The Issue The issue in this case concerns whether the Florida Department of Transportation's (FDOT's or Department's) proposed action to award a contract to Couch Construction, L.P., is contrary to the agency's governing statutes, the agency's rules or policies, or the bid or proposal specifications.
Findings Of Fact The Florida Department of Transportation (Department) issued an Invitation to Bid (ITB) for road resurfacing on State Road 10/US 90 in Columbia County, Florida; Financial Project No. 208406-1-52-01 (The Project). Four companies submitted responses to the ITB. Couch was low bidder at $2,271,354.81, and Petitioner was second low at $2,278,263.07. The ITB incorporated the plans and specifications for the proposed highway resurfacing. The price proposal specifications stated in pertinent part: Item Number 2102-10. . .Approximate Quantity. . . 4,320.00 hours Item Number 2102-74-1 . Approximate Quantity . . .75,780.00 each day Item Number 2102-99 . . Approximate Quantity . . . 720.00 each day None of the bidders filed a timely objection to the price proposal specifications. Article 2-6, of the Florida Department of Transportation Standard Specifications for Road and Bridge Construction states: A proposal will be subject to being considered irregular and may be rejected if it shows omissions, alternations of form, additions not called for, conditional or unauthorized alternate bids, or irregularities of any kind; also if the unit prices are obviously unbalanced, either in excess of or below the reasonable cost analysis values. After the bids were opened, each bid was reviewed by the Department to determine whether the bid was mathematically and/or materially unbalanced. The Department's Preliminary Estimates Engineer conducts an unbalanced review of the bids to determine if the bids are mathematically unbalanced. A bid is considered to be mathematically unbalanced if the prices quoted are significantly different from the approximate cost of the item to the contractor. It is very common for bids on construction projects to contain some item prices that are mathematically unbalanced. Bid prices that are mathematically unbalanced are considered by the Department to be non-material irregularities if they do not affect the order of the bidders. In determining whether a mathematically unbalanced price is material, the Department follows a policy set out by the Federal Highway Administration (FHWA). The Department has been following the same policy since at least 1992. The FHWA does not allow for materially unbalanced bids to be accepted by the Department on projects that are federally funded. A materially unbalanced bid is one in which there is a reasonable doubt as to whether award to the bidder submitting the mathematically unbalanced bid will result in the ultimately lowest cost to the Department. The Department has developed an Unbalanced Program Logic for its computer analysis of the bids. The program flags the items that are mathematically unbalanced. It flags the item with an "A" for those items that are above the tolerance window, "U" for under the tolerance window, and "F" as front-loaded items. The flagged items which are short-listed by the computer program are sent to the designer of record to verify the quantities and to verify whether the correct pay item was used. The designer of record verified that the quantities were correct for this Project. As part of the bid review, the Department does a statistical average or mean average for each of the bid items. A standard and a-half deviation either side of the mean is established. The bid items outside that standard and a-half deviation, positive or minus, are discarded. The remaining bid items are re-averaged and this second average is referred to as the "serious average." A front-end loaded item is an item for which work is performed early in the contract. Mobilization is considered a front-end loaded item. Couch's Mobilization item 2101-1B was flagged by the computer analysis. The Department did an analysis of the Mobilization item. The Department started with the difference between Couch's bid and the Petitioner's bid on this item, $18,0000.00. That amount was multiplied by the current interest rate, 10 per cent, and then multiplied by a factor of .5, which spread it over half the contract, times 180-day contract period divided by 365, one calendar year. The result was $434.84, which represents the potential advantage that could result from paying the $18,000.00 amount early in the contract. That amount, $434.84, did not materially unbalance Couch's bid. The three items identified by Petitioner as unbalanced (paragraph 3, above) were low and did not present any detriment to the Department. If those three items overran at the rate established, it would be an advantage to the Department. In evaluating unbalanced bids, the Department follows the guidance in a May 1988 memorandum from the FHWA, which addresses bid analysis and unbalanced bids. The memorandum provides that where unit prices for items bid are either unusually high or low in relation to the engineer's estimate of the price, the accuracy of the estimated quantities of the items are to be checked. If the quantities are reasonably accurate, the bid is to be further evaluated to determine whether the mathematical imbalance is materially unbalanced such that there is "reasonable doubt that award to the bidder submitting the mathematically unbalanced bid will result in the lowest ultimate cost to the Government." The analysis of a mathematically unbalanced bid to determine if it is materially unbalanced considers the effect of the unbalanced bid on the total contract amount; the increase, if any, in the contract cost when quantities are corrected; whether the low bidder will remain as the low bidder; and whether the unbalanced bid would have a potential detrimental effect upon the competitive process or cause contract administration problems later. In this case, the Department compared the unit prices (line item prices) by each bidder on the bid proposal sheet to the average unit price for that item. The average unit price is based upon an average of the bidders' unit prices bid for a given pay item and the Department's estimated unit price for that item. If an individual bidder's unit price is significantly greater or less than the average price, the Department's computer flags the item as mathematically unbalanced. Such a bid then receives further evaluation by the Department to ensure the accuracy of the original estimates of the quantities of those items for which an unbalanced unit price has been submitted. The Department also reviews the project plans for accuracy. The more in-depth review is performed to determine if there is a potential for a cost overrun or if there is an error in the Department's estimated quantities which would result in an increased cost to the Department for the project. In this case, Couch and Anderson submitted bid proposals for each of the individual line item prices contained on FDOT's form. Couch's unit price for the off-duty law enforcement item was $0.25/hour. The Department's average price for the off-duty law enforcement item was $25.22/hour. The Petitioner's quotation for off-duty law enforcement was $26.00/hour. The Department's computer analysis of Couch's bid flagged the off-duty law enforcement item as mathematically unbalanced. The quote by Petitioner for the off-duty law enforcement item was not unbalanced, and therefore was not flagged for further review by the Department. The same analysis was applied to the barricades and variable message sign items, with similar results. The Department also did an in-depth review of item 2101-B, Mobilization, for front-end loading. The result of that analysis was that, as a result of front-end loading, there was the probability of increased cost to the Department of $443.84. This small increase in the cost to the Department was not large enough to change the order of the bidders. Therefore, it was not a materially unbalanced item. The Department then made a more in-depth review of the three mathematically unbalanced items in Couch's bid and determined that none of those items were materially unbalanced, because none of them had the potential to increase the cost to the Department and none of them had the potential to change the order of the bids. In sum, the Couch bid was not materially unbalanced. The evidence in this case is insufficient to support a basis for rejecting the Couch bid.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Florida Department of Transportation issue a final order in this case dismissing the Petitioner's Formal Protest and Request for Hearing; denying all relief requested by the Petitioner; and awarding the subject contract to the Intervenor, Couch Construction, L.P. DONE AND ENTERED this 7th day of May, 1999, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 7th day of May, 1999.
The Issue Whether Respondent, Department of Corrections' ("Department") intended decision to award contracts to Intervenors, Gateway Foundation, Inc. ("Gateway"), and The Unlimited Path, Inc. ("UPI"), for licensed in-prison substance abuse treatment services pursuant to Invitation to Negotiate FDC ITN 17-112 ("the ITN"), is contrary to the Department's governing statutes, rules, or the ITN specifications, and contrary to competition, clearly erroneous, arbitrary, or capricious.
Findings Of Fact The ITN, Site Visits, and Addenda The Department is a state agency responsible for the supervisory and protective care, custody, and control of all inmates incarcerated by the Department in each of its four regions. As of June 30, 2016, the Department had a total inmate population of 99,119, with 62 percent (61,454) of those inmates in need of treatment for a substance abuse disorder. The Department wants to strategically improve the manner in which it provides licensed substance abuse treatment services to inmates by focusing on maximizing the levels of treatment and individual inmate needs without increasing costs. The Department chose to utilize a flexible competitive procurement process to achieve its goals; specifically, an invitation to negotiate method of procurement rather than an invitation to bid or request for proposals, because it wanted industry leaders to craft individual and innovative solutions to address the problem.1/ Against this backdrop, on September 21, 2016, the Department issued the ITN, "In-Prison Substance Abuse Treatment Services," seeking replies from qualified vendors to provide licensed substance abuse treatment services to inmates incarcerated by the Department in each of its four regions. The Department reserved the right to make separate awards to each of its four regions, or to make a statewide award to a single vendor. The initial term of the contract(s) to be awarded under the ITN is five years. In addition, the Department may renew the contract(s) for up to one additional five-year term. The ITN separated substance abuse treatment services into five distinct service types: Prevention Services, Outpatient Substance Abuse Treatment, Intensive Outpatient Substance Abuse Treatment, Long-term Residential Therapeutic Community, and Aftercare. Additional services were also required, including motivation/readiness classes for program participants awaiting admission to Outpatient, Intensive Outpatient, or Residential Therapeutic Community services, and an alumni support group for program participants who have completed treatment services. The ITN required that the treatment services be provided in programs licensed pursuant to Florida Administrative Code Chapter 65D-30. The ITN identified the selection criteria as follows: The focus of the negotiations will be on achieving the solution that provides the best value to the State based upon the "Selection Criteria" and satisfies the Department's primary goals as identified in this ITN. The Selection Criteria may include, but is not limited to, the following. Selection Criteria: Respondent's articulation of their solution and the ability of the solution to meet the requirements of this ITN and provide additional innovations. Respondent's experience in providing the services being procured and the skills of proposed staff relative to the proposed approach and offering. Respondent's Technical Reply and Cost Reply, as they relate to satisfying the primary goals of the services identified herein. All interested vendors, before submitting their replies, were required to visit various sites within the regions covered by their reply. GEO attended these site visits, which were held in October to November 2016. During the visits, the topic of the budget was discussed. All vendors were informed that the Department "did not have any new money," and that it would be operating within the existing budget. Section 4.10, TAB A, of the ITN required that each vendor submit with its reply a letter from a surety company or bonding agent that documents the vendor's present ability to obtain a performance bond or irrevocable letter of credit in the amount of $1,500,000, per region. In Section 4.8 of the ITN, Pass/Fail Mandatory Responsiveness Requirements, the Department stated it would reject any and all replies that did not meet the pass/fail criteria. One of these criteria, Section 4.8e), specifically required each vendor to demonstrate its ability to meet the performance bond requirement. A vendor was likewise required to make this certification on Attachment IV to the ITN, Pass/Fail Requirement Certification and Non-Collusion Certification. Section 4.8e) stated as follows: The Vendor must be able to demonstrate its ability to meet the Performance Bond requirements. Prior to execution of prospective contract, Respondent will deliver to the Department a Performance Bond or irrevocable letter of credit in the amount equal to the lesser of $1.5 million dollars, per region, or the average annual price of the Contract (averaged from the initial five year Contract term pricing). The bond or letter of credit will be used to guarantee at least satisfactory performance by Respondent throughout the term of the Contract (including renewal years). Section 5.36 of the ITN, Performance Guarantee, also provided: The Vendor shall furnish the Department with a Performance Guarantee in the amount of $1,500,000, per region, on an annual basis, for a time frame equal to the term of the Contract. The form of the guarantee shall be a bond, cashier's check, or money order made payable to the Department. The guarantee shall be furnished to the Contract Manager within thirty (30) days after execution of the Contract which may result from this ITN. No payments shall be made to the Vendor until the guarantee is in place and approved by the Department in writing. Upon renewal of the Contract, the Vendor shall provide proof that the performance guarantee has been renewed for the term of the Contract renewal. Based upon Vendor performance after the initial year of the Contract, the Department may, at the Department's sole discretion, reduce the amount of the bond for any single year of the Contract or for the remaining contract period, including the renewal. The purpose of a performance bond is to mitigate the Department's risk should a vendor fail to perform on a contract. In Addendum 2, the Department identified six current contracts being replaced by the ITN, and provided links to those contracts and budgetary information on the Florida Accountability Contract Tracking System ("FACTS").2/ The Department also provided two rounds of formal questions and answers, which are reflected in Addenda 6 and 7. In Addendum 6, question 3, a vendor asked a question about cost. In response, the Department answered as follows: Vendors are encouraged to submit a Cost Reply in such a manner as to offer the most cost effective and innovative solution for quality services and resources, as both cost efficiency and quality of services will be a consideration in determining best value. In Addendum 6, question 77, a vendor asked a question about how to submit a reply. In response, the Department answered as follows: Vendor's shall only submit one Reply, and the Reply must be clearly labeled with the Region(s) included, or that the Reply is Statewide. In Addendum 7, question 2, the Department again addressed the issue of how many replies are required of a vendor who was interested in either a statewide or a regional award, through the following questions and answers: Question 2: In the responses to vendor questions (Addendum 006), Change to No. 6- "4.9 Submission of Replies" states that "In Reply to this ITN, each Vendor shall: Submit a separate Reply for each Region (bullet item a on page 8). However, under answer #77 (p.21), it states that "Vendor's shall only submit one Reply, and the Reply must be clearly labeled with the Region(s) included, or that the Reply is Statewide." Can you please confirm that a statewide proposal can be one, single proposal for the entire state rather than four separate proposals for each of the four regions? Answer: Yes. If submitting for a Reply for Statewide, the Reply can be submitted as one (1) Reply. If submitting a Reply for multiple Regions such as Regions 1 and 2, a Reply must be submitted for each Region. A separate Technical Reply and Cost Reply must be included for each submission. The Cost Replies must be sealed in a separate envelope from the Technical Replies, but they can all be submitted in the same package. Submission and Evaluation of Replies to the ITN On June 15, 2017, the Department received replies to the ITN from the following six vendors: GEO, Gateway, UPI, SMA Behavioral Health Services, Inc., Village South, Inc., and Bridges of America, Inc. GEO submitted five separate replies, one for each region and one for statewide. Gateway submitted a single statewide reply, but indicated in the reply that it wanted to be considered for a statewide award and one or more regional awards. Gateway also included a detailed budget breakdown by region with pricing for each region. The Department's instructions to the evaluators of the replies included a note reminding them that Gateway submitted a statewide response, but that it wanted to be considered for each individual region. UPI submitted three separate replies, one each for Regions 1, 2, and 3. UPI made the required certifications regarding the performance guarantee and submitted a letter from a surety company evidencing its ability to obtain a performance bond in the amounts required by the ITN. All of the replies were deemed to satisfy the pass/fail criteria and were then evaluated and scored. Negotiations Following the evaluation of the replies, the Department entered into the negotiation phase with GEO, Gateway, UPI, and