Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: In March of 1993, the Department issued an Advertisement for Bids (hereinafter referred to as the "Advertisement") through which it solicited the submission of bids on a construction project (Department Project No. NV-30A, which is hereinafter referred to as the "Project") involving the expansion of the water treatment facility at the Martin Correctional Institution. The Advertisement, along with the other bid documents issued in conjunction with the Advertisement, including, but not limited to, the Instructions to Bidders (hereinafter referred to as the "Instructions") and the Proposal Form, were compiled in a two-volume Specifications Manual (hereinafter referred to as the "Manual") that was made available for public inspection. Section B of the Manual's first volume contained the Instructions. Section B-2 2.A.(11) thereof provided that "Section 01420 as contained in the Technical Specifications must be submitted and the qualifications listed therein must be satisfactory to the Owner and the Engineer. " "Section 01420 as contained in the Technical Specifications" was a "Bidder's Qualification Form, Reverse Osmosis Treatment System Component" (hereinafter referred to as the "R.O. Form"), on which the bidder was to provide "R.O. [Reverse Osmosis] System Supplier" information. The R.O. Form repeated the directive that the bidder was to "[r]eturn [the] [c]ompleted [R.O.] Form [w]ith [its] proposal." Section B-14 of the Instructions addressed the subject of "preparation and submission of bids" and provided, in pertinent part, as follows: Each Bidder shall copy the proposal form on his own letterhead, indicate his bid prices thereon in proper spaces, for the Base Bid and for alternates on which he bids. . . . Proposals containing . . . . items not called for or irregularities of any kind may be rejected by the Owner. Section B-16 of the Instructions addressed the subject of "disqualification of bidders" and provided, in pertinent part, as follows: More than one bid from an individual, firm, partnership, corporation or association under the same or different names will not be considered. Reasonable grounds for believing that a Bidder is interested in more than one proposal for the same work will cause the rejection of all proposals in which such Bidders are believed to be interested. The subject of "contract award" was addressed in Section B-21 of the Instructions, which provided, in pertinent part, as follows: . . . The recommendation for contract award will be for the bidder qualified in accordance with Section B-2 and submitting the lowest bid provided his bid is responsible and it is in the best interest of the Owner to accept it. The qualified bidder submitting the lowest bid will be that bidder who has submitted the lowest price for the base bid, or the base bid plus additive alternates or less deductive alternates, taken in the numerical order listed in the bid documents in an amount to be determined by the Owner. The Order of the alternates may be accepted by the Owner in any sequence so long as such acceptance does not alter the designation of the low bidder. The Owner reserves the right to waive any informality in bids received when such waiver is in the interest of the Owner. Section C of Volume I of the Manual contained the Proposal Form that all bidders were required to use to indicate their bid prices. The following statement appeared at the bottom of the second page of the Proposal Form: There is enclosed: A certified check, cashier's check, treasurer's check, bank draft or Bid Bond in the amount of not less than five (5) percent of the Base Bid payable to the Department of Corrections, as a guarantee. An executed Trench Excavation Safety Certification, Section F-13. An executed Experience Questionnaire and Contractor's Financial Statement and Public Entity Criminal Conviction Form, Section L. An executed Bidder's Qualifications Form (Reverse Osmosis), Technical Specification Section 01420. While one completed R.O. Form had to accompany each bid, there was no provision in any of the bid documents issued by the Department requiring a bidder to submit only one such completed form and no more. Petitioner, McMahan and R.J. Sullivan Corporation (hereinafter referred to as "Sullivan") were among the contractors that timely submitted bids in response to the Advertisement. McMahan's and Sullivan's bids were each accompanied by more than one completed R.O. Form. Petitioner, on the other hand, provided the Department with only one completed R.O. Form along with its bid. Of the bids submitted, McMahan's was the lowest, Sullivan's was the second lowest and Petitioner's was the third lowest. McMahan's base bid price was $857,000.00. Petitioner's was $905,000.00. McMahan's total price, including the nine additive alternates accepted by the Department, was $948,000.00. Petitioner's was $1,032,600.00, $84,600.00 more than McMahan's. By letter dated July 1, 1993, the Department advised McMahan of its intent "to award the contract [for Department Project No. NV-30A] to [McMahan] as the lowest responsive bidder." On July 9, 1993, Petitioner filed a formal written protest of the preliminary determination to award the contract to McMahan alleging that McMahan was not a responsive bidder inasmuch as McMahan "submitted Reverse Osmosis ("R.O.") Qualifications Forms for more tha[n] one vendor." According to Petitioner, "[t]his [was] not in conformance with the Bid Documents and gave [McMahan] an unfair advantage."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Corrections enter a final order finding Petitioner's bid protest to be without merit and awarding McMahan, as the lowest responsive and qualified bidder, the contract for Department Project No. NV-30A. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 2nd day of September, 1993. STUART M. LERNER 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 2nd day of September, 1993.
The Issue The issues presented here concern the propriety of the Respondent's action in its decision to reject all bids submitted for Project 72906-9109, Duval County, thereby excluding the bid of the Petitioner which was the apparent low bid in this process.
Findings Of Fact Alfair Development Company, Inc. (Alfair), is a company owned by Maggie Alford. This company is certified as a "Disadvantaged Business Enterprise" under the terms of Chapter 337, Florida Statutes. This recognition is for benefit of contractual work done for the State of Florida, Department of Transportation. Alfair, together with two other companies who are "Disadvantaged Business Enterprises," responded to a bid opportunity from the Department of Transportation identified as Project No. 72906-9109, Duval County. The other two bidders were ILA Construction Company, Inc., of Daytona Beach, Florida, and Highway Valets, Inc., of Norwalk, Ohio. This project was for the construction of concrete sidewalks and curb cut ramps, installation and repair. The contract was for competition solely among contractors who had been certified as "Disadvantaged Business Enterprises" by the Office of Minority Programs within the Department of Transportation. As such, it is referred to as a "set-aside" job. In a "set-aside" project, bids are accepted from these "Disadvantaged Business Enterprises" in furtherance of the requirements of Section 339.0805, Florida Statutes, which mandates that not less than 10% of the amounts expended from the State Transportation Trust Fund shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals. When the bids were opened related to Project No. 72906-9109, Duval County, Alfair was the apparent winner having offered the lowest bid among the three competitors. However, there was a problem with the bid submission by Alfair and the others, in that Alfair's bid was 70% above the pre-bid estimate of the Department of Transportation concerning the expected price that the agency would have to pay for this project. The other two bidders were even higher, but within the range of the 70% above the pre-bid estimate. The pre-bid estimate had been derived by resort to a manual at the Department of Transportation referred to as the Contract Maintenance Administration and Inspection Manual. Within that manual the pre-bid estimate is found, as it was here, by examining historical workload and/or work needs survey information and development of that information and retention of that information through a computation book. That book includes appropriate forms, square yards, per linear feet, etc., for each item of activity to be paid for in the contract. The form to be used in this process shows the project number, the county, the section number of the roadway to be worked, the method of calculating estimated quantities and specific project location, if known. In this arrangement prior contracts of a similar sort to that contemplated in this instance are reviewed in trying to anticipate the contract costs on this occasion. That approach was followed in making the pre-bid estimate in this project. When the comparison was made of those figures it was a comparison to the immediately preceding years' contract for similar work against the work called for in the subject project at hand. In addition, the Department of Transportation contacted concrete companies to make sure that the concrete cost had remained the same. It also verified that minimum wage requirements had not changed from the prior year to the year in question. At hearing, the only rebuttal which the Petitioner offered to this approach of pre-bid estimate was the attempt to present certain documents which were denied admission as evidence in that the representative of the Petitioner, James D. Alford, III, husband to Maggie Alford, was not shown to be sufficiently apprised of contracting matters to explain those exhibits and show how they would tend to rebut the method of pre-bid estimate by the Department of Transportation. The exhibits standing alone did not lend themselves to the interpretation that they were competent rebuttal. When the degree of difference between the pre-bid estimate and the quotes by the bidders was examined by employees within the Department of Transportation, the belief was expressed that the bids were so out of keeping with the pre-bid estimate as to put to question the advisability of contracting with the apparent low bidder, Alfair. The Department felt that it needed to make certain that its pre-bid estimate was not flawed in some fashion and a determination was made to undergo reevaluation of the initial perception held about the bids offered before making a decision. Nonetheless, the impression was created in the mind of Barry D. Bunn, District Contract Administrator for District II, Department of Transportation, that he was expected in his employment to notice that the bids had been rejected. As a consequence on October 25, 1988, the bidders were advised that all bids were rejected for the project. On that same date, an advertisement was placed in the local newspaper that the project was being resolicited for bid purposes and through the advertisement the "set-aside" was deleted. This meant that for purposes of the re-advertisement of October 25, 1988, a general class of bidders could respond, to include "Disadvantaged Business Enterprises." Having been made mindful of this error, Bunn contacted the newspaper where the advertisement had been placed and told them to take that advertisement out of circulation. This occurred on October 26,1988. On that same date further correspondence was directed to the bidders, to include Alfair, in which it was stated that the bids had not been rejected, identifying that the bids were undergoing a reevaluation process. That reevaluation process did not change the initial impression by the Department of Transportation concerning the quotations received as being too far in excess of the Department's pre-bid estimate. Consequently, on November 1, 1988, a further notice of bid rejection was dispatched. That notice did not describe the reason for the rejection, but upon inquiry Mr. Alford was informed that the basis of the rejection was that the bid quotations were too costly when compared to the pre-bid estimate. Under inquiry the Department of Transportation did not identify the details of that explanation in the sense of saying what items they resorted to for drawing that conclusion and the Alfair company did not seek to gain a further explanation of their reasoning through prehearing discovery. The Department of Transportation had refused to give any further information to the Petitioner about this in the course of the telephone conversation between Mr. Alford and an employee in the Lake City, Florida Office of the Department of Transportation based upon the Department's belief that Section 337.168, Florida Statutes exempts it from having to state the pre-bid cost estimate until a contract has been entered into concerning the project. Nonetheless, it was revealed in the course of the hearing what the difference between the bid quotation of Alfair and the pre-bid estimate had been, as well as identifying the methods for deriving that difference. When Alfair received the notice of rejection of its bid it filed a timely notice of protest followed by a timely petition in protest. In addition, the Petitioner posted the appropriate amount of bond under Section 337.11(3)(b), Florida Statutes, to allow it to pursue this case. The pleadings by the Petitioner are not particularly informative but the sum and substance off the allegations as demonstrated in those pleadings and as set forth by remarks of the representative at hearing, identify the belief held by the Petitioner that the Department of Transportation in rejecting the Alfair bid has been unjust, illegal, dishonest and arbitrary. Moreover, Alfair through its representative found fault with the refusal to reveal to him over the phone the methods of arriving at the pre-bid estimate and the general belief that the Department allows the participation in the bidding process and in the award of contract related to "Disadvantaged Business Enterprises" of persons who are not registered or licensed as contractors through the offices of the Department of professional Regulation within the State of Florida. None of these claims were shown to be meritorious through the proofs submitted at hearing. The Department of Transportation seeks the award of costs under the provisions of Section 337.11(3)(b), Florida statutes. The evidence in this hearing reveals that the salaries of the two witnesses who testified for the Department of Transportation, namely Russell O. Davis and Barry D. Bunn, were $125.80 and $130.00, respectively, per day. These employees were involved in the hearing process for one day. In addition to salary costs the State had to pay these employees $62.50 each for per diem allowance in that the witnesses were from out of town. The cost of attendance at hearing by the court reporter is $67.50.
