Findings Of Fact On or about June 3, 1987, DOT advertised that it would receive bids on State Project No. 97870-334, etc. in Dade, Broward and Palm Beach Counties to improve portions of the Florida Turnpike. On June 24, 1987, bids were received by DOT from Gilbert, State Paving and Archer Western Contractors. The apparent low bidder at bid opening on June 24, 1987, was Gilbert and State Paving was apparent second low bidder. DOT was informally advised by John Beck, an attorney representing State Paving, that Gilbert's bid was believed to be unbalanced and the appropriate officials referred the issue to the DOT Bureau of Estimates to look into the low bid to see if it was unbalanced to the detriment of the State. Review of the Gilbert bid began with an internal analysis of the bid prices in comparison to the DOT Estimate of the Work. All bid prices above or below a certain percent of the engineer's estimate of costs were prepared in a computer printout and those items were checked by the consultants on the project. Basically, the major items in the project, which comprises some 400 bid items, were broken down to 10 groupings and the bids for each item in these groups was prepared for the three bidders and tabulated in Exhibit 2. The DOT Technical Committee reviewed the bids and concluded there was no unbalancing in Gilbert's bid which was detrimental to the State. This recommendation was approved by the Awards Committee which had also been furnished the information in Exhibit 2 by the consulting engineer for the project. Based upon this information, the Awards Committee concluded that the awards should go to Gilbert as no unbalancing detrimental to the State was found. Specification made a part of all DOT bid proposals provide that DOT may reject an unbalanced bid. As a matter of policy, DOT only rejects unbalanced bids deemed contrary to the interests of the State. Bids may be unbalanced in numerous ways. One significant method is known as front loading where the bidder submits a high bid for the work to be done at the beginning of the project such as clearing and grubbing and low bids for the work done later in the project. If successful in getting the award, this bidder would have excess profits on the clearing and grubbing which could draw interest while the less profitable later work was being done. Another variant is to study the plans and specifications to see if the quantities listed in the bid proposal are accurately reflected in the plans and specifications. If not, those items for which the bid proposal shows more than the plans and specifications reasonably required can be bid low, and for those items by which the bid proposal shows less than actually will be required can be bid high. Since the contractor is paid by the units used, those excess units at a higher price would result in more profit for the contractor yet allow him to submit an overall lower bid. For example, if the bid proposal contains two similar items for which the request for proposal estimates 100 each will be required, and the bidder concludes that only 50 will be required at Site A and 150 at Site B, he submits a low bid for Site A and a high bid for Site B. If the fair price for these units is $10 each, and the bidder bids $5 per unit for Site A or $500, and $15 for Site B or $1500, the total bid price is $2000, but if the bidder only installs 50 at Site A he would be paid $250 and install $150 at Site B for which he would be paid $2250. His total compensation would be $2500. In competitively bid contracts, such as the instant project, contractors modify their prices by taking a calculated risk that certain items bid on will not need to be accomplished and submit a nominal bid of $1 or 1 cent for such an item. By definition, such a bid is unbalanced, but if the item so bid has to be provided, the contractor has to provide this service at the bid price. The only evidence submitted by Petitioner tending to show Gilbert's bid was unbalanced to the detriment of the State was testimony, objected to and sustained, that the plans and specifications showed more of certain units would be needed than the estimated quantities on the bid proposal, which constituted the basis for the bids submitted. Such evidence constitutes a challenge to the bid specifications and is untimely. Gilbert's witness who prepared the bid submitted by Gilbert adequately explained the basis for bids submitted by Gilbert on the challenged items. The document entitled "This is Not an Addendum," clearly states on its face that "an addendum may follow containing the following information." No bids are solicited thereby and for no item contained thereon is the State obligated to contract. This document was provided all bidders before bids were open and no unfair advantage to anyone or detriment to the State was shown. In a project containing some 400 bid items, many modifications of the contract during construction is required to cover unforeseen circumstances that arise. While it would be better to get competitive bids on every bit of work done on this project, in this imperfect world unforeseen items will appear. The document complained of attempts to alert the bidders to some anticipated work not foreseen when the bid proposal was prepared, but it is not a part of the bid solicitation.
The Issue : The issue to be resolved in this proceeding concerns whether the agency action in recommending award of the contract for a renovation of a National Guard Armory to Concrete Services, Inc. (CSI) was "clearly erroneous, contrary to competition, arbitrary or capricious." More specifically, it must be determined whether a specification requiring that all general and subcontractors visit the project site and examine the existing site conditions prior to bid submittal, and certifying to that fact, was a waivable or minor irregularity, not affecting the price of the proposal by giving an unfair competitive advantage to any bidder or proposed vendor.
Findings Of Fact The Department of Military Affairs (Department) issued an invitation to bid for certain renovation work at the National Guard Armory in Tallahassee. The invitation to bid was issued on March 2, 2008. It was accompanied by an advertisement number 207005 and addenda No. 1-3. These were the documents that defined the scope of the work proposed to be constructed by the Department and the various specifications, conditions, and criteria which were to guide and be relied upon by prospective vendors or bidders. The invitation to bid stated that the contract would be awarded to the lowest responsive and responsible bidder. The invitation to bid notified prospective bidders that the Department reserved the right to waive minor irregularities in a bid where they did not affect the price of the proposal. Thus, the Department stated in the Invitation to Bid "the Department reserves the right to accept or reject any or all proposals received and reserves the right to make an award with or without further discussion of the proposals submitted or accept minor informalities or irregularities in the best interest of the State of Florida, which are considered a matter of form and not substance and the correction or waiver of which is not prejudicial to other proposals." The reasons stated in the Invitation to Bid and Addenda for disqualification of a bidder did not include the failure of the contractor or subcontractors to visit the project site. Rather, the invitation to bid and advertisement list placed on the discriminatory business list, the submission of an electronic bid and employment of unauthorized aliens as irregularities that would result in disqualification of a bidder. The invitation to bid defines minor irregularities as "those that will not have an adverse effect on the DMA's interest and will not affect the price of the proposal by giving a proposer an advantage or benefit not enjoyed by all other proposers." The Department thus did not make failure of a contractor or subcontractor to visit the site of the project an event that would result in disqualification. The Department's intent rather was to place contractors on notice that failure to visit the site would be at the sole risk of the general contractor/bidder if failure to visit the site resulted in an unforeseen problem, cost, or risk. The Department stated at Addendum 1, D-9 the following: D-9 site examination by contractor: The general contractor and all subcontractors as listed on Exhibit Five, shall visit the project site and examine the existing conditions affected by this work prior to submitting a bid. Any bid submitted without prior examination of on-site existing conditions will be at the sole risk of the general contractor. The contractor shall submit on its letterhead the following at time of bid, certifying that he and his subs thoroughly examined the project site: 'I (name of general contractor), do hereby certify that all associated general and subcontractor entities have visited the project site and thoroughly examined the on- site existing conditions prior to the submittal of the bid.' Lt. Col. Keating is the contract officer and manager. His duties include reviewing the bids and making final determination on bid proposals submitted to the Department for projects such as this renovation project. He reviewed the entire package of bid submissions after the bid opening in Tallahassee. These are his duties concerning every bid opening of the Department. Lt. Col. Keating reviewed the failure of CSI to submit the Addendum D-9 letter and determined that the absence of the letter did not give CSI an unfair competitive advantage. He determined that this was a minor irregularity which was waivable. Mr. Hersey was the construction consultant for the Department for this project. Mr. Hersey reviewed the CSI file after the bids were submitted, noting that CSI's bid did not include all the verbiage required by Addendum One, D-9. He determined, however, that the proposed included the "Exhibit 4" document which stated that CSI had "visited the site of the proposed project and familiarized himself with the local conditions, nature, and extent of the work." Mr. Hersey brought this omission to Lt. Col. Keating's attention. Lt. Col. Keating considered the failure of CSI to submit the Addendum 1, D-9 letter language and determined that the omission did not give CSI an unfair competitive advantage over other bidders and therefore that it was a minor irregularity. He determined that the fact that there was language in the bid submittal of CSI to the effect that the contractor had visited the site and familiarized himself with conditions, nature, and scope of the work made the bid actually responsive. The failure to include the language required in Addendum 1, D-9 did not render the bid unqualified or non- responsive, but, instead, the failure to include that language would have the consequence of making CSI responsible for any loss caused by the failure to visit the project site or have the subcontractors visit the project site before bidding. If that omission caused any additional cost or unforeseen circumstances which had a cost attributable to them, CSI would have to bear the risk of paying for any such expense itself under the terms of the specifications. It was thus determined that the failure to visit the site had the consequence of making the contractor assume resulting risks but was considered by the Department to be a quality assurance measure in the specifications, instead of a determining or qualifying factor for award of the project. Lt. Col. Keating determined that the failure to submit the required language in the letter did not give CSI an unfair competitive advantage. CSI's bid was $1,866,212.00. The bid of the Petitioner, Warren Building Company, Inc., was $1,944,000.00. Thus, CSI's bid was $77,788.00 lower than the bid submitted by the Petitioner Warren. In preparing his bid submittal, the Petitioner had not been charged by his subcontractors for their visiting the Tallahassee project site. His entire cost of submitting the response to the invitation to bid on behalf of Warren, was $10,000.00 or less. Thus, the failure by CSI to have subcontractors visit the site and evaluate the work was clearly not shown to have saved CSI costs, in an amount anywhere approaching the total difference in the amounts of the two bids. Only if the avoidance of such costs represented by the visits of the contractor and subcontractors to the job site was greater than or at least approximately equal to the $77,788.00 difference between the two bids, would the failure of CSI to entirely comply with this specification result in a change in the relative competitive positions of the two bidders. Put another way, there was no evidence to show that had CSI completely complied with the disputed specification, that it would not still have much the lowest-priced responsible and responsive bid. It was thus determined by Lt. Col. Keating that the $1,866,212.00 bid submitted by CSI was the lowest responsible and responsive bid. He therefore determined that the award of the contract should be give to CSI and an Agency decision to that effect was posted on April 11, 2008. The subject protest and proceeding ensued.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Military Affairs, awarding the contract for renovation work at the National Guard Armory in Tallahassee, Florida (No. 207005) to Concrete Services, Incorporated. DONE AND ENTERED this 20th day of August, 2008, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of August, 2008. COPIES FURNISHED: Thayer M. Marts, Esquire 1105 Hays Street Post Office Box 1814 Tallahassee, Florida 32302 Kim F. Heller, II, Esquire Elizabeth C. Masters, Esquire Florida National Guard Post Office Box 1008 St. Augustine, Florida 32085-1008 Elizabeth C. Masters, Lt. Colonel Florida Army National Guard 82 Marine Street St. Augustine, Florida 32084
Findings Of Fact The Department issued an invitation to bid (ITB) and solicited bids for district-wide miscellaneous property management maintenance services pursuant to ITB-DOT-94-95-4004. Kemp Services, Inc. (Kemp), submitted the lowest bid for the subject ITB. Petitioner, Urban Group, Inc., submitted the second lowest bid for the subject ITB. Section 1.1 of the ITB provided: Invitation The State of Florida Department of Transport- ation requests written bids from qualified firms to MAINTAIN RIGHT-OF-WAY STRUCTURES AND VACANT LOTS BY PROVIDING CLEAN-UP SERVICES, LAWN SERVICES, LANDSCAPE SERVICES, SECURING OF BUILDINGS, AND OTHER MISCELLANEOUS HANDYMAN AND SKILLED LABOR SERVICES. ALSO PROVIDE SERVICES FOR SIGN REMOVAL FOR STRUCTURES ILLEGALLY ON THE DEPARTMENT'S RIGHT-OF-WAY OR ILLEGALLY ON PRIVATE PROPERTY IN THE FOLLOWING FIVE COUNTY AREA: BROWARD, MARTIN, PALM BEACH, ST. LUCIE AND INDIAN RIVER COUNTIES. For the purpose of this document, the term "bidder" means the prime Consultant acting for itself and those individuals, partnerships, firms, or corporations comprising the bidder's team by joint venture or subcontract. The term "bid package" means the complete response of the bidder to the Invitation To Bid, including properly completed forms and supporting documentation. [Emphasis in text.] The services were to be provided on an as-needed basis for the term of the agreement, two years. Section 1.7.1 of the ITB provided: Qualifications 1.7.1 Bidders must meet the following minimum qualifications: BIDDERS MUST HAVE AT LEAST TWO YEARS EXPERIENCE PROVIDING AT LEAST TWO (2) OF THE SIX SERVICES OUTLINED IN THE SCOPE OF SERVICES IN EXHIBIT "A". BIDDERS MUST HAVE BEEN IN CONTINUOUS BUSINESS FOR THE PAST TWO (2) YEARS AND COMPLETE FORM "F" WITH THE INFORMATION REQUESTED REGARDING WORK EXPERIENCE AND REFERENCES. ALL REFERENCES WILL BE CHECKED. FAILURE TO PROVIDE FORM "F" AND THE WORK EXPERIENCE REQUESTED WILL CONSTITUTE A NON- RESPONSIVE BID. [Emphasis in text.] Section 1.7.4 of the ITB provided: Qualifications of Key Personnel Those individuals who will be directly involved in the project must have demonstrated experience in the areas delineated in the scope of work. Individuals whose qualifications are presented will be committed to the project for its duration unless otherwise accepted by the Department's Contract Manager. Where State of Florida registration or certification is deemed appropriate, a copy of the registration or certificate should be included in the bid package. Section 1.7.5 of the ITB provided: Authorizations and Licenses The Consultant must be authorized to do business in the State of Florida. Such authorization and/or licenses should be obtained by the bid due date and time, but in any case, will be required prior to award of the contract. For corporate authorization, contact: Florida Department of State Division of Corporations The Capitol Building Tallahassee, Florida 32399 (904)487-6052 Other than the provisions above, no other licensure or authorization to do business was required by the ITB. Section 1.8.2 of the ITB provided: Responsiveness of Bids All bids must be in writing. A responsive bid is an offer to perform the scope of services called for in this Invitation to Bid. Bids found to be non-responsive shall not be considered. Bids may be rejected if found to be irregular or not in conformance with the requirements and instructions herein contained. A bid may be found to be irregular or non-responsive by reasons, including, but not limited to, failure to utilize or complete prescribed forms, conditional bids, incomplete bids, indefinite or ambiguous bids, improper undated or unsealed signatures (where applicable). Section 1.8.4 of the ITB provided: Other Conditions Other conditions which may cause rejection of bids include evidence of collusion among bidders, obvious lack of experience or expertise to perform the required work, or failure to perform or meet financial obligations on previous contracts, or in the event an individual, firm, partnership, or corporation is on the United States Comptroller General's List of Ineligible Contractors for Federally Financed or Assisted Projects. Bids will be rejected if not delivered or received on or before the date and time specified as the due date for submission. Section 1.8.5 of the ITB provided: Waivers The Department may waive minor informalities or irregularities in bids received where such is merely a matter of form and not substance, and the correction or waiver of which is not prejudicial to other bidders. Minor irregular- ities are defined as those that will not have an adverse effect on the Department's interest and will not affect the price of the Bids by giving a bidder an advantage or benefit not enjoyed by other bidders. Section 1.18.1 of the ITB provided: Award of the Contract The Department intends to award a contract to the responsible and responsive bidder who bids the lowest cost as identified in Form "C", Bid Blank, attached hereto and made a part hereof. The ITB did not specify a minimum number of employees, vehicles or hours of service for a bidder to be deemed responsible or responsive. At all times material to this case, Kemp has been in continuous business for the past two (2) years, and completed form "F" with the information requested regarding work experience and references. The Department's agent, Mr. Gentile, checked with two of the references listed by Kemp to verify information relative to this bid requirement. At all times material to this case, Kemp had at least two years experience providing at least two (2) of the six services outlined in the scope of services. The Department's agent, Mr. Gentile, checked with two of the references listed by Kemp to verify information relative to this bid requirement. While Mr. Gentile was authorized to check with all references listed by Kemp, the failure to do so does not discount the information obtained from the sources that were checked. Kemp had an appropriate occupational license to perform work in the tricounty area, but did not have occupational licenses with the City of Hollywood or Broward County. At all times material to this case, Kemp maintained a warehouse to secure the equipment to be used such as lawnmowers, trimmers, and cleaning supplies/equipment. After the bid protest was filed, the Department verified that Kemp had used the warehouse as it claimed. No evidence to the contrary was presented. The mailing address Kemp listed on the first page of its bid response was 8637 S. Sutton Drive, Miramar, Florida. Mr. Faluade resides at that address. He listed that address for mail purposes. The business address for Kemp listed on the bid response was 6200 Johnson Street, Miramar, Florida. This address is a store-front facility with limited office equipment and furniture. Kemp maintains an office at this location but stores its equipment elsewhere as noted above. Kemp was the lowest responsive, responsible bid for ITB-DOT-94-95- 4004.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Transportation enter a final order dismissing Petitioner's challenge to the award of ITB-DOT-94-95-4004 to Kemp Services, Inc. DONE AND RECOMMENDED this 14th day of February, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH 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 14th day of February, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-5967 Rulings on the proposed findings of fact submitted by the Petitioner: Paragraphs 1 through 4, 6, and 8 are accepted. With regard to paragraphs 5, 7, and 16 noting that the additional emphasis is not in the text and that the citations are incomplete (and perhaps misleading), they are accepted. Paragraph 9 is rejected as contrary to the weight of credible evidence. Paragraph 10 is rejected as contrary to the weight of credible evidence. Paragraph 11 is rejected as incomplete, and therefore, misleading. Corporate documents may have been filed on that date, however, the weight of the credible evidence established that Kemp had been in business the requisite amount of time. Paragraph 12 is rejected as incomplete, and therefore, misleading. The business conducted by the Kemp personnel continued regardless of the business entity structure that was used. Paragraph 13 is rejected as contrary to the weight of credible evidence. Paragraph 14 is rejected as contrary to the weight of credible evidence or irrelevant. Paragraph 15 is rejected as contrary to the weight of credible evidence. Paragraph 16 is rejected as contrary to the weight of credible evidence. Moreover, no credible evidence was presented to establish that Kemp did not provide services as described in the ITB or that it was not in business the requisite time. Paragraph 17 is rejected as incomplete, and therefore, misleading. The mailing address listed by Kemp was a residential address. Paragraph 18 is rejected as irrelevant. Paragraph 19 is rejected as contrary to the weight of credible evidence. Paragraph 20 is rejected as irrelevant. Kemp probably does not have a Leon County occupational license either. It did have an appropriate occupational license at all times material to this case. Rulings on the proposed findings of fact submitted by the Respondent: 1. Paragraphs 1 through 29 are accepted. COPIES FURNISHED: Thomas H. Duffy Assistant General Counsel Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Mitchell B. Polay Mark H. Klein 750 S.E. Third Avenue Suite 205 Fort Lauderdale, Florida 33316 Thornton J. Williams General Counsel Department of Transportation 562 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450
The Issue The issue in this case is whether Respondent properly rejected the bid of Petitioner.