Bridges of America, Inc. Negotiations commenced in August 2017 and continued through October 2017. The Department held a total of three negotiation sessions with each of these vendors. The ITN provided that the scores from the evaluation phase would not carry over into negotiations and that the negotiation team was not bound by the scores. The Department's negotiation team consisted of Kasey Faulk, chief of the Bureau of Procurement (lead negotiator); Patrick Mahoney, chief of the Bureau of Readiness and Community Transition; and Maggie Agerton, the assistant chief of In-Prison Substance Treatment in the Bureau of Readiness and Community Transition. Ms. Faulk has a master's degree in business administration from the University of Florida. She is also a Florida-certified project management professional; Florida- certified contract negotiator; and Florida-certified contract manager. In her tenure as chief of the Bureau of Procurement, she has overseen more than 130 competitive solicitations, including at least 80 invitations to bid, at least 30 requests for proposals, and approximately 17 invitations to negotiate. She has drafted procurement procedures at two different state agencies, and helped draft revisions to Florida Administrative Code Chapter 68-1. Without objection, Ms. Faulk was accepted at hearing as an expert in the area of Florida procurement processes. Ms. Agerton authored the programmatic portions of the ITN and served as an evaluator. She has a bachelor's and master's degree in criminology. She is also a Florida-certified addiction professional and certified criminal justice addictions professional. She currently serves as contract manager for the Everglades Recovery Center ("Everglades") contract, of which GEO is the incumbent vendor.3/ During negotiations, GEO, which had only provided services to the Department for a short time, touted its experience and devotion of resources at Everglades. However, GEO was under a corrective action plan at Everglades as of May 12, 2017, because of missing information in clinical files and lack of staff supervision. Complete clinical files are very important to substance abuse treatment. Proper clinical documentation is necessary for licensure purposes and allows the Department to ensure that services are being provided in accordance with the contract. By the end of October 2017, Ms. Agerton had conducted a site visit to Everglades, and although GEO had made significant progress in the area of leadership and staff, the clinical files were still a significant problem. Ms. Agerton and Ms. Faulk had concerns about GEO's current contract performance at Everglades. During the negotiation phase, GEO was aware of the Department's concerns regarding its performance at Everglades. During negotiations, GEO was told by the Department that it is trying to spend its money more efficiently and in a cost-effective manner. GEO was told by the Department that its price was outside the range of competitive replies, and GEO was encouraged to provide alternative pricing models and "sharpen its pencils." During negotiations, the Department asked every vendor to identify its cost drivers. GEO did not identify the performance bond as a cost driver. However, UPI identified the performance bond as a cost driver. UPI informed the Department that a performance bond would cost it $200,000 per year regardless of whether the amount of the bond was reduced, because the cost of the bond is based on the complete value of the contract. UPI requested that it be allowed to submit a cashier's check to the Department in the amount of $1,000,000 for three regions in lieu of paying $200,000 per year for five years to a bonding company for a performance bond. At hearing, Ms. Faulk explained the process of negotiating with individual vendors, the importance of having a strategy, and the value of making individual concessions with individual vendors during negotiations. UPI had performed services for the Department for over ten years, through budget cuts, and had not walked away from their contracts. Accordingly, the negotiation team considered UPI's suggestion to be a low risk. That is, the Department did not believe there was a significant risk that UPI would abandon the contract. In any event, the cashier's check proposed by UPI would benefit the Department because the Department could easily take the money and use it to recoup losses in the event of nonperformance, as opposed to a bond, which may require the Department to engage in protracted litigation with a surety company to obtain the value of the bond. The Department also saw the cashier's check as an opportunity to obtain lower pricing from UPI. The negotiation team told UPI it would accept, in lieu of the performance bond, a $1,000,000 cashier's check if UPI was awarded three regions; a $750,000 cashier's check if UPI was awarded two regions; and a $500,000 cashier's check if UPI was awarded one region. Allowing UPI to post a cashier's check in the amount of $750,000 for the two regions it was awarded did not provide UPI with a competitive advantage over GEO. At hearing, GEO's representative, John Thurston, who oversaw the development of GEO's reply and BAFO, and participated in the negotiations, acknowledged that GEO's cost to obtain a performance bond in the amount of $1,500,000 would only have been $67,500 per year. During negotiations, the Department revised the scope of work. Following the negotiations, on October 25, 2017, the Department emailed an RBAFO to those vendors who participated in the negotiations. The RBAFO informed vendors that the term "Best and Final Offers" is used to provide the vendor the opportunity to clarify its response and adjust its price based on the negotiations, and that this does not preclude the Department from seeking clarification or additional information upon receipt of the BAFOs. The RBAFO further stated that the BAFO "must contain a written narrative of services to be provided inclusive of clarifications and any alternative or modifications discussed during the negotiation process." The BAFO required an executive summary, description of service delivery, a staffing matrix, and a price sheet. GPR-037 (General Program Requirements) in the RBAFO addressed staffing and provided, in pertinent part: The vendor shall ensure that all required Vendor staff positions are filled for the entire scheduled 40 hour weekly working period, and that those individuals are physically present at the work site. All positions are full-time, unless otherwise specified, inclusive of interim positions. As to the price sheet, the per diem pricing "should represent the best price the Vendor is willing to offer to the Department." The RBAFO specifically addressed and allowed for vendors to provide alternative pricing models and methods. Providing alternative price offerings gives the Department more options to solve its problem and demonstrates a vendor's understanding of the Department's needs. All vendors were provided with an equal opportunity to submit BAFOs reflecting revisions to the ITN made by the Department during negotiations. The RBAFO reminded vendors to include in their BAFOs alternatives or any modification discussed during the negotiation process. GEO was aware during negotiations that it could have inquired about or proposed to negotiate different components of all aspects of its proposal. GEO was also aware that any global changes for all vendors would be included in the RBAFO, but that negotiation concessions, innovative solutions, and negotiated points with individual vendors, would not be included. In fact, GEO negotiated items that were not shared with other vendors. The BAFOs and Negotiation Team Recommendation The deadline for vendors to submit their BAFOs was November 14, 2017. The Department received BAFOs from the four vendors invited to negotiate. The ITN provided that BAFOs would not be scored and the negotiation team would make a recommendation of award based on which vendor's solution presented the best value to the state, utilizing the selection criteria in the ITN. Prior to submitting its BAFO, the Department responded to Gateway's inquiries about differences between what was to be included in the BAFO and what was discussed during negotiations, specifically in the context of the ratio of Prevention Services counselors (indicated as one counselor to fifty participants in the RBAFO, but discussed during negotiations as one counselor to eighty participants). The Department instructed Gateway to use the ratios included in the RBAFO, and "provide an alternative price with the ratio your Company is proposing." As allowed by the RBAFO and further clarified by the Department, Gateway's BAFO included both a base price offering and an alternative price offering, with detailed explanations of the assumptions included within each offering. Gateway's BAFO included a ratio for Prevention Services counselors from one counselor for every fifty participants (1:50), and an alternative ratio of one counselor for every eighty participants (1:80). Gateway's staffing models in its BAFO also included part-time positions. The members of the negotiation team reviewed the BAFOs and then made a formal recommendation of award at a public meeting held on November 17, 2017, with recorded minutes. The negotiation team recommended regional awards rather than a statewide award. It recommended an award of Regions 1 and 2 to UPI and Regions 3 and 4 to Gateway. The team recommended these vendors because it believed their solutions represented the best value to the state based on the selection criteria identified in the ITN. Ms. Faulk recommended UPI for Regions 1 and 2 because UPI was an incumbent vendor with a long history of providing satisfactory services to the Department. Additionally, she felt UPI had tremendous ideas on how to maximize treatment, their cost was affordable, and they proposed innovative solutions. Ms. Faulk ultimately recommended Gateway's alternate price offering for Regions 3 and 4 because she found them very innovative and treatment-focused. She felt they had extensive experience in a correctional setting providing substance abuse treatment, and their cost was very affordable. She recommended the alternate price offering because it was an innovative solution to increase services. Gateway's alternate price offering increased the number of available treatment slots and provided staffing which the Department found acceptable and appropriate, while at the same time offering a better price. Ms. Agerton recommended UPI for Regions 1 and 2 because she felt UPI brought an innovative solution in negotiations, as well as many different ideas. She felt that based on their incumbent status, they had knowledge of the Department's systems and were able to suggest improvements while remaining affordable. Ms. Agerton recommended Gateway for Regions 3 and 4 because they also brought innovative solutions, particularly an evaluator that would help with monitoring their implementation. She also felt Gateway was likewise affordable and energetic. Neither Ms. Faulk nor Ms. Agerton recommended GEO for any of the regions. Ms. Faulk felt GEO's cost was significantly higher than the other vendors. She also had concerns about some of GEO's responses during the negotiation sessions, particularly with regard to the problems at Everglades. Ms. Faulk felt GEO lacked innovation, it did not understand the problems at Everglades, and it lacked an effective strategy for how not to have the problems reoccur in the future. Ms. Agerton did not recommend GEO for any of the regions because she felt they were very expensive compared to the other vendors; so expensive, in fact, that their price exceeded the Department's budget. Ms. Agerton also had concerns about GEO's current contract performance at Everglades. A formal recommendation memorandum was prepared by the procurement officer and routed through various levels of the Department. The memorandum included a cost analysis, which reflected the total awarded price for all four regions for the initial five-year term to be $57,683,377.25. GEO's proposed price for all four regions for the same period was $80,558,693.75, approximately $22,000,000 higher than the Department's intended awards for all four regions. Notably, the formal recommendation memorandum mistakenly reflected 225 prevention slots in Region 3, instead of the 320 prevention slots included in Gateway's alternative proposal; and 200 prevention slots in Region 4, instead of the 320 prevention slots included in Gateway's alternative proposal. For Region 3, multiplying 320 slots times Gateway's per diem rate of $3.89 (and by 365 days a year), results in an annual total cost of $454,352; compared to the annual cost figure of $319,466.25 for 225 slots reflected in the memorandum. For Region 4, multiplying 320 slots times Gateway's per diem rate of $3.89 (and by 365 days a year), results in an annual total cost of $454,352; compared to the annual cost figure of $283,970 based on 200 slots. Thus, accounting for the increased prevention slots for Regions 3 and 4 results in an annual increase in cost of $305,267.75 above the $11,536,675.45, for a total annual cost for all four regions of $11,841.943.20, and a five-year cost of $59,209,716. On the other hand, GEO's proposed price for all four regions for the same period was $80,558,693.75, which divided by five results in an annual cost to the Department of $16,111,738.70. GEO eliminated the cost of Aftercare services because the Department intends to use an Alumni Program for zero cost in lieu of Aftercare services. GEO calculated that removing the cost to the Department of Aftercare services would result in $1,885.790.75 less, or a total annual cost of $14,225,948.70. Thus, removing the cost of Aftercare services from GEO's proposed price for all four regions would still result in a five-year cost to the Department of $71,129,743.50, which may exceed the amount appropriated, budgeted, and available to the Department for substance abuse treatment for Fiscal Year 2017- 2018, and which far exceeds the cost of $59,209,716 (the amount of the proposed award to Gateway and UPI for the same time period).4/ The recommendation memorandum was approved by the Department's secretary on January 9, 2018. GEO's Protest GEO's protest raises numerous issues, none of which warrant rescission of the Department's intended award to Gateway and UPI. Gateway's Reply to the ITN GEO contends Gateway submitted only a single "statewide" reply to the ITN, and no reply for any regions, and therefore, Gateway is ineligible for a regional award. The persuasive and credible evidence adduced at hearing demonstrates that Gateway's reply was properly considered as a reply for multiple regions because Gateway clearly indicated its intent to be considered for multiple regions. Moreover, Gateway gained no competitive advantage over other vendors as a result of combining its statewide reply with a regional reply. In fact, the Department would have been inundated with replies if it required a vendor to reply for every conceivable combination of regions. UPI's Performance Guarantee GEO contends the Department materially deviated from the ITN and gave UPI a competitive advantage over it by allowing UPI to provide, in lieu of a performance bond, a cashier's check in the amount of $500,000 if awarded one region; $750,000 if awarded two regions; or $1,000,000 if awarded three regions. The persuasive and credible evidence adduced at hearing demonstrates that the Department did not materially deviate from the ITN and give UPI a competitive advantage over GEO by allowing UPI to provide, in lieu of a performance bond, a cashier's check in the amount of $500,000 if awarded one region; $750,000 if awarded two regions; or $1,000,000 if awarded three regions. Notably, the ITN did not require proposers to submit a performance bond or letter of credit with its reply to the ITN, and none of the vendors submitted a performance bond or letter of credit with their replies. Instead, in replying to the ITN, a vendor was only required to "demonstrate its ability to meet the Performance Bond requirements." UPI satisfied the requirements of the ITN by demonstrating its ability to meet the performance bond requirements. In any event, the reduction in the amount of the bond agreed to by the Department ($750,000 in connection with the award of contracts for two regions) did not provide UPI with a competitive advantage over GEO. At hearing, Mr. Thurston estimated GEO's annual cost of providing a performance bond in connection with contracts to be awarded pursuant to the ITN would be approximately $67,500, well below the $200,000 per year that UPI was quoted for its bond. Moreover, the amount of $67,500 is insignificant compared to the significant disparity in the annual, total prices proposed by GEO and UPI in their BAFOs for Regions 1 and 2 (GEO: $9,299,141.50; UPI: $6,342,203, for a difference of $2,956,938.50 per year). At hearing, Mr. Thurston acknowledged he could have raised the issue of the performance bond during negotiations. As Mr. Thurston also acknowledged at hearing, even if GEO had been able to negotiate an elimination of the performance bond amount requirement in its entirety, GEO would not have been able to offer a price that would have remedied the disparity. Gateway's BAFO (Prevention Services Ratio) GEO contends Gateway's ratio for Prevention Services counselors of 1:80, as provided in Gateway's BAFO alternative price offering, is a material deviation from the RBAFO requirements. As detailed above, this alternative offering was expressly permitted by the RBAFO and was further clarified by the Department to Gateway before its BAFO was submitted. Moreover, increasing the prevention capacity to 80 per institution adds an additional 605 inmates served at any one time, resulting in the Department being able to serve more inmates for the same appropriation amount. This is precisely the type of innovative thinking the Department sought to reach its goals. GEO did not submit an alternative pricing model, and it never asked the Department if the ratios for Prevention Counselors were negotiable. At hearing, GEO could not say how much it could have lowered staff levels, if at all, if it attempted to negotiate ratios. Gateway was not given a substantial advantage over GEO by increasing the prevention capacity. In addition, although chapter 65D-30 does include required ratios for certain types of services, there is no maximum caseload requirement applicable to Prevention Services. Gateway's BAFO (Part-Time Positions) GEO also contends Gateway violated GPR-037 in the RBAFO because Gateway's staffing models included part-time positions. However, the Department