Recommendation In consideration of the facts found and the conclusions of law reached, it is RECOMMENDED that Final Order be entered which rejects all bids and allows the re-advertisement of Project No. 72906-9109, Duval County. DONE and ENTERED this 28th day of March, 1989, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS 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 28th day of March, 1989. APPENDIX Petitioner has submitted a Memorandum in which an indication is given concerning the Project 72906-9109, Duval County, as to the scope of that project-and an explanation in the mind of the representative of Petitioner as to the reason for "set-aside" projects. An accusation is made that the Department of Transportation has tried to avoid bringing black businesses into the mainstream of Florida economy. This is not borne out by the proof. An accusation is made which was not proven at hearing and is not relevant to the resolution of this dispute concerning the contributions to the Florida tax base made by the black community and businesses. This contention together with the allegation that the Department of Transportation is using tactics to deny a small percent.age of tax dollars to recirculate into the black community for economic development and by such arrangement promotes institutional slavery was not proven. Reference to rejection of all bids on October 18, 1988 is at odds with the facts of this case. Further, there is no indication in the facts of this case that for the first time in history a black-owned company was going to cross economic a threshold within the district in terms of gaining business and that the agency rejected the bids to avoid this. Further reference to the procedural history of this case and the fact that corrections had to be made to the process of notification of rejection of all bids is not sufficient reason to overturn the decision to reject all bids. Reference within the Memorandum/Argument to the need to post a bond as being done because it would cause an economic hardship on a black-owned company is rejected as a grounds of argument in that the requirement of bond is a matter of law imposed upon all companies black or otherwise. The fact that office holders within the State Legislature were called upon by the Petitioner to ascertain the status of this project and that the Department of Transportation went through the process of correcting "the initial rejection of bids in favor of a reevaluation phase, has been explained in the fact finding elated to the sequence of events and the procedures involved in rejecting all bids. Reference to the failure to describe the reasons for rejection beyond the fact that the bids were too high has been described in the- fact finding. No evidence was shown that the refusal to indicate the reason in detail or to refer to the source of the data was in the interest of somehow favoring white prime contractors over black contractors. There is some other indication within this Memorandum concerning the meeting of goals for "Disadvantaged Business Enterprises" and the concern that the Department of Transportation is using minority individuals instead of minority businesses to meet those goals. There was no indication that the Department of Transportation acted inappropriately in its attempts to gain a contract in this case, or that it generally has participated in a process which the Petitioner refers to dualism in preferring minority persons who are not licensed by the Department of Professional Regulation to engage in the construction business over those who are. Moreover, Section 489.103(1), Florida Statutes, states that the license provisions of Florida law, do not pertain to contractors who are working on bridges, roads, streets and highways and services incidental to that work. Comments about training and apprenticeship found within the Memorandum were not proven in the course of the hearing and are not sufficiently relevant to the inquiry at hand; that they need be considered in resolving this dispute. The suggestion that the Department of Transportation intends to put the contract back out for award in some arrangement other than a "set-aside" is correct in the sense of the intentions expressed in the ad of October 25, 1988; however, that advertisement was not carried forward and the oral indication was made by an official of the Department of Transportation at hearing, that the contract would remain "set- aside" if the Department were allowed to readvertise at some point beyond the outcome of this hearing. Finally, the suggestion that if the second bidder in this case had been a non-black company or individual, the Department would have awarded the project to that entity was not borne out in the proof. Respondent's facts are subordinate to the facts found. COPIES FURNISHED: James D. Alford, III 1348 Davis Street Jacksonville, Florida 32209 Marilyn McFadden, Esquire Department of Transportation 605 Suwannee Street, M.S.-58 Tallahassee, Florida 32399-0458 Kaye N. Henderson, Secretary Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Thomas H. Bateman, III General Counsel Department of Transportation 562 Suwannee Street Tallahassee, Florida 32399-0450
Findings Of Fact The Department of Health and Rehabilitative Services currently leases approximately 22,000 square feet of space from Nelson P. Davis. The space is contained in two separate buildings, both located at 417 Racetrack Road, Ft. Walton Beach, Florida. The Department and Davis were involved in a legal dispute involving the currently leased premises, which concluded in 1986 with the entry of judgment in Davis' favor. While some antagonism remains between the parties related to the legal action instituted by Davis, Davis has been an acceptable landlord in all other respects. The current lease expires February 1, 1989. Davis has been aware, since late February or early March of 1988, that the Department would need space in excess of the currently occupied 22,000 square feet, but was not aware of the actual additional space requirements until the issuance of the invitation to bid. In general, the Department's space requirements have increased annually. In response to the anticipated need for additional space, Davis initiated plans for design of a third Racetrack Road building that could meet the additional need, but did not construct the facility. In response to the space requirements of previous years, Davis has constructed additional space. The Department has occupied the additional space in such proportions as to avoid the competitive bidding process, however, the current need for additional space exceeds the maximum which can be leased without competitive bidding. The Department on May 11, 1988, issued an invitation to Bid for approximately 26,165 square feet of space in Ft. Walton Beach, Florida. (HO #1) In response to the invitation, Davis submitted a bid proposal. The Davis proposal, the sole proposal received by the Department, was disqualified by the Department as non-responsive. On June 23, 1988, the sole bid was opened by Joseph Pastucha, HRS District One Facilities Manager, who initially reviewed the Davis bid. Mr. Pastucha identified items of concern related to the responsiveness of the bid and then provided the information to his supervisor, who in turn provided the information to Mr. James Peters. The Department did not contact Davis for further information or to provide the opportunity to correct any defects. James Peters, HRS's District One Manager for Administrative Services has expressed on at least one occasion a desire to avoid entering into business arrangements with Nelson P. Davis. The bases for Peters' opinion is the earlier litigation between the parties. Peters was on the committee which was to have evaluated bids submitted in response to the invitation. However, Peters has stated that his personal opinion would not influence his participation in the bid solicitation process. The evidence did not indicate that Peters based his opinion regarding the Davis bid submission solely on the earlier litigation or that any other person involved in the agency's action permitted personal opinions to affect the decisional process. Davis' bid proposal included the two buildings constituting approximately 22,000 square feet located at 417 Racetrack Road which the Department currently occupies, plus a third building of approximately 4,000 square feet. The proposed square footage and lease cost were acceptable. The third building was to be either a planned, unconstructed building located at the 417 Racetrack Road location or an existing building located "7/l0ths of a mile southeast of the present HRS offices," (the off-site building). However, a memorandum attached to Davis' submission stated that he did not intend to use the off-site building for HRS purposes, (HO #2). Further, Davis had previously indicated in conversation with the HRS manager of the 417 Racetrack Road offices that he planned to utilize the off-site space otherwise. On page one of the bid submittal form Davis indicated the address of the proposed location as 417 Racetrack Road. By letter dated July 5, 1988, the Department notified Davis that his bid offering was deemed non-responsive and that the Department expected to readvertise for space in Ft. Walton Beach. The letter made no mention of any opportunity to protest the determination. The statement, "[f]ailure 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," which is required to be included in the notice of agency decision by Section 120.53(5)(a), Florida Statutes, was omitted by the Department. (HO #3) On or about July 7, 1988, Davis contacted the Department of General Services to express his dismay regarding the disqualification of his submittal. A meeting, held on or about July 19, 1988, between Davis and Department representatives, did not alter the Department's position. On or about July 25, 1988, the written notice of protest and request for hearing was filed. The Department forwarded the request to the Division of Administrative Hearings. The letter dated July 5, 1988, advising Davis that his bid was deemed non-responsive enumerated five reasons for the Department's decision. The reasons stated were: No photograph of the proposed facility was submitted as requested; No floor plan of the facility was submitted as requested; A substituted site was submitted Proposed space was not an existing building and was not measurable; Three buildings in bid proposal constitute three locations and are unacceptable. The letter was signed by Chuck Bates, DHRS Deputy District Administrator, District One. The letter was drafted by James Peters. (HO #3) Mr. Bates relied upon Peters and Pastucha to provide information sufficient to justify the disqualification of the bid, and was satisfied that the action was justified prior to signing the letter. Examination of the bid submittal package reveals that Davis failed to acknowledge by initial the requirements of page seven, but that he did, on that page, appropriately respond to questions related to proposed parking spaces being bid. The Department did not base the disqualification of the bid on the failure to acknowledge the page and did not include the failure to initial the page in the stated reasons for deeming the bid non-responsive. Paragraph 9(a) of the bid submittal form requires the submission of a clear photograph of the exterior front of the building. (HO #2) Davis submitted no photographs. Paragraph 9(b) of the bid submittal form requires the submission of a scaled floor plan showing present configurations with measurements. (HO #2) Davis submitted floor plans for the proposed-to-be-constructed building and for the off-site building, but failed to submit floor plans for the two buildings which the Department currently occupies. The bid also failed to include calculations of net rentable square footage related to the omitted floor plans. The letter to Davis stated that an additional reason for disqualification of his bid from further consideration was the submission of a substituted site, (HO #3). The "substituted site" refers to Davis' inclusion of the off-site building not identified in the bid submission other than by the statement that the building was located seven-tenths of a mile southeast of the present HRS office location. No map, street address, legal description, or other identifying information was submitted. The proposal submitted by Davis included plans to construct a third building at 417 Racetrack Road, which was rejected as not measurable. The invitation to bid states that to be considered, the space must be existing, dry and physically measurable, at the time of bid submitted. (HO #1) The proposed third building clearly fails to meet this requirement. While the Department may permit the correction of minor deficiencies, the deficiencies were adjudged by the Department to be more than minor. The proposal's inclusion of nonexisting space (Racetrack Road building #3) or in the alternative a building, the location of which can not be determined from the bid information and which the bidder apparently intends not to provide, is non- responsive to the specifications of the invitation. As to the fifth enumerated reason for disqualification of the bid (three buildings/three locations) the Department and Petitioner presented extensive testimony related to paragraph 3(b) of page 15 of the bid submittal form. Page 15 of the bid submittal form is titled "Evaluation Criteria" and contains a list of weighted factors which were to be used in the evaluation of bids. (HO #2) Paragraph 3(b) states, as one factor for consideration in evaluation, whether the bid provides for the required aggregate square footage in a single building, and continues, "[p]roposals will be considered, but fewer points given, which offer the aggregate square footage in not more than two locations provided the facilities are immediately adjacent to or within yards of each other." (HO #2) The space left for the specification of maximum yardage was erroneously left uncompleted by the Department and the Department did not learn of the error until the bid was submitted. The Department's disqualification of the bid on this basis relies on the Department's assertion that the three buildings included in the Davis proposal constitute three locations and that a responsive bid may contain not more than two locations. The Department's position is that "location" and "building" are synonymous and that paragraph 3(b) of the evaluation criteria prohibits consideration of a bid submission including more than two buildings. The Department's position is rejected as arbitrary. The bid package does not state that proposals including more than two buildings will be disqualified. The sole reference to the number of buildings in a responsive bid submission is as stated and contained on the page of "Evaluation Criteria", wherein it is identified with a weighting factor of five percent of total possible points.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order dismissing Case No. 88-3868BID. DONE and ENTERED this 28th day of September, 1988, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 28th day of September, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-3868BID The following constitute rulings on the proposed findings of fact submitted by the parties. Petitioner: Accepted in part. The use of the word "required in the fourth sentence is rejected. The referenced section relates to evaluation factors, not specific requirements. Accepted. Accepted in part. The third building was proposed as either the off-site building or the planned, non-existent space. Accepted. Accepted. Accepted. Rejected as restatement of testimony. Other testimony indicated that Petitioner planned to use the off-site location for non-HRS purposes. Rejected, immaterial. Accepted. Accepted. Accepted as modified. Accepted in part. The use of the word "technical" is rejected. Accepted. Accepted as modified. Accepted as modified. Accepted. Accepted. Accepted. Accepted as modified. Accepted as modified. Accepted as modified. The change between the two invitations to bid was to clarify the obvious confusion related to the use of terms "location" and "building" and was made not to the bid specifications but to evaluation criteria. Rejected as restatement of testimony. Rejected, conclusion of law. Accepted so far as relevant. While the Davis bid was disqualified as non-responsive, the right to reject any and all bids encompasses the disqualification of a bid as non-responsive to the specific requirements of an invitation to bid. Respondent: Rejected, conclusion of law. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected. Floor plan of the off-site building was submitted showing that the building is essentially a hollow, box-like structure. Accepted. Accepted. Accepted. Rejected, irrelevant. While the usual distance may be 100 yards, the actual bid specifications do not state such. Further the sole reference to the distance between "locations" was contained in evaluation criteria. At no time prior to the June 23, 1988 bid opening did the Department attempt to identify the preferred distance between locations. Accepted. Accepted. Accepted. COPIES FURNISHED: Bruce A. McDonald, Esquire Post Office Box 887, Suite 105 151 Mary Esther Cutoff Mary Esther, Florida 32569 Rodney M. Johnson, Esquire Acting District One Legal Counsel Post Office Box 8420 Pensacola, Florida 32505-8420 Joseph J. Pastucha 3300 North Pace Boulevard Room 109 Town & Country Plaza Pensacola, Florida 32505 Jan Kline 417 Racetrack Road Ft. Walton Beach, Florida 32548 James V. Peters Department of General Services 160 Governmental Center Fourth Floor, Room 412 Pensacola, Florida 32501 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Tom Batchelor Staff Director House HRS Committee The Capitol Tallahassee, Florida 32399-1300
The Issue The issues in these consolidated cases are: (1) whether the decision by Respondent, Department of Transportation, to reject all bids for the contract at issue was illegal, arbitrary, dishonest, or fraudulent; and (2) if so, whether Respondent's actions in cancelling the notice of intent to award the contract at issue to Cyriacks Environmental Consulting Services, Inc., ("CECOS") and requiring the submittal of new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious.2/
