficient to meet the requirements of the statute. JSP, apparently still relying on the superceded language in the RFP, forwarded only an amount sufficient to bring the deposited funds to $5,000 in each case. By letter dated September 25, 2003, the Department again advised JSP that the deposited funds were insufficient and provided yet another opportunity to JSP to deposit additional funds. On September 29, 2003, JSP forwarded additional funds to provide the appropriate deposits.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Juvenile Justice enter a Final Order as follows: Dismissing the Petition for Hearing filed by MAD DADS of Greater Ocala, Inc., in Case No. 03-3670BID based on the withdrawal of the Petition for Hearing. Dismissing the Petitions for Hearing filed by JSP for failure to comply with Section 287.042(2)(c), Florida Statutes (2003), and for the other reasons set forth herein. DONE AND ENTERED this 16th day of January, 2004, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 16th day of January, 2004. COPIES FURNISHED: James M. Barclay, Esquire Ruden, McClosky, Smith, Schuster & Russell, P.A. 215 South Monroe Street, Suite 815 Tallahassee, Florida 32301 Brian Berkowitz, Esquire Kimberly Sisko Ward, Esquire Department of Juvenile Justice Knight Building, Room 312V 2737 Centerview Drive Tallahassee, Florida 32399-3100 Larry K. Brown, Executive Director MAD DADS of Greater Ocala, Inc. 210 Northwest 12th Avenue Post Office Box 3704 Ocala, Florida 34478-3704 Andrea V. Nelson, Esquire The Nelson Law Firm, P.A. Post Office Box 6677 Tallahassee, Florida 32314 William G. Bankhead, Secretary Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-3100 Robert N. Sechen, General Counsel Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-3100
The Issue The issue is whether Respondent's notice of intent to award a contract for a Prescription Drug Monitoring System (PDMS) to Intervenor is, under section 120.57(3)(f), Florida Statutes, contrary to governing statutes, rules, policies, or solicitation specifications due to the nonresponsiveness of Intervenor's proposal or flaws in the scoring.
Findings Of Fact RFP On October 14, 2010, Respondent issued the RFP. RFP Section 3.1 states that the purpose of the RFP is to acquire and implement a customizable, commercial, off-the-shelf PDMS, in accordance with section 893.055, Florida Statutes. RFP Section 3.1 states that this statute provides for the establishment of a comprehensive, electronic database securely to collect and store data of the dispensing of Schedule II-IV controlled substances by prescribers and dispensers. Section 3.3 defines a commercial, off-the-shelf program as "computer software or hardware, technology, or computer products that are ready-made and available [to] the general public, which includes systems that are manufactured commercially, and then tailored for specific uses." RFP Section 3.2 states that the initial term of the PDMS contract is November 30, 2010, through September 30, 2011. The November 30 start date for this ten-month contract anticipated the posting of the intent to award on November 16, 2010 and no challenge to the proposed award. Section 3.2 states that the proposed PDMS should be delivered and accepted by Respondent within 90 days after execution of the contract. RFP Section 4.1 states: To participate in this solicitation the Proposer must provide documentation to answer all the qualification questions listed in Attachment I. Each mandatory question requires a "Yes" or "No" answer. Proposals that have any "No" answer to these mandatory requirements will be deemed non- responsive and will not be given further consideration. Proposers should use care and integrity in preparing their documentation supporting responses to the qualification questions, since these are mandatory requirements. The RFP contains a detailed statement of the scope of services,1 specific tasks,2 projected staffing profiles,3 qualifications,4 technical approach and implementation timelines,5 and other matters.6 Many of these provisions, such as the scope of services and specific tasks, are requirements imposed upon proposals. Among the requirements incorporated into the RFP is PUR 1001, which is the state of Florida "General Instructions to Respondents" to bid solicitation documents. Paragraph 4 of PUR 1001 states: "Failure to comply with terms and conditions, including those specifying information that must be submitted with a response, shall be grounds for rejecting a response." RFP Section 4.21 states that each proposer must submit a cost proposal, using the Cost Proposal Form that is Attachment XI. The cost proposal depicts the costs for the term of the contract plus three, one-year renewals. Of especial significance to this case, RFP Section 4.21 contains four bullet points and two flush paragraphs. Section states: The cost proposal must include the following items: The proposer must submit a cost proposal using the worksheet provided in Attachment XI, covering the entire period of the contract, including potential renewals. The cost proposal must show the cost for implementing the system, the cost for the maintenance of the system, the cost for hosting of the date through September 11, 2011, and the cost for providing operational support to the PDMS. The cost proposal shall include the costs necessary for the proposer to fully comply with the contract terms and conditions, RFP requirements including amendments, and the proposer's proposal. . . . Only costs incurred after the resulting contract's effective date specifically related to the implementation, maintenance, hosting, and operational support of contracted services should be included in the cost proposal. Proposers shall provide a firm fixed price for the tasks and deliverables outlined in this RFP. The fixed price shall take into consideration, including but not limited to, all staff hours, equipment, travel costs, overhead, and any profit or fees required for that deliverable. Immediately following these four bullet points, the first flush paragraph of RFP Section 4.21 provides: The Proposer must submit a narrative itemizing the costs included in the cost proposal. The narrative must specifically address the comprehensiveness of the proposed PDMS and any tasks or services that are excluded and are considered enhancements that may be implemented in the future. Proposed costs for prospective enhancements should be included. RFP Section 4.21 concludes with the second flush paragraph, which describes the scoring of the cost proposals. Section 4.21 provides that 50 points will be awarded to the lowest cost proposal. For higher cost proposals, the proposers will receive a score that results from multiplying 50 points times a fraction whose numerator is the lowest proposed cost and whose denominator is the proposed cost of the proposer under review. RFP Section 4.22 provides: Each qualified proposal will be evaluated and scored based on the criteria defined in Attachment II. Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring. . . . The proposer receiving the highest score will be selected for the award. RFP Section 5.8 provides: [Respondent] reserves the right to accept or reject any and all proposals, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if [Respondent] determines that doing so will serve the State's best interests. [Respondent] may reject any response not submitted in the manner specified by the solicitation documents. Attachment I is "Qualifying Criteria." This attachment states at the top: . . . All proposals will be screened for compliance. Failure to comply shall render a proposal non-responsive and ineligible for further evaluation. . . . The nine qualifying criteria in Attachment I are stated as questions, and the form implies that Respondent will evaluate each proposal by answering "yes" or "no" to each of the questions. The qualifying criteria are: Does the proposal include a fully executed Statement of Financial Capability, including all supporting documentation? Attachment I. Does the proposer certify that they [sic] will comply with the Harold Rogers Grant #2009PM-BX-4004? (See Required DOH Certifications Attachment III) Does the proposal provide documentation that the prospective proposer currently hosts a PDMS as defined in this RFP in at least one other state for at least one year? See Section 3.2 Does the proposal provide documentation that the proposed system is a customizable, commercial-off-the-shelf data base system? See Section 4.6.1 Does the proposal provide documentation that the proposed system is compatible with existing PDMS used nationally? See Section 4.6.1 Does the proposal provide documentation that the proposed system collects electronic data in the format established by the American Society for Automation in Pharmacy (ASAP) 2007, version 4.1, Rules Based Implementation Guide for Prescription Monitoring Programs or its successor? See Section 4.2 Will the proposed system be hosted offsite and operate independently of any other systems or networks of the Department or the State of Florida? Does the proposed system comply with Health Insurance Portability and Accountability (HIPPA) as it pertains to protected health information, electronic protected health information (EPHI), and all other relevant state and federal privacy and security laws/regulations? See Section 4.2 Does the submitted Statement of Financial Capability and supporting documentation demonstrate the Proposer has the financial capability to complete the tasks of this RFP? For the last qualifying criterion, Attachment I adds: The Statement of Financial Capability . . . will be evaluated by an evaluator designated by the Department as having the knowledge and experience to determine if the Proposer is financially capable of completing all the services and tasks contemplated by this RFP. Failure to receive "YES" shall render a proposal non-responsive and ineligible for further evaluation. Attachment II is "Evaluation Criteria." These are the technical scoring items of this RFP. Attachment II states: Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring. The proposer receiving the highest score will be selected for award. Point Value: Unless otherwise indicated, zero is lowest possible and the number indicated in this column is the highest possible. Attachment II lists 19 items to be scored. For each item, Attachment II prescribes what is to be scored, identifies the section of the RFP to which the item relates, and states the maximum available points. The RFP does not contain further guidance for the evaluators in terms of the meaning of the maximum score or a score less than the maximum. The 19 scoring items carry a maximum of 500 points. The scoring dispute in this case focuses largely on one evaluator's scores of Items 15-19, each of which has a maximum score of 20 points.7 The five, 20-point items in dispute are stated below, with the item number on the left. The RFP reference for each items is RFP Section 4.21. The five items are: How well does the cost proposal narrative explain the costs of the customization and the necessity of the costs for delivery of the proposed PDMS? How well does the cost proposal narrative explain the operational support costs and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the system maintenance costs and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the costs for hosting and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the need for and the cost of prospective enhancements? In contrast to the first 14 items, which require the evaluator to assess "the proposal," Items 15-19 direct the evaluator to assess "the cost proposal narrative." Four of the five challenged items require the proposer to explain the costs for a particular PDMS cost category and the necessity of these costs. The final item requires the proposer to explain the need for, and costs of, enhancements. Attachment XI, which is the Cost Proposal Form, identifies five categories of costs on a single page. The form requires the proposer to state a total cost for the commercial, off-the-shelf product, which is complete on delivery at the start of the contract, and a total cost for the customization required to conform the off-the-shelf product to the technical specifications in RFP Section 4.6. The RFP defines customization to include implementation, hosting, and maintenance through September 30, 2011. Attachment XI calls for a total cost for each of the remaining three categories of costs, which are maintenance support, operations support, and hosting for each of the three one-year anticipated renewal periods ending September 30, 2012, 2013, and 2014. The form requires the itemization of these three categories of costs into monthly amounts, which are merely the total annual costs of each category of cost divided by twelve. Lastly, the form requires the totaling of these five categories of costs, so that the proposer states at the bottom of the completed Attachment XI its "grand total cost proposal." Responses Cost Proposals Petitioner's Attachment XI shows no cost for the commercial, off-the-shelf program. The total cost of customization is $94,380. The annual costs for maintenance, operations, and hosting are, respectively, $40,440, $66,912, and $49,536, and these costs remain unchanged over the three anticipated renewal years. Petitioner's grand total cost proposal is therefore $565,044. Petitioner Response, p. 190. Intervenor's Attachment XI shows the total cost for the commercial, off-the-shelf program is $96,730, and