interprets the phrase "unless otherwise specified" to mean that unless the vendor specifies a position in its reply as part time, the Department will assume that any positions referenced in the reply are full time (40 hours). GEO never asked the Department for clarification on the meaning of the phrase "unless otherwise specified." At hearing, Mr. Thurston could not say whether its BAFO would have been adjusted had GEO asked about negotiating the positions, in terms of being full time. In any event, the Department currently utilizes part- time staff under the contracts being replaced by the ITN. Part- time staff may provide a more cost-effective solution than full- time staff. Gateway's BAFO (Clerical Positions) GEO also contends Gateway's alternate price offering provided for a reduction in clerical staff positions contrary to GPR-035 as set forth in Addendum 6 and the RBAFO. GPR-035 required that each vendor provide a minimum of one clerical position for up to 136 treatment slots, and one-half position for each additional 68 treatment slots. In support of its position, GEO presented Exhibit 1. However, GEO's Exhibit 1 is based on incorrect assumptions, and it is unreliable and unpersuasive. First, the ratios calculated by GEO are impermissibly "rounded-up." Secondly, contrary to GEO's position, the Department only calculates an additional one-half position once the full 68 treatment slots have been achieved. GPR-035 does not require one-half positions for "up to each additional 68 slots." A plain reading of GPR-035, consistent with the Department's reasonable interpretation, is that an additional one-half position is required only after the full 68 slots have been achieved. Gateway's base price offering fully complied with the staffing ratios when the ratios are calculated according to a plain reading of GPR-035, which is bolstered by the Department's practice in calculating ratios. Gateway's alternative price offering providing for a reduction in clerical positions to one full-time employee per facility was a cost-saving measure discussed with the Department and a product of negotiations. Even if Gateway's alternative price offering deviated with regard to the clerical positions, given the discrepancy between GEO's and Gateway's price offerings, the deviation is so small that it is a minor irregularity and not a material deviation. Gateway's BAFO (Pricing) GEO also contends Gateway failed to provide region- specific pricing or a final, firm pricing offer of any kind for the initial term or the renewal term. During negotiations and in its BAFO, Gateway reiterated that it would accept a regional or multi-regional award. Under Section 4.12 of the ITN, the Department reserved the right to seek clarification from vendors regarding their BAFOs and to reopen negotiations after receiving BAFOs. The negotiation team recommended awarding Gateway's alternate price offering for Regions 3 and 4 contingent upon clarification from Gateway that its pricing would be applicable to Regions 3 and 4. Although vendors were invited and could have attended the public meeting and heard this for themselves, none of them chose to attend. Four days later, on November 21, 2017, the Department's procurement officer reached out to Gateway's representative asking it to confirm that the pricing listed in the alternate price offering would remain the same if awarded individual regions as opposed to the entire state. Gateway's representative responded that the alternate prices included in Gateway's BAFO could remain in effect with a modified administrative personnel staffing plan if Gateway was awarded more than one region. At the time of this exchange, the Department's negotiation team had already recommended Gateway for Regions 3 and 4; so, the Department knew there would be no need to renegotiate pricing because Gateway was recommended to receive more than Region 4. According to Ms. Faulk, the Department understood Gateway's response to mean that the per diem pricing provided in Gateway's BAFO would apply to Regions 3 and 4. Gateway would reduce the oversight positions to two or three positions, consistent with the smaller level of responsibilities required for two regions instead of four. This exchange occurred prior to the drafting of the award recommendation memorandum, which was dated November 28, 2017. It was not signed by Ms. Faulk until January 3, 2018, or the Secretary until January 9, 2018. Gateway's per diem statewide pricing applied equally to Regions 3 and 4. Although Gateway did not provide a grand total price on its BAFO price sheet, the Department calculated the grand total price using the correct per diem unit prices provided. The ITN stated that unit prices would control in the event of a mathematical error. As it pertains to the price sheet instructions, the RBAFO stated that the vendor's pricing should represent the best price the vendor is willing to offer the Department. Gateway provided both a base price offering and an alternate price offering. The base price offering's price sheet contained the required per diem prices for both the original contract term and the renewal contract term. Under the section titled "TOTAL PRICE," Gateway appeared to sum the individual per diem prices rather than provide an actual grand total contract amount. Gateway did the same for its alternate price offering price sheet. Although Gateway did not provide a grand total price on the price sheet, it included a detailed budget breakdown for both its base price offering and alternate price offering. The Department felt these breakdowns offered additional transparency into Gateway's pricing. Section 4.10, Tab F, of the ITN provided that all calculations would be verified for accuracy by the Department's Bureau of Support Services staff, and that unit prices submitted by a vendor would prevail in the event a mathematical error is identified. Ms. Faulk testified the Department could calculate a grand total price by using the per diem pricing provided on the price page. She explained the Department could multiply the per diem price for each service type by the number of slots for that service, and then multiply that number by 365 days to arrive at the yearly price for a particular service. The Department could then add those prices together to obtain an annual total. She also explained these same calculations could be done for the renewal pricing. UPI's BAFO (Clerical Positions) GEO contends UPI deviated from the staffing requirements by providing fewer clerical support positions than required by the RBAFO. Specifically, GEO contends UPI had a deficit of six clerical support positions, and that if GEO knew it could reduce the staffing complement by six, it would have been worth approximately $270,000. UPI's clerical staffing ratios deviated from GPR-035, because its ratios were calculated based on the belief that prevention slots were not "treatment" slots. The ITN and RBAFO refer to prevention slots as treatment slots. Nevertheless, given the discrepancy between the prices submitted by GEO and UPI, UPI's deviations from the clerical staffing requirements are so small that they are minor irregularities and not material deviations. UPI's BAFO (Pricing) GEO also contends UPI's BAFO failed to include the Revised Price Sheet. Specifically, in paragraph 24 of its amended petition, GEO alleged: "UPI appears to have created its own form that emulated the format of the required form but provides many more spaces for additional information. Other Vendors that used the ITN required form did not have the opportunity to include this additional information." Although UPI did not use the specific Revised Price Sheet form, it provided per diem prices for each level of treatment as required by the form and additional information for the Department's consideration. GEO failed to include per diem pricing for Residential Therapeutic slots in Regions 2 and 4. GEO also modified its price sheets and submitted additional information in the form of annotations denoted by asterisk. In sum, the persuasive and credible evidence adduced at hearing demonstrates that the Department appropriately determined that the proposed awards to Gateway and UPI will provide the best value to the Department based on the selection criteria. Any irregularities in Gateway's and UPI's replies and BAFOs as alleged by GEO were minor and not material deviations. The Department's intended awards to Gateway and UPI are not contrary to the Department's statutes, rules, the ITN specifications, clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Corrections enter a final order dismissing the protest of GEO Reentry Services, LLC. DONE AND ENTERED this 20th day of April, 2018, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of April, 2018.
Findings Of Fact On, or about, November 20, 1991, HRS released ITB 92-18BC. ITB 92-18BC was an invitation to bid on HRS' procurement of a data processing cartridge tape subsystem for Unisys computers. Prior to the issuance of the ITB, HRS conducted a bidder's conference. The bidders' conference was attended by representatives of HRS, Unisys and StorageTek. Vendor representatives at the bidders' conference were informed that HRS would "attempt to answer the questions in the best" possible manner. Vendors were also instructed that the answers received at the bidders' conference were "not binding, are not official, and must be submitted in writing to receive an official answer." Additionally, the ITB contains language stating that any questions concerning specifications or conditions were to be submitted in writing to HRS and that no interpretation shall be binding on HRS unless it is in writing. StorageTek and Unisys submitted written questions pursuant to the above mentioned instructions. The only relevant inquiry submitted by Unisys had to do with the requirement of "one (1) dual path controller with redundant paths for each string." Pursuant to Unisys' request, HRS modified that requirement to read "At least one (1) dual path controller with redundant paths for each string." The only relevant written inquiry submitted by StorageTek is found on page 14 of the written inquiries of the ITB. The written inquiry by StorageTek asked whether HRS would consider the total automation through an RFP rather than only a small piece of total automation through an ITB. HRS responded negatively stating that the success of this ITB will be based on using current allocations to fund the change to cartridge tape. Following the issuance of ITB 92-18BC, StorageTek filed a notice of intent to protest the specifications of the ITB. StorageTek never filed a formal notice of protest and subsequently withdrew the notice of intent to protest the bid specifications. The ITB as finally issued states its "Purpose" as "The purpose of this Invitation is to obtain competitive bid prices for a data processing cartridge tape subsystem, with installation components and maintenance, to be attached to Unisys A17-L and A15-I computers located at the HRS Technology Centre, 1940 North Monroe Street, Tallahassee, Florida." The ITB also contains the following hardware "Quantities and Technical Specifications": The following minimum specifications shall govern any equipment offered: Twenty-eight (28) cartridge tape drives configured as follows: One (1) string of sixteen (16) tape drives One (1) string of eight (8) tape drives One (1) string of four (4) tape drives At least one (1) dual path controller with redundant paths for each string In the General Conditions, the ITB states Any questions concerning 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. In bold print at the bottom of the "General Conditions" is found: "NOTE: ANY AND ALL SPECIAL CONDITIONS AND SPECIFICATIONS ATTACHED HERETO WHICH VARY FROM THESE GENERAL CONDITIONS SHALL HAVE PRECEDENCE." The ITB also contains the following "Special Conditions": The Office of Management Systems intends to acquire robotic tape units within 24 months to manage approximately 20,000 tapes. The future value of the cartridge tape drives toward this goal will be a consideration in this bid. If the purchased tape drives will directly attach to the robotic units then 100% of the value is maintained. However, if the tape drive unit must be replaced then a trade-in value must be bid (see Cost Table). Auto load trays are considered part of the tape drive unit. The Office of Management System also must be able to connect these tape drives to an IBM computer in the future. This capability is mandatory and must be stated with supporting documentation. The hardware/software to accomplish this goal is not part of this bid, but associated cost should be identified in the documentation provided. The ITB also specified that "[t]he award will be made to the responsive bidder with the lowest bid price for 'Net Future Cost'." Finally, the ITB contains the following pricing sheet formula for calculating cost, the blanks of which were to be completed by the bidder: CARTRIDGE TAPE SUBSYSTEM COST $ Includes all costs for specified 28 cartridge tape drives . . . . LESS TRADE-IN ALLOWANCE ( ) (see specified Bid Condition #5 and 13) SUPPLIES MAINTENANCE NET COST . . . . . . . . FUTURE VALUE OF TAPE EQUIPMENT (See Notes A and B below) * ( ) NET FUTURE COST $ Note to Bidders: (A) If the tape drives directly attach to the robotics unit, the future value of tape equipment shall equal to [sic] the amount entered for item 1 above. (B) If the tape drives must be replaced in accordance with section 6 of this ITB, the amount entered will be the trade-in value of the equipment in October 1993. HRS received two bids for ITB 92-18BC. The bids that were submitted were bids by StorageTek and Unisys. The two bids were publicly opened at Winewood and transported to Management Systems for evaluation. When the bids arrived at Management Systems they were evaluated by an evaluation team consisting of Joe Duggar, Marilyn VanDusseldorp and Dick Bradley. The evaluation team concluded that both bids that were submitted were materially responsive to the ITB. However, review of the StorageTek bid showed that StorageTek failed to subtract line six from line five on the bid pricing sheet and had placed a zero for the cost on line seven of the bid pricing sheet. HRS reworked the numbers and entered a price on line seven in accordance with the mathematical requirements of the pricing sheet. HRS corrected StorageTek's entry on line seven and found that StorageTek's bid for line seven was over $300,000. Unisys' bid for line seven was for $243,454. HRS concluded that Unisys was the lowest responsive bidder for ITB 92- 18BC. As such, Management Systems reported these findings to Secretary Robert B. Williams, Secretary, Department of Health and Services, on January 2, 1992. After, reviewing the Unisys bid, StorageTek raised concerns about whether the Unisys bid satisfied the mandatory requirements of the ITB. StorageTek was concerned with whether Unisys had met the requirement of "At least one dual path controller with redundant paths for each string." Larry Smith, an employee of StorageTek, contacted Tom Johnson, Assistant Deputy Secretary for Management Systems, about the contents of the Unisys bid. Mr. Johnson, after listening to Larry Smith's concerns, asked Marilyn VanDusseldorp to check into StorageTek's allegations. Ms. VanDusseldorp and Mr. Duggar met with Mr. Greg Priest and Mr. John Thompson of the Unisys Corporation. Mr. Priest and Mr. Thompson went over the bid with the HRS evaluators. At this meeting, a conversation took place about the number of controllers that StorageTek and Unisys had bid and the cross coupling cables between those controllers. Unisys informed HRS that if HRS wanted that cable for strings B and C, Unisys could make that cable available at no additional charge. However, HRS would not avail itself of this crosscabling until after the acceptance period for the hardware as bid. The ability to cross cable strings B and C is not a requirement of or part of this ITB. Ms. VanDusseldorp and Mr. Duggar were convinced that they understood the Unisys bid and their original understanding of the Unisys bid's responsiveness did not change because of these conversations. Ms. VanDusseldorp reported back to Tom Johnson that the allegations by StorageTek were unfounded and that Unisys was responsive as bid in Unisys' response to the ITB. HRS awarded the bid to Unisys on January 16, 1992. StorageTek filed a timely notice of protest and formal written protest. As framed by StorageTek's amended formal written protest and the parties' Prehearing Stipulation, StorageTek contended that the award to Unisys was improper because: Unisys did not meet the requirement of providing "at least one dual path controller with redundant paths for each string"; Unisys allegedly failed to prove equipment capable of connecting the tape drives to an IBM computer without the loss of redundant paths; and Unisys allegedly failed to accurately represent net future costs. DISPUTED TECHNICAL REQUIREMENTS At Least One Dual Path Controller With Redundant Paths for Each String The ITB contained the following pertinent hardware requirements: Quantities and technical specifications: The following minimum specifications shall govern any equipment offered: (28) Cartridge tape drives configured as follows: One (1) string of sixteen (16) tape drives One (1) string of eight (8) tape drives One (1) string of four (4) tape drives At least one (1) dual path controller with redundant paths for each string . . . StorageTek bid equipment to provide two controllers for string A, two controllers for string B and two controllers for string C. Unisys bid two controllers for string A, one controller for string B and one controller for string C. StorageTek interpreted the requirement "at least one dual path controller with redundant paths for each string" as calling for dual or redundant controllers and complete redundancy from the mainframe or host computers to the tape drives. StorageTek's interpretation is contrary to the plain language of the specification and the common usage in the industry. In determining the common usage in the industry, the testimony of Dr. Fred J. Taylor is given great weight. He is an expert in configuration and design of I/O subsystems. He is an independent expert in that he is not an employee of any party and he had no involvement in the bid proceedings. A "path" is an unidirectional connection between two points. The word "path" has a different meaning depending on whether it is being used in reference to software or hardware. In the software context a "logical path" is the artificial path which exists only within the software configuration. The "physical path" is a hardware path along which information is actually communicated. It