Findings Of Fact The Parties Respondent is the state agency that issued the RFP to procure the Contract for Respondent's District IV. CECOS is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB was granted party status to DOAH Case No. 16-0769 by Order dated February 29, 2016, and by Order dated March 9, 2016, was determined to have standing in that case as a party whose substantial interests were affected by Respondent's decision to reject all proposals. Overview of the Procurement Process for the Contract Respondent issued the RFP on or about October 1, 2015. The RFP sought to obtain support services related to environmental impacts review for projects in Respondent's District IV work program; wetland mitigation design; construction, monitoring, and maintenance; permitting of mitigation sites; exotic vegetation control and removal in specified locations; relocation of threatened, endangered, or rare flora and fauna; permit compliance monitoring; and other services specified in the RFP. The RFP stated Respondent's intent to award the Contract to the responsive and responsible proposing vendor6/ whose proposal is determined to be most advantageous to Respondent. The responses to the RFP were scored on two components: a technical proposal, worth a total of 60 points, that addressed the proposing vendor's experience, qualifications, and capabilities to provide high-quality desired services; and a price proposal, worth a total of 40 points, that addressed the proposed price without evaluation of the separate cost components and proposed profit of the proposing vendor, compared with that proposed by other vendors. The price proposal evaluation was based on the following formula: (Low Price/Proposer's Price) X Price Points = Proposer's Awarded Points. The Special Conditions section of the Advertisement portion of the RFP, paragraph 3, stated in pertinent part: In accordance with section 287.057(23), Florida Statutes, respondents to this solicitation or persons acting on their behalf may not contact, between the release of the solicitation and the end of the 72- hour period following the agency posting the notice of intended award, . . . any employee or officer of the executive or legislative branch concerning any aspect of this solicitation, except in writing to the procurement officer or as provided in the solicitation documents. Violation of this provision may be grounds for rejecting a response. The period between the release of the solicitation and the 72-hour period after posting of the intended award is commonly referred to as the "cone of silence." The Special Conditions section of the Advertisement portion of the RFP, paragraph 19, informed vendors that Respondent reserved the right to reject any or all proposals it received. Exhibit B to the RFP, addressing compensation, limited compensation for all authorizations for work performed under the Contract to a total of $5,000,000. Exhibit B stated that the schedule of rates listed in the Price Proposal Form C (i.e., the rates submitted for the sections comprising Exhibit C to the RFP) would be used for establishing compensation. On October 7, 2015, Respondent issued Addendum 1 to the advertised RFP. Addendum 1 revised Exhibit A to the RFP, the Scope of Services; and also revised Exhibit C to the RFP, the Bid Sheet, to provide it in Excel format. As revised by Addendum 1, Exhibit C consists of an Excel spreadsheet comprised of six sections, each of which was to be used by the responding vendors to propose their rates for the specified services being procured in each section of the Bid Sheet. Section 6 of the Excel spreadsheet, titled "Trees, Schrubs [sic], and Ground Cover, consists of eight columns and 258 rows, each row constituting a plant item on which a price proposal was to be submitted. The columns are titled, from left to right: No.; Scientific Name; Common Name; Unit; Estimated of [sic] number of Unites [sic]; Rate; Extension (Unit X Rate); and Multiplier 2.5 (Price X 2.5). Each row of the spreadsheet in Section 6 identified, as a fixed requirement for this portion of the proposal, the specified type of plant, unit (i.e., plant size), and estimated number of units (i.e., number of plants). For each row of the Section 6 spreadsheet, only the cells under the "Rate" column could be manipulated. Vendors were to insert in the "Rate" cell, for each row, the proposed rate for each plant item. The cells under all other columns for each row were locked, and the RFP stated that any alteration of the locked cells would disqualify the vendor and render its proposal non-responsive. The instructions to Exhibit C, Section 67/ stated: Trees, Schrubs [sic], and Ground Cover Price of plants shall include project management, field supervision, invoicing, installation, mobilization of traffic, water throughout the warranty period, fertilizer and [sic] six (6) month and demobilization, minor maintenance guarantee. Installation of plant material shall be per the Scope of Services. All planting costs shall include the cost to restore area to pre-existing conditions (i.e., dirt, sod, etc.). On October 20, 2015, Respondent issued Addendum 2, and on October 29, 2015, Respondent issued Addendum 3. Both addenda changed Respondent's schedule for reading the technical proposal scores, opening the sealed price proposals, and posting the intended awards. Addenda 1, 2, and 3 were not challenged. However, a key dispute in these consolidated proceedings is whether the Addendum 1 Bid Sheet in Section 6 and the instructions for completing that Bid Sheet were ambiguous, or whether Respondent reasonably believed them to be ambiguous. The vendors were to submit their responses to the RFP, consisting of their technical proposals and price proposals, by October 16, 2015. CECOS, DB, and four other vendors timely submitted responses to the RFP. On November 2, 2015, the scores for the technical proposals submitted by the vendors were presented to the Selection Committee ("SC") at a noticed meeting. DB received the highest number of points on the technical proposal portion of the RFP. The SC met again on November 3, 2015. At that time, Respondent's Procurement Officer, Jessica Rubio, read the total awarded points for each vendor's price proposal, as well as each vendor's total combined points——i.e., total points for technical proposal and price proposal. CECOS received the highest number of points for the price proposal portion of the RFP, and also received the highest total combined points. Respondent recommended, and the SC concurred, that Respondent should award the Contract to CECOS. At 10:00 a.m. on November 3, 2015, Respondent posted the Proposal Tabulation, constituting its notice of intent that CECOS would be awarded the Contract.8/ CECOS submitted a price proposal of $4,237,603.70. DB submitted a price proposal of $9,083,042.50. The other four vendors' price proposals ranged between $4,540,512.90 and $5,237,598.55. The "cone of silence" commenced upon Respondent's posting of the Proposal Tabulation, and ended 72 hours later, on November 6, 2015, at 10:00 a.m. As discussed in greater detail below, after the Proposal Tabulation was posted, Respondent discovered an apparent ambiguity in Exhibit C, Section 6, regarding the instructions to that section and the inclusion of the "2.5 Multiplier" column on the Bid Sheet. After an internal investigation, Respondent decided to cancel its intent to award the Contract to CECOS. On November 5, 2015, Respondent posted a notice that it was cancelling the intent to award the Contract to CECOS. On November 5, 2015, DB filed a Notice of Protest, stating its intent to challenge the award of the Contract to CECOS. Thereafter, on November 9, 2015, DB contacted Respondent by electronic mail ("email") to withdraw its Notice of Protest.9/ Due to the apparent ambiguity in Exhibit C, Section 6, on November 9, 2015, Respondent issued Addendum 4 to the RFP. Addendum 4 required the responding vendors to submit new price proposals for all sections (i.e., sections 1 through 6) of Exhibit C to the RFP. Addendum 4 also established a new timeline for a mandatory pre-bid conference to be held on November 12, 2016; set a sealed price proposal due date of November 19, 2016; and identified new dates for opening the price proposals and posting the Notice of Intended Award of the Contract. On November 12, 2015, Respondent conducted a mandatory pre-bid conference to address Addendum 4. The participating vendors expressed confusion and posed numerous questions regarding the submittal of new price proposals and their technical proposals. Immediately following the pre-bid conference, Respondent issued Addendum 5, which consisted of a revised Exhibit A, Scope of Services; revised Exhibit C, Bid Sheet in Excel format for all six sections; and responses to the questions posed at the pre-bid conference.10/ The Addendum 5 Bid Sheet comprising Exhibit C, Section 6, was substantially amended from the version that was published in Addendum 1. Specifically, the column previously titled "Rate" was changed to "Rate Per Unit"; the "Extension (Unit X Rate)" and "Multiplier 2.5" columns were deleted; and a new column titled "Proposed Cost (Rate per Unit X Est. No. of Units)" was added. Additionally, the instructions for Section 6 were substantially amended to read: "'Rate Per Unit' must include all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, travel, invoicing, labor, maintenance of traffic, mobilization and demobilization, staking and guying, maintenance of planting site throughout the 180[-]day plant warranty." These amendments were intended to clarify that the proposed rate for each plant unit was to include all overhead costs associated with performance of the Contract with respect to that particular unit. On November 13, 2015, CECOS filed a Notice of Protest to Respondent's issuance of Addendum 4, requiring the vendors to submit new price proposals. Thereafter, on November 23, 2015, CECOS filed the First Petition challenging Respondent's decision, announced in Addendum 4, to require the responding vendors to submit new proposals for the price proposal portion of the RFP, and its decision to cancel the notice of intent to award the Contract to CECOS.11/ Once CECOS filed its Notice of Protest on November 13, 2015, Respondent ceased all procurement activity directed toward awarding the Contract. On December 17, 2015, Respondent posted notice that it was rejecting all proposals and that the Contract would be re- advertised through issuance of a new RFP. On December 22, 2015, CECOS filed a Notice of Protest, and on January 4, 2016, filed its Second Petition challenging Respondent's decision to reject all proposals and re-advertise the Contract. Bases for Respondent's Actions Shortly after Respondent posted the Proposal Tabulation noticing its intent to award the Contract to CECOS, Christine Perretta, owner and president of DB, sent an email to Respondent, then called Rubio to inquire about Respondent's decision to award the Contract to CECOS. The evidence shows that these contacts occurred sometime on or around November 3, 2016.12/ In her telephone discussion with Rubio, Perretta inquired about how to file a notice of protest13/ and also asked whether Respondent had reviewed the vendors' price proposals for correctness or accuracy, or had simply chosen the lowest price proposal. In the course of the discussion, Perretta informed Rubio that DB had submitted a "loaded" rate for each plant unit ——meaning that DB's rate proposed for each plant item in the "Rate" column on the Section 6 Bid Sheet consisted not only of the cost of the plant item, but also the cost for all associated overhead services listed in the instructions to Section 6 and in the RFP Advertisement, paragraph 18(v), plus compensation.14/ Rubio could not clearly recall whether, in the course of their discussion, Perretta had inquired about the use of the 2.5 multiplier, and there is conflicting evidence as to whether Perretta related her view that CECOS may not be able to perform the Contract based on the price proposal it had submitted. In any event, as a result of Rubio's discussion with Perretta, Rubio determined that she needed to review Exhibit C, Section 6. In the course of her investigation, Rubio called Wendy Cyriaks, owner and president of CECOS.15/ Cyriaks confirmed that CECOS had submitted an "unloaded" rate for each plant item—— meaning that it had included only the cost of each plant item in the "Rate" column on the Section 6 Bid Sheet, and had not included, in the proposed rate for each plant item, the cost of the associated overhead services listed in the instructions to Section 6 or RFP Advertisement, paragraph 18(v), or compensation. Cyriaks told Rubio that CECOS expected that its overhead costs and compensation for each item would be covered through use of the 2.5 multiplier. Also in the course of her investigation, Rubio asked Bogardus whether he had intended the 2.5 multiplier to be used to cover all costs, including vendor compensation, associated with obtaining, installing, and maintaining the plant items listed in Section 6. Bogardus initially confirmed that his intent in including the 2.5 multiplier on the Section 6 Bid Sheet was to cover all of the overhead costs and compensation. However, the persuasive evidence establishes that Bogardus subsequently agreed with Rubio that the 2.5 multiplier should not have been included in Section 6. Pursuant to her discussions with Perretta and Cyriaks, Rubio realized that the wide discrepancy between DB's and CECOS' price proposals was due to their differing interpretations of the instructions in Section 6 regarding plant item rates and the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet. Rubio testified, persuasively, that the inclusion of the "2.5 Multiplier" column rendered Exhibit C, Section 6, of the RFP ambiguous. To that point, the RFP does not contain any instructions or discussion on the use of the 2.5 multiplier. Therefore, to the extent the multiplier was intended to be used by the vendors to build overhead costs and compensation into their price proposals, the RFP fails to explain that extremely important intended use——leaving the significance and use of the multiplier open to speculation and subject to assumption by the vendors in preparing their price proposals. Rubio reasonably viewed DB's and CECOS' divergent interpretations of the instructions and the inconsistent use of the 2.5 multiplier as further indication that Section 6 was ambiguous. She explained that in order for Respondent to ensure that it is procuring the most advantageous proposal for the State, it is vitally important that the RFP be clear so that responding vendors clearly understand the type of information the RFP is requesting, and where and how to provide that information in their price proposals. Rubio persuasively testified that in her view, the instructions in Section 6 had, in fact, called for a loaded rate, but that CECOS had erroneously assumed, based on the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet, that overhead and compensation for each plant item would be covered through use of the 2.5 multiplier, and that as a consequence, CECOS incorrectly proposed unloaded rates for the plant items. In Rubio's view, CECOS' error was due to the ambiguity created by the unexplained and unsupported inclusion of the 2.5 multiplier in Section 6. Rubio testified that CECOS had been awarded the Contract because it had submitted the lowest price proposal, but that its proposal was based on an unloaded rate for the plant items, contrary to the instructions for Section 6. In Rubio's view, CECOS' price proposal was unresponsive, and CECOS should not have been awarded the Contract. Rubio also testified, credibly and persuasively, that the use of the 2.5 multiplier in Section 6 for compensation purposes rendered the RFP arbitrary. Respondent's District IV historically has not used a 2.5 multiplier for compensation purposes for commodities contracts, and no data or analyses exist to support such use of a 2.5 multiplier.16/ This rendered the RFP both arbitrary and unverifiable with respect to whether it was structured to obtain the most advantageous proposal for the State. To this point, Rubio credibly explained that Respondent's existing environmental mitigation services contract with Stantec was procured through the "Invitation to Negotiate" ("ITN") process. In that procurement, Respondent negotiated to obtain the best value for the State. The ITN bid sheet contained a 2.5 multiplier that was used only for weighting purposes to evaluate and determine which firms would be "short- listed" for purposes of being invited to negotiate with Respondent for award of the contract. Importantly——and in contrast to the RFP at issue in this case——the multiplier in the ITN was not used to determine the final prices, including compensation, to install trees, shrubs, and ground cover under that contract. Rubio also testified, credibly, that the Bid Sheet was structurally flawed because it did not allow the vendor to clearly indicate the "unit price" inclusive of all overhead costs, and that this defect would result in Respondent being unable to issue letters of authorization to pay invoices for the cost of installing the plant items or compensating for work performed. For these reasons, Respondent determined that it needed to cancel the intent to award the Contract to CECOS. As noted above, Respondent posted the cancellation of the intent to award the Contract on November 5, 2015. At a meeting of the SC conducted on November 9, 2015, Respondent's procurement staff explained that the intent to award the Contract had been cancelled due to ambiguity in the instructions and the Bid Sheet for Exhibit C, Section 6. Ultimately, the SC concurred with Respondent's cancellation of the intent to award the Contract to CECOS and agreed that the vendors should be required to submit new price proposals. Thereafter, on November 9, 2015, Respondent issued Addendum 4, announcing its decision to solicit new price proposals from the responding vendors. Respondent conducted a pre-bid meeting with the vendors on November 12, 2015, and immediately thereafter, issued Addendum 5, consisting