the total cost of customization is $115,068. The annual costs for maintenance, operations, and hosting are, respectively, $50,665, $132,976, and $41,455, and these costs remain unchanged over the three anticipated renewal years. Intervenors grand total cost proposal is therefore $887,059. Intervenor Response, p. 126. Item 15: Customization Costs and Their Necessity Petitioner Response For its narrative of the cost of customization and the necessity of this cost, Petitioner's response explains that the first part of the customization cost is $15,015. Petitioner Response, p. 191. This is the labor cost of customization. Petitioner Response, p. 192. The narrative explains that most of the features described in RFP Section 4.6.1 are already in the commercial, off-the-shelf program. The labor in customizing the off-the-shelf program includes: Time spent in requirement analysis meetings to arrive at the Requirements Definition for customization of the software. We propose to have two sessions. To customize the software such that application security can be configured per user to assign security roles to authorized department staff, dispensers, prescribers, and any other users authorized by law. To make necessary changes and modifications to the application software such that all of the web pages are tuned to comply with the business rules of the State of Florida as agreed upon in the requirements sessions. To include a statement in the software indicating that Florida's PDMS was made available using funds from a federal grant . . .. Provide for a method that allows the department to suspend the 15 day requirement during emergency events (e.g., hurricane) Provide a method that allows registered dispensers to request an extension to the reporting requirement (e.g., per individual or per pharmacy) in accordance with proposed Rule 64K-1, F.A.C. Create a method to coordinate and implement the initial mass registration of dispensers and prescribers. Petitioner Response, pp. 192-93. To customize its off-the-shelf program, Petitioner stated that it must perform requirements analysis; perform analysis, study, and design; perform design documentation and review; make changes to the database; make changes to the user interface; make changes to the business logic; conduct quality assurance and quality control; prepare user documentation; and perform project management. In documenting $15,010 in total labor for customization, Petitioner's response itemizes the labor costs by hourly rate and number of hours for the following positions: systems analyst, database administrator, senior programmer analyst, programmer analyst, quality analyst, technical writer, and project manager. Petitioner Response, p. 193. The second part of Petitioner's customization cost is $14,000. This is for all costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. Petitioner breaks down these costs into skilled labor and travel expenses. The skilled labor covers individual tasks--e.g., hardware and server setup, data collection help desk setup, and implementation of customized PDMS--by position type, hourly rate, and hours. The travel expenses show airfares, food and per diem for particular tasks, such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days. The total is $28,000, but Petitioner discounts this item by half for what it anticipates will be a long-term relationship. Petitioner Response, p. 191. The third part of the customization cost is $65,370. This is for the hosting, maintenance, and operations support from the "go-live" date of April 8, 2011,8 through September 30, 2011, or five months. The monthly cost for each of these components is, respectively, $3370, $5576, and $4128. Petitioner Response, p. 192. 2. Intervenor Response For its narrative of the cost of customization and the necessity of this cost, Intervenor's response states: all associated start-up costs for development, configuration, and integration are part of the total proposed implementation price. [Intervenor] will fully host the RxSentry solution for [Respondent] utilizing our state-of-the-art co-location data center, AtlantaNAP. Hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract. Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements. A one-time licensing fee for RxSentry is included in the implementation pricing. Ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry are included in the total pricing for the initial contract period. [Intervenor] project management, clinical, and technical support staff are provided to ensure a seamless transition from implementation to daily operations. Personnel costs include a primary contact as the PDMP Account Manager Ms. Sheila McCollough, access to clinical expertise from our Training Manager, Mr. Steve Espy, RPh, technical writing expertise for customized user guides and training materials, quality and contractual compliance oversight, and a highly skilled technical and customer service staff to maintain the RxSentry solution and provide customer service and support to both [Respondent] staff and the prescriber/dispenser population. [Intervenor] performs regular monitoring and maintenance for all our clients, including routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections to ensure that RxSentry continues to meet our clients' needs and standards. Expense categories used in pricing the project include all line item costs shown in the following table [no costs are shown]: [Technical Lead] Information Systems Manager . . . Customer Support Manager [Training Coordinator] . . . Technical Support Manager . . . Technical Help Desk Staff Technical Writing Staff Operating Expenses: Travel Training Office Supplies Printing fees Mailings Administrative fees . . . System Expenses: Hardware leasing Software purchase (one time) RxPert License Fee (one time) AtlantaNAP Data Center Fees Communication Fees Software Maintenance Hardware Maintenance Intervenor Response, pp. 123-24. Under the heading, "Customization," Intervenor's response states that Intervenor will work with Respondent during the implementation requirement sessions to document all specifications for collecting and reporting controlled substance data. This includes: dentifying required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens per [Respondent] request. The next section of Intervenor's response is "Assumptions." This section states: No inflationary increase has been added to ongoing operational pricing. Standard technical hours and support for data submitters and requestors will be provided Mon-Fri, EST, from 9:00 AM - 5:00 PM; excluding state and national holidays. Training materials for dispensers and practitioners will be hosted online along with computer-based training as required by [Respondent]. Notification letter