is the wires themselves. ITB 92-18BC is seeking a hardware system, not a software system. Therefore, the requirement of "[a]t least one dual path controller with redundant paths" relates only to the physical connection path. It refers only to the physical path (the wires) between the host computer (the A15 and A17) and the controller. Each controller can control only eight tape drives. Therefore, for string A, two controllers are needed. For Strings B and C, only one controller is required as long as it has two physical paths between the host and the controller and two other redundant physical paths between the same points. The term "redundant" given both its common English language usage and its usage in the industry means "duplicate," "copy," "alternate," or "more than one of that thing." The three string configurations bid by Unisys are responsive to the requirements of the ITB because each string contains dual paths between the host and the controller and each contains redundant paths for each of the requisite dual paths. StorageTek claimed to have asked HRS at the prebid conference and later in a telephone conference with Tom Johnson, Assistant Deputy Secretary for Management Systems, whether HRS intended to require two controllers per string. The evidence does not support this claim. StorageTek also claimed to have orally questioned whether the purpose of requiring at least one dual path controller with redundant paths for each string was to provide for simultaneous data transfers. Again, the competent, substantial, credible evidence does not support this claim. StorageTek did not put any such questions in writing. The ITB provided and StorageTek understood that changes or clarifications to the contract were not binding unless in writing. Nothing in the ITB required each string of tape drives to contain two controllers. Nothing in the ITB required that each string be capable of processing simultaneous data transfers. Nothing in the ITB required complete redundancy from the host computers to the tape drives. Capability to Connect Tape Drives to an IBM Computer in the Future The ITB contained the following special condition: The office of management systems also must be able to connect these tape drives to an IBM computer in the future. This capability is mandatory and must be stated with supporting documentation. The hardware/software to accomplish this goal is not part of this bid, but associated costs should be identified in the documentation provided. StorageTek claimed that Unisys' bid was nonresponsive because it did not demonstrate that the subsystem as bid in its entirety was capable of attaching to an IBM computer without losing one of the redundant paths on string B and string C. Nothing in the ITB required the bidders to demonstrate that the subsystem as bid could attach to an IBM computer without losing one of its redundant paths. To the contrary, the specification was specifically limited to demonstrating the capability of connecting the underlying tape drives to an IBM computer in the future. The purpose of the requirement for demonstrating the capability to attach to an IBM computer was to insure that the tape drives retained some value in the future if HRS no longer used the equipment to attach to the Unisys A series computer. Unisys' bid demonstrated it was capable of attaching the tape drives to an IBM computer and therefore the bid was responsive. NET FUTURE COST The ITB provided that the contract would be awarded to the bidder with the lowest dollar amount for "net future cost." Net future cost was the descriptive term for line item 7 on the ITB pricing information sheet (the pricing sheet). The ITB pricing sheet is set forth in Findings of Fact 14 above. The bidders were to insert the appropriate amount on each line, adding or subtracting as indicated by the presence or absence of parentheses. Unisys and StorageTek both filled out the pricing sheet appropriately with respect to line items 1-6. On line item 7, Unisys entered the difference between line item 5 and line item 6. This resulted in a figure of $243,454.00. StorageTek entered a zero on line item 7. The clear meaning of the pricing sheet was that line item 7 would be the difference between line item 6 and line item 5. StorageTek inserted on line item 7 its proposed cost to HRS in the future to attach the cartridge tape drives bid by StorageTek to robotic units. Line item 2 required bidders to enter one of two numbers. If the bidders' cartridge tapes would be capable of directly attaching to robotic units, the bidder was given a 100% credit for the present cost of the cartridge tapes on the pricing sheet. If the bidders' cartridge tapes would not be capable of directly attaching to robotic units, the bidder was required to insert on line item 2 the amount of the trade-in value the bidder would provide in the future in order to attach to robotic units. Under StorageTek's asserted interpretation of the pricing sheet, there would have been no difference between the information provided on line item 2 and the information provided on line item 7 because, as submitted by StorageTek, the substance of the information provided on both line 2 and line 7 was that there would be no additional change to HRS to attach the StorageTek cartridge tape drives to robotic units. Under StorageTek's asserted interpretation of the requirements of the pricing sheet, the amount of money being expended by HRS today would have had no bearing on the award of the contract. If StorageTek's bid on line item 5 -- the net cost to HRS today -- had been $10 million or $100 million, under StorageTek's theory it still would have been entitled to award of the contract because it would charge zero dollars in the future to attach the tape drives to robotic units. Such an interpretation is both illogical and unreasonable. The ITB did not define net future cost as the cost of attaching the cartridge tape drives to robotic units in the future. During the prebid conference, Larry Smith, the account representative for StorageTek, questioned Karin Morris, the HRS contract administrator for the ITB. Larry Smith suggested to HRS that the cost of attaching to the robotic units "was being totally ignored in this ITB." Karin Morris advised Larry Smith to put his concerns in writing. StorageTek did put its concern in writing requesting HRS to reconsider this acquisition by issuing an RFP (request for proposals) which would include consideration of the cost of converting to automation (robotics). HRS' response to StorageTek's written question was "No. The success of this ITB will be based on using current allocations to fund the charge to cartridge tape. No new appropriations have been requested for this acquisition." Larry Smith testified that he objected to the ITB because it ignored the cost of attaching to robotics, yet he inserted zero on line 7 because he understood net future costs to be the cost of attaching to robotics. The response of HRS to StorageTek's written question no. 11 unequivocally stated that the ITB would be awarded based on current allocations. HRS properly concluded that StorageTek deviated from the bid requirements by placing a zero on line 7. HRS properly waived the irregularity in StorageTek's bid regarding the line item 7 and recalculated StorageTek's pricing sheet to comport with the pricing sheet requirements by subtracting line six from line five to arrive at the net future cost in line 7. After recalculating StorageTek's pricing sheet, HRS correctly found that Unisys submitted lower dollar amounts on line item 5 and line item 7. ULTIMATE FACTS Unisys' bid was responsive to the ITB in all material respects. Unisys' bid was the lowest bid. Unisys' bid was the lowest responsive bid and should be awarded the contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order therein: Determine Unisys to be the lowest responsive bidder pursuant to Section 287.057(1). Award the bid for ITB 92-18BC to Unisys. DONE and ENTERED this 31st day of March, 1992, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of March, 1992. APPENDIX TO THE RECOMMENDED ORDER 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, Storage Technology 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(1); 2-7(9-14); and 34(43). 2. Proposed findings of fact 8-10, 52-54, 93, 103, 111, 112, 122, 134, 135, 141, 145, 146, 148, 156, and 158 are subordinate to the facts actually found in this Recommended Order. 3. Proposed findings of fact 11-21, 29-32, 39, 40, 47-51, 91, 92, 104-107, 110, 123-129, 131, 132, 136-140, 142, 143, 149, 150, 152, and 153 are irrelevant to the resolution of the issues raised in this case. 4. Proposed findings of fact 22-28, 35-38, 41-43, 55-76, and 113-121 are mere summaries of testimony and to the extent that factual matters recited in them are reflected in the Findings of Fact herein, they are subordinate to those Facts. 5. Proposed findings of fact 33, 44-46, 77-79, 94, 98, 102, 108, 109, 130, 133, 144, 147, 151, 154, 155, 157, 159, and 160 are unsupported by the credible, competent and substantial evidence. 6. Proposed findings of fact 80-90, 95-97, and 99-101 are unnecessary in light of the Findings of Fact and issues herein. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Department of Health and Rehabilitative Services 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: 1-8(1-8); 9-26(15-32); 27(34); 28(41); 29(43); 30(50); 35(52); 37(57); 38(58); 39(63); 40(62); 41(77); 42(78); and 43(82). Proposed findings of fact 31-34 and 36 are subordinate to the facts actually found in this Recommended Order. Specific Rulings on Proposed Findings of Fact Submitted by Intervenor, Unisys Corporation 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(57); 2(58); 3(14&59); 4-23(60-79); 29-33(34-38); 34-40(45-51); 41(41); 43(44); and 45-49(52-56). Proposed findings of fact 24-28, 42, and 44 are subordinate to the facts actually found in this Recommended Order. COPIES FURNISHED: F. Perry Odom Melissa Fletcher Allaman Attorneys at Law Ervin, Varn, Jacobs, Odom & Ervin 305 South Gadsden Street Post Office Drawer 1170 Tallahassee, Florida 32302 Peter A. Lewis Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building one, Room 407 Tallahassee, Florida 32399-0700 W. Robert Vezina, III Mary M. Piccard Attorneys at Law Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Drive Post Office Box 589 Tallahassee, Florida 32302-0589 Robert B. Williams, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue There is presented for consideration the question of whether the State of Florida, Department of General Services (Department), should be entitled to purchase certain software from the Intervenor, American Software, Inc. (ASI), as contemplated in Section 287.062(1)(c), Florida Statutes, known as the sole source exception to the general requirements of competitive bidding. The software under consideration is part of the "FFAMIS" Purchasing Subsystem related to the Florida Fiscal Accounting Management Information System. See Sections 215.93(1)(e) and 215.94(5), Florida Statutes. This case also examines the choice by the State of Florida, Department of General Services, Division of Purchasing (Division) to authorize the sole source purchase. Petitioner, Unisys Corporation (Unisys) has challenged the actions by the Department and Division which would preclude any opportunity on the part of Unisys to provide the subject software. Unisys claims that the sole source exception for purchase should not be allowed on this occasion in that Unisys provides a viable alternative in selecting a vendor.
Findings Of Fact Stipulated Facts Unisys is a foreign corporation authorized to do business in Florida pursuant to Section 604.304, Florida Statutes. Intervenor is American Software, Inc., 470 East Paces Ferry Road, Atlanta, Georgia. During 1985, the Division developed a conceptual statements describing the desired functionality of the Florida Fiscal Accounting Management Information System ("FFAMIS") Purchasing Subsystem. Draft functional specifications which describe the desired functionality of the sub system somewhat more definitely were issued on April 22, 1986. The Division performed these activities through a Design Team which consisted of members from the Division and the Division of Information Services. The members of the Design Team were: William Walsh; Robert Glover; William Brundydge; Christine Logan; Judith Smith; aid Zayda Cooper. The draft functional specifications, entitled ("FFAMIS") Purchasing Subsystem Functional Specifications," have been admitted as Joint Exhibit 1. That document was supplemented in May 1986 by a document entitled "FFAMIS Purchasing Subsystem Functional Specification Comments/Questions and Development Team Responses," which has been admitted as Joint Exhibit 2. During the fall of 1986, the Design Team performed an evaluation of the Purchasing and Material Management System (PMM) produced by American Software and the Purchasing 1100 System produced by Unisys. After the evaluation, the Design Team recommended that DGS purchase the American Software system. On June 29, 1987, the Division issued another document entitled "State of Florida FFAMIS Purchasing Subsystem Functions and Features Document," which has been admitted as Joint Exhibit 7. On August 20, 1987, ITRPAC recommended that DGS purchase the American Software System as a sole source. By memorandum dated August 20, 1987, (admitted as Joint Exhibit 9), the Executive Director of DGS requested that the Division authorize the purchase of American Software's system as a single source. The purchase price for the American Software system is $346,000. Unisys' notice of intent to protest was filed within 72 hours of DGS' August 20, 1987 posting. Unisys filed its formal written protest within ten days of filing its notice of intent to protest. DGS plans to make modifications to the American Software system after its purchase. Hearing Facts The FFAMIS Purchasing Subsystem is a legislatively mandated portion of the Florida Fiscal Accounting Management Information System. See Section 215.93(1)(e), Florida Statutes. The Department of General Services is the functional owner of the purchasing Subsystem and is charged with its design, implementation and operation. See Section 215.94(5), Florida Statutes. This Subsystem must include components for commodity procurement, inventory control and warehousing. See Section 215.94(5)(a), Florida Statutes. The FFAMIS Council, consisting of the State Comptroller, Treasurer, and the directors of five other agencies, coordinates and reviews activities of the various functional owners. See Section 215.96, Florida Statutes. The purpose of the Purchasing Subsystem is the computerization of all state purchasing under a single purchasing system. The Division was given the responsibility, within the Department, to develop and implement the Purchasing Subsystem. Moreover, it is expected that the FFAMIS Purchasing Subsystem will eliminate paper work and redundant data entry, bring about automation of purchasing, bidding, document tracking, status reporting, statistics gathering, reporting, and inventory control. In February 1985, the FFAMIS Council directed the Department to prepare a legislative budget request for the Subsystem. In conjunction with this request, the Department developed a Conceptual Statement, DGS Exhibit 10. The Conceptual Statement was written to highlight the major elements within a purchasing system as gleaned from the Department's contact in 1985 with various state, federal and military applications and surveys of other Florida state agencies. In early 1986, the conceptual statement was reviewed by representatives of agencies which will eventually use the Subsystem. Section 215.92(6), Florida Statutes, requires the functional owner to describe what the "subsystem is required to do" along with its "features, characteristics, controls and internal control measures . . . ." In turn, the FFAMIS Purchasing Subsystem Functional Specifications, Joint Exhibit 1, were written to serve this purpose, as well as to show the ultimate users the important elements of the Subsystem. Within the Division, responsibility for developing the Subsystem was delegated to the Department's Bureau of Purchasing Systems and Services, initially headed by Robert Glover. A User Group was also involved in the development of the Subsystem. It was comprised of some fifty individuals representing many agencies who would ultimately employ the Subsystem in their agencies. It was divided into subcommittees with a Steering Committee chosen to lead the group. One of the functions of the User Group was to help produce the Functional Specifications. Another entity involved in the development of the Functional Specifications was the Information Resources Commission (IRC) consisting of the Governor and Cabinet. The IRC is responsible for the basic oversight, planning and policy for data processing for the state. Toward this end, its Executive Administrator, Mike Hale, and his staff had a great deal of interaction with the User Group and Department, giving advice and assistance in developing functional specifications for the Subsystem. The Functional Specifications, Joint Exhibit 1, were widely reviewed by the User Group representing purchasing, financing and accounting staff of all state agencies and the State University System, and by the Department's upper management and the FFAMIS Council. William Walsh is the DGS employee primarily responsible for design, development and implementation of the Subsystem. Mr. Walsh was heavily involved in preparing the Functional Specifications. User Group comments/questions about the Subsystem, along with Mr. Walsh's responses, were appended to the Functional Specifications, Joint Exhibit 1. Again, these questions, comments, and responses may be found as Joint Exhibit 2. Together these two exhibits came to reflect the purchasing subsystem contemplated for development. The functional specifications were intended to conform to the User Group's and the Design Team's conclusions as to what should be included as major elements in the Purchasing Subsystem as well as describing in greater detail the more comprehensive expectations those entities held for the Subsystem. The Department considered three methods of providing the software for the Purchasing Subsystem. First buying an off-the-shelf package and using it without modifications. This was rejected because there was no package which could be used without modifications. In-house development of a system from "scratch" was a second option. The third option was buying a canned system which closely met the needs and modifying it in-house. As the Department contemplated its choices, it had already done general research of