Findings Of Fact Respondent issued on February 28, 1990, an invitation to bid concerning the installation of bleachers at a high school ("ITB"). The ITB was duly advertised. Among the bidders was Interkal, Inc., which is a manufacturer of bleachers. The Interkal bid, which was timely submitted, was executed by its president. The Interkal bid contained a bid bond naming Interkal as principal and a certification from the secretary of Interkal reflecting a corporate resolution authorizing the execution of all bid documents on behalf of Interkal by its corporate officers. The Interkal bid disclosed two subcontractors. The supplier was shown as Interkal, and the erector was shown as Petitioner. Petitioner is the authorized factory representative for Interkal in Florida. As such, Petitioner solicits business and installs and removes bleachers on behalf of Interkal. As compensation, Petitioner receives commissions for such work from Interkal. However, the shareholder and chief executive officer of Petitioner is not a shareholder or officer of Interkal. In addition, Petitioner is not authorized to execute bid documents on behalf of Interkal. Petitioner is no more than a Subcontrator of Interkal. The bidder in this case was Interkal, not Petitioner, even though Petitioner handled much of the paperwork or its manufacturer. When an unrelated bidder was awarded the contract, Petitioner filed a formal written protest in its name. Interkal has not participated as a party in the subject proceeding.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that Respondent enter a Final Order dismissing the petition of Diversified Design Enterprises. ENTERED this 22nd day of May, 1990, in Tallahassee, Florida. ROBERT D. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of May, 1990. COPIES FURNISHED: Ned N. Julian Stenstrom, McIntosh, et al. P.O. Box 1330 Sanford, FL 32772-1330 William Merkel, President Diversified Design Enterprises 321 N.E. Second Avenue Delray Beach, FL 33444 Robert W. Hughes, Superintendent Seminole County School Board 1211 Mellonville Avenue Sanford, FL 32771
Findings Of Fact On May 19, 1983, Respondent mailed official Invitations to Bid (IFB) forms to 18 different firms, including Petitioner, soliciting bids for Class VI printing in accordance with the specifications and conditions attached to the letter, signed by R. E. Read, Jr. This letter contained the comment, "As the best interests of the State may require, the right is reserved to reject any and all bids and to waive any irregularities in bids received." This letter also advised prospective bidders who had questions regarding the IFB to call Larry Amison, the individual who had drafted the accompanying specifications. The notice of IFB, published in the Tallahassee Democrat on Thursday, May 19, 1983, also contained a notice of reservation of the right to reject all bids. Only five IFB forms were returned. Three of the five were returned without bids for various reasons, such as "Not Competitive," "Unable to meet specified delivery date" and "Cannot schedule job of this proportion at this time." This type of explanation, in government procurement circles, need not be taken at face value, but is often used to signal the recipient's thanks for the invitation to bid and a desire to be invited to bid again at some time in the future. The other two forms received were bids: one from Zenith Communications Group, and one from Petitioner. This procurement was somewhat unusual in that the IFB stipulated the amount of money the agency had to spend and requested a hid as to the most product it could get for that money. There were two publications involved: "A" and "B." An alternative was given on delivery date options: one within 30 working days of receipt of approved proofs, and one within 45. Zenith offered to provide 7,180 copies of Book "A" and 7,155 copies of Book "B" (14,335 total books) for a total price of $53,400 1/ within 30 working days. Petitioner offered to provide 9,473 copies of Book "A" and 4,950 copies of Book "B" (15,423 total books) for a total price of $53,344.64 within 45 days. The bids were opened on June 1, 1983, and published from June 1 through June 10, 1983. They were brought to the Director for consideration upon opening. It is his responsibility to evaluate the bids and make a recommendation to the Commissioner of Agriculture on the successful low bidder. Since there was only one bid on each delivery date, the Director felt there were not two comparative bids. As a result, he forwarded the bid package to Ms. Grace Harrison, a purchasing agent with the Department of Agriculture and Consumer Services and an individual very familiar with the procurement of printing services. After a review of the entire bid package, Ms. Harrison's studied opinion was that there were two valid bids and Douglas was the low bidder, and it is so found. Ms. Harrison also felt it was unusual not to receive any more responses than were received on a procurement of this magnitude. This same opinion is held by Mr. Amison, who drafted the specifications. Others have differing opinions, however. Whether it was unusual or not, however, is immaterial. There were two valid bids, and only two are required for an award. However, even in the case of two bids, the agency reserved the right to reject any and all bids. As a result, on or about June 6, 1983, the Director decided, based on his understanding of state policy on the matter and in light of the size of the procurement, to seek more bids through rebidding. In this case, the Director felt more bids were available because of the responses of the nonbidders which referred to the response times being so short. Therefore, he directed a rebid, and this information was communicated to all bidders, including Petitioner. On June 7, 1983, Petitioner wrote to the Director, disagreeing with his decision and notifying him of its protest. On the following day, the Director notified Petitioner the rebidding was being delayed, giving Petitioner 10 days to file a formal notice of protest. This was done in a timely manner. The phrase regarding the agency's right to reject bids is contained in every State IFB. Its purpose is to permit state agencies to reject bids where it becomes apparent there is a valid and legitimate benefit to be gained by the agency in doing so. One such situation is when, in the bona fide opinion of the agency, there are insufficient bids. While there is a difference of opinion as to whether only two bids are unusual in a procurement of this nature, there is no dispute that it would have been beneficial to the agency to have received more than two, since more bids would increase competition. To rebid the contract at this juncture would undoubtedly increase competition to the potential benefit of the Respondent. However, Petitioner claims it would also work to its detriment because other potential bidders would have access to the details of the two present bids and would thereby gain an advantage. This may be the result of rebidding.
Recommendation In light of the foregoing, it is RECOMMENDED: That Petitioner, Douglas Printing Company, Inc., be awarded Contract DOF- ADM-79. RECOMMENDED this 8th day of September, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 8th day of September, 1983.
The Issue The issues are whether Personnel Pool of North Central Florida, Inc., d/b/a Medical Personnel Pool (MPP), is the lowest qualified bidder on Contract No. R- 2119 or whether Suwannee Valley Medical Personnel Corporation (Suwannee) is entitled to the award of Contract No. R-2119 or is entitled to have all bids rejected and the contract relet for bids.