mailing costs for uploaders is based upon 8,322 active pharmacies and approximately 7,312 active dispensing healthcare practitioners. All tasks and activities will be performed at the [Intervenor's] Corporate Office in Auburn, AL. Proposed pricing and annual maintenance for PMIX Hub is not included in the cost proposal but is provided in the following narrative section, "System Enhancements." Intervenor Response, p. 125. Item 16: Operational Support Costs and Their Necessity Petitioner Response For its narrative of the cost of operational support and the necessity of this cost, Petitioner's response states that the operational support costs are $5576 per month for each of the three one-year renewal terms. These costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner Response, p. 195. Petitioner breaks down the operational support costs by position, hourly rate, and hours per month. The positions are data collection help desk analyst and data collection senior help desk analyst. Other expenses include infrastructure and office space and telephone. Petitioner's response describes the positions in terms of work experience. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 17: System Maintenance Costs and Their Necessity Petitioner Response For its narrative of the cost of system maintenance and the necessity of this cost, Petitioner's response notes that the system maintenance costs are $3,370 per month for each of the three one-year renewal terms. These services are to respond to all emails from Respondent. For system-down calls, Petitioner will respond within four hours; for severely impaired-impact calls, Petitioner will respond within 24 hours. For the remaining calls, Petitioner will respond within 72 hours. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 18: Hosting Costs and Their Necessity Petitioner Response For its narrative of the cost of hosting and the necessity of this cost, Petitioner's response notes that the hosting costs are $4128 per month for each of the three one-year renewal terms. Hosting is at a secure facility with redundant power and redundant data carriers. Petitioner breaks down the hosting costs by the single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 19: Need for, and Cost of, Prospective Enhancements Petitioner Response For its narrative of the need for and cost of prospective enhancements, Petitioner's response notes that its software has an available PMIX interface software module. Because PMIX "is beyond the scope of the current proposed project," Petitioner's response proposes the module as a prospective future enhancement. Petitioner breaks down the cost of the PMIX enhancement into a one-time cost of $10,600, which consists of $7800 for customization and implementation, and $2800, which consists of travel costs for training. Monthly costs would increase $1000, which consists of $750 for maintenance and $250 for operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours, and the travel costs for two persons for one day in Tallahassee. Additionally, Petitioner's response offers a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work. 2. Intervenor Response The final section of the cost worksheets in Intervenor's response is "System Enhancements." This section states that Intervenor "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor's response warns: "Pricing for PMIX Hub is not included in the proposed contract pricing but is provided below as a prospective enhancement to the RxSentry solution." The following table lists "PMIX Implementation" at a cost of $40,035 and "PMIX Hub Annual Maintenance" at a cost of $15,000. Assessment and Scoring of Proposals Respondent received only the two proposals of Petitioner and Intervenor. After the submittal deadline had passed, Respondent's Chief of Bureau of Operations, Lola Pouncey, examined each of the two proposals for compliance with the first eight of nine mandatories contained in Attachment I. Respondent hired CPA Richard Long to examine each proposal for compliance with the ninth mandatory, which requires an assessment of demonstrated financial capability. Ms. Pouncey and Mr. Long determined that both proposals met all of the mandatories in Attachment I. These determinations are not at issue. Likewise, one of Respondent's representatives calculated the cost scores for both proposals--50 points for Petitioner and 31.85 points for Intervenor--and these determinations are not at issue. The five evaluators had been trained by Respondent's Administrative Lead Janice Brown. By memorandum dated December 7, 2010, she advised them to "evaluate each proposal individually" and not to meet with other evaluators to discuss a proposal. Providing a little more guidance for scoring than is found in the RFP, the memorandum adds: The maximum possible score for each category should only be awarded if the vendor addressed each element we requested for that section thoroughly. If a vendor does not address elements in that section, their scores should be reduced accordingly. The five evaluators scored all of the Evaluation Criteria of Attachment II. The technical scores for Petitioner averaged 409.2 points--ranging from Ms. Poston's score of 266 to another evaluator's near-perfect score of 496. The technical scores for Intervenor averaged 448.6 points--ranging from scores of 360 to a perfect score of 500. Ms. Poston's total score for Intervenor is 430. Her score for Intervenor is its second lowest. Two of the evaluators scored Petitioner's proposal higher by 21 and 18 points. Two of the evaluators scored Intervenor's proposal higher by 40 and 32 points. Ignoring Ms. Poston's scores, which favored Intervenor by a lusty 164 points, Intervenor would have emerged from the technical scoring with an 8.25-point advantage. Because Petitioner earned a 18.15-point advantage from its superior cost proposal, Ms. Poston's scores, in this sense, dictated the outcome of the procurement. However, if Ms. Poston had assigned Petitioner's technical proposal the average of the scores of the other four evaluators or even the score of Petitioner's second-lowest evaluator, Petitioner would have prevailed on total points. Combining the technical scores with the cost scores, Respondent determined that Intervenor earned 480.45 points, and Petitioner earned 459.20 points. After confirming that Intervenor's references were acceptable, on December 21, 2010, Respondent posted its intent to award the contract to Intervenor. Except for the above-described examination of the proposals for compliance with the nine mandatories of Attachment I, at no time while Respondent processed the proposals did anyone determine whether each proposal was responsive to all of the other requirements of the RFP. On December 23, Petitioner timely