existing applications of software referred to above. This past research was done by the Design Team consisting of three members. Visits were made to Texas, Virginia, Michigan and Minnesota to look at possible applications. Applications in Florida were also examined. At the point of more serious reflection on alternatives, the Design Team investigated some fourteen systems in the public and private domains. These included the State of Michigan, several Big Eight accounting firms, the University of Florida's CUFFS system, SADCOM, and other private software packages. The Design Team also researched current literature to find an adequate system. In addition, the team attended vendor presentations by ASI, Unisys and Structured Computer. Eventually, though serious consideration had been given to the alternative of in-house development of necessary software, this choice was also rejected because it was felt to be too time-consuming and risky a proposition. From that point forward, the decision was to buy existing software and modify it to meet the specific needs that the State had in mind. Toward this end, the Structured Computer offering was discarded because of limitations in hardware. That left for consideration the possibility of using ASI or Unisys software, which would be modified in this connection, though the State did not expect to be presented an exact match with its functional specifications, referred to as a "wish list," it was expected that the software which was purchased must respond to requirements of basic functionality. The software would be required to undergo scrutiny by an Evaluation Team within the Department to ascertain its functionality. This Evaluation Team was constituted of the Design Team which had six members, including the project manager, Walsh. The evaluations were to be more extensive than the preliminary demonstrations of the ASI and Unisys equipment which have been mentioned, pertaining to ASI's Purchasing and Materials Management system or PMM equipment and the Unisys system that was demonstrated, known as Purchasing 1100. The demonstrations took place in October 1986. The evaluations would allow hands-on usage of the software by the state evaluators processing examples of routine purchasing functions. In preparation for the hands-on evaluation which the six members of the evaluation team would perform, the vendors ASI and Unisys were provided copies of Joint Exhibit 1, the functional percent specifications. Unisys received this information in the person of one of its local employees, James Schraeder, an account executive. This was received from Mr. Walsh sometime in late September or early October 1986. The ASI functional specifications were sent by cover letter from Mr. Walsh on September 29, 1986. Within Joint Exhibit 1, there are described general functions which the vendors' equipment would be expected to respond to. Among those at 2.4.3 would be a bid processing module and at 2.4.5 a supply management module also known as an inventory module. The State evaluators expected the vendors to provide the essence of those functions found within those subsections to the functional specifications, together with requisition, purchasing and receiving modules. Related to the functional specifications and their general requirements for a bid module and an inventory module, on October 9, 1986, when a technical specialist within Unisys demonstrated its Purchasing 1100 system, it was apparent that the Purchasing 1100 did not include the function for bid processing that the State expected in this project, nor did it include an inventory module of any kind. The piece of equipment had a request for quote "capacity" which is unlike the state's competitive bid system and the bid module spoken to in the Functional Specifications. The competitive bid system was what the state wished to acquire through a bid module in the Purchasing Subsystem. The choice to demonstrate the Purchasing 1100 and to later offer it for evaluation was that of Unisys, not the State. In addition to the provision of a set of functional specifications for the benefit of the vendors prior to the evaluation session, the evaluation team prepared a questionnaire which was given to each vendor at the commencement of the hands-on evaluation performed on the vendors' equipment. A copy of this questionnaire may be found as Joint Exhibit 3. In its substance, it inquires of the vendors concerning the nature of the product which the vendor would offer in furtherance of the state's needs for the Purchasing Subsystem, and also discusses the topic of vendor support of the equipment if it were purchased by the state. The evaluation team also prepared a checklist to be used in the course of the hands-on evaluation of the vendor's equipment. A copy of this checklist may be found as Petitioner's Exhibit 6 admitted into evidence. During the course of the hands-on evaluation sessions; the Design Team or Evaluation Team did place data into the systems being demonstrated to simulate the uses to which the software would be put in meeting the State needs for the Purchasing Subsystem. The ASI evaluation was conducted partially in Atlanta, Georgia, on ASI-owned equipment. The ASI equipment evaluated was the PMM system which incorporated modules for the dive functions contemplated within the Purchasing Subsystem. ASI elected to perform this evaluation session at their facilities to allow for a controlled environment and to guard against program bugs. Program bugs are anomalies in the performance of the software. The Atlanta session took place in the lasts week of October 1986. A further session was held in the first week of November 1986, in Tallahassee, Florida, through a telephone hook-up to the ASI computers in Atlanta, Georgia. All told, approximately five days were spent in the evaluation. In the hands-on evaluations of the ASI equipment, the team members from the Department had specific responsibilities in accordance with their experience and background. The same format would be followed, with the same division of responsibility among the Evaluation Team when it examined the Unisys equipment on later dates. In both the ASI and Unisys hands-on evaluation period, an initial orientation was conducted by the two vendors in describing the features and the functions of the software and familiarization with the use of their equipment which was employed in demonstrating the software packages. The evaluation team input, in particular, typical state requisitions, purchase orders, bids, commodity descriptions and vendor descriptions, having in mind examining whether the equipment would perform the desired functions. During the course of the ASI evaluation, Robert Glover, the Chief of the Bureau of Purchasing Systems and Resources within the Department, found that the system performed adequately from a functionality standpoint and would meet all the required basic functions contemplated, and had the necessary modules. Zayda Cooper, systems project administrator within the Department, found the system to be easy to utilize. Judy Smith, a purchasing specialist within the Department, examined the system from the point of view of user documentation in all the five required modules and is not reported to have been concerned about the performance of the system. Bill Brundydge, a consultant manager from the Division of Information Services, was involved in the evaluation in looking at the design of the programs in the data base in addition to systems documentation to see if these materials were written in a manner which the State could support and maintain. He expressed no concerns about the adequacy of the ASI equipment. Sometime before Thanksgiving, in 1986, the Unisys evaluation was conducted. It was conducted in the Administrative Management Information Center or AMIC in Tallahassee, Florida. This is the data center associated with the Department. The choice of this location was that of Unisys. Unisys elected to demonstrate the Purchasing 1100 system. This system, as Unisys knew before the point of the hands-on evaluation, did not include an inventory module and its request for quote module did not correspond to what the functional specifications contemplated as a bid module. Some testimony was offered by Mr. Bartholomew, the technical specialist for the October 9, 1986, demonstration and for the evaluation, to the effect that had he been given adequate notice, he could have brought with him an inventory module which could have been interfaced with the Purchasing 1100 equipment and provided the necessary inventory module. Mr. Bartholomew does not have a recollection of his October 9, 1986, demonstration of the Purchasing 1100's equipment, at which point that equipment had been devoid of the necessary bid module and any inventory module. Bartholomew had not been informed of the Functional Specification by the Tallahassee staff of Unisys who had received those functional specifications in late September or early October 1986. Specifically, Bartholomew says that another week would have been enough to install an interfaced inventory module added to the two weeks prior to evaluation for installing the Purchasing 110. More than an extra week had been given to Unisys in providing its Tallahassee staff with a copy of the Functional Specifications. On the other hand, in his testimony at hearing, Bartholomew states that it is difficult to determine what type inventory module should be presented, having read the Functional Specifications. To follow this line of reasoning, there are no assurances that he would have prescribed an inventory module had he personally been given adequate notice to install one. In any event, contrary to Mr. Bartholomew's remonstrations, the inventory module requirements were sufficiently clear for a vendor to present that component for evaluation if it had been available. In the last analysis, whether Mr. Bartholomew knew or others knew about the need to provide a system which would include an inventory module and a bid module as opposed to a quote module, Unisys as a corporation knew and it failed to provide two of the five basic modules that needed to be examined in the evaluation period. Those modules were the bid module and inventory module. Unisys has not offered an adequate excuse for failure to provide the inventory module for evaluation or an acceptable bid module, given that Unisys had been told through the Functional Specifications document that the inventory and bid module would need to be examined, a process vital to the interest which the Department had in making certain that the essential building blocks were available to it in creating the Purchasing Subsystem. From the evaluations period forward, Unisys seems to take the point of view that had the State really wanted to see an inventory module demonstrated, it had but to ask. The State had asked through its provision of the Functional Specifications. The State had asked at the most important juncture in this process that it wished to see the basic capabilities of the software before making a decision to purchase the software. The State cannot be seen as responsible for continuing to request from Unisys what should have been provided in the evaluation session, that is to say an adequate bid module and provision of an inventory module. The Department simply was not obligated beyond the evaluation session to continue to request Unisys to provide an inventory module and an adequate bid module. The project needed to move forward. It is the inadequacy of Unisys' performance at evaluation in two important particulars which is their fault, not the Department. Unisys' comments by its employees in the course of the evaluation session that it manufactured inventory systems was simply too late to accomplish its needs and those of the State. The time for promoting this response had arrived and Unisys was unsuccessful in its attempt at compliance. For reasons that will be subsequently described, even had Unisys brought with it some form of inventory module to be interfaced with the Purchasing 1100, there are grave reservations about whether that arrangement would sufficiently satisfy the basic needs that the Department had in obtaining a software foundation for its Purchasing Subsystem. As Cooper used the Unisys equipment, she began by familiarization with the Unisys terminal. She found it more difficult to use than the ASI equipment. It was not as clear to understand, the help messages were not as beneficial and the screens did not flow in a logical manner. She found that her knowledge of the evaluation information did not correspond with the Unisys documentation of that information and that errors within the system were not caught as they should have been. In one instance where quantities were not described, a $43,000,000 purchase order was developed. Ms. Cooper discovered inconsistencies between requested requisition numbers and those that were actually displayed by the software. Ms. Smith encountered similar difficulties and found that the documentation did not always match what was shown on the screens and errors were allowed to move forward beyond the place where they should have been caught. She found that the ASI documentation was easier to utilize than Unisys. She and others as well noted the nonexistence of an inventory module. She also noted that the documentation for the quote system within the Unisys equipment was not a bid system. Mr. Glover found errors in the Unisys documentation and had not found any in the ASI equipment. In the course of the evaluation, related to the bid module, the ASI system was found to provide the basic functionality, whereas the Unisys system in its request for quote module merely provided an automated entry of vendor information, but was not a module pertaining to the creation of a bid document. The documentation errors that were discovered with the Unisys system were significant matters in that documentation is critical in developing training manuals for the agency personnel- who will utilize the Purchasing Subsystem. Given that Unisys did not provide an inventory module for review, it did not provide literature related to an inventory module or the manner in which that module might work with the Purchasing 1100 which was provided for the evaluation. The ease of operation when comparing ASI to Unisys in the software evaluation and the superior performance which Unisys equipment displayed in some instances are not the crucial items. The crux of the problems with Unisys is the lack of functionality in the bid module, a lack of any inventory module and the errors. Responses to the questionnaire, Joint Exhibit 3, were offered by both vendors following the evaluation sessions. The ASI responses found as Joint Exhibit 5 were provided with a cover letter on November 7, 1986. The Unisys response came through Joint Exhibit 4 with a cover letter dated December 2, 1986. Mr. Walsh describes that the weight afforded these responses was somewhere in the neighborhood of five percent in the decision-making process. He gave these items a complete review but found the product explanation to be a less convincing statement of capabilities than the actual performance as seen in the course of the evaluation sessions. In effect, approximately 95 percent of the attitude about the adequacy of the two systems demonstrated by the vendors comes from the experience in hands-on evaluation. In its response to the questionnaire through Joint Exhibit 4, Unisys indicates at 2.4.5 related to the supply management module or inventory module and whether it has the ability to provide that function, "No, but with more detailed specifications Unisys believes that the UNISYS 1100 or MAPPER FACS inventory modules could satisfy the needs of the State of Florida. Together we could determine which system is applicable. Possibly it would better serve the user community by expanding Purchasing 1100 to include the required functionality." This seems to correspond to Mr. Bartholomew, in his testimony, continuing to promote the idea that Unisys had somehow been less than certain about what the state meant in its requirement for an inventory module. Again, even if one were to assume that the exact details of the inventory module identified by the Functional Specifications had not been developed, it is certain that an inventory module was contemplated and that Unisys had been put on notice that that inventory module needed to be presented for evaluation. By the remarks set forth in the answer to the questionnaire, Unisys did not seem to know which inventory module it wished to offer. Nonetheless, if it intended to respond to this opportunity to sell the product to the state, it was incumbent upon it to make that decision prior to the evaluation session and offer some form of inventory module for assessment. It was not incumbent upon the State beyond the point of evaluation to solicit Unisys for further documentation about an inventory module, or to ask for further demonstration of the capabilities of an inventory module. The reason why the State did not evaluate a Unisys inventory module is because no inventory module was offered for evaluation at the time when the State went forward with its hands-on analysis of the capabilities of the software. Unisys, in its responses to the questionnaire, also acknowledged that its bid module could only partially meet the requirements by the State and commented that the quote module of Unisys within the Purchasing 1100 does have "processing." After concluding both hands-on evaluations, the Team members produced a written report and recommendation, the Software Evaluation Report, Joint Exhibit 6. Individual members first write down their findings, which they circulated among themselves. Next, evaluation paragraphs expressing preferences and giving reasons were added. After a unanimous agreement by the Design Team, Mr. Walsh added a final section reflecting the Team's recommendation to purchase the American Software PRIM System. The final document was finished during the last week of December 1986. Mr. Glover testified that he wrote Section 2 of the Report. His recommendation to purchase the ASI package was based on the fact that it "provided the closest fit to the Functional Specifications, [and] provided the functionality" required. In addition, it was easier to use, the instructions were clear, screen movement was easier and movement from screen to screen was easier. Ms. Cooper participated in writing Section 2 with Mr. Glover. Her reasons for recommending acquisition of the ASI Package included the fact that it included all the necessary modules and documentation, and the ease with which she could teach others to use the system. She found it to be "much more user