Findings Of Fact The ITB on Contract No. R-2119 was developed jointly between the Department's Central Office and the Region II contracting staff. The Region II staff sent a draft of the ITB to the Central Office, where it was reviewed by Gerald Ellsworth, the Department's Human Service Program Specialist. Mr. Ellsworth is responsible for reviewing the Department's contracts and plans, as well as for development of the Department's proposed invitations to bid and other related types of documents. Mr. Ellsworth has considerable experience in drafting and reviewing governmental contracts for purchasing of services at the state, local and federal government levels. The ITB was also reviewed by the Department's legal office, the Office of Management and Budget and the Correctional Medical Authority, with regard to both the specifications and the contract language in the ITB. The Department properly published the ITB on or about June 28, 1989. The ITB was published under cover of a formal State of Florida Invitation to Bid for Contractual Services, Form PUR: 7031 (Rev. 10/18/88), containing the State of Florida standard general conditions for bids for contractual services. Among those conditions were detailed requirements regarding the sealed nature of bids, requirements for the execution of bids, requirements regarding the opening of bids and conditions regarding prices, terms and payment, interpretations and disputes, conflict of interest, awards, governmental restrictions, default, legal requirements, advertising, assignment, liability, facilities, cancellation and public records. The same general conditions on the first page of the ITB specifically provided an exclusive mechanism for the bidders to resolve questions and disputes regarding the conditions and specifications of the ITB: INTERPRETATIONS/DISPUTES: Any questions con- cerning conditions and specifications shall be directed in writing to this office for receipt no later than ten (10) days prior to the bid opening. Inquiries must reference the date of bid opening and bid number. No interpretation shall be considered binding unless provided in writing by the State of Florida in response to requests in full compliance with this provision. (Emphasis added.) The body of the ITB stated that the Department was soliciting bids for registered and licensed practical nurse services in the Department's Region II, on all shifts, for the care and treatment of inmate patients, as further defined in the ITB's section entitled "Responsibilities of Successful Bidder; Scope of Work." The ITB also contained detailed requirements regarding Nurse Professional Qualifications, Quality Management Standards, Scheduling of Nurses, Records, Invoicing, Insurance, Legal Requirements, Conflict of Interest, Unsatisfactory Performance, Brokering of Contract, Subcontracts, Verbal Instructions, detailed procedural requirements regarding the submission, review and evaluation of the bids, a description of the institutions covered and a copy of the sample contract. One of the procedural requirements in the body of the ITB repeated that: All inquiries from Bidder's [sic] concerning this Invitation to Bid shall be submitted in writing to the office identified on the cover of this Invitation to Bid. Such inquiries shall be received by the office on or before the date indicated above in the Calendar of Events as the "Last Day for Written Inquiries" [July 10, 1989]. (Emphasis added.) The ITB contained a "Bid Price Sheet" which contained separate blanks for RN and LPN services, separate blanks for each service for weekdays and weekend/holidays, and separate blanks for each of these categories for each of the three geographic areas of Region II, in each of the three years of the contract. That Bid Price Sheet stated that prices quoted "shall be firm net prices regardless of travel involved. . . " The body of the ITB specified that bidders must submit "all costs in the format specified on the Price Quote Sheet provided." (Emphasis added.) Further, the "Proposal Evaluations" section of the ITB specified that the figures to be inserted in the blanks on p. 15 were to be "hourly rates" for each type of nursing service. The next paragraph of this section of the ITB, however, stated that "Total cost, and cost breakouts on the Price Quote Sheet shall be clearly stated." The undisputed testimony of Gerald Ellsworth established that the intent of these provisions of the ITB was to require the bidders to state the total cost (i.e., net firm price) for each hour of nursing services in a particular geographic area at a particular point in time. Even though the ITB set forth an estimate of the hours that would be required under the contract, this information was clearly only in the nature of an estimate, and it was never the intent of the ITB to require the bidders or the Committee to project or evaluate, respectively, the total cost of the contract (as opposed to the total cost of each hour of service) by multiplying the bidders' bid costs for each hour of service by the corresponding estimate of hours needed over the three- year life of the contract for each of those categories. The primary reason for this focus upon the cost of an hour of service, rather than the cost of the entire contract, is that the estimated hours needed, as indicated by the ITB, are only estimates. Actual demands for service and workloads are likely to vary considerably, both by type of nursing position and geographic area. These demands could also vary as a result of factors such as the vacancy levels in the Department's own staff of employee nurses or changes in administrative personnel at a given institution. The ITB called for a mix of both objective and subjective evaluation of materials submitted by the bidders. The cost data, submitted in response to p. 7, para. E; p. 12, para. F.2.e; and p. 15, para. 7 was entirely objective, as was the Committee's role in evaluating that data. On the other hand, the information required from bidders under p. 12, para. F.2.a ("Project understanding and statement of work and reference from clients"), and p. 12, para. F.2.b ("Nurse Professional Qualifications"), called for a mix of both subjective and objective information and evaluation. The former, referred to throughout the testimony as "Criterion A," required the bidder to submit "a narrative statement of work to be performed, and references from clients in accordance with the specifications appearing at p. 4, para. 2.A. The latter, referred to in the testimony as "Criterion B," required bidders to: submit professional qualifications, experi- ence, and CPR certification for Department reviewers which documents the Bidders [sic] capability to provide registered and licensed practical nurse personnel that meet the training specifications. as set forth at pp. 4-5, para. 2.B. Within Criterion B, for example, an entirely objective requirement is the proof of the bidders' nurses' CPR qualification. A subjective element of this same criterion would be the quantity and quality of documentation of available nurses. The ITB required the Committee to award points to the respective bidders based on a formula which takes into account each of these objective and subjective criteria. That Formula, at its first level, assigned a point value of 20 points for Criterion A (Project understanding and statement of work, and references from clients), 30 points for Criterion B (Nurse Professional Qualifications) and 50 points for Criterion C (Bid Cost). Specifically as to Criterion C (Bid Cost), this criterion was entirely objective and did not require any subjective analysis by the Committee. The ITB specified that the lowest bidder "shall" be awarded 50 points, based on the average of the three years' quotes for cost of hours of nursing services. The ITB specified that the remaining bidders "shall" be awarded points for bid cost based on the following formula: Points Awarded Equals 50 x (1-A/B) where A equals the difference between the respective bidders' average bid and the lowest average bid, and B equals the lowest bidder's average bid. Unlike Criterion C, the Committee members' evaluation of the bidders' responses to Criteria A and B was left to their judgment and discretion. While the ITB set forth factors that were to be taken into consideration by the Committee members under these criteria, there was no required method by which an evaluator was to assign points for Criteria A and B. Specifically, there was no requirement in the ITB that the evaluators rank the bidders under Criteria A and B. An evaluator was free, for example, to give all bidders full point credit under either criterion, or to assign them any variation of points. This type of point system for mixed weighing of subjective and objective criteria is not unusual in governmental purchasing contracting and competitive bidding and is, in fact, normal procedure. The bid criteria set forth in the ITB, as well as the system set forth therein for evaluation of those bids by a mix of subjective and objective criteria, is rational. Further, and specifically, the ITB's requirement that costs be quoted as a rate per hour of service, by geographic area and point in time, is rational. It would be irrational to evaluate bid cost under this ITB by multiplying each bidder's price quotes for individual hours of service, broken down by geographic area and point in time, by the corresponding estimates of hours needed, set forth at p. 3 of the ITB, and then comparing the resulting "total cost" of the contract under each bid, since the estimated hours were intended to be no more than estimates, and the Department recognizes that these hours are subject to significant variation over the term of the contract. This probable variation would make the latter calculation entirely meaningless and baselessly speculative. It was not the intent of the ITB to find the "lowest and best" bidder. Instead, the intent of this ITB was to find the lowest bidder who met the qualifications and specifications set forth in the ITB. This is not the same as "lowest and best." The Bidders and Their Bids Medical Personnel Pool MPP, the successful bidder on Contract No. R-2119, timely submitted its bid for that contract. MPP's bid showed that MPP is a nationally recognized health care provider, with over twenty years of experience in serving the health care needs of both home health clients and facility clients. Its franchise office in Gainesville, Florida, is one of four offices operated in the Region II area by Mr. Ed Bixby, a former vice president of MPP's parent company, Personnel Pool of America, Inc. Mr. Bixby personally has over fifteen years of experience in medical staffing. All MPP offices follow the same national corporate standards for quality assurance, office operation and general business practice. Further, MPP is a financially sound and viable business, with an ongoing corporate recruitment program that regularly attracts new employees. MPP's client service representatives are on-call and available 24 hours a day, seven days a week, to meet the Department's staffing needs. The agency has been managed since October 1987, by Mr. Duane Gorgas, who has seventeen years of experience in facility clinical laboratory medicine, and who is licensed by the Department of Health and Rehabilitative Services as a clinical laboratory supervisor. MPP demonstrated compliance with Criterion B of the ITB by showing that each of its nurses is carefully and personally screened and tested for nursing skills prior to being sent into the field. In addition, MPP personally verifies all nurses' licenses with the Department of Professional Regulation, as well as their CPR certifications. A minimum of one year's documented current clinical experience is required prior to a nurse's being sent into the field. Further, MPP is itself an approved provider of nursing and other professional continuing education programs (DPR Provider No. 27M0938) and provides continuing education directly to its employees on a regular basis. MPP's Gainesville franchise already provides RN's and LPN's to correctional facilities, hospitals and nursing homes throughout sixteen counties in north central Florida. A list of the prisons and county jails currently and historically staffed by MPP in both Regions II and III was included in the bid, and includes thirteen corrections facilities in those two regions. A broad range of references from these and other clients, both institutional and personal, was included as Attachment II to MPP's bid. Copies of the licenses of 48 experienced MPP nurses, qualified and available to provide the services called for under Contract No. R-2119, were attached to the bid as Attachment III. Suwannee Suwannee's bid was also timely submitted. Whereas Suwannee now protests that the Department's manner of determining bid costs as net cost per hourly unit of service is irrational, that contention is belied by Suwannee's own bid. In the first place, Suwannee did not quote cost as a multiplication of hourly rates times total estimated hours anywhere in its bid, even though its president, Mr. Fortner, now contends this is the only rational way to quote or determine bid cost under the ITB. Further, Mr. Fortner expressly conceded that the ITB did not call for any such calculation of "total cost" by multiplication of rates by estimated hours. Even so, Suwannee has waived any objection or question it may now have as to the method of determining bid cost. Mr. Fortner conceded that he was fully aware of the standards set forth at pp. 1 and 11 of the ITB, requiring that questions or objections to the reasonableness, necessity or competitiveness of the terms and conditions of the ITB be submitted in writing in a timely manner prior to July 10, 1989. Mr. Fortner nevertheless conceded that he failed to submit any such questions or objections regarding the reasonableness, necessity or competitiveness of the terms and conditions of the ITB, until the filing of his protest after the award of the bid to MPP, and long after July 10, 1989. Having failed to file any timely written objections to the reasonableness, necessity or competitiveness of the terms and conditions of the ITB, therefore, Suwannee has waived any objections to the Department's method of calculating bid costs by averaging each bidder's unit net price for an hour of service by geographic area and point in time, as opposed to Suwannee's after- the-fact preferred method of multiplying these rates by estimated hours to determine Suwannee's definition of "total cost." Suwannee's bid, as supported by its president's testimony, showed that Suwannee was only incorporated in late July 1988, less than a year before the ITB was published. Prior to that time its then-22-year-old president's business experience consisted of operating a video store. Mr. Fortner conceded he had no prior experience whatsoever in providing any sort of nursing or medical services. Prior to the bid letting, Suwannee's sole experience in attempting to staff a correctional facility was at Baker Correctional Institute. Mr. Fortner testified that his first client was Lake City Medical Center, yet no reference from that facility appears in his bid. On the other hand, MPP's bid contains a highly favorable reference from Lake City Medical Center's director of nursing, indicating a completely satisfactory contractual relationship with MPP since 1987. Whereas MPP directly provides continuing education to its nurses under its own provider number, Suwannee takes the position that continuing education requirements are the nurses' responsibilities, and that they must meet these requirements at their own expense. Further, while Mr. Fortner stated that he believes Suwannee tests its nurses, he admitted he did not know how, and Suwannee's bid was silent on this aspect of Criterion B of the ITB. Suwannee's bid was also silent on screening of new nurse applicants. Suwannee has only recently hired a full-time director of nursing. Whereas MPP submitted qualifications for 48 nurses to staff the estimated hours under contract, Suwannee proposed to staff the same number of estimated hours with only 31 nurses. Mr. Fortner testified that the number of licenses in Suwannee's bid constitutes the full complement of nurses he deems necessary to provide the number of hours of service estimated in the ITB. The Bid Evaluation Process Objective Evaluation of Criterion C Initially, because of a confusing misprint in the ITB regarding the mathematical formula for calculating points to be awarded to bidders, other than the lowest average cost bidder, under Criterion C (bid cost), some of the four Bid Evaluation Committee members calculated the ranking of bidders under that criterion differently. That calculation was corrected by Dr. Rechtine, the Committee chairperson, however, in consultation with officials of the Region II office. The correction did not alter the ultimate overall ranking of the bidders, although it made slight differences in the points awarded individual bidders by some members of the Committee, and in one case the second and third bidders under Criterion C were reversed on one evaluator's tally sheet. All four of the Committee members testified that they agreed with the corrected calculation of points to be awarded each of the bidders under Criterion C. At no time was any other part of any Committee member's points awarded altered or changed. Subjective Evaluation of Criteria A and B Steven Smith Committee member Steven Smith, Regional Health Services Administrator for Region II, responsible for assisting institutions in the region with health service issues, including contracting for health services, evaluated the respective bids of MPP and Suwannee in a rational and reasoned manner. With respect to Criteria A and B, Mr. Smith thoroughly reviewed the entire bid document of each bidder and made judgments as to the merits of each bid. His evaluations were based on how the bidders presented their respective documents, including the presentation and content of the narratives. While he did not assign any greater weight to either MPP's or Suwannee's references, Mr. Smith felt that MPP better articulated its understanding of the nature of the work. Mr. Smith was particularly impressed with MPP's understanding of the Department's court-ordered duty to improve access for inmates' to nursing services, which Mr. Smith felt was indicative of MPP's understanding of the contract's service requirements. He was also impressed with MPP's documentation of its 24-hour coverage. In sum, Mr. Smith felt MPP's bid was much clearer than Suwannee's. Cynthia Vathauer Committee member Cynthia Vathauer is a Department accountant, in charge of the inmates' welfare fund, who has previously served as an evaluator of competitive bids. Ms. Vathauer evaluated the respective bids of MPP and Suwannee in a rational and reasoned manner. With respect to Criteria A and B, Ms. Vathauer reviewed the ITB and next performed a detailed analysis of whether the bid components called for by the ITB under Criteria A and B were present in each bid. Her review of the bids under Criteria A and B consisted of listing all of the required components under each criterion and then checking off whether each bidder had adequately provided the required components, making notes where there was partial or questionable compliance and deducting points from the total allowable for each criterion which was missing or incomplete. Whereas Suwannee contends Ms. Vathauer made "no analysis" of the bids under Criteria A and B, simply because Ms. Vathauer stated that she did not read these components of the bids in detail for comparative content, this allegation is not supported by the weight of the competent, substantial evidence. Ms. Vathauer's detailed analysis of the presence or absence of the factors called for by the ITB, supported by her contemporaneous notes, shows that Ms. Vathauer made a rational and reasoned analysis of the bids under those criteria, fully supporting her allocation of points to the bidders under those criteria. She admitted candidly that she was not familiar with the clinical or operational aspects of health service provision. Thus, for example, rather than attempt to compare the relative quality of nurse evaluations (which, incidentally, was not required under the ITB), Ms. Vathauer based her judgment of compliance with this criterion on the presence or absence of valid copies of actual licenses. Dianne Rechtine, M.D. Dianne Rechtine, M.D., is the medical executive director at North Florida Reception Center and acting medical services director for Region II. Dr. Rechtine also performed a rational and reasoned evaluation of the bids under the standards of the ITB. Dr. Rechtine read the respective bids and, with respect to Criteria A and B, assigned points based on her evaluation of those bids. Her notes of how she allocated points under these criteria appear as Joint Exhibit No. 4D and show that Dr. Rechtine actually scored Suwannee higher than MPP under Criterion A and the same as MPP under Criterion B. Suwannee has not been heard to assert that Dr. Rechtine's analysis under these criteria was other than rational and reasoned. Thus, it is found that Dr. Rechtine's analysis and evaluation of the bids was in fact rational and reasoned. Peggy (Richardson) Patray Since Peggy (Richardson) Patray was not called to the witness stand, MPP offered into evidence, without objection, her deposition testimony, taken prior to MPP's intervention and without benefit of cross-examination by MPP or its counsel. Nevertheless, that deposition and Ms. Patray's own evaluation notes appearing as Joint Exhibit No. 4E demonstrate that Ms. Patray, a registered nursing services consultant employed by the Department and previous nursing supervisor at New River Correctional Institute, carefully reviewed the ITB and analyzed and evaluated the bids under Criteria A, B and C prior to awarding points to the bidders. Ms. Patray looked at the types of facilities from which references were obtained and considered, for example, related jail-type experience to be a positive factor. Ms. Patray actually scored Suwannee superior to MPP under Criterion A for reasons related to the bidders' statements of understanding of work. She scored the two bidders evenly under Criterion B, even though she was favorably impressed by one (at the time of her deposition, she could not recall which) bidder's emphasis on pre-employment screening and in-service training, when contrasted with the other bidder's leaving of this responsibility to the individual nurses. Finally, Ms. Patray testified that she was favorably impressed with MPP's sources of references, as opposed to Suwannee's, and that there was not enough information in Suwannee's bid, in her opinion, regarding nurse professional qualifications. In sum, Ms. Patray's testimony and notes in Joint Exhibit No. 4E demonstrate clearly that she also performed a rational and reasoned evaluation of the bids of the parties under the terms and conditions of the ITB. Suwannee's Allegations There is no evidence on the record of this proceeding to support Suwannee's allegations that political or media pressure adverse to Suwannee influenced the decision to award Contract No. R-2119 to MPP. Each Department witness who testified in this proceeding testified that no such political pressure was brought to bear upon them or even attempted. The competent, substantial and unrebutted evidence of record demonstrates clearly that no such pressure or influence occurred or was attempted. In the same vein, Suwannee has alleged that the Committee improperly considered, to Suwannee's prejudice and detriment, factors or information outside of the ITB and the bid documents. The only evidence of record of Committee members having considered information outside of the ITB or the bids was the testimony of several of the Committee members that they either were aware of or considered allegations of past difficulties with MPP, not Suwannee. For example, Mr. Smith testified that he was aware of one past problem with MPP, but none with Suwannee. In any event, he did not consider anything outside of the bid documents in his review. Ms. Vathauer said nothing relating to this issue. Dr. Rechtine testified that she was aware of, and had considered, past problems with MPP, that she had received favorable input as to Suwannee and, to the extent that this knowledge affected her evaluation, she agreed that it did so to the advantage of Suwannee (scored 20 under Criterion A, 20 under Criterion B), and to the disadvantage of MPP (scored 12 under Criterion A, 20 under Criterion B). Finally, even Ms. Patray testified that she had received some negative reports on MPP, whereas she mentioned no such information regarding Suwannee. In sum, there is no evidence of record to support Suwannee's allegations that the Committee members improperly considered, to Suwannee's prejudice and detriment, factors outside the bid documents. Any error which may have occurred in this regard was entirely harmless as to Suwannee, and if it had any effect at all, it worked to Suwannee's benefit. Results of the Bid Evaluation Process The result of the bid evaluation process was that MPP received 88 overall points under the formula set out in the ITB, Suwannee received 85.62, Quality Care received 73.05 and Upjohn received 58.87. MPP was also the low bidder on cost, i.e., Criterion C. The weight and preponderance of the competent, substantial evidence demonstrates that Contract No. R-2119 should have been awarded to MPP, as it was, and that there is an ample, rational, reasoned and logical basis in the record supporting the decision of the Department to award the contract to MPP.