of a revised Scope of Services and a substantially revised Bid Sheet for all six sections of Exhibit C. As previously discussed, the Section 6 Bid Sheet issued in Addendum 5 was revised to, among other things, delete the "2.5 Multiplier" column and the column previously titled "Rate" was changed to "Rate Per Unit." Also as discussed above, the instructions to Section 6 were revised to clarify that the "Rate Per Unit" provided for each plant unit must contain all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, invoicing, labor, maintenance of traffic, and other costs specified in the instructions——i.e, constitute a loaded rate. All of these changes were made in an effort to clarify, for the benefit of all vendors, the specific information that Respondent needed to be provided in the price proposals. Rubio testified, credibly, that in requiring the vendors to submit new price proposals pursuant to revised Exhibit C, Respondent did not give, or intend to give, any vendor a competitive advantage over any of the other vendors, nor did Respondent place, or intend to place, CECOS at a competitive disadvantage by requiring the vendors to submit new price proposals pursuant to revised Exhibit C. As noted above, once CECOS filed its Notice of Protest, Respondent ceased all procurement activity directed toward awarding the Contract. Consequently, the vendors did not submit new price proposals and the scheduled meetings at which the new price proposals would be opened and the intended awardee announced were cancelled. On December 17, 2015, Rubio briefed the SC regarding the problems with the RFP and described her concerns about proceeding with the procurement. She explained that Respondent's procurement staff was of the view that the instructions in Section 6, as previously published in Addendum 1, were ambiguous because they did not clearly provide direction on how to complete the Bid Sheet for that section. Additionally, the Section 6 Bid Sheet, as structured in Addendum 1, did not allow the vendors to provide a plant unit rate that was inclusive of all overhead costs. To this point, she noted that unless the vendors provided a loaded rate——i.e., one that included all overhead costs——Respondent would not be able to issue work orders for any plant items in Section 6.17/ She explained that these flaws constituted the bases for Respondent's decision, announced on November 9, 2015, to require the submittal of new price proposals. Rubio further explained that in Respondent's rush to issue a revised Scope of Services as part of Addendum 5, mistakes had been made18/ and Respondent's Environmental Office needed more time to carefully review the Scope of Services and Bid Sheet, to ensure the RFP was correctly drafted and structured so that the Contract could be accurately solicited and procured. Additionally, the vendors——including Mark Clark of CECOS——had expressed confusion regarding the revised Bid Sheet and submitting new price proposals, and some vendors had inquired about submitting new technical proposals. Further, under the revised procurement schedule issued as part of Addendum 4 on November 9, 2015, the vendors had a very compressed timeframe in which to prepare and submit their new price proposals, heightening the potential for mistakes to be made. Because of these substantial problems and concerns with the RFP, Rubio recommended that Addendum 5 be rescinded, that all vendor proposals (both technical and price) be rejected, and that the entire procurement process be re-started. The SC concurred with her recommendation. As noted above, on December 17, 2015, Respondent rejected all proposals and announced that the Contract would be re-solicited in the future through issuance of another RFP. CECOS' Position CECOS takes the position that the RFP and the Section 6 Bid Sheet published in Addendum 1 were not ambiguous. Specifically, CECOS contends that the use of the 2.5 multiplier in Section 6 clearly indicated that Respondent was seeking an unloaded rate for the plant items listed on the Section 6 Bid Sheet. In support of this position, CECOS notes that all of the vendors other than DB had submitted unloaded rates for the plant items in Section 6. CECOS contends that this shows that Section 6 was not ambiguous, and that DB simply did not follow the RFP instructions——of which it was fully aware——in preparing and submitting its price proposal.19/ CECOS also contends that Rubio's failure to contact the other vendors to determine if they found the instructions or use of the 2.5 multiplier in Section 6 ambiguous evidences that Rubio's conclusion that Section 6 was ambiguous lacked any factual basis, so was itself arbitrary. CECOS asserts that Bogardus' intent to use a 2.5 multiplier for compensation purposes was evidenced by its inclusion on the Section 6 Bid Sheet, that its use on the Section 6 Bid Sheet did not render the RFP flawed, and that Bogardus' intent to compensate using the multiplier should control the structure of compensation paid under Section 6.20/ CECOS also notes that the use of the 2.5 multiplier on the Section 6 Bid Sheet mirrors the 2.5 multiplier in the existing environmental mitigation support services contract with the current contractor.21/ CECOs further contends that there was no material difference, with respect to structuring compensation for the plant items, between the ITN process used for procuring the existing contract and the RFP process used to procure this Contract. As additional support for its argument that the use of the 2.5 multiplier in Section 6 was valid, CECOS points to a request for proposal for environmental mitigation services issued by Respondent's District VI. In that contract, a 2.5 multiplier was used for compensation purposes, albeit for specific plant items that were not contained in the original list of specific plant items for which rate proposals had been solicited in the request for proposal. CECOS further contends that Respondent——and, most particularly, Rubio——did not conduct a thorough investigation into the historic use of 2.5 multipliers in Respondent's commodities contracts. CECOS argues that as a consequence, Respondent's determination that the use of the 2.5 multiplier rendered the Section 6 Bid Sheet structurally flawed and arbitrary was unsupported by facts, so was itself arbitrary and capricious. CECOS asserts that cancelling the notice of intent to award the Contract to CECOS and requiring the vendors to submit new price proposals placed CECOS at a competitive disadvantage and was contrary to competition because once the Proposal Tabulation was posted, the other vendors were informed of the price that CECOS had bid, so knew the price they had to beat when the Contract was re-solicited. CECOS also points to what it contends are procedural irregularities with respect to Respondent's treatment of, and communication with, CECOS and DB once Respondent decided to cancel the notice of intent to award the Contract to CECOS. Specifically, CECOS contends that Respondent did not respond to its calls or email asking why the intent to award the Contract to CECOS had been cancelled. CECOS also contends that Respondent communicated with DB on substantive matters during the "cone of silence." CECOS further notes that Respondent did not convene a resolution meeting within the statutorily- established seven-day period after CECOS filed its First Petition, but instead held the meeting over 60 days later, on January 28, 2015, and that even then, Respondent did not engage in good faith negotiation to resolve the challenge. Finally, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions (discussed above) that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. CECOS asserts that it followed the instructions in the RFP in preparing its price proposal, submitted the lowest price proposal, and is ready, willing, and able to perform the Contract at the rates it proposed in its response for Section 6. On that basis, CECOS contends that it is entitled to the award of the Contract. Findings of Ultimate Fact CECOS bears the burden in this proceeding to prove that Respondent's decision to reject all proposals was arbitrary, illegal, dishonest, or fraudulent.22/ Even if CECOS were to meet this burden, in order to prevail it also must demonstrate that Respondent's actions in cancelling the intent to award the Contract and requiring the submittal of new price proposals were clearly erroneous, arbitrary, capricious, or contrary to competition. For the reasons discussed herein, it is determined that CECOS did not meet either of these burdens. The Multiplier Rendered Section 6 Ambiguous, Arbitrary, and Structurally Flawed As discussed in detail above, Respondent decided to cancel the intent to award the Contract to CECOS and to require the submittal of new price proposals by the vendors only after it had conducted an extensive investigation that included a careful review of numerous provisions in the RFP and the instructions to Section 6 and had analyzed the structure of Section 6 in relation to other provisions in the RFP. That investigation showed that nowhere in the RFP was the use of the 2.5 multiplier in Exhibit C, Section 6, discussed or explained. Thus, to the extent the multiplier was to be used in determining reimbursement for overhead costs and compensation, the RFP failed to explain this extremely important point, leaving the multiplier's purpose, use, and significance open to speculation and assumption by the vendors in submitting their price proposals. This rendered the multiplier's use in Section 6 ambiguous. This ambiguity is further evidenced by DB's and CECOS's widely divergent price proposals for Section 6, and the credible testimony of Perretta and Cyriaks regarding their differing views of the purpose of the 2.5 multiplier. The credible, persuasive evidence establishes that the ambiguity in Section 6 caused the vendors to have differing interpretations of the manner in which they were to propose plant unit rates in Section 6; that the vendors submitted plant price proposals predicated on differing assumptions; and that this resulted in Respondent being unable to fairly compare the price proposals for purposes of obtaining the most advantageous proposal for the State. On these bases, Respondent reasonably concluded23/ that the inclusion of the 2.5 multiplier in Section 6, rendered that portion of the RFP ambiguous. As extensively discussed above, the credible, persuasive evidence also establishes that Respondent concluded, based on its investigation and review of Section 6, that inclusion of the 2.5 multiplier rendered Section 6 both arbitrary and structurally flawed.24/ The credible, persuasive evidence further establishes that Rubio investigated Respondent's use of multipliers in commodities procurements and contracts to the extent necessary and appropriate for her to reasonably conclude that the use of the 2.5 multiplier in Section 6 rendered this portion of the RFP ambiguous, arbitrary, and structurally flawed.25/ In sum, the credible, persuasive evidence establishes that Respondent engaged in a thorough and thoughtful investigation before concluding, reasonably, that the inclusion of the 2.5 multiplier in Exhibit C, Section 6 rendered that portion of the RFP ambiguous. Respondent's Actions Were Not Contrary to Competition Although the evidence shows that CECOS may suffer some competitive disadvantage because competing vendors were informed of the lowest "bottom line" price they would have to beat, it does not support a determination that Respondent's decisions to cancel the intent to award the Contract to CECOS and require the vendors to submit new price proposals were contrary to competition. To that point, in Addendum 5, Respondent substantially restructured the Section 6 Bid Sheet and also amended the Bid Sheet comprising the other price proposal sections in Exhibit C, so that CECOS' and the other vendors' price proposals submitted in response to Addendum 5 may have substantially changed from those submitted in response to Addendum 1. In any event, it cannot be concluded that Respondent's decisions to cancel the intent to award the Contract to CECOS and require submittal of new price proposals are contrary to competition such that they should be overturned in this proceeding. Procedural Irregularities CECOS also points to certain procedural irregularities in Respondent's treatment of, and communication with, CECOS once Respondent decided to cancel the notice of intent to award the Contract to CECOS and require submittal of new price proposals. CECOS apparently raises these issues in an effort to show that Respondent's actions were clearly erroneous, contrary to competition, arbitrary, or capricious. The undisputed evidence establishes that Rubio communicated with both DB and CECOS during the "cone of silence" following the posting of its intent to award the Contract to CECOS. The undersigned determines that the "cone of silence" applied to Rubio and her communications with DB and CECOS within the 72-hour period following Respondent's posting of the intent to award the Contract. Specifically, she is an employee of Respondent's District IV Office, so is an employee of the executive branch of the State of Florida. Further, the evidence shows that her communications with both DB and CECOS during the "cone of silence" period dealt specifically with substantive, rather than "administrative" issues regarding the RFP and the vendors' price proposals. Accordingly, it is determined that these communications did, in fact, violate the "cone of silence." However, this does not require that Respondent's decision to cancel the intent to award the Contract to CECOS be overturned. The credible, persuasive evidence shows that while DB's conversation with Rubio may have spurred Rubio to decide she should investigate the Section 6 instructions and use of the 2.5 multiplier, it was not the reason why Respondent ultimately determined that the intent to award the Contract should be cancelled. Rather, Respondent's discovery of the ambiguity and structural flaws in Section 6, through Rubio's investigation, was the reason that Respondent determined that the intent to award the Contract to CECOS should be cancelled. In sum, the credible, persuasive evidence shows that notwithstanding Rubio's communications on substantive matters during the "cone of silence" with both DB and CECOS, the integrity of the procurement process was not undermined such that Respondent's decision to cancel the intent to award the Contract to CECOS was clearly erroneous, contrary to competition, arbitrary, or capricious. CECOS failed to present persuasive evidence establishing that other procedural irregularities rendered Respondent's actions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decisions to Cancel Intent to Award the Contract and Require Submittal of New Price Proposals Based on the foregoing, it is determined that CECOS did not meet its burden to show that Respondent's decisions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decision to Reject All Proposals As noted above, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. However, the credible, persuasive evidence shows that Respondent's ultimate decision to reject all bids was factually supported and was reasonable. As discussed above, Respondent initially decided to cancel the intent to award the Contract to CECOS and to require the vendors to submit new price proposals after it discovered the ambiguity and structural flaws resulting from the use of the 2.5 multiplier in Section 6. At that point, rather than rejecting all proposals, which would require the vendors to go to the time and expense of preparing completely new proposals, it decided to instead only require the vendors to submit new price proposals. Due to the interrelated nature of the six sections of Exhibit C comprising the complete price proposal for the RFP, Respondent determined revision of Section 6 would also require revision of the other five sections of Exhibit C, in order to ensure that they were internally consistent with each other. At the mandatory pre-bid meeting preceding the issuance of Addendum 5, the participating vendors had numerous questions about the sweeping revisions to all six sections of Exhibit C, and they expressed confusion about the revisions and their effect on preparation of new price proposals. Some vendors also expressed concern that they may have to change their personnel in order to be able to accurately prepare new price proposals, raising the question whether the technical proposals needed to be revised. As a result of vendor confusion and concern, and also because Respondent's Environmental Office needed additional time to carefully review and revise the RFP as needed, Respondent decided to reject all proposals and to start the procurement process anew. Respondent's decision to reject all bids was made after fully considering all of the pertinent information regarding the ambiguity and structural flaws in Section 6, vendor confusion and concern caused by Respondent's revisions to Exhibit C needed to address the ambiguity and flaws in Section 6, and Respondent's need for additional time to ensure that its RFP accurately and clearly solicited the needed environmental mitigation support services. Accordingly, Respondent did not act arbitrarily in deciding to reject all bids. Further, no persuasive evidence was presented to show that Respondent's decision to reject all bids was illegal, dishonest, or fraudulent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Transportation: Issue a final order in Case No. 16-0769 finding that the rejection of all proposals in response to Request for Proposal RFP-DOT-15/16-4004PM was not illegal, arbitrary, dishonest, or fraudulent; and Issue a final order in Case No. 16-3530 finding that the decisions to cancel the award of the Contract for Request for Proposal RFP-DOT-15/16-4004PM to CECOS and to require the vendors to submit new price proposals for Request for Proposal RFP-DOT-15/16-4004PM were not clearly erroneous, contrary to competition, arbitrary, or capricious. DONE AND ENTERED this 30th day of December, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS 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 30th day of December, 2016.