filed a notice of intent to protest the intended award to Intervenor. On or before January 3, 2011, Petitioner timely filed the Formal Written Protest with a proper and sufficient bond. Respondent transmitted the file to the Division of Administrative Hearings on January 19, 2011. Determinations Concerning Responsiveness Respondent misreads the RFP in arguing that Attachment I is an exhaustive list of the requirements of the RFP to which a proposal must respond in order to be responsive. Attachment I lists nine requirements that, if unmet, will render a proposal unresponsive.9 But nothing in Attachment I implies that its nine requirements are an exhaustive list of the requirements of the RFP, or an exhaustive list of the RFP requirements that a proposal must satisfy to be responsive. Respondent's strained interpretation of its RFP creates an unnecessary conflict between Attachment I and paragraph 4 of PUR 1001, which warns proposers that Respondent may reject a proposal for a failure to comply with any RFP condition. On the basis of paragraph 4 of PUR 1001, as well as the authority cited in the Conclusions of Law, requirements contained in other RFP provisions, including Section 4.21, if unmet, may result in a determination that the proposal is nonresponsive, regardless of whether a proposal meets all of the mandatories set forth in Attachment I. As quoted above, Section 4.21 requires a "narrative itemizing the costs included in the cost proposal." (Emphasis supplied.) Intervenor's proposal does not itemize the costs of customization, operations, maintenance, and hosting. Intervenor's proposal minimally itemizes the costs of enhancement--$40,035 for PMIX Implementation and $15,000 for PMIX annual maintenance. The unitemized costs in Intervenor's cost proposal are: 1) $96,730 for the off-the-shelf program; 2) $115,068 for customization; 3) $50,655 for maintenance; 4) $132,976 for operations; and 5) $41,455 for hosting. The costs included in Petitioner's cost proposal are: 1) nothing for the off-the-shelf program; 2) $94,380 for customization; 3) $40,440 for maintenance; 4) $66,912 for operations; and 5) $49,536 for hosting. Petitioner's cost narratives itemize these costs in detail. The $94,380 for customization comprises $15,010 for customization labor, $14,000 for implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations through September 30, 2011, which is defined by the RFP as part of customization. Petitioner further itemizes the $15,015 of labor, $14,000 of implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations, which is merely the monthly costs for these items, as shown in Petitioner's Attachment XI, during the three annual renewal periods. Additionally, Petitioner's proposal itemizes the $3,370 per month for maintenance by showing hourly rates and number of hours by four positions; the $4,128 per month for hosting by showing the hourly rate and number of hours for one position plus various other monthly costs; and the $5,576 per month for operations by showing the hourly rate and number of hours for two positions and various other monthly costs. Lastly, for the PMIX enhancement, Petitioner itemizes the one- time customization costs of $7,800, which themselves are broken down; travel costs for training of $2,800, which themselves are broken down; and additional monthly costs of $1,000 for maintenance and operations. However, Intervenor's failure to itemize the costs in the cost proposal gave it no competitive advantage. Despite some unclear comments about a "cost-plus" proposal, Intervenor's proposal contains an unambiguous, enforceable statement of costs, as does Petitioner's. Each proposal locks in its proposer in terms of what it is agreeing to provide and at what cost. Nor did the requirement of itemization likely chill the bidding, so as to discourage potential vendors from competing for the PDMS contract. Attachment XI requires each proposer to identify the costs of customization and ongoing operations, maintenance, and hosting. To arrive at these broader category of costs, a diligent vendor probably would have had to assemble the underlying subcosts, so it would be easy to add them to the proposal. The effort in constructing the itemization appears minimal. The monthly costs of maintenance, operation, and hosting are relatively modest, so they do not have many subcosts, and the process of extending these costs for the term of the contract, plus renewals, is a simple matter of multiplication. In its proposed recommended order, Petitioner argues that Intervenor gained competitive advantage as follows: [Petitioner] recognized that this additional level of detail would enable [Respondent] to understand the level of commitment of resources of each respondent, and to hold the ultimate contract awardee accountable for the provision of the promised level of performance as reflected in the itemized costs. If a competitor fails to provide the detailed, itemized costs required by Section 4.21, it will enjoy a competitive advantage relative to bidders that do comply with that requirement. By failing to commit to any particular itemized cost, a bidder such as [Intervenor] may provide less training, and enjoy less expense, than another provider that itemized its costs. Failing to comply with Section 4.21 allows a bidder the flexibility not only to reduce its costs, but to also reduce the level and quality of services provided, without violating a commitment made to [Respondent.] Petitioner's proposed recommended order, p. 9. These arguments are that cost itemization: 1) enables Respondent to understand the level of commitment of each proposer; 2) enables Respondent to hold the selected proposer accountable for the promised level of performance; and 3) prevents a nonitemizing proposer from providing less services by reducing the level and quality of services provided. The second argument misses the purpose of itemization. Itemization breaks down the overall costs shown in Attachment XI. The accountability function that Petitioner mistakenly assigns to the itemization requirement is actually served by numerous other provisions of the RFP, such as the undertaking of to satisfy the scope of services, including specified data fields, data, and training10; the undertaking to provide the detailed tasks and services11; the specification of proposed staffing levels, which are enforceable conditions12; the detailed description of the design, capacity, and other features of host facility13; the detailed description of the proposer's approach to providing the technical services that demonstrates a thorough understanding of the project and includes a detailed description of the PDMS and how general maintenance and support services will be performed14; and the focus of the other 14 