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that The Department of Corrections enter a Final Order awarding Contract No. R-2119 to Personnel Pool of North Central Florida, Inc., d/b/a Medical Personnel Pool. DONE and ENTERED this 4th day of December, 1989, in Tallahassee, Florida. DIANE K. KIESLING Hearing Office 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 4th day of December, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-4566BID The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Suwannee Valley Medical personnel Corporation 1 Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1 (page 5). Proposed findings of fact 2-5, 7-12, 14-16, and 18 are subordinate to the facts actually found in this Recommended Order. Proposed findings of fact 6, 17, and 19 are unnecessary or irrelevant. Proposed finding of fact 13 is unsupported by the competent, substantial evidence. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Department of Corrections Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 2 (3); 3 (19, 25); 4 (page 5); 6 (11); 7 (12); 8 (16); 9 (46); 14 (44); and 15 (45) Proposed findings of fact 1, 5, and 10-13 are subordinate to the facts actually found in this Recommended Order. Specific Rulings on Proposed Findings of Fact Submitted by Intervenor, Medical Personnel Pool Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 16-50 (1-35) and 53-63 (36- 46) Proposed findings of fact 12-15 are unnecessary or irrelevant. Proposed finding of fact 51 is included on page 5 of the Recommended Order. Proposed finding of fact 52 is subordinate to the facts actually found in this Recommended Older COPIES FURNISHED: John F. Gilroy Attorney at Law Haben & Culpepper 306 North Nonroe Street Tallahassee, Florida 32302 Drucilla E Bell Perri M. King Attorneys at Law Florida Department of Corrections 1311 Winewood Boulevard Tallahassee, Florida 32399-2500 Thomas D. Watry Attorney at Law Parker, Hudson, Rainer & Dobbs 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 Richard L. Dugger, Secretary Department of Corrections 1311 Winewood Boulevard Tallahassee, Florida 32399-2500
Findings Of Fact On March 1, 1984, Respondent gave notice to qualified contractors that it would receive sealed bids for State Project No. 72000-3541, referred to as Federal-Aid Project No. M 9041(10). This project involves the installation of a computerized traffic control system for the City of Jacksonville. In response to the opportunity to bid, the Department of Transportation received four bids. Petitioner, Winko-Matic Signal Company, was among the bidders. The other bidders were Georgia Electric Company, Traffic Control Devices, Inc., and Sperry Systems Management. The bids of Traffic Control Devices and Sperry Systems were rejected based upon an error in bid tabulations on the part of Traffic Control, a mistake on the quantities page, with the Sperry rejection being based upon a bid bond problem. Traffic Control had been the apparent low bidder with a bid of $1,964,115. Winko-Matic was the second apparent low bidder with a bid of $2,279,604.70. The Department of Transportation had estimated that the total cost of the Jacksonville project would be $ 2,024,680.61. Having discarded the bid of Traffic Control Devices, the Department of Transportation telegrammed Winko-Matic on April 4, 1984, advising Winko-Matic that it was the apparent low bidder for the Jacksonville project. Subsequently, the awards committee of the Department of Transportation met on April 18, 1984, and determined to reject all bids and re-advertise the job. In the course of this meeting the awards committee was told that there were erratic bids received on contract items, pointing to some perceived confusion among the contractors as to requirements of the contract. Discussion was also held on the possibility of establishing a pre-bid conference if the project was re advertised. The awards committee then voted to reject the bids on the basis that the apparent low bidder, Winko-Matic, had submitted a bid which-was 12.6 percent over the Department's estimate, instead of being within 7 percent of the Department of Transportation's pre-bid estimate, a point above which the Department of Transportation in its non-rule policy would call to question to the acceptability of the apparent low bid. In addition to deciding to reject all bids and re-advertise, it was determined that a pre-bid conference should be scheduled at least 30 days prior to the bid-letting date. Winko-Matic was advised that the Department of Transportation's decision to reject all bids by correspondence of May 4, 1984, in which it was indicated that all bids had been rejected based upon the fact that they were too high. In response to this notice of rejection, Winko-Matic, effective May 17, 1984, filed a written notice of protest. The case was subsequently referred to the Division of Administrative Hearings on June 20, 1984, and a final hearing date was established by Notice of Hearing of July 5, 1984. The hearing date in this cause was September 12, 1984. The Jacksonville project in question requires the utilization of what has been referred to "UTCS Enhanced" software. This software package is unique and has only been used in a limited number of locations within the country. Those locations are Los Angeles, California; San Diego, California; Broward County, Florida; and Birmingham, Alabama. Another unique feature within the project design is the use of an associated coaxial computer sys gem. Given the unique nature of this project and the fact that the Department of Transportation had never advertised for bids related to UTCS software, Department of Transportation obtained assistance from a consulting firm, Harland, Bartholomew & Associates. In fulfilling its function Harland gave estimates to include an estimate related to the projected cost of the software, Item 681-102. The Harland estimate for the overall project was $2,143,130 including a $100,000 estimate for the software system. That estimate relating to the software was subsequently adjusted by the Department of Transportation to depict a cost of $13,780. The Department of Transportation estimate was based upon information within its computer related to a system unlike the enhanced software contemplated by the plans and specifications. In other words, the stored information in the Department of Transportation computer was not the same as contemplated by the plans and specifications in the Jacksonville project. Moreover, the initial estimate of Harland was based upon the idea of an extended software system, as opposed to an enhanced software system. Winko-Matic had bid $389,500 for the software in Item 681-102. That estimate was premised upon figures obtained from JHK and Associates, the group which Winko-Matic intended to use as its subcontractor for the enhanced software portion of the project. JHK developed the software and was responsible for systems integration of the Los Angeles, California, project, one of the locations in which UTCS enhanced software has been utilized. JHK premised its estimate for the software hare upon experience in Los Angeles and an evaluation of the tasks to be performed related to the enhanced software. This included general software development activities, hardware innovation, installation costs during the period of acceptance and testing, and the preparation of data base. The JHK bid price was $339,500. Another $50,000 was added to that price related to what the Petitioner describes as its management costs for that item. By June 20, 1984, when a further meeting was held by the awards committee on the subject of the Jacksonville project, it was concluded that the estimate made by the Department of Transportation of $13,780 was not correct, on the topic of the enhanced software. A more reasonable estimate, according to the information imparted in this session, would be $200,000 for enhanced software as called for in this project, with a $100,000 amount being a reasonable estimate had they chosen to use extended software. Adjusting the initial price related to the UTCS enhanced software to reflect a corrected estimate of the Department of Transportation in its original advertised bid, that estimate becomes $2,210,900.61 and its consultant Harland's estimate becomes $2,243,130. With this adjustment, the differential in the estimate made by the Department of Transportation and the Petitioner approaches 3 percent and not the 12.6 percent originally found. The 3 percent is below the threshold of 7 percent used as the policy for determining whether a bid might be rejected as being far beyond the acceptable limits set forth in the Department of Transportation's estimate. In the aforementioned June 20, 1984, awards committee meeting, the Department of Transportation continued to hold the opinion that all bids in the Jacksonville project should be rejected and the matter re-advertised. Although the problem pertaining to the estimate of the cost of the enhanced software package had been addressed, the committee continued to feel that the prices received in the bid letting were erratic Reference was also made to revisions or modifications to the project plan which would be offered if the matter were re- advertised. It was also pointed out that the Federal Highway Administration would concur in the Department's decision to reject all bids and would accept modifications. The awards committee again voted to reject the bids. The matter was again considered by the awards committee on August 31, 1984. On that occasion, it was pointed out that the revisions contemplated by the Department of Transportation, should the matter be re-advertised, would not affect in a substantial way the cost estimate for the project with the exception of Item 680-101, the system control equipment (CPU), which would promote a lower price for the project. The committee determined in the August, 1984, meeting to reject all bids and re-advertise. While the initial notice of rejection of May 4, 1984, had suggested the basis for rejection as being the fact that Petitioner's bid far exceeded the 7 percent allowance for price above the Department of Transportation's estimate of costs, the meetings of the awards committee and the suggestion of the Respondent in the course of the final hearing in this case indicated that there were other reasons for the decision to reject. Those Were: (a) an apparent lack of clarity among bidders regarding specifications for the Jacksonville job, (b) the desire of the Respondent to revise specifications on the Jacksonville project; and (c) a lack of sufficient competition in the bids. In connection with the first of the additional reasons Respondent suggests that variations within the bid responses related to particular line items within the specifications point out a lack of clarity in the project's specifications or confusion by bidders related to those specifications. Respondent did not bring forth any of the bidders who might speak to the matter of possible confusion or misunderstanding concerning some of the bid items. By contrast, the Petitioner's president; the president of JHK & Associates and James Robinson, Harland's project manager for the Jacksonville job, did not find the specifications in the original documents to be confusing. In addition, the testimony of those individuals established the fact that bid variations related to particular line items are not extraordinary and do not establish any apparent confusion by the bidders as to the requirements of those line items. In effect, what the differentials demonstrate are variations related to the manufacture or in-house capabilities of the bidders and an effort to allocate discretionary costs in various places as to line items. Moreover, they might indicate last- minute adjustments in the bid quote prior to the opening and a possible effort by a contractor to enter into a new job market. Finally, they demonstrate offsetting which is the allocation of item prices by a contractor to maximize profits. To do this, a contractor submits high bids on items representing quantities which the contractor feels will increase after the contract is awarded and submits low bids on items representing quantities which are not likely to change. In summary, while the Department of Transportation in its presentation expressed some concern about the variations in the pricing in the bid quotations offered by the respective bidders in this project, its suspicions on the question of the possible clarity of its specifications were not confirmed and are not convincing. On the topic of revisions which the Department of Transportation would offer if the matter were re-advertised, with one exception those matters appear to be items that could be attended through change orders or supplemental agreements. They are not matters which necessarily must be addressed through a rejection of all bids and a re-advertising of the project. The lone exception to this is the possibility that the Department of Transportation may not be able to protect its proprietary rights in the enhanced software which is being developed for the project, under the terms of the present bid documents. Given that uncertainty, the Respondent would wish to re-advertise the project and make certain that its proprietary interests are protected. Finally, Respondent has alluded to the fact that the Jacksonville project should be re-advertised in view of the lack of competition in the initial letting. Only four bidders expressed an interest in this project at the time of the first letting. Of those, two bidders were found to be responsive. While this is a low number of bidders, there does not appear to be any agency practice on the part of' the Department of Transportation to the effect that this number of bidders would not be accepted. Moreover, no indication has been given that should the matter be re-advertised a greater number of bidders would express an interest than was the case in the first letting. Consequently, this reason for bid rejection is not acceptable. If Respondent did not reject the bids and re-advertise the project, Winko-Matic would be the successful bidder in the Jacksonville project.
Findings Of Fact On or about December 29, 1981, the College solicited sealed bids for construction of alterations and additions to the Technical and Gymnasium Buildings located on its campus in Madison, Florida. In response, seven general contractors submitted bids. (P-1, P-2, P-3.) Bids were publicly opened on February 9, 1982. Griffin Construction, with a bid of $536,575, was the apparent low bidder; the second lowest bidder was Long Contractors, with a bid of $539,512. (Testimony of Griffin, Sims, Rutherford; P-3, P-4, P-5.) After the low bid was identified, Tom McClanahan, representing Long Contractors, asked that the subcontractor list accompanying the low bid be opened. Griffin Construction's subcontractor list was then opened. McClanahan asked if the license and charter numbers of the subcontractors were listed. 2/ Upon learning that these numbers were not included on Griffin Construction's subcontractor list, McClanahan protested. (Testimony of Sims, Rutherford, Griffin.) At its February 15, 1982, meeting, the College District Board of Trustees ("Board") rejected the low bid of Griffin Construction on the sole ground that the omission of subcontractor license and charter numbers constituted a failure to comply with the conditions of the bid documents. 3/ The Board then voted to award the contract to Long Contractors, the second lowest bidder, on the ground that it was the lowest bid conforming to the bid documents. In so doing, the Board followed the College president's recommendation--a recommendation based on his belief that the non-complying bid must be rejected, that it did not involve a matter of Board discretion. (Testimony of Sims, Rutherford, Griffin; Stipulation of Parties; P-41.) The bid specifications contain instructions to bidders requiring "each Bidder . . . [to] submit with his proposal a list of the subcontractors who will perform the work . . . as indicated by the `List of Subcontractors' form." (P-1, P-2.) The instructions further provide: The applicable subcontractor license registration or certification number must be noted on the bid opposite his name, and in the event that the subcontractor is a corporation, his State Corporate Charter number shall also be noted. If the subcontractor is an out of state firm, their Charter number with the Secretary of State to do business in the State of Florida should also be noted. The "Listing of Subcontractors" form provided with the specifications contains column headings for the names and addresses of the subcontractors but does not contain a separate heading for the requested license or corporate charter numbers. 4/ The form states that the subcontractor list "is an integral part of the bid." (P-1, P-2.) The bid instructions further require bidders to evaluate and determine the qualifications of their listed subcontractors. The bidder shall have determined to his own complete satisfaction that a listed subcontractor has been successfully engaged in this particular type of business for a reasonable length of time, has successfully completed installations comparable to that which is required by this agreement and is qualified both technically and financially to perform that pertinent phase of the work for which he is listed. (P-1, P-2.) The bid documents expressly reserve to the College the right "to reject any or all bids, and to waive informalities." (P-1 P-2.) No bidder correctly listed the required license and corporate charter numbers on its "Listing of Subcontractors" form. Griffin Construction. Griffin failed to include any license or corporate charter numbers. However, by subsequent letters dated February 9 and February 18, 1982, and at hearing, it supplied the required subcontractor license and charter numbers. Long Contractors. Long listed for its roofing subcontractor a sheet metal registration number, not the required roofing license number. [A sheet metal registration does not qualify a contractor for roofing work. See, 489.105, 489.113, Fla. Stat. (1981).] For its electrical subcontractor, Long omitted the prefix, "ER" from the listed number. For its plumbing subcontractor, Long listed a mechanical registration number instead of the required plumbing certification or registration number. [A mechanical registration does not qualify a contractor to perform plumbing work. See, 489.105, 489.113, supra.] Of the four areas requiring state licenses--roofing, heating and air conditioning, electrical, and plumbing--Long listed correctly only the registration number for its heating and air conditioning subcontractor. Long incorrectly listed No. FO6962 as the corporate number of Gandy Enterprises, its painting subcontractor. This is the number of a related corporation, Industrial Coatings, Inc. Remaining Bidders. Of the five other general contractors submitting bids, two-- Richard Walker Construction Company and GRC Contracting, Inc.--omitted all subcontractor license and charter numbers. The other three bidders failed to completely list all the required numbers. (Testimony of Rutherford; P-11, P-12, P-13, P-14, P-15, P-16, P-17, P-34, P-37, R-1, R-5.) The project architect testified that the submittal of incorrect or incomplete subcontractor license and charter numbers was a deficiency which a bidder should be allowed to cure after bid opening. But the failure to submit any required "number" was a deficiency which, in his opinion, could not be similarly corrected. He failed, however, to supply a reasonable basis for drawing such a distinction. Therefore, his opinion on this question is given little weight. 5/ (Testimony of Rutherford.) Subcontractor license and charter numbers are readily obtainable and can be verified by contacting the pertinent state agency--the Florida Department of Professional Regulation, Construction Industry Licensing Board, or the Florida Department of State. (Testimony of Griffin, Rutherford; P-32, P-33, P- 34, P-35, P-36, P-37.) The project architect, William Rutherford, routinely requires the listing of subcontractor license and charter numbers on bids for public construction projects. The main purpose it serves is that it would enable him to identify the listed contractor, since sometimes subcontractors have similar business names. Although if he was uncertain about the qualifications of a subcontractor, he would ordinarily question the general contractor. (Testimony of Rutherford.) Although Mr. Rutherford has customarily required the listing of subcontractor "numbers" on public projects, he has never made any use of those numbers in the past. (Testimony of Rutherford.) The general contractor who is awarded the contract is responsible to Mr. Rutherford and the College for construction of the project in accordance with the bid specifications. If, after bid opening, a listed subcontractor is unable to perform, Mr. Rutherford would ordinarily arrange for substitution of a new subcontractor acceptable to the general contractor and owner. (Testimony of Rutherford.) Griffin Construction's failure to list the license and charter numbers of its listed subcontractors, and its subsequent curing of that failure, did not affect the amount of its bid 6/ by giving it an advantage or benefit not enjoyed by other bidders. The bid omission did not allow Griffin Construction the opportunity to change any material element of its bid after bid opening. The inclusion or exclusion of subcontractor "numbers" at bid opening does not affect the ability of a contractors to obtain the required bond, the quality of bidding general contractors, the quality of listed subcontractors, the quality of work performed, or any material feature of the competitive bidding process. (Testimony of Griffin, Rutherford.)