The Issue The issue for consideration herein is whether the Petitioners, MISSCO, GENERAL, AND INTERSTATE should be placed on the convicted vendor list pursuant to Section 287.133 Florida Statutes (1991).
Findings Of Fact The facts stated in the Joint Stipulations to the extent set forth below are hereby adopted as findings of fact: On April 9, 1993, DMS issued notices of intent pursuant to Section 187.133(3)(e)(1), Florida Statutes. Jt. Stips. Appen. at pp. 72-73. On April 13, 1993, MISSCO filed petitions with DMS for a formal hearing pursuant to Section 120.57(1), Florida Statutes, to determine whether it is in the public interest for MISSCO, GENERAL, or INTERSTATE to be placed on the Florida Convicted Vendor List pursuant to Section 287.133, Florida Statutes. Jt. Stips. Appen. at p. 74-77. Subparagraph 287.133(3)(e)e., Florida Statutes, establishes factors which, if applicable to a convicted vendor, will mitigate against placement of that vendor upon the convicted vendor list. On April 5, 1991, General Equipment Manufacturers, Inc., (hereinafter "General"), a Mississippi corporation, and wholly owned subsidiary of MISSCO Corporation, was convicted of the commission of a public entity crime as defined within subsection 287.133(1)(g), Florida Statutes. Jr. Stips. p. 1, Appen. at pp. 41-43. A criminal information was filed in the United States District Court for the Southern District of Mississippi against General Equipment Manufacturers, Inc., alleging a violation of Section 1001, Title 18, United States Code and applicable Federal Acquisition Regulations which occurred on or about December 2, 1988. Jt. Stips. p. 1, Appen. at p. 40. The criminal information filed in the United States District Court, Southern District of Mississippi charged General with falsely representing on or about December 2, 1988 that the equipment schedule and price list submitted to the General Services Administration (hereinafter GSA) was General's established commercial price list. (Jt. Stips. p. 2, Appen. at p. 40. Upon entry of a plea of guilty, the Court entered a judgement against General which was filed April 5, 1991. The judgement required payment of a special assessment of $200, a fine in the amount of $10,000, without interest, and restitution in the amount of $28,000. Jt. Stips. p. 2, Appen. at pp. 40-48. The GSA issued Solicitation No. FCGS-X8-38010-N for FSC Group 66 Part II, Section P, Laboratory/Pharmacy Furniture. General submitted an offer dated August 18, 1988, and signed by Charles H. Wright, General Manager of General's SystaModules Division. In connection with its offer, General submitted its purported commercial price list dated January 31, 1987. Mr. Wright certified in Section M-FSS-330, M.3, Basis for Price Negotiation, Item (c), Certificate of Established Catalog or Market Price, that: The price(s) quoted in General's proposal is based on established catalog or market prices of commercial items, as defined in FAR 15.804-3(c), in effect on the date of the offer or on the dates of revisions submitted during the course of negotiations. Substantial quantities of the items have been sold to the general public at such prices. All of the data, including sales data, submitted with General's offer are accurate, complete, and current representations of actual transactions to the date when price negotiations are concluded. By letter dated December 2, 1988, Mr. Wright, in his capacity as General Manager of General's SystaModules Division, certified on behalf of General that: . . . all data submitted with General's offer pursuant to the discount schedule ad marketing data sheets and any other data submitted as as part of General's offer on Solicitation FGS-X8-38010-N are current, accurate, and complete a of the conclusion of negotiations, which occurred on December 2, 1988. Jt. Stips. p. 2-3, Appen. at pp. 51-53. On the basis of General's offer on Solicitation No. FGS-X8-38010-N, the GSA awarded General Contract No. GS-00F-06709 on December 13, 1988. The contract was for the period February 1, 1989, through January 31, 1992. Jt. Stips. p. 3-4, Appen. at p. 53. An investigation by the Federal Bureau of Investigation determined that General provided the GSA with fabricated price lists in connection with FGS-X8-38010-N. Jt. Stips. p. 4, Appen. at pp. 53-54. The details of the criminal information against General are discussed in the findings and determination made by the GSA Office of Acquisition Policy, dated May 18, 1992, which are incorporated herein by reference. Jt. Stips. Appen. at pp. 49-71). Particular findings are as follows: Federal debarment was imposed on General and its corporate officials Messrs. Wright and Majure. Jt. Stips. Appen. at p. 50. The debarments were effective throughout the Federal Executive Branch. The debarment precluded the award, renewal, or extension of federal contracts. Jt. Stips. Appen. at p. 50. Debarment proceedings were initiated by separate notices dated November 1, 1990 based on a referral from the Federal General Services Administration (GSA), Office of Inspector General (OIG). Jt. Stips. Appen. at p. 51. General bid on GSA Solicitation No. FGS-X3-36426-N and in connection with its offer General submitted a "dealer retail price list," and certified that: its prices were based on established catalog or market prices, substantial quantities of the items had been sold to the general public at said prices: and that all of the data submitted with its offer was accurate, complete and current representations of actual transactions up to the date when price negotiations were concluded. Jt. Stips. Appen. at p. 51. General's offer on the solicitation was accepted and it was awarded contract number GS-00F-70316 on April 19, 1984. Jt. Stips. Appen. at p. 52. On June 28, 1985 General made the same representations as to GSA Solicitation No. FGS-X8-38000-N for laboratory and pharmacy furniture. The award was made to General on December 9, 1985. Jt. Stips. Appen. at p. 52. Identical representations were made by General in response to GSA Solicitation No. FCGS-X8-38010-N issued on July 7, 1988. The solicitation was for laboratory and pharmacy furniture. The award was made to General on December 13, 1988. Jt. Stips. Appen. at p. 53. Criminal Information Number J90-00080(B) was filed in the U.S. District Court for the Southern District of Mississippi on November 15, 1990. The information was based on the FBI investigation of General's submission of false commercial price lists to GSA. The criminal information charged General with violating Title 18, U.S.C. 1001 in connection with its offer on Solicitation No. FGS-X8-38010-N. It alleged that General knowingly, willfully, and falsely represented to GSA that the equipment schedule and price lists submitted with General's 1988 offer was General's established commercial price list. Jt. Stips. Appen. at p. 54. General pled guilty to Criminal Information No. J90-00080(B) on December 19, 1990 and was ordered to pay a fine of $10,000 and to make just restitution to the GSA in the amount of $28,000. The conviction was also used as the basis for the federal debarment of General. Jt. Stips. Appen. at p. 54. Mr. Wright and Mr. Majure were also debarred by virtue of their conduct in connection with the General conviction. Jt. Stips. Appen. at pp. 54- 59. General and MISSCO are affiliated companies. General is a wholly-owned subsidiary of MISSCO. MISSCO is directed and governed by its executive committee which acts in lieu of the board of directors. Mr. Majure was a director of MISSCO, a member of MISSCO'S executive committee, a senior vice president of MISSCO, and president, director, and general manager of General. Jt. Stips. Appen. at p. 59. Mr. Majure held a position of substantial responsibility in both MISSCO and General, and through MISSCO's control group is accountable for the circumstances of General's crime. Jt. Stips. Appen. at p. 60. A decision not to impose federal debarment on MISSCO was predicated on MISSCO management's decision to ensure that it did not supply the Federal government with the same goods and services formerly provided by General during the period of General's debarment: MISSCO management made a commitment to emphasize ethical business practices: the people responsible for General's crime were no longer employed by MISSCO: the GSA administrative record (with the exception of General) does not indicate a lack of business integrity or poor performance on federal contracts. Jt. Stips. Appen. at pp. 61-63. Federal debarment of General was predicated upon the following: conviction of the crime of making false statements posed a substantial risk to government business dealings: General submitted false information on solicitations over an extended period of time: General fabricated price lists and false certification son two prior solicitations: General's crime posed a substantial danger to the integrity of the Federal government's MAS program: the accountable individuals for the crime were high-ranking officials at General. Jt. Stips. Appen. at pp. 63-66. The federal debarment proceedings found mitigating factors in that: the parties pled guilty and cooperated with the Department of Justice throughout the investigation: the parties cooperated with GSA throughout the debarment proceedings: General was not charged with deliberate overcharges on its federal MAS contracts: General promptly paid its fine and restitution: General has made good faith efforts to undertake remedial action. Jt. Stips. Appen. at pp. 68-69. On April 9, 1993, Respondent issued Notices of Intent pursuant to Section 287.133(3)(e)1, Florida Statutes, which were received by the Petitioners. Jt. Stips. p. 5, Appen. at pp. 72-73. On April 13, 1993, Petitions filed petitions pursuant to Section 287.133(3)(e)2, Florida Statutes, and Section 120.57(1), Florida Statutes, requesting an order determining that it is not in the public interest for Petitioners to be placed on the State of Florida Convicted Vendor List. Jt. Stips. p. 5, Appen. at pp. 74-75. MISSCO is a holding company which has a number of operating divisions and two wholly-owned subsidiary corporations, General Equipment Manufacturers (General) and MISSCO Exports Corporation (Exports). Jt. Stips. p. 2, Appen. at pp. 35-36. Interstate of Florida is a Division of MISSCO and is a dealer (re- seller) of General's products. Jt. Stips. p. 2. General and MISSCO are commercially distinguishable and they do not occupy the same facilities. MISSCO's primary lines of business are distribution of school equipment and supplies, office equipment and supplies, and commercial printing. Jt. Stips. p. 4. MISSCO Exports is an entity formed solely for accounting and tax purposes, has no employees, and does not engage in substantive commercial operations. Jt. Stips. p. 4. MISSCO has extensive dealings with the federal government, as supplier of goods manufactured by other entities. General is the only MISSCO entity that contracts with the government under the Multiple Awards Schedule (MAS) program. General's primary line of business is manufacturing institutional furniture. Jt. Stips. pp. 4-5. In compliance with paragraphs 287.133(3)(a) and (B), Florida Statutes, MISSCO made timely notification to the DMS and provided details of the conviction of General, by letter dated March 24, 1992 and provided copies of the criminal information, judgement and related correspondence. Jt. Stips. p. 5, Appen. at pp. 37048. Payment of the fine in the amount of $10,000 and restitution in the amount of $28,000 imposed by the conviction and judgement entered April 5, 1991 were promptly paid by General on April 15, 1991. Jt. Stips. pp. 5-6, Appen. at pp. 47-48. Subsequent to the criminal information filed in the United States District court, Southern District of Mississippi in November of 1990, General entered a plea of guilty to the charge, thus eliminating the necessity for further investigation and trial. Jt. Stips. p. 6. The GSA in its findings and determination dated May 18, 1992, cited mitigating factors favorable to General and MISSCO. The factors included, cooperation with the Department of Justice throughout its investigation; cooperation with the GSA throughout the debarment proceeding; constructive dealings by counsel for MISSCO and General with the GSA Office of General Counsel on issues relating to the restrictions on MISSCO and General's business relationship with the government and government prime contractors. Jt. Stips. p. 6, Appen. at pp. 68-69. MISSCO fully cooperated with the DMS in connection with its investigation initiated pursuant to Section 287.133, Florida Statutes. Jt. Stips. p. 6. MISSCO formally filed its disclosure pursuant to Section 287.133(3)(b), Florida Statutes with the DMS by letter dated March 24, 1992, together with exhibits attached thereto. The letter specifically referred to the criminal information filed against General and the judgement entered by the Federal District Court. A copy of the criminal information and judgement were enclosed with the letter, together with a copy of correspondence between MISSCO and the GSA. Jt. Stips. pp. 8-9, Appen. at pp. 37-39. In response to a request dated April 15, 1992 from the DMS for additional information, MISSCO promptly furnished all such information. Jt. Stips. p. 9. At its meeting held December 17, 1992, the Board of Directors of MISSCO was convened and all of the offices then held by Mr. James T. Majure, former President of General, were declared vacant and other persons were elected to those positions. Jt. Stips. p. 7, Appen. at pp. 2, 67, 70. Mr. Charles Wright was retired from General under a medical disability prior to 1990. Jt. Stips. p. 7. MISSCO Corporation fully cooperated with the GSA by proposing and implementing remedial measures including the presentation of an Ethics Seminar by Mr. Norman Roberts, past chairman of the American Bar Association's section on government contracting. Jt. Stips. p. 7. MISSCO revised its corporate Code of Ethics, revised its Employee Handbook, installed an 800 hotline telephone number permitting employees to communicate any concerns regarding business ethics, designated a Corporate Vice President as the Ethics Compliance Officer, appointed a committee of three corporate executives to monitor corporate business activities, and revised its internal audit procedures to insure that no cash is unaccounted for which might be used for the purpose of kickbacks. Jt. Stips. pp. 7-8, Appen. at pp. 28-33, 62-63. MISSCO's management undertook prompt and verifiable action to comply with the restrictions imposed on MISSCO's business dealings with the government after notices of proposed debarment. General promptly and voluntarily withdrew from the GSA contract that was tainted by the submission of a fabricated commercial price list during negotiations. Jt. Stips. p. 8. MISSCO had a code of business ethics in place when the circumstances leading to General's conviction arose. The code was amended following the initiation of debarment proceedings to specifically address the importance of truthful certifications and providing accurate information in connection with business transactions with the government. Jt. Stips. p. 8. MISSCO substantially expanded its corporate ethics compliance program and undertook extensive training in business ethics. A detailed "ethics audit" was undertaken by MISSCO, and the results of this audit were provided to the GSA. Jt. Stips. p. 8, Appen. at pp. 10-22, 28-34. General sells its products through a dealer network and not through factory direct sales. General has a dealer agreement with Interstate of Florida for the sale of its products in Florida to private and public entities. Jt. Stips. p. 9. Interstate of Florida, a division of MISSCO Corporation of Jackson, is a dealer (re-seller) of General's products. There are other dealers throughout the United States which also market and sell General's products. Interstate of Florida had gross sales of approximately $6.8 million in fiscal year 1990-91. Approximately 99 percent of those sales were to public entities. Jt. Stips. p. 9. Interstate of Florida is primarily an educational sales company which sells educational contract furnishings such as laboratory casework, auditorium seating, and folding bleachers. It has conducted business with almost every school district in Florida. The largest transactions have been conducted with the school districts of Dade and Orange Counties in Florida. The largest municipal transactions have been conducted with the City of Tallahassee. Jt. Stips. p. 10.