friendly." Screens flowed more logically and help messages were clear. These were important factors to her because the level of expertise of users is usually very limited. Ms. Smith wrote Section 5 of the Report. She joined in the recommendation to acquire the ASI package because it had better documentation and user training manuals, it performed all of the functions required, the flow of information, screens and functions was much easier, it caught errors promptly, and did not produce errors unlike Unisys. Mr. Brundydge and Ms. Logan produced Sections 3 and 6. Mr. Brundydge agreed with the recommendation to purchase the ASI package because it had all the required functions, it could be maintained by the State and the programs were written in a logically laid-out manner. Mr. Walsh concurred in the unanimous recommendation, based on the other Team members' findings, as well as his conclusion that ASI has a superior data base management system. The evaluation report noted that the Unisys equipment did not have a bid module or supply management/inventory module, while both of these modules were set forth in the ASIPMM software. While the Unisys equipment was perceived to be adequate in some of its features and superior to ASIA in others, on balance the Unisys Purchasing 1100 was not acceptable because it did not respond to the bid module and inventory module requirements. The Evaluation Report was subjected to wide review. The recommendation to purchase the ASI package was accepted within DGS by William Monroe, Director, Division of Purchasing; his superior, Larry Strong; and the Executive Director, Mr. Ronald Thomas. The Steering Committee of the User Group unanimously accepted the recommendation. The FFIS Council also accepted the recommendation. The Department amended its legislative budget request to reflect acquisition of the ASI package. The Governor's Office supported the recommendation. DGS Exhibit 22 is the agency's amended budget request for funding to purchase the ASI package at a cost of $346,000. The Legislature approved and appropriated this amount. See DGS Exhibit 23. The proposed purchase of the ASI-PMM was also submitted to the IRC. The Department prepared and submitted to the IRC an amendment to its Information Technology Resource Plan for fiscal years 1987/88-1988/89. The IRC carefully scrutinized the proposed acquisition. The Department's IRC Plan, DGS Exhibit 24, was submitted for approval by the IRC to insure proper planning for information technology resource use and procurement. Specifically, the Department's IRC plan called for acquisition of the ASI package. Ultimately, the Governor and Cabinet, sitting as the IRC, approved the choice of ASI. In June 1987, FFAMIS Purchasing Subsystem Features and Functions, Joint Exhibit 7, was prepared to give the user community an overview of the ASI system. It also gave some detail of the anticipated modifications to be done to the package. As enumerated at page eight of Joint Exhibit 7, it was estimated that these modifications could be done in twelve to eighteen months using fourteen people to both operate and modify the system. An ITRPAC package, DGS Exhibit 8, was developed by Mr. Walsh and his staff for submission to the Information Technology Resource Procurement Advisory Council (ITRPAC). Included in this package is a fiscal summary containing the Department's latest cost projections for implementation of the Subsystem. There is also a prototype implementation schedule with estimates based on the experience of Mr. Walsh, with input from Mr. Brundydge. As Executive Administrator of the IRC, Mr. Hale also sits as a member of ITRPAC. Other members are the Director of the Office of Planning and Budgeting, Office of the Governor, and the DGS Purchasing Division Director, or their designees. See Section 287.073(2), Florida Statutes. Part of ITRPAC's responsibility includes making recommendations on sole source acquisitions. ITRPAC does not take final agency action. It has the power to make non-binding recommendations only. Mr. Hale's staff performed a review of the Respondent's ITRPAC package. Concurrently, the Governor's Office raised questions concerning the sole source aspect of the acquisition. Being satisfied about the sole source purchase, the Governor's Office approved this plan to purchase the ASI system. The INTRPAC package, DGS Exhibit 8, also points out that the cost of the purchase of the ASI PMM software package is $346,900. It reflects that the overall costs within that budget estimate for two years, to include the purchase price, and would also include costs for modification of the ASI software. Staffing requirements for the design, development, implementation, documentation, training and operation of that system are described as involving 14 additional data processing and purchasing FTE's. Within the $1.2 million budget for that two-year period are cost items unassociated with matters pertaining to the purchase and modification of the ASI PMM software package. Mr. Walsh prepared the package that was submitted to ITRPAC and also responded to the request by the Governor's Office concerning sole source acquisition. He is a staff employee for ITRPAC and his response to the Governor's Office was as a member of the Design Team. On August 20, 1987, ITRPAC met to consider the sole source request related to the purchase of ASI PMM. It voted to accept the purchase. From the evidence admitted, it appears that the ITRPAC decision to go with a sole source acquisition relied heavily on the Design Team's evaluation of the ASI and Unisys equipment. In the course of the ITRPAC meeting on August 20, 1987, Derrell Parham, branch sales manager for Unisys in Tallahassee, Florida, appeared and stated Unisys' opposition to a sole source purchase of the ASI software. Mr. Hale questioned Mr. Parham about deficiencies in the Unisys package, as Mr. Hale perceived them. Parham answered by stating that Unisys did not have an inventory component nor did it have a bid module that would meet the State's requirements. Hale pointed out errors that had been experienced when the evaluation was made concerning the Unisys equipment. (Those errors from the point of view of Mr. Bartholomew and his testimony at hearing could have been taken care of through a patch to remove the glitches within the program. That patch was not made available at the time of evaluation. Whether the program errors could have been accommodated through a patch maintenance tape or not does not avail Unisys because, at the most critical juncture, that patch maintenance tape was not installed. A sufficient time would appear to have been available for arranging for patch tapes in anticipation of the installation and evaluation session. Following the recommendation of ITRPAC, a memorandum was prepared by Mr. Walsh dated August 20, 1987, addressed to William Monroe, the Division of Purchasing Director, from Ronald W. Thomas as Executive Director of the Department, requesting permission to acquire the ASI package as a sole source. This memorandum is the formal request for sole source purchase. A copy may be found as Joint Exhibit 9. Walsh had a further role to play in this in that he reviewed the Department's request for sole source purchase as a member of the Division of Purchasing staff. Within the request for sole source are set forth what the Executive Director perceives as the minimum requirements for the FFAMIS Purchasing Subsystem. They are: The system must address all the Purchasing functional modules defined in the functional specifications. This requires an integrated package which supports requisition, purchase order, bid, inventory, and receiving functions, as well as providing user defined interface points to the User's Accounting System. The system must be a currently marketed product fully supported by the Vendor. The system must be implemented and operational in at least ten customer sites. The system must operate in the general hardware and software environment of either AMIC or the CDC, and utilize the Data Base Management System and Tele- communications Systems currently installed at each site. The Vendor must permit user modifications to the product without discontinuing support. The application package must be coded in ANSI COBOL or utilize the fourth generation programming language available within the data center (i.e. NATURAL for the CDC and MAPPER for AMIC). 75 The request for sole source approval goes on to describe how only two possible alternatives had been discerned as being potential alternatives for the purchase. The request talks about the fact that the two systems had been scrutinized through an evaluation process and a conclusion reached that one of the systems did not meet the bid and inventory control requirements, leaving only the ASI equipment which if purchased would cost $346,000 Having considered the evidence in this case, the expression of the minimum criteria contemplates software which will respond to the basic elements or modules through an integrated package. It does not contemplate an exact match to the Functional Specifications. Therein lies the necessity for modification. Concerning the approval of the request for sole source acquisition, typically an agency of State government would request authorization from the Division of Purchasing and the Division staff would research the industry to verify the circumstances for utilization of the sole source exception to purchase. This was not done on this occasion because extensive research and verification through an evaluation process had been done by personnel within the Division of Purchasing who would serve to advise the Division director on the question of approval The way that the decision for approval was communicated by the Division of Purchasing was by the placement of a stamp on the third page of the memorandum requesting sole source permission which carried a line for the signature of the Director of the Division of Purchasing, a date line and a statement of authority line and a note that a carbon copy would be sent to the Auditor General. The Director did not sign this, date it, nor state the authority, in that within the time permitted for testing the decision for sole source purchase, as set out in another stamped portion of the third page--that being a deadline of 3:00 p.m., August 25, 1987--Unisys filed its statement of protest to sole source. According to the custom in the Division of Purchasing, the approval stamp would only have been filled out subsequent to the time allotted for a protest to be filed. The approved request for sole source acquisition was then placed in Room 613 of the Larson Building, in Tallahassee, Florida, which is the headquarters of the Department. Its exact placement was on a ring binder, among other unrelated documents. Debbie Miller, an employee of Unisys, a legislative consultant, went to the Department on August 21, 1987, and after a number of attempts to ascertain the situation related to sole source acquisition of ASI software, found the memorandum with the approval stamp. She informed the Assistant Division Director on that date that Unisys would protest the single source decision, and was led to believe that one protest letter of the decision would be sufficient. This remark was made by Dozier Johnson, Assistant Division Director. The protest letter is dated August 24, 1987, and was filed with the Office of Clerk of the Department of General Services on that same date. It is addressed to the Executive Director of the Department of General Services and states: "This letter is to notify you that Unisys intends to file formal protest of the sole source decision to purchase the American Software, Inc., Purchasing package as decided by the Information Technology Resource Procurement Advisory Council on August 20, 1987." It is signed by Derrell Parham, the branch manager. There ensued the formal written protest which was timely filed. It better describes the fact that Unisys is challenging the Department and Division decisions for sole source. From the facts presented, it can be inferred that the Department and Division knew that their choices to vie for a purchase of ASI software through sole source was under challenge from the inception, that is, when Parham sent his letter of August 24, 1987. The process by which the Department undertook to acquire a FFAMIS Purchasing Subsystem, through the initial evaluation of available software, the selection to acquire an off-the-shelf system and modify as opposed to purchasing an off-the-shelf system without modification or designing a system in-house, the development of functional specifications and the evaluation process pertaining to ASI and Unisys were reasonable responses to the legislative mandate. The failure by Unisys to offer a system for evaluation which incorporated essential modules for bid and inventory jeopardizes its ability to criticize the choice to purchase sole source from ASI. This factual impression is held because the most critical juncture in assessing the needs for this project came at the point where the vendors were called upon to make available their equipment to allow the Department to test adequacy. The attempt by Unisys at the hearing de novo to rehabilitate its position and to describe how the Department is presented an alternative to the sole source purchase has not been successful. Unisys has attacked the cost factor and estimate for the preparation of modifications to the existing ASI PMM software. In doing so, it questions the estimates given by Mr. Walsh as to the time needed to accomplish the task of modifications. It also poses what it considers to be a less costly alternative which is the purchase of Unisys software and having that group modify the off- the-shelf purchase. It is acknowledged that the estimates which have been placed for achieving the ends which the State has in mind, that is, the modification of the ASI software to meet the functional specifications, has not been completely thought out. Nonetheless, the reasoning which the Department had in mind to maintain control over this modification process and to anticipate any future modifications which might come about through the use of this software and the estimate related to cost to accomplish those tasks is acceptable for purposes of resolving this dispute. This is especially true given that the Department is afforded deference in deciding that it would make a purchase of off-the-shelf software and modify that software in-house. It is not bound to accept the idea that a vendor will make the modifications even if the vendor can do them more cheaply. The real issue presented is whether there is an alternative to the purchase of ASI software which would meet the core requirements which form the basis for the construction of the necessary software for the FFAMIS Purchasing Subsystem. It may turn out that the choice to do the modifications in-house would be more costly than having a successful vendor do that task. Even should that occur, the control of the process of modification and the ability to have an on- going staff which can make further modifications and maintain the software without having to resort to the vagaries inherent in dealing with an outside entity which carries forward modifications is sufficient reason to allow the modifications to be accomplished in-house. To do the modifications in-house is seen by the Department as a means to maintain day-to-day control over the specifics of those modifications as opposed to placing that control with a vendor. It allows the staff analysts to become familiar with the software. The projected cost estimate of $1.2 million involves implementation of a prototype FFAMIS Purchasing Subsystem which is more than the modification of the ASI system. Beyond modifications, maintenance of this system is contemplated and the development of any enhancements that might come along beyond the point of the initial modifications. All of these tasks promote important familiarity by in-house staff pertaining to the Purchasing Subsystem. On the topic of modifications, the type required for the ASI software are considerably less involved than those for the Unisys software. The ASI programs are sufficiently close to the basic functionality to avoid major modifications. The Purchasing 1100 that was evaluated would require substantial adjustments to the bid module, known in the Unisys system as a request for quote module and a considerable amount of modification even should the 2R1 enhanced software be used when it becomes generally available on the market. It is unclear what modifications might have to be done with the inventory module to the UNIS 1100 software package, but it would always carry with it the risk associated with the fact that the UNIS 1100 inventory module had been interfaced with the Purchasing 1100 as opposed to being part of an integrated system. On the subject of equipment costs, Unisys in December 1986 offered-to sell the Purchasing 1100 system to the Department for $48,000, the price that included 25 percent discount. It has also offered to sell the Unisys 1100, which has an inventory module for $29,900 to which a 25 percent discount would be applied. Unisys offered testimony to the effect that it could satisfy functional specifications and modifications for a cost of $900,000. In any event, even if Unisys commits itself to a $900,000 figure for the sale of its basic software and modifications to that software, the State does not have to look to Unisys for modifications and sufficient questions remain about the adequacy of the Unisys software to meet the requirements for five modules and the essential functions within those modules contemplated by the Functional Specifications, such that the Unisys proposal is not a viable alternative to the sole source purchase of ASI PMM. Further, the Unisys software does not meet the six criteria or core functions in the sole source request memorandum which reasonably describe the essential functions which the foundation software must perform. It is not in any iteration an integrated package that would support the requisition, purchase order, bid, inventory and receiving functions. It lacks an adequate bid module, in the generation of the Purchasing 1100 that was evaluated by the design team. As briefly alluded to before, there has been some upgrade to the bid module which arguably comes closer to responding to the basic needs which the State has, but is still somewhat lacking. This describes an enhancement or update known as 2R1 which has been tested at beta sites at the point of final hearing, but had not been released as a generally marketed item. While both ASI and Unisys refer to quote or request for quote in describing their modules, ASI performs the basic