Recommendation Based on the foregoing, it is RECOMMENDED: That the construction contract in question be awarded to Vick Griffin Construction Company, the lowest responsible bidder. DONE AND RECOMMENDED this 29th day of April, 1982, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of April, 1982.
Findings Of Fact On August 31, 1994, the Respondent received and opened bids for its Project No. HSMV 92044000, Repairs, Art Sutton Drivers' License Office, Miami, Florida (the Project). The bid specification documents (the Specifications) for the Project included requirements for a Base Bid and for specific alternate proposals with respect to three defined items of alternate work. Section 01100 of the Specifications stated that "[a]ll Alternates described in this Section are required to be reflected on the Bid Form as submitted by the bidder." Part 2 of that section provided: ALTERNATE NO. 1 A. Provide a deductive price to the base bid for the removal of existing window units and the installation of new units as indicated in plans and specification Section 08520. ALTERNATE NO. 2 A. Provide a deductive price to the base bid for the provision of communications conductors see specification Section 16400. ALTERNATE No. 3 A. Provide a deductive price to the base bid for the installation of all landscape materials as indicated on plans and as per specification Section 02960. Also included in the Specifications as Exhibit 4 was a Proposal Form. The Specifications required each bidder to submit this form in triplicate on the bidder's letterhead. With respect to alternates, the Proposal Form required: With the foregoing as a Base Bid, the following costs of alternate proposals are submitted in accordance with the drawings and specifications. Alternate No. 1 Add or Deduct $ Alternate No. 2 Add or Deduct $ Alternate No. 3 Add or Deduct $ The Respondent's architect received four bids on August 31, 1994. As recorded on the Bid Tabulation and Notice of Award Recommendation, three bidders provided specific prices for the three alternates, as well as a Base Bid. The Bid Tabulation shows that two bidders provided specific prices for the three alternates and included the alternate prices in their Base Bids. The Petitioner provided specific prices for the three alternates, but excluded the alternate prices from its Base Bid. The fourth bidder provided a specific price for only one alternate and excluded that alternate price from its Base Bid. (The fourth bidder was disqualified as non-responsive for failing to submit prices on all three alternates.) In pertinent part, the Petitioner's proposal read: With the foregoing as a Base Bid, the following costs of alternate proposals are submitted in accordance with the drawings and specifications: Alternate No. 1 Add or Deduct . . . $4,400.00 Alternate No. 2 Add or Deduct . . . $1,158.00 Alternate No. 3 Add or Deduct . . . $2,084.00 These Alternates were in addition to the Petitioner's Base bid of $204,322.00. The proposal form submitted by the Petitioner comports with Exhibit 4 to the Specifications, which was the mandatory Proposal Form. On August 31, 1994, William Phillip Austin, Peitioner's President, wrote the architect: Per our telephone conversation this date regard- ing the confusion relating to the Add/Deduct for Alternates 1, 2 and 3 for the above project, please be advised that our base bid did not include the work described in the Alternates. As stated if you want work described in Alternates 1, 2 and 3, you must add the cost to our base bid. The base bid including Alternates 1, 2 and 3 would, therefore, be $211,964.00. If we can provide additional information, please do not hesitate to contact us. The Respondent's architect completed and submitted the bid Tabulation and Notice of Award Recommendation to the Respondent in early September. The document clearly discloses the amounts of each bidder's Base Bid and Alternate proposals. Using plus (+) and minus (-) signs, the Bid Tabulation further shows each bidder's method of calculation. The record is devoid of evidence that the Respondent had any problem in evaluating the bids and identifying the lowest bidder. The Petitioner was the lowest bidder on any combination of base bid plus or minus any or all alternates. Subsequently the Petitioner received a NOTICE OF AWARD RECOMMENDATION dated October 4, 1994. The Notice informed the Petitioner that the Respondent "has recommended that the contract be awarded to your firm in the total amount of $211,964.00, accepting the Base Bid and Alternates #1, #2 & #3. The Administrator of Contracts Design and Permitting, Division of Building Construction, Department of Management Services, State of Florida will consider this recommendation." Larry R. Coleman, Construction Projects Administrator, signed the letter. The Petitioner acknowledged receipt. A representative of the second lowest bidder, Kalex Construction, then contacted the Respondent, complaining of the Award Recommendation. The grounds for the Kalex complaint are not in the record. However, on October 14, 1994, H. R. Hough, the Respondent's Contracts Administrator, sent the Petitioner a letter "to notify you of the State's decision to reject all bids on the above referenced project due to ambiguities in the specifications." Mr. Hough's reasons for the rejection are "other than those stated by the protestor," Kalex. The Respondent's Rule 60D-5.007, Florida Administrative Code, states: Determination of Successful Bidder. All projects except where competitive bidding is waived under the provisions of Rule 60D-5.008 will be publicly bid in accordance with the provisions in the project specifications bidding documents. Award of contract will be made to the responsive bidder, determined to be qualified in accordance with the provisions herein and meeting the requirements of the bidding documents, that submits the lowest valid bid for the work. The lowest bid will be determined as follows: The lowest bid will be the bid from the responsive bidder that has submitted the lowest price for the base bid or the base bid plus the additive alternates or less the deductive alternates chosen by the Agency to be included in or excluded from the proposed contract, taken in numerical order listed in the bid documents. The order of the alternates may be selected by the Agency in any sequence so long as such acceptance out of order does not alter the designation of the low bidder. Under the above-quoted rule, the Respondent compares bids beginning with the lowest "base bid." The Respondent is of the view that for this comparison to be fair and equal, all bidders must include the same scope of work in the "base bid." The Respondent does not interpret the above-quoted rule to allow deductive alternates from some bidders and additive alternates from others. (For reasons discussed in the Conclusions of Law which follow, the Respondent's interpretation and application of the above-quoted rule is erroneous.) The Specifications contain some ambiguous and inconsistent language regarding whether alternates should be treated as additive or deductive. The ambiguous and inconsistent language did not provide any bidder with an advantage or a disadvantage, nor did it otherwise affect the fairness of the bidding process.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services issue a Final Order in this case awarding a contract for the subject project to the Petitioner. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of December 1994. MICHAEL M. PARRISH 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 16th day of December 1994. APPENDIX The following are my specific rulings on all proposed findings of fact submitted by all parties. Proposed findings submitted by Petitioner Paragraph 1: This is primarily a statement of position and is addressed in the Preliminary Statement. Paragraphs 2 through 10: Accepted in substance with a few unnecessary details omitted. Proposed findings submitted by Respondent Paragraphs 1 through 6: Accepted in substance. Paragraph 7: First sentence accepted in substance. Second sentence rejected as constituting a conclusion which is not warranted by the evidence. Third sentence is accepted as an accurate statement of how Respondent has been interpreting the subject rule, but is not accepted as constituting a correct interpretation of the rule. Paragraph 8: Rejected as misleading and confusing because the "scope of work" to be performed under the contract can only be determined after the Respondent decides which alternates to include and which to exclude. Paragraph 9: The first two sentences are accepted in substance. The last sentence is rejected as constituting a conclusion which is not warranted by the evidence. COPIES FURNISHED: Timothy J. Armstrong, Esquire Armstrong & Mejer Suite 1111 Douglas Centre 2600 Douglas Road Coral Gables, Florida 33134 Stephen S. Mathues, Esquire Department of General Services Knight Building, Suite 312 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Paul A. Rowell, General Counsel Department of General Services Knight Building, Suite 312 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 William H. Lindner, Secretary Department of General Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue The issue is whether Respondent lawfully awarded the main-line food contract to Mutual Distributors, Inc., and, if not, whether Respondent is required by law to award the contract to Petitioner.