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department not place the names of the Petitioners on the Florida Convicted Vendor List. DONE and ENTERED this 29th day of July, 1993, in Tallahassee, Florida. STEPHEN F. DEAN 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 29th day of July, 1993. COPIES FURNISHED: William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 C. Graham Carothers, Esquire Ausley, McMullen, McGehee Carothers & Proctor Post Office Box 391 Tallahassee, FL 32392 Terry A. Stepp, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950
Findings Of Fact On or about August 10, 1979, HRS caused a legal advertisement to be published concerning its Purchase Order No. 52579, requesting bids for window film installation pursuant to HRS Bid No. 30-497WR. The Invitation to Bid provided, in part, that: As the best interests of the State may require, the right is reserved to make award(s) by individual item, group of items, all or none or a combination thereof; to reject any and all bids or waive any minor irregularity or technicality in bids received. When it is determined there is competition to the lowest responsive bidder, then other bids may not be evaluated. Bidders are cautioned to make no assumptions unless their bid has been evaluated as being responsive. Among the special conditions of the Invitation to Bid was the following: The successful bidder will furnish and install window insulation film on all glass exposures of buildings designated as one through eight with the exception of these [sic] windows now having film installed. These buildings are commonly known as the Winewood Complex which is located at One Winewood Blvd., Tallahassee, Florida 32301. Subleased or other occupied space will be an addition to the basic glass square footage of buildings five, six, seven and eight now occupied by the Department of Corrections, Winewood Office Park Lmtd. and the Parole and Probation Commission. Prospective bidders will be provided these applicable locations by the project manager. The bid will contain a diagram and listing of these square footages. The computations of total square footages of applicable glass areas will be separated by buildings. This is necessary so that after the installation of the film on each building is completed and accepted by the project manager, an invoice can be submitted for payment. [Emphasis added]. In addition, tee following clause was also contained in the Special Conditions of the Invitation to Bid: All work performed by the Contractor in completing the subject project shall be guaranteed by the Contractor against all defect resulting from the use of materials, equipment and workmanship for a period of five years from the date of final completion of the subject project. If, within any guarantee period, repairs or changes are required in connection with the guarantee work, which in the opinion of the Owner is rendered necessary as a result of the use of materials, equipment or workmanship which are defective or inferior or not in accordance with the terms of the Contract, the Contractor shall, promptly upon receipt of notice from the Owner and without expense to the Owner, proceed to: Place in satisfactory condition in very [sic] particular all of such guaranteed work, correct all defects therein; and make good all damages to the structure or contents thereof, which in the opinion of the Owner, is the result of the use of materials, equipment, or workmanship which are inferior, defective, or not in accordance with the terms of the Contract; and made [sic] good any work or materials or the equipment and contects [sic] of structures or site disturbed in fulfilling any such guarantee. [Emphasis added]. The Special Conditions also provided that: No interpretation of the meaning of the Drawings, specifications, or other Bidding Documents, no correction of any apparent ambitquity [sic], inconsistency or error therein, will be made to any Bidder orally. Every request for such interpretation or correction should be in writing, addressed to the Project Manager. All such interpretations and supplemental instruction will be in the form of written addenda to the Bidding Documents. Only the interpretation or correction so given by the Project Manager in writing, shall be binding and prospective Bidders are advised that no other source is authorized to give information concerning, or to explain or interpret the Bidding Documents. Finally, the Invitation to Bid also provided for modification of bids if received in writing prior to bid opening. HRS distributed more than 25 bid invitations pursuant to the aforementioned bid, and in response thereto received four bids, one of which was a "no bid". Of the three remaining bidders, Solar-X of Tallahassee submitted a total bid of $34,624.88, based upon a measurement of 29,096 square feet at a price of $1.19 per square foot; Florida Solar Power, Inc. submitted a total bid of $30,079.14, based upon 30,693 square feet at $.98 per square foot; and, finally, Petitioner submitted a total bid of $43,555.10 based upon a calculation of 37,874 square feet at $1.15 per square foot. The bids of Solar-X of Tallahassee and Florida Solar Power, Inc. were determined to be unresponsive to the Invitation to Bid for reasons not here pertinent. Although Petitioner's bid contained a total square footage on which it proposed to install window film, the bid did not break down the area of glass on a per-building basis as required by the conditions of the Invitation to Bid. In addition, the conditions of the Invitation to Bid required that building space occupied by sublessors be separately computed in bid responses in order to attempt to pass on to those sublessors their pro-rata share of the cost. Petitioner did not separate this space in its bid as required. Petitioner also failed to furnish with its bid a diagram of exposed glass area in each building as required in the special conditions. Finally, Petitioner's bid response contained the following warranty provision: . . .3M Company and the [Petitioner] warrants [sic] "SCOTCHING" Brand Solar Control films against peeling, cracking, crazing, or loosening for a period of five (5) years after installation in the event the product is found to be defective under this warranty. [Petitioner] will replace such quantity of the film proved to be defective with the [Petitioner] additionally providing the reapplication labor free of charge for the first two (2) years of the warranty. The customer shall pay for any reapplication labor charges during the last three (3) years of the warranty. . .[Emphasis added]. At final hearing, a representative of Petitioner testified that this warranty was the manufacturer's warranty, and that Petitioner, as the seller of the product, intended that full warranty protection in accordance with the conditions of the Invitation to Bid be part of Petitioner's bid. However, nothing to this affect appears in Petitioner's bid, nor did Petitioner attempt to modify its bid in writing before bid opening to make HRS aware of its intentions in this regard. Although bid opening was initially scheduled for August 24, 1979, the opening date was extended to September 4, 1979, by addendum to the Invitation to Bid. After opening, bids ware reviewed by the staff of the Director of the Office of General Service in HRS for technical compliance with the Invitation to Bid. As a result of this review, it was determined that Petitioner's bid was the only bid submitted which complied with all provisions of the bid specifications, and the staff, therefore, recommended award of the contract to Petitioner. At this point the question of the award of the contract came to the attention of the Purchasing Director of HRS's Central General Services, whose office is responsible for evaluation of bids for compliance with the terms and conditions of an Invitation to Bid, state purchasing law and administrative rules relating to state commodity purchases. During the course of this review, it was determined that Petitioner's bid did not comply with the conditions of the Invitation to Bid in that it failed to break down its bid on a per-building basis and, additionally, improperly qualified the five-year warranty requirement contained in the Invitation to Bid and its conditions. At the Federal hearing in this cause the Purchasing Director for Central General Services also testified that he had received oral communications from other vendors, some of whom submitted bids and some who did not, to the effect that the technical specifications of the Invitation to Bid were tailored to the products sold by Petitioner to such an extent as to effectively close the bidding process to competition. None of these vendors protested the content of the specifications as required in the Invitation to Bid, nor was any direct testimony adduced at final hearing in this cause from these vendors. Although the Division of Purchasing of the Department of General Services also concluded that the bid specifications were too restrictive, there is insufficient evidence in the record in this proceeding upon which to base a conclusion that the specifications contained in the Invitation to Bid were either tailored to Petitioner's product, or were so restrictive as to limit competitive bidding. Indeed, one of the actual bidders, Solar-X of Tallahassee, submitted a bid which complied with the technical specifications, but was rejected because it included an unacceptable contingency clause for late delivery. After extensive in-house review by various HRS employees, a letter dated October 4, 1979, was forwarded to all vendors advising that HRS, after ". . .an extensive analysis of the bid responses. . ." had decided to reject all bids and issue a second call for bids. This letter also indicated that ". . .areas of concern which were expressed relative to the initial invitation will be addressed in the second call." The letter did not attempt to further identify the "areas of concern." The facts of record in this proceeding clearly establish that Petitioner's bid was not responsive to the Invitation to Bid. Petitioner did not include in its bid a diagram of each building on which window film was to be installed, nor did the bid indicate the number of square feet contained in each building. The two vendors whose bids were rejected apparently had no difficulty complying with this requirement. As a result, HRS was precluded from comparing the per-building cost of the competing bids, and, had the contract been awarded to Petitioner, HRS could not have determined the proper amount of periodic progress segments without performing independent measurement. Most importantly, however, Petitioner improperly qualified the five- year warranty provision contained in the Special Conditions. Petitioner's bid, on its face, limited its responsibility to replacement of defective window film during the five-year warranty period, and required that HRS be responsible for payment of labor charges for reinstallation during the last three years of the warranty period. This warranty qualification was clearly contrary to the requirement that any product replacement or reinstallation be without expense to HRS for a period of five years from the date of final completion of the project. There was extensive testimony at final hearing concerning allegations by Petitioner of improper conduct on the part of the HRS Purchasing Director for Central General Services which allegedly resulted in the decision to reject all bids and submit a second call for bids. Testimony on this issue involved Petitioner's assertion that the HRS employee's relationship by marriage to one of the unsuccessful bidders led to his conclusion that the technical specifications were so narrowly drawn as to preclude a consideration of his relative's product, and that the specifications should be redrafted so as to allow consideration of products other than Petitioner's. In light of the fact that Petitioner's bid was not responsive to the Invitation to Bid, in that it improperly qualified the warranty required, and did not contain square footage computations on a per-building basis, it is unnecessary to reach the question of the propriety of any conduct on the part of the HRS employee. The propriety of the rejection of Petitioner's bid was determined by Petitioner's failure to comply with the Special Conditions of the Invitation to Bid, and could not have been affected by the alleged misconduct on the part of an employee of HRS. Both Petitioner and Respondent have submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that such proposed findings of fact have not been adopted in this Recommended Order, they have been specifically rejected as being irrelevant to the issues in this cause, or as not having been supported by the evidence.