bid function contemplated by the State and Unisys in its software package which was evaluated by the State does not. The inventory module from the UNIS 1100 system which would be interfaced with Purchasing 1100 does not form an integrated package. The system which Unisys offers is not a currently marketed product fully supported by the vendor or implemented in operation in at least ten customer sites. It is a conglomeration of the Purchasing 1100 with an interface of the inventory module from the UNIS 1100. Unisys presented an exhibit which demonstrated more than ten users who have the Purchasing 1100 system and the UNIS 1100 system; however, no indication has been given that the Purchasing 1100 and UNIS 1100 has been interfaced at those sites, especially as it would relate to an interface wherein the UNIS 1100 inventory module operates independently of other modules in that system in conjunction with the Purchasing 1100. By contrast, ASI is an integrated package that has all of the five modules contemplated and it has the interface points necessary to operate with the Users Accounting System. Unisys, too, can interface with the Users Accounting System. ASI PMM is a currently marketed product fully supported by the vendor and is implemented and operational in at least ten customer sites. This system which Unisys would build to meet the needs of the State by combining the Purchasing 1100 software package with the inventory module, would appear to be a case of the first application of that combination. This inference is gained based upon the remarks of the employees of Unisys in the course of their testimony at hearing and at deposition in which they were unfamiliar with such application. The fourth, fifth and sixth criteria listed in the memorandum seeking sole source approval can be accomplished by both vendors. While the questionnaire answers within Joint Exhibit 5 may have indicated that ASI would not continue to support its software with the advent of modifications by the State, the testimony at hearing identified the fact that ASI would support the software package following modifications by the State. Their intentions are evidenced in their relationship with the State of Minnesota which has a similar PMM package that has been modified by that state and is still being supported by ASI. In particular, the ASI commitment to support the software package would continue if the sequence of the ASI code was not changed. The ASI spokesperson, Frank Smith, a corporate vice president, did not seem to think that the code sequence would be changed, but acknowledged that he had not gone into the details of the modifications contemplated by the State. This lack of absolute certainty is not regarded as non-compliance by ASI with the requirement for the vendor to permit user modifications to the product without discontinuing support. The Department has also stated that what it needs is a system which provides a reasonable fit to the functional specifications. Its primary concern is that the system provide purchasing functionality. This purchasing functionality was described at hearing by Robert Glover, Chief of the Department's Bureau of Purchasing Systems, as follows: The system must have modules for requisition, bids, purchase orders, receiving, and inventory. The system's central files, which contain commodity, vendor, and agency information, feed data into the modules. A requisition can be generated either manually, by inputting information into a terminal, or automatically, when inventory falls below the designated re-order point. Once a requisition is generated, the terminal operator can order that requisition information be transmitted to the bid file: Vendor information is then pulled from the central file and a commodity description and bid invitation is generated. The bid invitation is then sent to vendors. When the bid responses are received, these responses are keyed into the bid file which tabulates the responses. The purchasing agent selects the lowest responsive bidder and keys that award into the system. The system generates a purchase order which is sent to the vendor. Information is transmitted to the receiving file indicating that the commodity is on order, and identifying the vendor and commodity price. When the commodity is received, the receiving file is updated and the updated information is transmitted to the inventory and accounting files. In examining the functionality just referenced, the Department has a legitimate reason to be concerned about the performance of an unproven system such as the combination of Purchasing 1100 with an inventory module from UNIS 1100. This lack of utilization in the market place within the ten customer sites alone could cause the Unisys software package alternative to be rejected. The beta site testing that the 2R1 enhancement to the Purchasing 1100 was undergoing at the selected customer sites is not comparable to a market release in ten customer sites. The available information concerning this release was constituted of a functional overview which is set forth in the ASI Exhibit 1. The formal product documentation for the 2R1 release had not been finalized at the point of hearing. Among the references within the ASI Exhibit 1 pertaining to the request for quote is an indication of: .STATUS ON QUOTE RECORD-"ON-HOLD" .CANNOT BE LINKED TO REQUISITIONS OR PO' ."NEW ON-LINE PRINT PROGRAM. The ASI Exhibit 1 or functional overview of the 2R1 enhancement was derived from overhead transparencies or bullets intended to lead into discussion of the project. There is another document related to the system that Unisys would build to meet the demands that the State has that has to do with the interface. This is described as Sperry CIM/UNIS-1100, CIM/Purchasing 1100 Interface Installation memo, Petitioner's Exhibit 6. Each portion of this interfaced system of Purchasing 1100 and UNIS 1100 has a separate data base. Not all information that is used by this system is stored in both data bases. There are some items that are not transferred by the interface between the two pieces of software. On the other hand, there are occasions in which information is transferred and this leads to duplicate files within the Purchasing 1100 and the UNIS 1100. Under the circumstances the risk is presented of data mismatch, a condition in which file information within a duplicate data base is inconsistent or different or unsynchronized. The installation memorandum for the interface between the two Unisys products warns users about the problem of data mismatch. These warnings within Petitioner's Exhibit 6 may be found at 2.2, 2.3 and the note to 2.8. A system which allows for data mismatch could cause incorrect information to be employed in the activities contemplated by the FFAMIS Purchasing Subsystem. That is the reason why the Functional Specifications contemplate a system which has an integrated data base arrangement allowing the sharing of all file materials by each module. ASI provides that with its PMM product, and the Unisys system of combination of Purchasing 1100 and UNIS 1100 inventory module does not. It employs duplicate files which could effect the performance of the system through data mismatch. The idea of duplicate or redundant data files in addition to possible data mismatch, also promotes duplication or redundancy in hardware storage space. The Department contemplates an integrated system without duplicate files, thus avoiding the need for synchronization of data bases. The ASI PMM system consists of a series of modules using common data bases with no duplicate or redundant files. Modifications necessary for the ASI PMM software are described in Joint Exhibit 7 as: (a) provides security similar to SAMAS; (b) reformat and redefine screens to use FFAMIS naming convention; (c) refine SAMAS interface requirements; (d) modify report programs; and (e) rewrite user documentation. Similar functions would have to be performed related to Unisys software in addition to more basic modifications to the Unisys software. Even should this arrangement be made with the Unisys equipment, again it would not meet all the basic criteria contemplated in the request for sole source. An integrated system operates in "real time." ASI Exhibit 1, the 2R1 functional overview document for the Purchasing 1100, has reference to the interface with the UNIS 1100 and speaks in time of a "virtual real time of data" in describing the "user defined interval of information transfer. Through his testimony, Mr. Bartholomew tried to indicate that nothing special was intended by the use of the term virtual "real time." What he said was that he was interested in describing a circumstance in which the user determines the transfer interval. According to Bartholomew, the user can arrange for the interval to be a millisecond to a much greater length of time. The problem that is inherent in the Unisys arrangement is to the extent that information is placed in the data base for the UNIS 1100 inventory module which has a counterpart in the data base for Purchasing 1100, an interval will have to be arrived at to allow for the transfer of information in assuring that the duplicate files within the two interfaced systems will remain synchronized. The integrated system sought contemplates the entry of data into the data base without regard for the maintenance of duplicate files and the transfer of information from one duplicate fife to another. Although the interface arrangement between Purchasing 1100 and UNIS 1100 contemplates automatic maintenance of synchronization between duplicate files within the data bases for those two combined systems, there is still the risk recognized by Unisys of data mismatch in the duplicate file environment. Reference is made by Unisys to the belief that the Joint Exhibit 1 through Appendix C, Figure C-22 in its conceptual design of the system contemplates a number of data bases which share some common information or data. It may depict common data available to more than one data base or it may describe two types of data which correspond by type characterization to the data base with the same name designation. It does not describe duplicate files. Unisys also urges that, through its witness Bartholomew, that there is always some data mismatch whether you have activity with an interfaced system or an integrated system. Regardless of this opinion held by Mr. Bartholomew, and the description set forth in Figure C-22 to the Functional Specifications depicting common sources of information for various data bases, the system which the State wishes to purchase is an integrated system that does not contemplate two parts of a system connected by an interface in which duplicate data files may be held in each of those parts and upon the changing of data in the first duplicate file, transport or notification of that change must be brought to the second duplicate data file through the interface apparatus. The ASI system is integrated with common data bases for the various modules within the system and in which no duplicate or redundant files are involved, Unisys does not offer such a system. Finally, as observed by Mr. Hale, the intention of the Department to install the software in an existing State site, the Comptroller's data center, is advantageous in that it puts this prototype in the position where another system exists allowing the benefit of the guidance and expertise of the Comptroller's data center in interaction with the analysts involved with the FFAMIS Purchasing Subsystem. This location also houses the SAMAS accounting System with which the Purchasing Subsystem is required to interface.
The Issue The issues in these consolidated cases are: (1) whether the decision by Respondent, Department of Transportation, to reject all bids for the contract at issue was illegal, arbitrary, dishonest, or fraudulent; and (2) if so, whether Respondent's actions in cancelling the notice of intent to award the contract at issue to Cyriacks Environmental Consulting Services, Inc., ("CECOS") and requiring the submittal of new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious.2/
Findings Of Fact The Parties Respondent is the state agency that issued the RFP to procure the Contract for Respondent's District IV. CECOS is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB was granted party status to DOAH Case No. 16-0769 by Order dated February 29, 2016, and by Order dated March 9, 2016, was determined to have standing in that case as a party whose substantial interests were affected by Respondent's decision to reject all proposals. Overview of the Procurement Process for the Contract Respondent issued the RFP on or about October 1, 2015. The RFP sought to obtain support services related to environmental impacts review for projects in Respondent's District IV work program; wetland mitigation design; construction, monitoring, and maintenance; permitting of mitigation sites; exotic vegetation control and removal in specified locations; relocation of threatened, endangered, or rare flora and fauna; permit compliance monitoring; and other services specified in the RFP. The RFP stated Respondent's intent to award the Contract to the responsive and responsible proposing vendor6/ whose proposal is determined to be most advantageous to Respondent. The responses to the RFP were scored on two components: a technical proposal, worth a total of 60 points, that addressed the proposing vendor's experience, qualifications, and capabilities to provide high-quality desired services; and a price proposal, worth a total of 40 points, that addressed the proposed price without evaluation of the separate cost components and proposed profit of the proposing vendor, compared with that proposed by other vendors. The price proposal evaluation was based on the following formula: (Low Price/Proposer's Price) X Price Points = Proposer's Awarded Points. The Special Conditions section of the Advertisement portion of the RFP, paragraph 3, stated in pertinent part: In accordance with section 287.057(23), Florida Statutes, respondents to this solicitation or persons acting on their behalf may not contact, between the release of the solicitation and the end of the 72- hour period following the agency posting the notice of intended award, . . . any employee or officer of the executive or legislative branch concerning any aspect of this solicitation, except in writing to the procurement officer or as provided in the solicitation documents. Violation of this provision may be grounds for rejecting a response. The period between the release of the solicitation and the 72-hour period after posting of the intended award is commonly referred to as the "cone of silence." The Special Conditions section of the Advertisement portion of the RFP, paragraph 19, informed vendors that Respondent reserved the right to reject any or all proposals it received. Exhibit B to the RFP, addressing compensation, limited compensation for all authorizations for work performed under the Contract to a total of $5,000,000. Exhibit B stated that the schedule of rates listed in the Price Proposal Form C (i.e., the rates submitted for the sections comprising Exhibit C to the RFP) would be used for establishing compensation. On October 7, 2015, Respondent issued Addendum 1 to the advertised RFP. Addendum 1 revised Exhibit A to the RFP, the Scope of Services; and also revised Exhibit C to the RFP, the Bid Sheet, to provide it in Excel format. As revised by Addendum 1, Exhibit C consists of an Excel spreadsheet comprised of six sections, each of which was to be used by the responding vendors to propose their rates for the specified services being procured in each section of the Bid Sheet. Section 6 of the Excel spreadsheet, titled "Trees, Schrubs [sic], and Ground Cover, consists of eight columns and 258 rows, each row constituting a plant item on which a price proposal was to be submitted. The columns are titled, from left to right: No.; Scientific Name; Common Name; Unit; Estimated of [sic] number of Unites [sic]; Rate; Extension (Unit X Rate); and Multiplier 2.5 (Price X 2.5). Each row of the spreadsheet in Section 6 identified, as a fixed requirement for this portion of the proposal, the specified type of plant, unit (i.e., plant size), and estimated number of units (i.e., number of plants). For each row of the Section 6 spreadsheet, only the cells under the "Rate" column could be manipulated. Vendors were to insert in the "Rate" cell, for each row, the proposed rate for each plant item. The cells under all other columns for each row were locked, and the RFP stated that any alteration of the locked cells would disqualify the vendor and render its proposal non-responsive. The instructions to Exhibit C, Section 67/ stated: Trees, Schrubs [sic], and Ground Cover Price of plants shall include project management, field supervision, invoicing, installation, mobilization of traffic, water throughout the warranty period, fertilizer and [sic] six (6) month and demobilization, minor maintenance guarantee. Installation of plant material shall be per the Scope of Services. All planting costs shall include the cost to restore area to pre-existing conditions (i.e., dirt, sod, etc.). On October 20, 2015, Respondent issued Addendum 2, and on October 29, 2015, Respondent issued Addendum 3. Both addenda changed Respondent's schedule for reading the technical proposal scores, opening the sealed price proposals, and posting the intended awards. Addenda 1, 2, and 3 were not challenged. However, a key dispute in these consolidated proceedings is whether the Addendum 1 Bid Sheet in Section 6 and the instructions for completing that Bid Sheet were ambiguous, or whether Respondent reasonably believed them to be ambiguous. The vendors were to submit their responses to the RFP, consisting of their technical proposals and price proposals, by October 16, 2015. CECOS, DB, and four other vendors timely submitted responses to the RFP. On November 2, 2015, the scores for the technical proposals submitted by the vendors were presented to the Selection Committee ("SC") at a noticed meeting. DB received the highest number of points on the technical proposal portion of the RFP. The SC met again on November 3, 2015. At that time, Respondent's Procurement Officer, Jessica Rubio, read the total awarded points for each vendor's price proposal, as well as each vendor's total combined points——i.e., total points for technical proposal and price proposal. CECOS received the highest number of points for the price proposal portion of the RFP, and also received the highest total combined points. Respondent recommended, and the SC concurred, that Respondent should award the Contract to CECOS. At 10:00 a.m. on November 3, 2015, Respondent