technical scoring items on various features of the PDMS.15 The first and third arguments are also unpersuasive. Respondent rejected the first argument in its preparation of the RFP. Omitting the Section 4.21 requirement of itemization from the five technical scoring items related to cost, Respondent implicitly decided that it did not need the additional insight into a proposer's level of commitment. This is not a complicated procurement. Each proposer has implemented at least one monitoring system of this type in another state. For the same reason that itemization may have been omitted from the scoring items, so it is not especially important in understanding the level of commitment of resources of each proposer. Also, the worries sometimes attendant to the association of underbidding with the failure to include all of the solicited goods and services do not apply here, at least based on the relative cost proposals of both proposers. The third argument implies that the cost narratives will be elevated into the contract itself. But nothing in the RFP compels a proposer to pay a help-desk employee or data programmer the rate of pay specified in any cost itemization. Perhaps, in a deflationary economy, the rate of pay of these employees may decline, as may the office rent and travel costs. The selected vendor may pocket these savings, just as it must absorb the additional expenses, if, in an inflationary economy, these items increase in cost during the term of the initial contract or three annual renewal terms. The floor on services is not provided by a few cost itemizations, but by enforceable contract provisions and the selected vendor's incentive to keep the contract for the three one-year renewal periods, and perhaps beyond. Determinations Concerning Scoring General Petitioner objects to Ms. Poston's scoring--in general, all of it, but, in particular, her scoring of Items 15-19. In its proposed recommended order, Petitioner seems to make two arguments about Ms. Poston's scoring of its proposal. First, Ms. Poston favored Intervenor's proposal by such a wide margin as to call into question all of her scores. Second, Ms. Poston offered startlingly odd reasons, such as noncompliant formatting, for the relatively low scores of Petitioner's proposal. However, as in the Formal Written Protest and the hearing, Petitioner analyzes Ms. Poston's scoring of Items 15-19 only. Preliminarily, Petitioner's approach to the scoring issue raises two problems. First, absent analysis of Ms. Poston's scoring of the other items, Petitioner fails to prove flawed scoring of these items under the Clearly Erroneous Standard, which is explained in the Conclusions of Law. For this reason, this recommended order will not otherwise consider Ms. Poston's scoring of these items. Second, Petitioner's challenge to Ms. Poston's scoring of Items 15-19 suffers from a misreading of what these items require to be evaluated. Specifically, Petitioner misreads Items 15-19 to require the evaluators to evaluate how well the cost narratives itemize costs, among other things. One example of this misreading occurs at the last sentence of paragraph 18 of its proposed recommended order, which states: "In fact, the Section 4.21 requirement that each proposer submit an itemization of its costs . . . received twice as much weight as the cost proposal itself." Itemization of costs actually receives no weight in the five scoring items that pertain to the cost narrative. None of these five scoring items uses the word, "itemize" or "itemization." RFP Section 4.21 requires the itemization of various costs, and this requirement, as discussed in the preceding section, serves as a basis on which to determine the responsiveness of proposals. But Respondent did not include the itemization requirement of Section 4.21 in the scoring items for the cost narrative. In preparing the RFP, Respondent included some, but not all, of the requirements of Section 4.21 in these five scoring items, which are drawn from the first bullet and first flush paragraph of this section. The first flush paragraph requires a narrative that: 1) itemizes the costs in Attachment XI; 2) specifically addresses the comprehensiveness of the proposed PDMS; and 3) specifically addresses any excluded tasks or services that may be enhancements. The first flush paragraph encourages--through the use of the word, "should"--the inclusion within this narrative of a fourth element: proposed costs for prospective enhancements. The first four scoring items focus exclusively on the four cost categories--customization, operation, maintenance, and hosting--identified in the first bullet of Section 4.21. The five scoring items authorize scoring of the narratives only as to how well they explain the costs and their necessity. When compared to RFP Section 4.21, the five scoring items omit the requirements of an itemization of costs, a specific description of the comprehensiveness of the proposed PDMS, and a specific description of excluded tasks that may be enhancements, although this last requirement is covered to some degree by the fifth scoring item. At minimum, then, the narrative's itemization of costs and specific description of the comprehensiveness of the proposed PDMS receive no direct weight in scoring, except, as noted below, for the indirect value of each of these elements when scoring the cost narrative for its explanations of costs and their necessity. Further distinguishing RFP Section 4.21 from the five scoring items covering the cost narrative, the scoring items add two elements not found in RFP Section 4.21: 1) an explanation of the costs and 2) an explanation of the necessity of the costs. These elements are closely related to the provisions of Section 4.21, but are not explicitly required in this section. Petitioner's misreading of Items 15-19 undermines its scoring argument. This misreading attaches great significance to Petitioner's compliance with the itemization requirement of RFP Section 4.21 and Intervenor's noncompliance with this requirement--facts of some importance to the responsiveness issue discussed in the preceding section, but of no direct importance to the scoring issue discussed in this section. Also unhelpful to Petitioner's scoring argument is the fact that Ms. Poston's scores of Items 15-19 do not stand out among the evaluators. She gave each proposal 60 points, although she was the sole evaluator to score Intervenor's proposal higher than Petitioner's proposal on Item 15. One other evaluator scored the two proposals a tie on these five items, although his score was 100 points each. Another evaluator scored the two proposals a near-tie, with Petitioner's proposal earning 100 points and Intervenor's proposal earning 98 points. The remaining two evaluators scored