Findings Of Fact On October 26, 1976, the School Board of Orange County and ITEL Data Product Corporation (ITEL) entered into a lease agreement providing for the lease of data processing equipment to the Board from ITEL by which ITEL supplied a computer central processing unit (CPU) and related equipment. Concomitantly, by agreement, ITEL provided for servicing and maintenance of the equipment. In October, 1977, IBM announced its new 303X series of computers with delivery schedules to customers for the newly introduced equipment to take up to two years. IBM has had a long-standing policy, well-known in the data processing industry, of filling customer orders for equipment in the sequence in which they are received, called "sequential delivery." With public agency customers, such sequential orders are not envisioned by the agency nor IBM to be a firm order because of the often protracted procurement process, involving competitive bidding, that public bodies typically have to engage in before making such a major purchase. IBM therefore permits public agencies, such as the School Board in this case, to place non-binding orders in anticipation of a future procurement so that a sequential delivery position will be available to the public agency and thus cause no delay in acquisition of the equipment should IBM become the successful bidder upon a particular procurement. On October 6, 1977, the School Board placed a "reservation" for an IBM 3031 CPU and related data processing equipment. In a letter of October 11, 1978, the School Board informed IBM that this equipment would be needed in approximately November, 1979, subject to availability of funds and subject to IBM being selected as a winning vendor in a competitive bidding process. There was no executed contract or other commitment between IBM and School Board at this point in time. Sometime in the summer of 1979, the School Board, which had become dissatisfied with the service and maintenance it had received from ITEL pursuant to the ITEL lease, engaged certain members of its staff in a study regarding its future data processing equipment needs. The School Board staff study resulted in a determination by the staff, and ultimately by the Board, to acquire additional data processing equipment capacity in excess of the capacity supplied under the ITEL lease. On August 28, 1979, the School Board terminated the ITEL lease effective December 31, 1979, and on or about September 5th, notified ITEL of that termination. On or about October 2, 1979, after determining that it wished to lease new and greater capacity equipment, the School Board Issued an "Invitation to bid" to eleven vendors, providing for the leasing, with option to purchase, of an IBM 3031 CPU and related equipment "or their equal." In response to this invitation to bid, ITEL, Menrex Corporation, as well as IBM, submitted bids and on November 13, 1979, the School Board rejected all the bids as being not responsive, as it had reserved the right to do in the invitation to bid document. The rejection of these bids on November 13, 1979, provided only slightly over a month during which the School Board would have to acquire equipment by rental or purchase and have it installed, since the ITEL lease would be terminated on December 31, 1979. Accordingly, acting on the advice of counsel, the School Board determined that it could legitimately develop an interim emergency leasing plan for meeting its data processing needs upon the expiration of the ITEL lease starting December 31, 1979. This leased equipment was expected to be in place for approximately three to six months or until such time as a new bidding effort and procedure could be developed. The School Board, upon advice of counsel, determined that under its procurement regulations, it could rent equipment on a month to month basis without engaging in a competitive bidding process if it solicited quotations from at least three vendors. Thus, on November 13, 1979, the School Board solicited quotations from three potential vendors, Comdisco, ITEL and IBM, for purposes of securing an interim rental of an IBM 3031 CPU, "or equal", and related equipment. IBM and the Petitioner herein, NAS, which is the successor in interest to ITEL, responded to the solicitation of quotations and NAS informed the Board that it could not supply the particular equipment specified, but offered a NAS CPU at a monthly charge and suggested other related equipment to the Board that NAS considered to be suitable. The School Board staff informed NAS that the CPU unit itself would be a suitable alternative to the IBM 3031 CPU mentioned in the solicitation of quotations. On November 20, 1979, the School Board elected to select IBM's quotation and entered into the lease arrangement with IBM on a month-to-month rental basis. NAS did not challenge that action by the School Board. This rental agreement was entered into on or about December 7, 1979. It was a standard IBM lease and contained a provision whereby IBM offered the customer an option to purchase the equipment, although there was no obligation imposed therein on the customer to purchase the equipment, which was the subject of the lease. The agreement provided that the customer would be contractually entitled to certain "purchase-option credits" or accruals if it was leasing the equipment on a long-term basis and subsequently elected to exercise the option to purchase that same equipment. IBM grants such purchase-option credits as a general rule in month-to-month rental situations such as this, although they are not always a matter of contractual right on behalf of the customer. In any event, no consideration was shown to have been given at the time of entering this rental agreement to the existence or non-existence of any purchase-option credit provision since the only authorized contract at that time was a month-to- month rental agreement. No purchase or option to purchase which would be binding on either party was contemplated since both IBM and the School Board were aware that before a purchase of this magnitude could be made, that a competitive bidding procedure must be utilized. Equipment was installed pursuant to the rental agreement in December, 1979. Neither at the time of the contracting, nor at the time of the installation of the IBM 3031 CPU, did NAS or Comdisco challenge the award of the month-to-month rental contract to IBM. In early 1980, the rental agreement being only temporary, the School Board began studying various alternatives for making a permanent acquisition of needed data processing equipment. In early May of 1980, upon advice of its attorney and various staff members assigned to study the matter, the School Board determined that it would be more economical for the School Board to purchase a CPU and related equipment and service either by cash or installment payment, than to continue renting a CPU and related equipment or to lease those items with an option to purchase as had originally been contemplated in the October, 1979, aborted procurement effort. Thus, it was that on about April 20, 1980, the School Board appointed a committee of five persons to help draft technical specifications to ultimately be promulgated in bidding invitation documents with a view toward acquiring the required data processing equipment through competitive bidding and ultimate purchase. The committee included School Board employees and outside consultants with knowledge of the field of data processing. The members were: Louis Nall, Education Consultant with the Florida Department of Education; Kim Anderson, Information Systems Consultant with the Florida Department of Education; David Andrews, Coordinator, Systems Support, School Board; Mike Staggs, Coordinator, Operations for the School Board; and Craig Rinehart, Director of the Systems Development/Systems Support staff of the School Board. Upon this committee agreeing upon required specifications for the equipment to be acquired, the bidding documents or "invitation to bid" and related supporting documents were developed by the committee in conjunction with assistance of certain other members of the staff of the Board as well as the School Board's attorney. The bid documents were approved by the School Board on May 27, 1980, and they were issued on May 23, 1980, to eight potential vendors, including NAS, IBM, and Amdahl Corporation. The bid documents invited bids for the sale of an IBM 3031 CPU and related equipment "or their equal" (plus service and maintenance) for delivery no later than July 15, 1980. In addition to specifying an IBM 3031 CPU and related equipment "or their equal.," the pertinent specifications contained in the invitation to bid documents provided as follows: The manufacturer of the equipment described in the bid was required to currently manufacture it and offer for sale or lease along with it, an upgradable attached word processor subsystem the same as, or equal to, the IBM 3031 "attached pro- cessor." The Central Processing Unit, or CPU, being bid had to be capable of hosting or accommodating an attached processor. (The purpose of requiring this was so that the School Board could later ob- tain more processing capability if and when it needed it, rather than having to pay for more capacity than it needed at the time of the initial purchase. The vendors were not required by the bidding documents, however, to bid at the time of this procurement for the actual sale of such an attached processor, to be added later.) The School Board reserved the right to reject any and all bids and to waive any informal- ity in any bid. The bid documents initially stated that the School Board would not pay any separately stated interest or finance charges in arriving at its total purchase price for all equipment to be bid. Each bidder was required to offer a certain number of support or maintenance personnel in the Orlando area at the time the bid was submitted and the Board would enter into a separate service and maintenance agreement with the successful vendor. NAS did not protest the bid specifications contained in the invitation to bid documents. NAS did request and receive several interpretations and clarifications of the bid documents from the Board in a manner favorable to NAS. These favorable clarifications or interpretations were as follows: The unavailability of serial numbers for data processing equipment at the time the bid was prepared would not adversely affect the bid's validity. NAS could temporarily rent equipment from other manufacturers which it could not itself deliver by the July 15, 1980, date required in the bid documents. (emphasis supplied) NAS would be deemed by the Board to comply with the requirement that support personnel be present in the Orlando area, provided it had the required support personnel in the area at the time the equipment was actually delivered, rather than at the originally stated time of submission of the bid. The NAS 7000N CPU, which was a computer of greater capacity than the IBM 3031, even after the IBM had the attached processor added, was specifically determined by the Board to be con- sidered as equivalent to the IBM 3031 and thus ap- propiately responsive to that specification and the invitation to bid documents. NAS would be deemed by the Board to comply with the term "manufacturer" even though NAS did not in itself manufacture the equipment, but only marketed it for the maker, Hitachi Corporation. IBM also had a role in determining and securing clarifications or interpretations of the specifications in the invitation to bid from the School Board. Thus, it was that IBM suggested that the Board could save money if it allowed each vendor (not just IBM) to separately state an interest or finance charge in its bid, since IBM was of the opinion that the Internal Revenue Service would not tax as ordinary income to the vendor any separately stated interest charges or financing charges received by such vendor from a public governmental body such as the School Board. Thus, to the extent that vendors could save on income taxes from the total payment, if successful, then the School Board could reasonably expect all vendors to submit correspondingly lower bids in response to the invitation to bid. In response to IBM's request, the School Board amended the bid documents to allow a "separately stated time-price differential" for any item of equipment, not to exceed seven and one-half percent of that item of equipment. At NAS' request, the School Board also amended the bid documents to state that a single central processor (the NAS 7000N), with equivalent power to the IBM 3031 CPU, which was upgradable in the field, would be an acceptable alternative to the requirement that a separate processor must be capable of being attached to the CPU in order to increase data processing capacity. In fact, the NAS 7000N actually has somewhat greater data processing capacity than the IBM 3031. A further amendment to the bid documents provided that in determining the lowest and best bid, the Board would consider each vendor's total charges for service, maintenance and support of the equipment for a one- year period following the award of bids. Additionally, at the request of IBM, an amendment was approved to the bid documents stating that instead of seeking equipment "new and not refurbished," that that requirement would be changed to "new and not refurbished or not more than one-year old." These amendments were sent to all potential bidders. Prior to disseminating the May, 1980, invitation to bid documents, the School Board established an Evaluation Committee to review and analyze bids to be received in response to those documents. The Committee was composed of the following individuals: David Brittain, the Director of the Educational Technology Section, Florida Department of Education; William Branch, Director of Computer Service, University of Central Florida; Louis Nall, Education Consultant, Florida Department of Education; Ronald Schoenau, Director of Northeast Regional Data Center, Florida University System; Craig Rinehart, Director of Systems Development/Systems Support of the Orange County School Board; Mike Staggs, Coordinator, Operations of the School Board; David Andrews, Coordinator, Systems Support, School Board; Dale Brushwood, Director of Production Control, School Board; and David Brown, Attorney for the School Board. The Evaluation Committee was charged with conducting a review and analysis in accord with certain instructions given by the Board and to recommend to the Board the bid the Committee believed was the lowest and best bid. The Committee was instructed that objectivity is of prime importance. Five vendors submitted bids in response to the Invitation documents, as amended. They were NAS, IBM, Amdahl, CMI and Memorex. On June 17, 1980, the bids were opened by the Board. On a recommendation of the Evaluation Committee, the School Board found the bids submitted by CMI and Memorex to be not responsive to the bid documents. The bids submitted by NAS, IBM and Amdahl Corporation were found responsive to the bid document. The Evaluation Committee met for approximately 5 hours evaluating the bids by a number of different criteria, including the consideration of both a one-year and a three-year maintenance cost, as well as an assumption arguendo that the bid documents did not merely call for the IBM 3031 CPU upgradable by the addition of an attached processor, as the specifications actually requested, but instead that the $330,000 (estimated) attached processor was to be bought at the outset from IBM. The result was that the Evaluation Committee reported that the IBM bid was the lowest and best response, even if the cost of a $330,000 attached processor was added to their bid, which was not actually to be the case because the attached processor was not included in this procurement process. Even had that been added to the IBM bid, making it the second lowest dollar bidder, the Evaluation Committee still felt it to be the lowest, best bid. The IBM bid for the 3031 CPU and related equipment was $1,412,643 plus a time-price differential of $58,738 for a total of $1,471,381. The related bid for service, maintenance and support for the first year was $74,201.34, making a grand total for IBM's bid of $1,545,582.34. The NAS bid for the sale of an NAS 7000N CPU and related equipment was the next lowest bid at $1,575,751 plus a time-price differential of $74,722 for a total of $1,650,473. The accompanying bid for service, maintenance and support for the first year was $64,603. The total of the NAS bid was thus $1,715,076. The Amdahl Corporation's bid was higher than either IBM or NAS. In evaluating and in arriving at the decision that the IBM bid was the lowest and best, the Evaluation Committee was concerned with the previous poor record of maintenance and support provided by NAS's predecessor in interest, ITEL Corporation, as well as by the fact that there were then no NAS 7000N computer systems installed in the United States, so that some knowledge of its performance record could thus be gained. Further, the residual value for NAS' equipment had not yet been proven to the extent that IBM's had. Thus, the Committee determined that the IBM bid would still be the lowest and best even had the attached processor, at an estimated cost at time of $330,000, been added to the bid, making it the second lowest in dollar terms because the IBM bid combined the least risk, with the maximum equipment capacity growth flexibility at maximum benefit to the School Board in terms of financial flexibility. The NAS machine would provide more capacity than the Board needed for several years at higher cost, without the Board having an option regarding when that extra capacity should be obtained. The financial flexibility benefit of the IBM bid in terms of allowing for future capacity growth was borne out because the attached processor, by the time it was actually acquired from IBM in 1982, only cost $172,000, due to price decreases made possible by technological advances. The Evaluation Committee unanimously recommended acceptance of the IBM bid as the lowest and best received, and in official session on June 24, 1980, after hearing presentations by an NAS representative, the School Board unanimously voted to award IBM the contract for the subject equipment. On July 1, 1980, the contract submitted by IBM was executed by IBM and the School Board. It provided for a purchase by the Board of the equipment and services described above, payable in two installments, $600,000 on or before August 15, 1980, and the balance on or before July 5, 1981. On July 16, 1980, NAS filed a petition for administrative hearing with the Board, also filing an emergency motion for stay with the School Board, seeking a stay of all further agency action on the contracts with IBM, including any payment, pending disposition of the case. On July 29, 1980, the School Board, after hearing argument of NAS counsel, denied that petition for Administrative Hearing and motion for stay on the basis that the contract between the Board and IBM had already been executed and that the NAS request for a 120.57(1), Florida Statutes, hearing was not timely. On August 4, 1980, NAS appealed the Board's decision to deny a hearing to the Fifth District Court of Appeal and also filed an emergency motion for stay pending appeal. The emergency motion requested the court to prohibit any further action pursuant to the contract, including payment of any sums pending determination of the issues raised in the appeal. On August 15, 1980, the court granted the emergency motion for stay on the condition NAS post a supersedes bond on or before August 18, 1980. On August 26, 1980, the court vacated that order because of failure to timely post the supersedes bond. The School Board then paid IBM the first installment payment of $600,000, when due, shortly thereafter. On May 6, 1981 the Fifth District Court of Appeal ultimately rendered a decision that NAS ". . . should have an opportunity to present evidence and arguments, pursuant to Section 120.57(1)(b)4, Florida Statutes, (Supp. 1980), that its bid was the lowest and best response to the bid document." Thus, the case was remanded to the Board to conduct an administrative hearing, and the Board referred the matter to the Division of Administrative Hearings. On June 4, 1981, NAS filed with the Board a motion for stay to prevent the Board from making the final payment to IBM on the purchase price. After hearing arguments of NAS' attorney, the Board, on June 23, 1981, denied the motion for stay and NAS appealed. On July 3, 1981, the Fifth District Court of Appeal affirmed the School Board's denial of the stay. Final payment was thereafter made by the Board to IBM, thus completing the purchase and all performance of the contract.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence in the record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is RECOMMENDED: That a final order be entered by the School Board of Orange County denying the relief requested by the Petitioner. DONE and ENTERED this 22nd day of September, 1983, in Tallahassee, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 1983. COPIES FURNISHED: John A. Barley, Esquire 630 Lewis State Bank Building Post Office Box 10166 Tallahassee, Florida 32302 William M. Rowland, Esquire Post Office Box 305 Orlando, Florida 32802 Peter J. Winders, Esquire Nathaniel L. Doliner, Esquire Post Office Box 3239 Tampa, Florida 33601 Daniel E. O'Donnell, Esquire 400 Colony Square, Suite 1111 Atlanta, Georgia 30361 James L. Scott, Superintendent Orange County Public Schools Post Office Box 271 Orlando, Florida 32802
Findings Of Fact The Petitioner and a business associate formed a partnership for the purpose of publishing an administrative reporter. In pursuit of that purpose the Petitioner's partner, in October, 1978, requested from the Division of Personnel, Department of Administration, (hereinafter referred to as "Respondent") copies of several Career Service Commission orders. On October 16, 1978, Petitioner's partner received a packet from Respondent containing the requested orders. The orders totaled 183 pages for which Petitioner and his partner were charged fifty cents a page. Petitioner paid Respondent $91.50 for the copies. The charge of fifty cents a page was assessed by Respondent pursuant to its Rule 22-1.115(1), Florida Administrative Code. It was undisputed at the final hearing that the actual cost of the materials, rental on the copying machine, and the cost to Respondent of its service agreement on the copying machine was less than two cents per page copied. One of Respondent's employees expended time in pulling the requested orders from the files and copying the orders pursuant to the request. The employee did not record nor clearly remember how much time she spent responding to the request for copies. On the evidence presented it is reasonable to conclude that the employee expended one hour of time at the rate of $6.95 per hour, and two hours of time at the rate of $4.63 per hour. Petitioner paid the $91.50 charqe by warrant. Respondent's fiscal officer testified that he did not have at head the cost to Respondent of processing a warrant but he roughtly estimated that cost to be $5.00. The cost items set forth in paragraphs 3, 4, and 5 above are the only elements of the cost of copying for which Petitioner or Respondent could establish a firm dollar value. These elements total $24.87 for the 183 copies. Respondent charged Petitioner $91.50 for the 183 copies. The Respondent presented evidence showing that there are many indirect, "incalculable" costs attributable to the production of copies of public documents pursuant to a request from a member of the public. As examples of these "incalculable" costs Respondent referred to state auditing procedures; budgeting procedures; administrative hearings, such as the instant proceeding; bookkeeping required by the Comptroller's office and Treasurer's office; the cost of obtaining legal opinions; the cost of space for the copying machine; and the cost of electricity for the copying machine. Respondent's witnesses testified that these costs are "incalculable" and therefore have to be estimated. No evidence was presented which would establish that but for the necessity of providing copies to the public these "incalculable" costs would not be incurred. On the contrary, the evidence indicated that these "incalculable" costs would, in large part, be incurred by the agency in the pursuit of their responsibilities without regard to providing the public copies of public records. Respondent's evidence established that, with regard to the challenged rule, these "incalculable" costs were estimated by the Secretary of the Department of Administration and several of his division directors, including the State Budget Director and the State Personnel Director. No evidence was presented to show that these persons had the benefit of any formal or informal estimate or study of these "incalculable" costs. No evidence was presented to establish that these persons made an attempt, beyond their discussion of the matter at a meeting, to accurately and finitely estimate these "incalculable" costs. Other than the fact that these persons occupied senior management positions in State government, no evidence was presented which would establish their expertise or experience in estimating the "incalculable" costs appurtenant to copying public records pursuant to requests from members of the public. No evidence was presented which would establish that the price of fifty cents for the first copy of each page and twenty cents for each additional copy of each page, set forth in Rule 22-1.115(1), Florida Administrative Code, is based on any accounting study or other detailed inquiry into the cost of providing, to the public, copies of public records. Those elements of that price for which known dollar amounts have been established include the costs of the machine, which total less than two cents per copy; the cost of labor involved to produce the copies, which in this case has been established to be 8.86 cents per copy; and the cost of processing the payment warrant, which in this case has been established as 2.7 cents per copy. These identifiable costs with regard to the instant case total approximately 13.6 cents per copy. Respondent argues that the other 36.4 cents charged per copy are accounted for by the above-referenced "incalculable" costs which have been estimated without benefit of any studies as heretofore mentioned.
The Issue The issue in this case is whether the two corporate names and service/trademarks are so similar that they create confusion in the minds of the public and at Department of State.
Findings Of Fact The Petitioner, Computer Trends, Inc., filed articles of incorporation with the Department of State on April 16, 1984. Petitioner held its organizational meeting, used the corporate name, trademark, and tradename Computer Trends, Inc., on May 1, 1984. The Petitioner is engaged in the retail business of selling personal computers, peripherals, and computer supplies to individuals and small businesses. The system price of a typical sale is between $1,000 and $6,000. The Petitioner has one business location located in Port Richey, Florida. The Petitioner advertises statewide by various methods. The Petitioner has plans to open additional stores on the west coast of Florida. The Respondent Computer Trends filed its Articles of Incorporation with the Department of State on May 24, 1984 and registered "Computer Trends" as a trade and service mark on August 14, 1984. Computer Trends International, Inc., de-registered the trademark and service mark "Computer Trends" on December 11, 1984, and registered the trademark and service mark for Computer Trends International, Inc., on December 12, 1984. Computer Trends International is in the retail business of selling personal computers, peripherals, and computer software primarily to businesses. At present, Computer Trends International, Inc. has its business location in Orlando, Florida. It plans to expand its business operations to include state, national, and international offices. Computer Trends International's Business Plan Recap Summary for 1984 and Business Plan 1984/85 states Respondent intends to build numerous stores in 1985 and 1986 to include an outlet in Tampa, Florida. The intended market of Computer Trends International is the small business market which it projects will make up 80 percent of its total sales. There is no evidence that Computer Trends International utilized the words "Computer Trends" in its corporate name and trade/service marks with knowledge of the existence of Computer Trends, Inc., or any intent to infringe on its business. Computer Trends, Inc., and Computer Trends International, Inc., sell many of the same brand name computers and peripherals. Although the Petitioner sells computers for home use, at least 50 percent of the market is in small business computers. The Petitioner has a statewide WATS line, advertises statewide, and has intentions of expanding to other cities on the lower west coast of Florida. An operator in the Tallahassee Office of the Division of Corporations, Department of State, was queried about informational trends by Cynthia Armstrong, Vice-President of Computer Trends, Inc. The operator asked Armstrong, "which one, Computer Trends or Computer Trends International?" This was the only credible evidence of incidents related to confusion of corporate names presented by the Petitioner. The Petitioner and Respondent are both engaged in the retail sales of computers. The two corporations provide some of the same or similar types of goods and services. Both corporations use similar types of advertising media and maintain a substantial statewide business presence with an overlap of market area in the Tampa Bay area of Florida. The trade/service mark of the two corporations have very little in common except the words "Computer Trends." The trade/service marks use different colors, different style type, and different logos. The likelihood of confusion between the two trade/service marks is minimal. The two corporations while engaging in retail sales of computers and peripherals aim at different levels of the computer market place. The Petitioner's target market is home personal computers and personal computers utilized by small businesses. The target market for the Respondent is medium and large businesses using higher capacity personal computers.
Recommendation Based upon the foregoing findings of fact and conclusions of law it is RECOMMENDED: That the Department of State should dismiss the petition. DONE and RECOMMENDED this 11th day of March, 1985 in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of March, 1985. COPIES FURNISHED: S. Thomas Padgett, Esquire Post Office Box 737 Tampa, Florida 33601 Robert E. Mansback, Jr., Esquire Post Office Box 3000 Orlando, Florida 32802