Findings Of Fact Background This case arises out of Respondent's award of contracts for main-line food and snack foods and beverages. Through these contracts, Respondent obtains the delivery of 334 different items--297 items of main-line food and 37 items of snack foods and beverages--to over 160 sites for preparation and service to Respondent's students, teachers, and noninstructional staff. During the school year, Respondent serves over 150,000 meals daily, and the Director of Respondent's Food Service Operations manages an annual budget of $55 million. The two relevant bidders in this case are Petitioner and Mutual Distributors, Inc. (Mutual). These are the only bidders that submitted nondisqualified bids for the main-line food contract. Petitioner and Mutual also submitted bids for the snack foods and beverages contract. A third bidder, Magic Vending, also submitted a bid for the snack foods and beverages contract. Mutual has held Respondent's main-line food contract in the past. However, for at least the past seven years, Petitioner has held the main-line food and snack foods and beverages contracts. Petitioner was the only bidder for the main-line food contract for the 1996-97 school year, and, pursuant to a provision of that contract, Respondent renewed this contract for the 1997-98 school year. Petitioner presently supplies school food for the school districts in Dade, Palm Beach, Collier, Lee, Indian River, Martin, St. Lucie, Hardee, Hendry, DeSoto, and Glades counties. The size of the Hillsborough school district limits the number of vendors capable of handling the main-line food contract, although nothing in the record suggests that either Petitioner or Mutual lacks the resources to provide the specified food in a timely fashion. Invitation to Bid By Invitation to Bid dated April 30, 1998, concerning Bid Number 3743-HM (ITB), Respondent solicited bids for two product groups: main-line food, which consists of frozen entrees, frozen foods, canned goods, and staples, and snack foods and beverages. The cover sheets to the ITB advise all interested parties that Respondent would accept sealed bids until 3:00 P.M. on May 26, 1998. The cover sheets state that, on or about June 16, 1998, Respondent would award the contract, which would be in effect August 6, 1998, to August 5, 1999. The cover sheets state that Respondent would make its decision "in the best interest of the District " The cover sheets require that all bids incorporate the following language: POSTING OF RECOMMENDATIONS/TABULATIONS Recommendations and Tabulations will be posted at the Hillsborough County School District, Purchasing Department, 901 East Kennedy Boulevard, 3rd Floor, Tampa, Florida 33602 at 10:30 A.M. on 06/11/98 for seventy-two (72) hours. Actions against the specifications or recommendations for award shall follow F.S. 120.53. Procedures are available and on file in the Purchasing Office at the address listed above. The cover sheets identify the schedule of bidding events. The month of April would be for testing new products and evaluating the nutritional information of approved brands. April 30 would be the date of mailing draft copies of the ITB to all interested persons. May 8 would be the date of the pre-bid conference, at which interested persons could bring product information forms for possible approval of other products than those tentatively specified in the ITB. The cover sheets reserved a couple of days immediately after the pre-bid conference for testing any additional new products. The schedule listed May 13 as the date on which Respondent would mail the final copy of the ITB to interested persons. The schedule states that Respondent would review bids and conduct a "pre-award audit," if necessary, from May 26 through June 3. Part I of the ITB contains "general terms and conditions." Part I states: When an item appearing in this bid document is listed by a registered trade name and the wording "no substitute, bid only or only" is indicated, only that trade-named item will be considered. The District reserves the right to reject products that are listed as approved and wa[i]ve formalities. Should a vendor wish to have products evaluated for future bid consideration, please contact, in writing, the buyer listed on the 2nd page of this bid. If the wording "no substitute, bid only or only" does not appear with the trade name, bidders may submit prices on their trade-named item, providing they attach a descriptive label of their product to this proposal. Sample merchandise bid hereunder as "offered equal" may be required to be submitted to purchase in advance of bid award. Substitutions of other brands for items bid, awarded and ordered is prohibited except as may be approved by the supervisor of purchasing. Part I of the ITB includes a number of "stipulations" that are deemed a part of all bids. The stipulations provide: Tabulations of this bid will be based only on items that meet or exceed the specifications given in Part III. All other lesser items will not be considered. Failure to submit, at time of bid opening, complete information as stated in Part III can and may be used as justification for rejection of a bid item. The bidders will not be allowed to offer more than one product/price/service on each item even though the vendor feels that they have two or more types or styles that will meet specifications. If said bidder should submit more than one product/price on any item, all prices for that item will be rejected. . . . The District reserves the right to reject any and all bids or parts thereof, and to request a re-submission. The District further reserves the right to accept a bid other than the lowest bid, which in all other respects complies with the invitation to bid and the bid document, provided that, in the sole judgement and discretion of the District, the item offered at the higher bid price has additional value or function, including, but not limited to: life cycle costing, product performance, quality of workmanship, or suitability for a particular purpose. . . . All bids shall be evaluated on all factors involved, including the foregoing, price, quality, delivery schedules and the like. Purchase orders or contracts shall be awarded to the responsible offeror whose proposal is determined to be advantageous to the District, taking into consideration the factors set forth above and all other factors set forth in the request for bid as "lowest or lowest and best bid." The information called for on the item must be on the line with the item. When omitting a quotation on an item, please insert the words: no quotation, no bid or n/b. to eliminate any confusion about the item(s) being bid. . . . Any requirement by the bidder that certain quantities, weights, or other criteria must be met, in order to qualify for bid prices, will result in disqualification of the bid. Likewise, expiration dates or other constraints, which are in conflict with bid requirements, will result in disqualification. Bids may not be changed after the bid closing time. The exception would be if there was a misinterpretation of the unit for which the bid was requested. In which case, no dollar amount change would be allowed, and only a clarification as to the unit your bid represents will be considered. This must be done in writing 24 hours after notification to the bidder from the supervisor of purchasing. The submittal of a bid proposal shall constitute an irrevocable offer to contract with the District in accordance with the terms of said bid. The offer may not be withdrawn until or unless rejected or not accepted by the District. . . . 13. The District shall be the sole judge as to the acceptability of any and all bids and the terms and conditions thereof, without qualifications o[r] explanation to bidders. 27. This bid and the purchase orders issued hereunder constitute the entire agreement between the School District and the vendor awarded the bid. No modification of this bid shall be binding on the District or the bidders. 30. Variance in condition--Any and all special conditions and specifications attached hereto which vary from general conditions shall have precedence. Part II of the ITB contains "special terms and conditions." Section A of Part II explains that the purpose of the ITB is to establish a "'cost plus fixed fee per carton' annual contract for the delivery of main-line food and snack and beverages . . .." Section A projects that the annual value of Group A and Group B will be $8.5 million. Section A explains that the "product cost" is the vendor's actual cost, including delivery to its warehouse. The "fixed fee" is the difference between the vendor's cost and its selling price to Respondent. Section A notes that, while Respondent’s cost price may vary during the term of the contract, the fixed fee shall remain unchanged. However, Section K fixes the cost prices until December 31, 1998. As used in this order, "total cost" refers either to the total costs per item (i.e., the unit costs times the projected number of units to be purchased) or the total costs of all items, and the "bottom-line cost" is the total of the total costs of all items plus the fixed fee. The fixed fee includes the bidder's profit and is calculated by multiplying the fixed fee per carton, as stated in the bid, times the number of cartons actually delivered. Section B states: Bids will be awarded on the total bottom line cost and fixed fee for each group. To be considered for an award, the vendor must bid on each item within each group. Failure to bid on each item within each group will disqualify the vendor for the bid award. A distributor may choose to bid on both groups, or on only one group. In the event of default or non- availability of product, the School District reserves the right to utilize the next rated low bidder and their stated bid prices as needed. Sections C and D explain that the term of the contract is one year, ending August 5, 1999, but the parties may extend the term, in one-year increments, through August 5, 2001. Section G provides that potential bidders "may attend a pre-bid conference," but attendance is not mandatory. Section G identifies the time, date, and place of the pre-bid conference. Section G adds: If you wish to submit additional brands within a current product description for approval, you must bring from the appropriate broker/rep, a District product information form with all requested attachments to the conference. Do not bring samples. We will evaluate the product information forms and determine if testing an additional brand is necessary at this time. Submitting a product information form does not guarantee that the product will be tested. Samples must be made immediately for any product information forms submitted. Section H states: To be considered for an award, the vendor must bid on each item within each group. Failure to bid on each item within each group will disqualify the vendor for that group bid award. Section I provides: After the opening of the bids, school officials will review the line-by-line prices. Accuracy of additions and extensions, brands, and compliance with all instructions will be reviewed in order to ascertain that the offer is made in accordance with the terms of the request for bid proposal. School officials who find any error(s) in calculations will adjust the bottom line figure accordingly. However, if errors are found which either disqualify the bidder, or will raise the bottom line offer to the point where the vendor may no longer be the apparent low bidder, school officials will review the line-item prices of the next lowest bidder. This procedure will continue until a suitable offer is selected. During the review of the low bid, school officials may audit invoices or quotations on selected items for the accuracy of cost prices quoted. The extent of this audit will be at the discretion of school officials. In reviewing bids, school officials reserve the right to waive technicalities when it is in the best interest of the school system. Section O states that vendors must deliver "the brand that is quoted on the bid sheet." If vendors are "temporarily out-of-stock of a particular item, they must deliver an equal or superior product at an equal or lower price with prior approval of the District Food Service Department." Section O warns that "[e]xcessive occurrences of out-of-stock items is cause for contract cancellation." Part III of the ITB contains "instructions for completing bid sheets," followed by 65 pages of bid specifications for main-line food and nine pages of bid specifications for snack foods and beverages. Each page of specifications contains several rows, with each row devoted to a separate item, and seven columns, with the columns labeled as item number, product descriptions, approved brands, bid unit, unit cost, estimated annual usage, and total cost. Part III provides detailed instructions for describing the items bid and listing the costs for each item. Detailed specifications describe each of the items to be bid. Under "product descriptions," the two paragraphs of Section B address the issue of domestic versus imported products. The first paragraph describes products that the winning bidder may purchase, but the second paragraph limits items than can be bid. The two paragraphs state: Except for items normally not produced in the United States commercially, the contractor should make every effort to purchase domestic products. Products may be allowed from outside the United States provided specifications are met and there is a significant price differential between imported products and those produced within the States. Written documentation of these price differentials must be provided in writing to the School District by the distributor prior to the approval of such purchases. Please note: for purposes of awarding the bid, all distributors shall bid domestic products (pineapple exempt). Under "product descriptions," Section C provides: The contractor must bid on the approved brands (Column 3), packer label or house label for all items. If Column 3 is blank, the School Board will accept the brand quoted provided it meets the product description. For example, if bidding on a distributor's choice of pasta, the contractor would enter the following: Brand: Prince Product Code: 5115 If bidding on a distributor group label for green beans, the distributor must stipulate the code designation which may be a color or label, that denotes a product as being a particular grade. For example, Brand: North American/Larson Product Code: Blue If bidding a packer label the bidder must stipulate the name of the packer and the grade label designation, for example: Brand: Larsen Product Code: Lake Region For all packer label products Hillsborough County School Food Service Form "Private Label Chart for Fruits and Vegetables" (see Attachment D) must be completed and returned with the bid. Under "product descriptions," Section D states: "Bidder shall enter the grade of the brand offered only for those line items where grade is specified. " Under "approved brands," Part III provides: The bidder must bid on the approved brand and product code that is listed. If the column states "house brand," the School Board will accept the brand quoted provided it meets the product description. Some of the code numbers listed may be obsolete or incorrect, in which case the contractor may enter the correct code and submit written documentation provided by the manufacturer, verifying the correct code number. If any inconsistency exists between the approved brands and/or code numbers and the product description, the approved brand/code number will prevail. The decision as to whether a product does or does not meet the description provided in column 2 is at the discretion of the School District. A bidder may be requested to furnish acceptable confirmation from a packer that a product meets the requirements set forth in Column 2. Whenever approved brands are listed with house brands, the distributor's choice brand should be of equal or better quality than the approved brands listed. Buying group brands and codes are acceptable on frozen and canned fruits, vegetables, and juices, however, on further processed and manufactured foods the contractor shall quote a packer's brand. For example, a contractor may quote "Ore-Ida #1234, packed under the 'Code Red Label.'" Pre-Bid Conference Hank Morbach, Principal Buyer of Respondent's Purchasing Department, conducted the pre-bid conference on May 8. Also representing Respondent at the conference were Mr. Morbach's immediate supervisor, William Borrer, who is the Supervisor of Purchasing; Sherry Ebner, who is a Supervisor of Food Service Operations and a registered dietitian; and Mary Kate Harrison, who is Director of Food Service Operations, a registered dietitian, and Ms. Ebner's immediate supervisor. Minutes of the pre-bid conference reveal that Mr. Morbach and Ms. Ebner told the persons in attendance that they did not have to bid both groups, but must bid all items within the group for which they were submitting a bid. In response to a question from Mutual's representative, Mr. Morbach said that the bottom-line cost, not the fixed fee, would be the "deciding factor." In response to a question from Petitioner's representative, Mr. Morbach stated that, where code numbers were omitted for any item, specifications would prevail. The minutes disclose a discussion regarding imported versus domestic products. Although Respondent's representatives were initially ambivalent, Mr. Morbach "clarified by stating all products must be domestic." Likely, everyone understood that pineapples could still be imported. Following the pre-bid conference, Respondent issued a revised ITB on May 13. Presumably, the ITB identified as Joint Exhibit 1 is the revised ITB, so all references in this order to the ITB are to the ITB as it was finally revised. Adverse Publicity Toward the end of the pre-bid conference, a representative of the Weekly Planet appeared. The Weekly Planet is a free weekly Tampa newspaper, and the representative was a reporter, who, since October 1997, had written several articles asserting, at least by implication, that Respondent's food program suffered from excessive costs, favoritism, and possibly even wrongdoing. Part of the adverse publicity concerned Ms. Harrison's husband, who represented several manufacturers from which Petitioner had purchased food for resale to Respondent while Petitioner had the main-line food contract. The Weekly Planet published an article asserting that the husband of Ms. Harrison had lost a civil action brought by his employer for diverted commissions. By the time of the subject procurement, an internal audit had disclosed no conflict of interest on the part of Ms. Harrison, but had suggested that Respondent add personnel in Food Service Operations to monitor vendor compliance and seek more competition in awarding the food contracts. To Ms. Harrison's credit, since her employment with Respondent in 1990, she has converted a food service program that was losing $2.5 million annually into a profitable operation. The record suggests, though, Respondent's staff was extremely sensitive during this bidding process to the adverse publicity surrounding Respondent's business relationship with Petitioner. The Bids Four bidders timely submitted sealed bids for the main-line food contract. However, Respondent promptly disqualified two of the bidders because they did not submit complete bids. One disqualified bidder submitted a bid that was incomplete, unsigned, and omitted five items in the main- line food group. The other disqualified bidder submitted an incomplete bid with only six items in the main-line food group. After submitting their bids, Petitioner and Mutual each sent Respondent letters stating that each bidder did not want the snacks and beverages contract unless it also received the main-line food contract. Respondent did not object to these late-attached conditions to the two bids and did not consider either bidder for only the snack foods and beverages contract. As provided in the ITB, Respondent's staff contacted bidders, after bid opening, to confirm that certain bid items complied with the specifications. By letter dated June 3, Respondent asked Mutual for documentation that 41 listed items met the specifications, that the Fineline/Paris brand that Mutual had bid is Grade A quality, and for a complete private label chart for all