these five items substantially in Petitioner's favor, with advantages of 39 and 20 points. The proper analysis of Ms. Poston's scores is based on the actual language of Items 15-19. The impact of the inclusion or omission of the itemized costs from these cost narratives is more nuanced than Petitioner argues in its scoring argument. A cost narrative may explain the cost of, say, customization and the necessity of this cost without itemizing or identifying the subcosts of customization, although a cost narrative that starts by itemizing these subcosts may facilitate its explanation of the overall cost and its necessity. Understandably, Petitioner stresses Ms. Poston's testimony at the hearing that she reduced Petitioner's scores in general, at least in part, for the failure of its proposal to conform to various stylistic requirements in the RFP. These nonconformities include excessively small font size, inadequate margins, other unidentified formatting errors, numerous typographical errors, poor organization in which information was just "dropped" into various places, and inconsistency in style where sometimes the proposal uses bullet points and sometimes it uses narrative. Ms. Poston's testimony in the preceding paragraph is problematic for two reasons. First, Ms. Poston's testimony attempts to justify, in part, her scoring on grounds that are not authorized by the provisions of Attachment II. Second, this testimony is inapt. As to Petitioner's cost narrative, at least, the Administrative Law Judge did not measure font size, but did not notice any problems with font size, legibility, margins, formatting, typographical errors, or inconsistencies in style. And the organization of Petitioner's cost narrative permitted the Administrative Law Judge to find the relevant information much more readily than he could find it in Intervenor's cost narrative, which, as seen above, combined most of its responses to Items 15-18 in one section. Ms. Poston's typewritten scoring notes offer more support than her testimony, although her notes for Item 15 incorrectly report that Petitioner's response explained only the labor costs of customization. But her notes for Item 17 suggest that she captured more detail from Intervenor's proposal's explanation of system maintenance costs. However, nothing in the record suggests in any way that Ms. Poston was guilty of bias, fraud, or collusion in scoring, nor does Petitioner suggest as much. When asked, Ms. Poston freely explained her scores on items, using her typewritten notes when she could. She testified candidly and matter-of-factly about her scoring. Although not at all apologetic, Ms. Poston never appeared unduly invested in her scores or Respondent's proposed award. While testifying, she never acted adversarially, as an ally of Intervenor or opponent of Petitioner. Nor are Ms. Poston's scores of Items 15-19 arbitrary or capricious. Notwithstanding her comments about formatting, proofreading errors, and organization, Ms. Poston's scoring of these items is neither illogical nor irrational. Her typewritten notes reveal a clear understanding of the RFP and Petitioner's proposal, suggest an organized pattern to her thoughtful approach to scoring the items in question, and dispel any randomness in the scoring. The sole remaining question is whether Ms. Poston's scores of Items 15-19 are within the range of the reasonable. Consideration of the reasonableness of Ms. Poston's scoring must start with the acknowledgement that the phrasing of Items 15-19 invites a wider range of scores than would questions imposing on evaluators a task requiring more precision. These open-ended scoring items ask only "how well" a response "explains" certain costs and their necessity or, in the case of Item 19, "how well" a response explains the necessity and cost of prospective enhancements. Scoring of Item 15: Customization For Item 15, Petitioner first explains the labor in terms of the communications with Respondent's staff to obtain particularized information about what Respondent needs, programming to customize the off-the-shelf program to ensure that it delivers these communicated needs, and specific methods to allow registered dispensers to request extensions for reporting events and the mass registrations of dispensers and prescribers required on the initiation of the PDMS. Detailing this explanation of the labor involved in the customization of the off-the-shelf program, Petitioner's response outlines the tasks, which largely comprise the expected activities of analysis, design, design review, quality assurance and control, user documentation, and project management, but also identify changes to user interface and business logic. Petitioner's response further explains the costs of customization by detailing, by numbers of hours, the work to be done by systems analysts, database administrators, senior programmer analysts, programmer analysts, quality analysts, technical writers, and project managers. Second, Petitioner explains the costs of customization by discussing the costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. This discussion shows individual tasks, such as hardware and server setup, data collection help desk setup, and implementation of customized PDMS, but distinguishes itself by identifying the hours of work by position type. The travel expenses show airfares, food and per diem for particular tasks, such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days. Petitioner's explanation of costs is particularly relevant for this topic because it further explains that it has halved these projected costs. Third, Petitioner explains the costs of customization with respect to the operational support, hosting, and maintenance costs from the "go-live" date through the end of the original term of the contract. Petitioner's explanation of these costs is ample. For Item 15, Intervenor explains that it starts with an off-the-shelf program that necessitates the payment of a one- time license fee. From there, Intervenor's proposal states that it will perform "all associated start-up costs for development, configuration, and integration [that] are part of the total proposed implementation price." "Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements." Intervenor's proposal identifies some "line item costs" by position type, but this table omits hours or total costs and pertains largely, if not entirely, to operational support, hosting, and maintenance. Intervenor's proposal addresses customization costs explicitly in a relatively brief section devoted to this component. Intervenor explains that it will identify required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens, as requested by Respondent. Ms. Poston assigned 15 points to Intervenor's conclusory