canned and frozen fruits and vegetables. The letter requests a response by June 5. By letter dated June 10, Respondent asked Petitioner for documentation that thirty-seven listed items met the specifications and for a complete private label chart for all canned and frozen fruits and vegetables. The letter requests a response by June 12. Respondent wrote each bidder follow-up letters. In a letter dated June 12, Respondent asked Petitioner to document that five items met the specifications, and, in a letter dated June 15, Respondent asked Mutual to document that the same five items met the specifications. The deadlines in both letters were June 16. Mutual and Petitioner responded to these requests for additional information. By letter dated June 5, Mutual disclosed that Items 202 (broccoli), 300 (apple slices), and 366 (raisins) were imported. After receipt of the responses from the bidders, Respondent's employees further reviewed the bids. Early in this review, Respondent's employees realized that neither bid had complied entirely with the specifications. Among the deficiencies of Mutual's bid was the failure to quote a cost for Item 114, which is chicken wings. Mutual's bid identifies only a product, but no cost. Mutual's bid includes a cost for each of the other 296 items and a total cost, presumably for all 297 items. The ITB projects annual purchases for each of the 297 items. The ITB projects the purchase of 283,044 chicken wings. Petitioner bid 12.5 cents per chicken wing for a total cost of $35,309.50. Mr. Morbach justifiably tried to deduce Mutual's quote for chicken wings from the information contained in its bid. He logically assumed that the cost for Item 114 would be the difference between the total cost shown on Mutual's bid, which is shown on the bid, and the total cost for the other 296 items, which must be calculated separately. The details of Mr. Morbach's calculations did not emerge at the hearing, but it is possible to perform these calculations. Mutual's bid shows a total cost for all 297 items of $8,131,470.29. The total costs of each of the quoted 296 items comes to $6,785,080.14. The difference is $1,346,390.15. This figure clearly does not represent Mutual's bid for chicken wings, which would be thirty-eight times greater than Petitioner's bid and would representative the extraordinary cost of $4.75 per chicken wing. The calculations in the preceding paragraph are taken from Mutual's bid, including all changes shown on the bid, as it was submitted, that were made by Mutual. Mutual's representative initialed these changes. The calculations exclude all adjustments made by Respondent's staff because these calculations, which were made after bid opening, logically have no relevance in determining what, if anything, Mutual quoted for chicken wings. These adjustments can play no role in trying to determine, on the face of Mutual's bid, what it intended to bid for chicken wings. In addition to omitting the cost of one item, Mutual failed to bid numerous other items according to the specifications. Petitioner also failed to bid certain items according to the specifications, although Petitioner's bidding errors are fewer in number and less serious than Mutual's bidding errors. Incorporating the information charted by Food Service Operations staff, the following 25 paragraphs identify the errors in both bids. Item 121 is frozen Grade A turkey roasts with a 60/40 ratio of light to dark meat. Mutual's bid does not reveal the extent of white meat or whether the turkey roast is Grade A meat. Petitioner's bid does not reveal whether its turkey roast is Grade A meat. Item 128 is frozen corn dogs. Mutual bid an unapproved code number for an approved brand. Petitioner's bid complied with the specifications. This is a relatively large component of the overall bid, representing over $160,000 in each of the bids. Item 146 is natural swiss cheese. Mutual bid processed cheese. Petitioner's bid complied with the specifications. Item 202 is Grade A cut broccoli in bulk. Mutual bid an imported product. Petitioner's bid complied with the specifications. Item 220 is shoestring French-fried potatoes. Mutual bid a shorter French-fried potato than specified. Petitioner's bid complied with the specifications. Item 223 is shredded triangle potatoes. Mutual and Petitioner bid the same products, but Mutual's bid did not contain required information regarding grade, oil, and region grown. This is a relatively large component of the overall bid, representing over $140,000 in each of the bids. Item 232 is soft eight-inch tortillas weighing 1.39 ounces per serving. Mutual and Petitioner bid the same product, which weighs only 1.29 ounces per serving. Item 300 is canned sliced apples. Mutual bid an imported product. Petitioner's bid complied with the specifications. Item 328 is light, 26-percent concentration tomato paste. Mutual bid a product that does not meet the minimum- concentration specification. Petitioner's bid complied with the specifications. Item 335 is boneless chicken meat that is predominantly white meat. Mutual and Petitioner bid the same brand, but different product code numbers. Mutual's bid is not predominantly white meat. Petitioner's bid complied with the specifications. Item 366 is seedless raisins. Mutual bid an imported product. Petitioner's bid complied with the specifications. Item 399 is 100 percent semolina, spiral macaroni. Mutual's bid complied with the specifications. Petitioner bid a twisted egg noodle, instead of eggless spiral pasta. Item 431 is sugar sprinkles from one of five approved brands. Mutual bid an unapproved brand. Petitioner's bid complied with the specifications. Item 448 is instant yeast. Mutual's bid includes information on a product that it did not bid. Petitioner's bid complied with the specifications. Item 474 is Grade A Fancy apple jelly with no less than 65 percent soluble solids, and Item 475 is Grade A Fancy grape jelly with no less than 65 percent soluble solids. Neither bid provides sufficient information to determine if it met the specifications on either of these items. Item 480 is Dijon mustard. Mutual bid Dijon-style mustard. Petitioner's bid complied with the specifications. Item 484 is whole pitted medium, ripe olives. Mutual bid an imported product. Petitioner's complied with the specifications. Item 492 is whole, kosher pickles of approximately 95 in number per five gallon pail. Mutual and Petitioner bid larger pickles than specified. Item 505 is 50-grain white vinegar. Neither Mutual nor Petitioner provided the information necessary to determine if its bid complied with the specifications. Items 301, 308, 309, 323, and 331 are, respectively, unsweetened canned applesauce, crushed canned pineapple, sliced canned pineapple, canned pumpkin, and whole canned tomatoes. For each of these items, Mutual's bid did not provide the label to prove quality. Petitioner's bid complied with the specifications. Item 325 is Grade A canned sweet potatoes. Mutual and Petitioner both bid Grade B. Item 212 is yellow frozen squash. Mutual bid an imported product. Petitioner's bid complied with the specifications. Respondent's staff also noted on the chart that the yellow frozen squash was the second item manufactured by Fineline that was imported (the other was Item 202), and staff noted that it was "unable to determine if other frozen vegetables bid by this manufacturer are domestic as grading certificates were not provided." Mutual bid Fineline products for Items 201 (lima beans), 205 (corn), 208 (okra), 209 (peas), 211 (spinach), 214 (Italian-style vegetable blend), and 215 (Oriental-style vegetable blend). Cumulatively, the Fineline frozen vegetables represent a moderately large part of the overall cost, in excess of $53,000 of Mutual's bid. Coupled with the fact that two Fineline products were imported, Mutual's failure to demonstrate affirmatively that these produce are domestic constitutes additional failures to comply with the specifications and supports the inference that the products are imported. In an earlier version of their chart showing bidding errors, Respondent's staff identified problems with Items 217-19, 221-22, and 224. These are potatoes that the ITB specifies must be from the Pacific Northwest and processed in 100 percent canola oil. Respondent's staff determined that it was impossible to identify the source of these potatoes. However, Petitioner was able to document that some, but not all, of the potatoes that it bid for these six items were from the Pacific Northwest. In addition to failing to bid a cost for Item 114 and misbidding the numerous items charted by Respondent's staff, Mutual's bid failed to comply with the specifications for four other items. Item 229 is a frozen Gyro Wrap. Mutual bid a pita- fold bread product, even though a more expensive Gyro Wrap is available from the same manufacturer. Petitioner's bid complied with the specifications Item 378 is pure almond extract flavoring. Mutual bid an imitation flavoring. Petitioner's bid complied with the specifications. Item 402 is thin spaghetti of .062-.066 thickness in diameter. Mutual bid a thin-spaghetti product of 1.6 thickness in diameter. Petitioner's bid complied with the specifications. Item 456 is pancake syrup. Mutual bid an invalid code number. Petitioner's bid complied with the specifications. The parties devoted some attention during the hearing to Item 483, which is green olives. Mutual and Petitioner bid imported green olives, but domestic green olives are not available, at least in institutional quantities, so compliance with the specification of domestic green olives was impossible. Bid Evaluation and Award When Ms. Ebner informed Mr. Morbach of the errors that she had found in both bids, he suggested that they should eliminate the same item from both bidder's bids, if one bidder improperly bid the item. For example, if Mutual misbid fruit cocktail and Petitioner properly bid fruit cocktail, Respondent would delete the cost of fruit cocktail from both bids. The purpose of this adjustment, which reportedly is not atypical in school food procurements, is to avoid the unfair result of lowering the noncompliant bidder's bid, by reducing it for the cost of the misbid fruit cocktail, and leaving the compliant bidder's bid higher by the amount of the properly bid fruit cocktail. Ms. Ebner and Ms. Harrison agreed with this suggestion, and Respondent tabulated the bid costs accordingly. Mr. Morbach also suggested that they consider the bid of one of the disqualified bidders. Ms. Ebner disagreed with this suggestion. She rightly believed that they should not reconsider a bid that did not contain all of the specified items, and Mr. Morbach did not press the matter further. Although Ms. Ebner spoke daily with Ms. Harrison and Mr. Morbach, there were three larger meetings in late June and early July concerning the bids. The first meeting was during the week of June 22, the second meeting was early in the week of June 29, and the third meeting was on the Friday of that week, July 3. The only participants at the first of the three meetings were Ms. Ebner, Ms. Harrison, Mr. Morbach, and Mr. Borrer. For the second meeting, these four persons were joined by Dr. Michael Bookman, the Assistant Superintendent for Business and Research, which includes overall responsibility for the Purchasing Department; Michelle Crouse, of the Auditing Department; and Lee Chistiansen, another of Respondent's staff. The persons present at the third and final meeting were the same as at the second meeting, except that Respondent's counsel, Mr. Few, replaced Ms. Crouse. At the first meeting, Ms. Ebner expressed her belief that Petitioner's bid was better than Mutual's bid because Petitioner's bid complied with more of the specifications. She also expressed concern about the ability of Magic Vending to service the snack foods and beverages. Ms. Ebner's preference for Petitioner's bid was partly the result of her misplaced emphasis on awarding both contracts to the same bidder. It is likely that, at the first meeting, Mr. Morbach or Mr. Borrer informed Ms. Ebner that nothing in the ITB required that Respondent award both contracts to the same bidder. At the first meeting, everyone confirmed their agreement to adopt Mr. Morbach's suggestion to discard the cost of any misbid item in both bids, even if only one bidder misbid the item. Everyone agreed that this approach would facilitate a better comparison of bottom-line prices. Respondent's decision to eliminate the cost of any misbid item from both bids, even if one bid correctly bid the item, encourages bidding abuses. A bidder knowing that a competitor can quote lower prices for a wide range, for instance, of chicken items can neutralize this advantage by misbidding each of the chicken items, forcing Respondent to award the bid without regard to the lesser costs quoted by the competitor for the chicken items. The potential destructive impact on competitive bidding is incalculable where, as here, this kind of bid-tabulation method is unaccompanied by a provision in the ITB rejecting a bid in its entirety if it misbids more than a specified number or value of items. The ITB does not authorize Respondent's method of tabulating misbid items. As already noted, Stipulation 2 allows Respondent to tabulate bids based only on items that meet the specifications, but nothing in Stipulation 2 or anywhere else in the ITB authorizes the deletion of quotes for items bid in compliance with the specifications. Part I of the ITB allows Respondent to reject approved products, but this provision is part of a discussion of items approved for bidding and does not authorized the rejection of a cost quoted for an approved product. Nor do Mr. Morbach and Ms. Ebner rely on Stipulation 2 to justify tabulating bid costs by eliminating the costs of any misbid items, even if only one bidder misbid the item. Mr. Morbach and Ms. Ebner believe that the 1998 ITB permitted this approach, but the 1996 invitation to bid for school food did not. However, both invitations to bid contain Stipulation 2. Respondent has not cited the difference between the 1996 and 1998 invitations to bid to justify the tabulation method adopted by Respondent in this procurement. Respondent's staff have relied on ITB provisions allowing Respondent to waive formalities or reject all bids for support of their tabulation method. However, even if these provisions were not in the 1996 invitation to bid, they do not authorize Respondent's tabulation method. Mr. Borrer may have implicitly acknowledged the inadequacy of the claimed authority in the ITB for Respondent's tabulation method when he sensibly deleted the following language from a draft memorandum dated June 25 and bearing his name, but drafted for his revision by another employee: Products that were inconclusive or failed to meet specification were eliminated from all bids for the purpose of data analysis. Purchasing is given this authority to eliminate products by bid specifications, statutory guidelines and Board policy. Item 4, Page 3 of the bid specifications states, "The District reserves the right to reject any and all bids or parts thereof, and request re-submission. The District further reserves the right to accept a bid other than the lowest bid. . ." In addition, Item I, Page 11 of the bid specifications states, "In reviewing bids, school officials reserve the right to waive technicalities when it is in the best interest of the school system." Also Board Policy H-5.6 states, ". . ., in accepting bids the School Board shall accept the lowest and best bid". (Legal Reference Florida Statutes 230.23, 237.02) The most succinct description of Respondent's tabulation method lacks much of a justification for its use. This description occurs in a typewritten question and answer that appears at the end of Petitioner Exhibit 36, but probably does not belong with that exhibit, which is a fax from Mr. Borrer to Respondent's counsel, Mr. Few. The question is, "Why did you choose to award the contract rather than re-bid after you determined that each vendor had made errors?" The answer states: Bids may not be rejected arbitrarily, but may be rejected and re-bid when it is in the best interest of the public (School District) to do so. . . . To re-bid without changing the bid would be unfair because the vendors had exposed their competitive price structure in public. Through the efforts of our skilled Food Service staff "errors" were discovered in products bid by Mutual and [Petitioner]. Since all vendors bid products that did not meet specifications, we determined that it would be proper to build a mathematical model in which we removed all identified items that did not meet specifications from both vendors. Our analysis based the award criteria on the same set of specifications and conditions for each vendor. Achieving comparability of food products was a complex time- consuming task. The award was recommended to go to the low vendor who would agree and be held to meeting our bid specifications at the price bid. Probably not more than one or two days after the date of the first meeting, Ms. Ebner prepared a draft memorandum, dated June 25, to Mr. Borrer, through Ms. Harrison. The draft memorandum states that Mutual bid 14 items not meeting specifications, and Petitioner bid three such items. The draft memorandum states that Mutual bid 11 items for which compliance was inconclusive, and Petitioner bid five such items. The draft memorandum also states that Mutual bid five imported items, despite the "discussion at the pre-bid conference that only domestic products were allowed." In the draft memorandum, Ms. Ebner recalculated the bottom-line costs of the bids of Petitioner and Mutual after discarding all costs for items that either bidder had misbid. She determined that Petitioner had the lowest snack foods and beverages bid. She also determined that Petitioner had the lower total bid for the main-line food and snack foods and beverages contracts. Still preferring an award of both contracts to a single bidder, Ms. Ebner concluded in the draft memorandum that Respondent should award both contracts to Petitioner, and Ms. Harrison concurred with Ms. Ebner's recommendation. At the same time, Mr. Morbach and Mr. Borrer were headed in the opposite direction from Ms. Ebner and Ms. Harrison. At the direction of Mr. Borrer, Mr. Morbach elicited a letter dated June 24 from Magic Vending to Mr. Morbach, in which Magic Vending stated: "As a follow up to our conversation and subsequent to our bid submission, we are prepared to offer you a reduction in our overall bid of $15,000." The letter concludes: "The purpose of this reduction is to make the overall award process run more smoothly and to remove any potential complications." Although Petitioner had already written Respondent expressing no interest in only the snack foods and beverages contract, Respondent obtained this cost concession, which made Magic Vending's bid lower than Petitioner's bid, in case Petitioner changed its mind. By letter dated June 26 from Magic Vending to Mr. Morbach, Magic Vending assured that it would "abide by all the rules and specifications in addition to giving a $15,000.00 discount . . .." The letter concludes with a well- earned expression of gratitude by Magic Vending for Mr. Morbach's "consideration in this matter." As for the main-line food contract, Mr. Borrer obtained from Mutual a one-line letter dated June 26 from Mutual stating: "This letter is to assure you that all products quoted by [Mutual] on bid #3743-HM will meet the specifications as required." At the second meeting between the staff of Food Service Operations and the Purchasing Department, which evidently took place after the Purchasing Department had received the correspondence from Mutual and Magic Vending, Food Service Operations staff continued to recommend that the contracts be awarded to Petitioner. Everyone discussed the errors in Mutual's bid and the fact that the Magic Vending bid was $5000 more than Petitioner's bid for the snack foods and beverages contract. It is unclear if Ms. Ebner or Ms. Harrison yet knew of the price concession of Magic Vending, but everyone discussed that it would be controversial to award the contracts to a bidder that was not the lowest bidder. Apparently in anticipation of the award ultimately made, Petitioner served Respondent, on July 1, with a Notice of Intent to Protest the award of both contracts. By letter dated the same date, Respondent informed Petitioner that it would not stop the procurement process due to the "critical importance of this bid and the serious danger to the health of our children." In fact, Mutual and Magic Vending have been supplying main-line food and snack foods and beverages, respectively, since early August 1998. At the third meeting between the staff of Food Service Operations and the Purchasing Department, everyone agreed to recommend that the School Board award the contracts to Mutual and Magic Vending. The discussion at this last major staff meeting largely involved the matters that they had previously discussed. Unfortunately, no one ever discussed at these or other meetings involving Ms. Ebner how many errors a bid could contain before it should be disqualified. Likewise, no one ever discussed with her the distinction between awarding a contract on the basis of the lowest bid and on the basis of the lowest and best bid. However, Ms. Harrison discussed with Ms. Ebner the safety issues presented by imported, rather than domestic, foods. On the day prior to the July 7 School Board meeting now designated for the School Board to vote on the awards, Ms. Harrison advised Mutual by letter that Respondent's staff would recommend Mutual, "provided that any and all products found not to meet specifications will be replaced with products meeting specifications at the original bid cost." Petitioner Exhibit 13, which is a copy of this letter, lacks the attachment listing the noncompliant items. At the bottom of the July 6 letter is a signature space for Mutual's representative, indicating assent to the following sentence: "Indicate, by signing below, that you are in agreement to provide all products meeting specifications, including USDA Grade A products, at the original bid price." Petitioner Exhibit 13 contains the signature of Mutual's representative. On July 7, the School Board met and gave Petitioner's counsel and corporate representative brief opportunities to explain why Respondent should not award the main-line food contract to Mutual. However, the Board did not give Petitioner's representatives sufficient time to convey much meaningful or detailed information. Mr. Few, Dr. Bookman, and Ms. Harrison supplied the Board with more information, but unfortunately never disclosed that Mutual's bid contained more errors than did Petitioner's bid and that Mutual's bid contained more errors involving more substantive matters than did Petitioner's bid, as discussed below. Contradicting the advice given by Mr. Morbach at the pre-bid conference and ignoring the contrary provision in the ITB and ignoring the distinction in the ITB between items that the winning bidder may purchase additional items that may be bid, Mr. Few advised the Board that the ITB expressed only a preference toward domestic products and cited the unique example of olives as support for this interpretation. Dr. Bookman advised the Board that Mutual had assured them that all items bid were Grade A. He was evidently unaware that, as explained below, Mutual had still not obtained Grade A turkey roast, even though Grade A turkey roast is available. As late as the final hearing, Ms. Ebner admitted that Mutual had still not corrected one or two noncompliant items, although it is unclear if one of them is the turkey roast. Notwithstanding staff's assurances, several Board members expressed misgivings at having to absorb a lot of detailed information in a short period of time. Ms. Harrison informed the Board that they did not have time to defer action, implicitly and correctly informing them that they did not have time to rebid the main-line food contract. One Board member replied that she wanted all of the food to be USDA approved and that parents had enough to be concerned about without being concerned about what Respondent was feeding their children. A motion to award the contracts to Mutual and Magic Vending failed by a 3-4 vote. A second motion to delay awarding these contracts passed 5-2, so that, individually, Board members could talk to staff to learn more about the bids and Petitioner's claim of bidding improprieties. The record does not reveal what staff told individual Board members. After a recess during which Board members, individually, met with staff, one of the Board members who had previously voted not to award the contracts moved to award the contracts to Mutual and Magic Vending, saying that Mutual had agreed to replace noncomplying products with products meeting the specifications. Relying on Mutual's promise to deliver conforming food items, as opposed to the noncomplying items that it had bid, this Board member reasoned that it was one thing to make a mistake with a bid, but another thing to make a mistake with the schoolchildren. The School Board unanimously approved the motion, and the meeting ended. By letter dated July 9 from Mutual to Mr. Borrer, Mutual addressed each of the 25 items charted by Respondent's staff, acknowledging that Mutual's bid had not complied with the specifications for nearly every charted item, but promising that Mutual would supply a product meeting the specifications for all of these items. However, concerning the moderately large component of the bid represented by Item 121 (turkey roasts, which represented over $62,000 in Mutual's bid), the letter states only: "Currently trying to locate an item to meet specifications." Bid Protest On July 10, Petitioner served Respondent with a Protest. The Protest asserts that Mutual's bid did not contain prices on all items, did not propose all domestic products, contained unapproved brands, bid unapproved product codes, and bid products different from those specified in the ITB. The Protest asserts that Respondent allowed Mutual to provide a letter after the deadline for receiving bids assuring that it would provide all Grade A product, as specified in the ITB. The Protest did not mention the snack foods and beverages contract awarded to Magic Vending. The Protest does not allege that Petitioner's bid is responsive. Respondent has not filed any responsive pleading raising the question of the responsiveness of Petitioner's bid. Respondent's Bid Policies Following receipt of Petitioner's Notice of Intent to Protest, Mr. Borrer sent a letter dated July 1 to Petitioner that contained Respondent's rules governing bids. This document, which is part of Petitioner Exhibit 37, is the source of Respondent's bidding rules set forth in the following two paragraphs. Respondent's rules provide for the protest of specifications as follows: Specifications—Any bidder that feels that their firm is adversely affected by an specification contained in a Sealed Bid or Request for Proposal issued by the Purchasing Department may file a written notice of protest with the Supervisor of Purchasing within seventy-two (72) hours after the receipt of the bid documents. . . . A formal written protest shall be filed by the bidder within ten (10) days of the written notice of protest. . . . These rules also provide for the awarding of costs, but not attorneys' fees, as follows: If, after the completion of the Administrative Hearing process and any appellate court proceedings[,] the School District prevails, then the School District shall recover all costs and charges which shall be included in the Final Order or Judgement, including charges made by the Division of Administrative Hearings, but excluding attorney's fees. . . . If the protestor prevails then the protestor shall recover from the School District, all costs and charges which shall be included in the Final Order or Judgement, excluding attorney's fees. Another source of Respondent's rules in the record is Chapter 7 of a compilation of Board policy that was applicable to the present procurement. This document requires that Respondent award bids "on the basis of the lowest and best bid which meets specifications with consideration being given to the specific quality of the product, conformity to the specifications, suitability to school needs, delivery terms and service and past performance of the vendor." Lastly, Mr. Borrer, by memorandum to the file dated July 9, noted that the two disqualified vendors were disqualified under Board Policy H-5.10, which states: "Bids received which do not meet specifications shall not be considered valid and shall not be tabulated." Ultimate Findings of Fact Bid Tabulation Method Is Clearly Erroneous, Contrary to Competition, and Arbitrary It is irrelevant whether the standard of proof governing a protest of specifications is a preponderance of the evidence or the more deferential standard, clearly erroneous, contrary to competition, arbitrary, or capricious. Petitioner has proved that Respondent's tabulation method is clearly erroneous, contrary to competition, and arbitrary. As already noted, Respondent's tabulation method potentially penalizes compliant bidders by eliminating their compliant items from the tabulation when a noncompliant bidder misbids the same item. The anti-competitive, arbitrary effect of this tabulation method may be ameliorated somewhat by the fact that the ITB is for a cost-plus contract. However, the ITB fails to impose any minimum requirement or threshold for compliant items, in terms of number or dollar volume--e.g., if a bid contains noncompliant items totaling more than one percent of the total cost bid, then the entire bid is rejected. This means that Respondent's tabulation method can destroy the competitiveness of the procurement by allowing a bidder purposefully or unintentionally to misbid a large number of items, resulting in the effective elimination of these items from the tabulation of bids submitted by bidders with superior access to these items. Under these circumstances, Respondent's selection of this tabulation method was clearly erroneous, contrary to competition, and arbitrary. Mutual's Bid Is Nonresponsive The standard of proof governing Respondent's determination that Mutual's bid was responsive is clearly erroneous, contrary to competition, arbitrary, or capricious. As already noted, it is impossible to deduce Mutual's quote for Item 114 from the face of Mutual's bid. A failure to quote a cost for an item is little different from a failure to bid the item. In the case of a complete omission, Respondent knows nothing of the item bid; in the case of the omission of only a quote, Respondent knows what item the bidder has bid, but not the cost of the item. The omission of the cost of a single item adequately described in the bid may be a minor irregularity, if the cost can be deduced by subtracting from the total cost of all items the total cost of all but the omitted item. Here, though, the difference between these amounts is clearly wrong, so that, if Respondent overlooks the omission, it leaves open the possibility of a later dispute over the cost of Item 114. Under the present circumstances, including the disqualification of two other bidders for omitting items, Respondent's failure to disqualify Mutual's bid was clearly erroneous, contrary to competition, and arbitrary. Mutual's Bid Contains Material Variances The standard of proof governing Respondent's determination that Mutual's bid did not contain material variances from the ITB is clearly erroneous, contrary to competition, arbitrary, or capricious. Food Service Operations staff identified numerous deficiencies in Mutual's bid. For Mutual's bid, Ms. Ebner's June 25 memorandum counts 14 items not meeting specifications and 11 items for which compliance is inconclusive due to Mutual's failure to submit the required documentation. Treating the misbidding of green olives and the potatoes specified in Items 217-19, 221-22, and 224 as minor irregularities due to the impossibility of compliance with the specifications concerning the origin of these items, Mutual's bid still reveals consequential deviations from the specifications. Using only the chart prepared by Food Service Operations staff and disregarding the green olives and six potato items, Mutual's consequential deviations from the specifications include five imported foods, two meat products that fail to contain the required ratio of light to dark meat (one of the meat products and another product also failing to demonstrate the proper Grade), a lower Grade of canned sweet potatoes, shorter French Fries, excessively diluted tomato concentrate and inadequate documentation of the dilution of two jelly products, processed instead of natural cheese, and a missing ingredient from Dijon mustard. Of all the witnesses, Ms. Ebner was most capable, by training, experience, and job assignment, of understanding the significance of the deviations in Mutual's bid. For instance, addressing the seemingly inconsequential matter of excessively diluted jelly, Ms. Ebner noted that Respondent had had problems with runny jelly not remaining on peanut-butter- and-jelly sandwiches. The nutritional consequences of this seemingly harmless deviation are students discarding peanut- butter-and-jelly sandwiches that have lost their jelly. In each of these consequential deviations from the specifications, Mutual bid a cheaper product than specified, which conferred upon it an unearned competitive advantage, and a product of lower quality than specified, which jeopardized the primary purpose of the specifications to ensure that Respondent obtained food of high nutrition, safety, and taste for students and staff. Any implicit or explicit determination by Respondent dismissing the charted findings of deviations by Food Service Operations staff or treating them as minor irregularities rather than material variances would be clearly erroneous, contrary to competition, and arbitrary. Besides the findings contained in the chart prepared by Food Service Operations staff, Mutual misbid several other items. The consequential deviations from the specifications included seven imported items, a cheaper pita- fold than the specified Gyro wrap, and a cheaper imitation almond flavoring for pure almond flavoring. Any express or implied finding by Respondent discrediting these deviations would be clearly erroneous, contrary to competition, and arbitrary. Although an express or implied determination by Respondent that these deviations, standing alone, are minor irregularities would not be clearly erroneous, contrary to competition, arbitrary, or capricious, such a finding concerning these deviations, together with the previously discussed deviations charted by Food Service Operations staff, would be clearly erroneous, contrary to competition, and arbitrary. The standard of proof governing the determination that Mutual submitted written assurances, after bid opening, that it would supply product in compliance with the specifications, is the preponderance of the evidence. However, the standard of proof governing findings of the significance of the submittal of these assurances is clearly erroneous, contrary to competition, arbitrary, or capricious. Any implied or express determination by Respondent that Mutual's written assurances were not an attempt to change its bid after bid opening would be clearly erroneous, contrary to competition, and arbitrary. As already noted, Petitioner has already proved, by this deferential standard, that Mutual's bid contained material variances from the specifications. The purpose of Mutual's written assurances was to eliminate these material variances, which, in fact, were still not entirely eliminated by the time of the final hearing. Petitioner's Bid Contains Material Variances Consistent with its determination that Mutual's bid is responsive and suffers no material variances, Respondent claims in its proposed recommended order that Petitioner's bid is responsive and contains no material variances. Respondent awarded the main-line food contract to Mutual because it submitted the lower bid. However, Petitioner demands the award of the main- line food contract, so it is necessary to consider whether its bid, which is clearly responsive, contains any material variances. Because of the resolution of this issue, it is unnecessary to consider whether Petitioner's bid contains any minor irregularities, for which Respondent's implied or express refusal to waive would be clearly erroneous, contrary to competition, arbitrary, or capricious. Using the chart prepared by Food Service Operations staff and disregarding the green olives and six potato items, Petitioner misbid only seven items. In fact, the record reveals no other misbid items by Petitioner. Several of Petitioner's misbid items are relatively inconsequential. These are a tortilla slightly lighter than specified, larger pickles than specified, and omitted documentation showing the grain of vinegar. Mutual misbid these items also. However, three of Petitioner's misbid items are consequential. Although Petitioner's bid reflects the specified ratio of light and dark meat, unlike Mutual's bid, Petitioner's bid of turkey roast fails, as does Mutual's bid, to provide sufficient documentation to show that it is Grade A. Like Mutual's bid, Petitioner's bid is for Grade B canned sweet potato and fails to provide documentation that the two jelly products are not excessively diluted. The only consequential deviation in Petitioner's bid not found in Mutual's bid is Petitioner's failure to bid an eggless pasta. However, the standard of reference for determining whether Petitioner's bid contains material variances is not Mutual's bid, but the ITB. Although considerably more compliant than Mutual's bid, Petitioner's bid, when measured against the ITB and the importance of obtaining nutritious, safe, and tasty food for Respondent's schoolchildren, also falls impermissibly short of the mark. Petitioner's consequential deviations from the specifications also mean cheaper items than specified, through which Petitioner would have obtained an unearned competitive advantage, and products of lower quality than specified, which would have jeopardized the primary purpose of the ITB to ensure that Respondent obtained high-quality food. Impossible specifications, like domestic green olives or six potato items from the Northwest, or the failure to comply in some minor respect, such as sugar sprinkles from an unapproved manufacturer or excessively large pickles, may constitute minor irregularities. But the failure to ensure that each of the 297 items bid complies substantially in quality is not. Thus, an implied or expressed determination by Respondent that Petitioner's bid contains no material variances would be clearly erroneous, contrary to competition, and arbitrary. Petitioner has failed to prove that Respondent is liable for attorneys' fees. There is no direct proof of any factual basis to award fees. Perhaps Petitioner infers an improper purpose from the fact that, despite the benefit of highly deferential standards of proof, Respondent has not prevailed. Obviously, Respondent's failure to prevail is due to several express or implied determinations that were clearly erroneous, contrary to competition, arbitrary, or capricious. If this fact alone warranted a fee award, all agencies would be liable for fees in every bid case that they lost. The absence of such a statutory provision reveals the Legislative intent not to make agencies strictly liable for attorneys' fees in bid cases. The better approach is to permit an inference of improper purpose, but only if the agency were aware or reasonably should have been aware that its handling of the award was not merely clearly erroneous, contrary to competition, arbitrary, or capricious, but was so egregiously so as to support an inference of improper purpose. Such is not the case here. There is no evidence of Petitioner's costs, and Petitioner did not request the administrative law judge to reserve jurisdiction or leave the record open for a later determination of costs.
Recommendation It is RECOMMENDED that the School Board of Hillsborough County enter a final order setting aside the award of the main-line food contract to Mutual Distributors, Inc., and rebidding the contract. DONE AND ENTERED this 17th day of November, 1998, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 17th day of November, 1998. COPIES FURNISHED: Dr. Earl Lennard Superintendent School Board of Hillsborough County Post Office Box 3408 Tampa, Florida 33601-3408 Robert W. Rasch 129 Live Oak Lane Altamonte Springs, Florida 32714 W. Crosby Few Few & Ayala, P.A. 109 North Brush Street, Suite 202 Tampa, Florida 33602