explanation of customization costs and their necessity and 10 points to Petitioner's detailed explanation of these costs and their necessity. A score that assigns more points to Intervenor than to Petitioner for Item 15 is outside the range of the reasonable by five points. Scoring of Item 16: Operational Support For Item 16, Petitioner explains that operational support costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner identifies two positions--two help desk analysts--and breaks down the operational support costs by hourly rate and hours per month. Petitioner's response describes these positions in terms of work experience. For Item 16, Intervenor explains ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry, all of which are included in the total pricing for the initial contract period. Intervenor explains that project management, clinical, and technical support staff will assist Respondent in the transition from implementation to daily operations. Intervenor identifies available personnel by name and position--although not the expected extent of availability or use. Ms. Poston assigned each proposal 10 points for Item Petitioner's explanation of hours per month is of some utility, but the range of personnel--two help desk analysts-- limits the value of this response when compared, say, to the wider range of labor tasks involved in customization. Although more explanation might have been expected of Intervenor on this item, given the large difference between the two proposals for operations costs, the two explanations of operations costs and their necessity are roughly comparable, and Ms. Poston's scores for Item 16 are within the range of the reasonable. Scoring of Item 17: System Maintenance For Item 17, Petitioner explains that these costs involve email responses to service calls from Respondent, and Petitioner provides call-back deadlines based on the severity of reported problems. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide. For Item 17, Intervenor explains that maintenance is included in hosting and it will undertake all software and hardware maintenance. Additionally, Intervenor explains that it will perform routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections necessary for the PDMS. Ms. Poston gave Intervenor 15 points and Petitioner 10 points for Item 17. She may legitimately have valued Intervenor's emphasis on system solutions over Petitioner's emphasis on customer service, so Ms. Poston's scores for Item 17 are within the range of the reasonable. Scoring of Item 18: Hosting For Item 18, Petitioner explains that the hosting is at a secure facility with redundant power and redundant data carriers. Petitioner breaks down the hosting costs by a single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server. For Item 18, Intervenor explains that the hosting is at its "state-of-the-art" data center. Intervenor explains that hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract. Ms. Poston gave both proposals a 10 for Item 18. She understandably found no difference between a secure facility with redundant power and redundant data carriers and a state-of- the-art data center, so Ms. Poston's scores for Item 18 are within the range of the reasonable. Scoring of Item 19: Prospective Enhancements For Item 19, both parties identified the PMIX hub as a prospective enhancement. For this item, the RFP requires an explanation of the need for, and costs of, any enhancement. Neither party addressed the need for the enhancement in any detail, but perhaps that is because the PMIX hub is in the RFP Scope of Services, at RFP Section 4.2, although it is not in the Tasks and Services, at RFP Section 4.6.1. Petitioner explains that its software has an available PMIX interface software module. Petitioner further explains this cost by breaking the PMIX enhancement into one-time costs of customization and implementation and travel costs for training and monthly costs for maintenance and operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours. Petitioner further explains this cost by describing a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work. Intervenor warns that it "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor identifies the implementation and maintenance costs of a PMIX hub. Ms. Poston assigned Petitioner 20 points and Intervenor 10 points for Item 19. Contrasted to Petitioner's detailed explanation of enhancement costs, Intervenor's proposal acknowledges a present inability to provide this service, which certainly limits its ability to explain the costs that will eventually go with this service, once it is developed. Ms. Poston's scores for Item 19 are within the range of the reasonable. Summary of Scoring Findings Another shortcoming in Petitioner's scoring challenge is its failure to explain why the flaws in Ms. Poston's scoring of Items 15-19 should result in the rejection of all of her scores. To outpoint Intervenor, Petitioner needs over 100 more points from Ms. Poston. Items 15-19 are worth a total of 100 points, and Petitioner already received 60 points from her on these items, so Petitioner's scoring challenge, despite its focus on Items 15-19, necessarily seeks to overturn more than Ms. Poston's scores on these five items in Petitioner's proposal. But Petitioner does not seek more points from Ms. Poston. The gist of Petitioner's complaint with the scoring starts with the fact that it won or lost, by narrow margins, with the other four evaluators, but Ms. Poston's overall scoring margin--430 for Intervenor and 266 for Petitioner--determined the outcome of the scoring. Petitioner argues that Ms. Poston's scoring of Items 15-19 was illogical, irrational, and so outside the range of the reasonable that its effect cascades through all of her scores and, to preserve the integrity of the subject procurement, her scores must be thrown out in their entirety, resulting in a recommendation that Respondent rebid the PDMS contract or award it to Petitioner. Whatever the exact form of this argument, after close analysis of the five scoring items that Petitioner challenged, the Administrative Law Judge has found nothing arbitrary or capricious in Ms. Poston's scoring and only one item that falls outside the range of the reasonable--by only five points. As discussed in more detail in the Conclusions of Law, this finding provides no platform for Petitioner's larger attack on the reliability of Ms. Poston's overall scoring and its role in Respondent's overall evaluation of the two proposals.
Recommendation It is RECOMMENDED that the Department of Health enter a final order dismissing the Formal Written Protest. DONE AND ENTERED this 8th day of March, 2011, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 8th day of March, 2011.