posted the Proposal Tabulation, constituting its notice of intent that CECOS would be awarded the Contract.8/ CECOS submitted a price proposal of $4,237,603.70. DB submitted a price proposal of $9,083,042.50. The other four vendors' price proposals ranged between $4,540,512.90 and $5,237,598.55. The "cone of silence" commenced upon Respondent's posting of the Proposal Tabulation, and ended 72 hours later, on November 6, 2015, at 10:00 a.m. As discussed in greater detail below, after the Proposal Tabulation was posted, Respondent discovered an apparent ambiguity in Exhibit C, Section 6, regarding the instructions to that section and the inclusion of the "2.5 Multiplier" column on the Bid Sheet. After an internal investigation, Respondent decided to cancel its intent to award the Contract to CECOS. On November 5, 2015, Respondent posted a notice that it was cancelling the intent to award the Contract to CECOS. On November 5, 2015, DB filed a Notice of Protest, stating its intent to challenge the award of the Contract to CECOS. Thereafter, on November 9, 2015, DB contacted Respondent by electronic mail ("email") to withdraw its Notice of Protest.9/ Due to the apparent ambiguity in Exhibit C, Section 6, on November 9, 2015, Respondent issued Addendum 4 to the RFP. Addendum 4 required the responding vendors to submit new price proposals for all sections (i.e., sections 1 through 6) of Exhibit C to the RFP. Addendum 4 also established a new timeline for a mandatory pre-bid conference to be held on November 12, 2016; set a sealed price proposal due date of November 19, 2016; and identified new dates for opening the price proposals and posting the Notice of Intended Award of the Contract. On November 12, 2015, Respondent conducted a mandatory pre-bid conference to address Addendum 4. The participating vendors expressed confusion and posed numerous questions regarding the submittal of new price proposals and their technical proposals. Immediately following the pre-bid conference, Respondent issued Addendum 5, which consisted of a revised Exhibit A, Scope of Services; revised Exhibit C, Bid Sheet in Excel format for all six sections; and responses to the questions posed at the pre-bid conference.10/ The Addendum 5 Bid Sheet comprising Exhibit C, Section 6, was substantially amended from the version that was published in Addendum 1. Specifically, the column previously titled "Rate" was changed to "Rate Per Unit"; the "Extension (Unit X Rate)" and "Multiplier 2.5" columns were deleted; and a new column titled "Proposed Cost (Rate per Unit X Est. No. of Units)" was added. Additionally, the instructions for Section 6 were substantially amended to read: "'Rate Per Unit' must include all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, travel, invoicing, labor, maintenance of traffic, mobilization and demobilization, staking and guying, maintenance of planting site throughout the 180[-]day plant warranty." These amendments were intended to clarify that the proposed rate for each plant unit was to include all overhead costs associated with performance of the Contract with respect to that particular unit. On November 13, 2015, CECOS filed a Notice of Protest to Respondent's issuance of Addendum 4, requiring the vendors to submit new price proposals. Thereafter, on November 23, 2015, CECOS filed the First Petition challenging Respondent's decision, announced in Addendum 4, to require the responding vendors to submit new proposals for the price proposal portion of the RFP, and its decision to cancel the notice of intent to award the Contract to CECOS.11/ Once CECOS filed its Notice of Protest on November 13, 2015, Respondent ceased all procurement activity directed toward awarding the Contract. On December 17, 2015, Respondent posted notice that it was rejecting all proposals and that the Contract would be re- advertised through issuance of a new RFP. On December 22, 2015, CECOS filed a Notice of Protest, and on January 4, 2016, filed its Second Petition challenging Respondent's decision to reject all proposals and re-advertise the Contract. Bases for Respondent's Actions Shortly after Respondent posted the Proposal Tabulation noticing its intent to award the Contract to CECOS, Christine Perretta, owner and president of DB, sent an email to Respondent, then called Rubio to inquire about Respondent's decision to award the Contract to CECOS. The evidence shows that these contacts occurred sometime on or around November 3, 2016.12/ In her telephone discussion with Rubio, Perretta inquired about how to file a notice of protest13/ and also asked whether Respondent had reviewed the vendors' price proposals for correctness or accuracy, or had simply chosen the lowest price proposal. In the course of the discussion, Perretta informed Rubio that DB had submitted a "loaded" rate for each plant unit ——meaning that DB's rate proposed for each plant item in the "Rate" column on the Section 6 Bid Sheet consisted not only of the cost of the plant item, but also the cost for all associated overhead services listed in the instructions to Section 6 and in the RFP Advertisement, paragraph 18(v), plus compensation.14/ Rubio could not clearly recall whether, in the course of their discussion, Perretta had inquired about the use of the 2.5 multiplier, and there is conflicting evidence as to whether Perretta related her view that CECOS may not be able to perform the Contract based on the price proposal it had submitted. In any event, as a result of Rubio's discussion with Perretta, Rubio determined that she needed to review Exhibit C, Section 6. In the course of her investigation, Rubio called Wendy Cyriaks, owner and president of CECOS.15/ Cyriaks confirmed that CECOS had submitted an "unloaded" rate for each plant item—— meaning that it had included only the cost of each plant item in the "Rate" column on the Section 6 Bid Sheet, and had not included, in the proposed rate for each plant item, the cost of the associated overhead services listed in the instructions to Section 6 or RFP Advertisement, paragraph 18(v), or compensation. Cyriaks told Rubio that CECOS expected that its overhead costs and compensation for each item would be covered through use of the 2.5 multiplier. Also in the course of her investigation, Rubio asked Bogardus whether he had intended the 2.5 multiplier to be used to cover all costs, including vendor compensation, associated with obtaining, installing, and maintaining the plant items listed in Section 6. Bogardus initially confirmed that his intent in including the 2.5 multiplier on the Section 6 Bid Sheet was to cover all of the overhead costs and compensation. However, the persuasive evidence establishes that Bogardus subsequently agreed with Rubio that the 2.5 multiplier should not have been included in Section 6. Pursuant to her discussions with Perretta and Cyriaks, Rubio realized that the wide discrepancy between DB's and CECOS' price proposals was due to their differing interpretations of the instructions in Section 6 regarding plant item rates and the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet. Rubio testified, persuasively, that the inclusion of the "2.5 Multiplier" column rendered Exhibit C, Section 6, of the RFP ambiguous. To that point, the RFP does not contain any instructions or discussion on the use of the 2.5 multiplier. Therefore, to the extent the multiplier was intended to be used by the vendors to build overhead costs and compensation into their price proposals, the RFP fails to explain that extremely important intended use——leaving the significance and use of the multiplier open to speculation and subject to assumption by the vendors in preparing their price proposals. Rubio reasonably viewed DB's and CECOS' divergent interpretations of the instructions and the inconsistent use of the 2.5 multiplier as further indication that Section 6 was ambiguous. She explained that in order for Respondent to ensure that it is procuring the most advantageous proposal for the State, it is vitally important that the RFP be clear so that responding vendors clearly understand the type of information the RFP is requesting, and where and how to provide that information in their price proposals. Rubio persuasively testified that in her view, the instructions in Section 6 had, in fact, called for a loaded rate, but that CECOS had erroneously assumed, based on the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet, that overhead and compensation for each plant item would be covered through use of the 2.5 multiplier, and that as a consequence, CECOS incorrectly proposed unloaded rates for the plant items. In Rubio's view, CECOS' error was due to the ambiguity created by the unexplained and unsupported inclusion of the 2.5 multiplier in Section 6. Rubio testified that CECOS had been awarded the Contract because it had submitted the lowest price proposal, but that its proposal was based on an unloaded rate for the plant items, contrary to the instructions for Section 6. In Rubio's view, CECOS' price proposal was unresponsive, and CECOS should not have been awarded the Contract. Rubio also testified, credibly and persuasively, that the use of the 2.5 multiplier in Section 6 for compensation purposes rendered the RFP arbitrary. Respondent's District IV historically has not used a 2.5 multiplier for compensation purposes for commodities contracts, and no data or analyses exist to support such use of a 2.5 multiplier.16/ This rendered the RFP both arbitrary and unverifiable with respect to whether it was structured to obtain the most advantageous proposal for the State. To this point, Rubio credibly explained that Respondent's existing environmental mitigation services contract with Stantec was procured through the "Invitation to Negotiate" ("ITN") process. In that procurement, Respondent negotiated to obtain the best value for the State. The ITN bid sheet contained a 2.5 multiplier that was used only for weighting purposes to evaluate and determine which firms would be "short- listed" for purposes of being invited to negotiate with Respondent for award of the contract. Importantly——and in contrast to the RFP at issue in this case——the multiplier in the ITN was not used to determine the final prices, including compensation, to install trees, shrubs, and ground cover under that contract. Rubio also testified, credibly, that the Bid Sheet was structurally flawed because it did not allow the vendor to clearly indicate the "unit price" inclusive of all overhead costs, and that this defect would result in Respondent being unable to issue letters of authorization to pay invoices for the cost of installing the plant items or compensating for work performed. For these reasons, Respondent determined that it needed to cancel the intent to award the Contract to CECOS. As noted above, Respondent posted the cancellation of the intent to award the Contract on November 5, 2015. At a meeting of the SC conducted on November 9, 2015, Respondent's procurement staff explained that the intent to award the Contract had been cancelled due to ambiguity in the instructions and the Bid Sheet for Exhibit C, Section 6. Ultimately, the SC concurred with Respondent's cancellation of the intent to award the Contract to CECOS and agreed that the vendors should be required to submit new price proposals. Thereafter, on November 9, 2015, Respondent issued Addendum 4, announcing its decision to solicit new price proposals from the responding vendors. Respondent conducted a pre-bid meeting with the vendors on November 12, 2015, and immediately thereafter, issued Addendum 5, consisting of a revised Scope of Services and a substantially revised Bid Sheet for all six sections of Exhibit C. As previously discussed, the Section 6 Bid Sheet issued in Addendum 5 was revised to, among other things, delete the "2.5 Multiplier" column and the column previously titled "Rate" was changed to "Rate Per Unit." Also as discussed above, the instructions to Section 6 were revised to clarify that the "Rate Per Unit" provided for each plant unit must contain all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, invoicing, labor, maintenance of traffic, and other costs specified in the instructions——i.e, constitute a loaded rate. All of these changes were made in an effort to clarify, for the benefit of all vendors, the specific information that Respondent needed to be provided in the price proposals. Rubio testified, credibly, that in requiring the vendors to submit new price proposals pursuant to revised Exhibit C, Respondent did not give, or intend to give, any vendor a competitive advantage over any of the other vendors, nor did Respondent place, or intend to place, CECOS at a competitive disadvantage by requiring the vendors to submit new price proposals pursuant to revised Exhibit C. As noted above, once CECOS filed its Notice of Protest, Respondent ceased all procurement activity directed toward awarding the Contract. Consequently, the vendors did not submit new price proposals and the scheduled meetings at which the new price proposals would be opened and the intended awardee announced were cancelled. On December 17, 2015, Rubio briefed the SC regarding the problems with the RFP and described her concerns about proceeding with the procurement. She explained that Respondent's procurement staff was of the view that the instructions in Section 6, as previously published in Addendum 1, were ambiguous because they did not clearly provide direction on how to complete the Bid Sheet for that section. Additionally, the Section 6 Bid Sheet, as structured in Addendum 1, did not allow the vendors to provide a plant unit rate that was inclusive of all overhead costs. To this point, she noted that unless the vendors provided a loaded rate——i.e., one that included all overhead costs——Respondent would not be able to issue work orders for any plant items in Section 6.17/ She explained that these flaws constituted the bases for Respondent's decision, announced on November 9, 2015, to require the submittal of new price proposals. Rubio further explained that in Respondent's rush to issue a revised Scope of Services as part of Addendum 5, mistakes had been made18/ and Respondent's Environmental Office needed more time to carefully review the Scope of Services and Bid Sheet, to ensure the RFP was correctly drafted and structured so that the Contract could be accurately solicited and procured. Additionally, the vendors——including Mark Clark of CECOS——had expressed confusion regarding the revised Bid Sheet and submitting new price proposals, and some vendors had inquired about submitting new technical proposals. Further, under the revised procurement schedule issued as part of Addendum 4 on November 9, 2015, the vendors had a very compressed timeframe in which to prepare and submit their new price proposals, heightening the potential for mistakes to be made. Because of these substantial problems and concerns with the RFP, Rubio recommended that Addendum 5 be rescinded, that all vendor proposals (both technical and price) be rejected, and that the entire procurement process be re-started. The SC concurred with her recommendation. As noted above, on December 17, 2015, Respondent rejected all proposals and announced that the Contract would be re-solicited in the future through issuance of another RFP. CECOS' Position CECOS takes the position that the RFP and the Section 6 Bid Sheet published in Addendum 1 were not ambiguous. Specifically, CECOS contends that the use of the 2.5 multiplier in Section 6 clearly indicated that Respondent was seeking an unloaded rate for the plant items listed on the Section 6 Bid Sheet. In support of this position, CECOS notes that all of the vendors other than DB had submitted unloaded rates for the plant items in Section 6. CECOS contends that this shows that Section 6 was not ambiguous, and that DB simply did not follow the RFP instructions——of which it was fully aware——in preparing and submitting its price proposal.19/ CECOS also contends that Rubio's failure to contact the other vendors to determine if they found the instructions or use of the 2.5 multiplier in Section 6 ambiguous evidences that Rubio's conclusion that Section 6 was ambiguous lacked any factual basis, so was itself arbitrary. CECOS asserts that Bogardus' intent to use a 2.5 multiplier for compensation purposes was evidenced by its inclusion on the Section 6 Bid Sheet, that its use on the Section 6 Bid Sheet did not render the RFP flawed, and that Bogardus' intent to compensate using the multiplier should control the structure of compensation paid under Section 6.20/ CECOS also notes that the use of the 2.5 multiplier on the Section 6 Bid Sheet mirrors the 2.5 multiplier in the existing environmental mitigation support services contract with the current contractor.21/ CECOs further contends that there was no material difference, with respect to structuring compensation for the plant items, between the ITN process used for procuring the existing contract and the RFP process used to procure this Contract. As additional support for its argument that the use of the 2.5 multiplier in Section 6 was valid, CECOS points to a request for proposal for environmental mitigation services issued by Respondent's District VI. In that contract, a 2.5 multiplier was used for compensation purposes, albeit for specific plant items that were not contained in the original list of specific plant items for which rate proposals had been solicited in the request for proposal. CECOS further contends that Respondent——and, most particularly, Rubio——did not conduct a thorough investigation into the historic use of 2.5 multipliers in Respondent's commodities contracts. CECOS argues that as a consequence, Respondent's determination that the use of the 2.5 multiplier rendered the Section 6 Bid Sheet structurally flawed and arbitrary was unsupported by facts, so was itself arbitrary and capricious. CECOS asserts that cancelling the notice of intent to award the Contract to CECOS and requiring the vendors to submit new price proposals placed CECOS at a competitive disadvantage and was contrary to competition because once the Proposal Tabulation was posted, the other vendors were informed of the price that CECOS had bid, so knew the price they had to beat when the Contract was re-solicited. CECOS also points to what it contends are procedural irregularities with respect to Respondent's treatment of, and communication with, CECOS and DB once Respondent decided to cancel the notice of intent to award the Contract to CECOS. Specifically, CECOS contends that Respondent did not respond to its calls or email asking why the intent to award the Contract to CECOS had been cancelled. CECOS also contends that Respondent communicated with DB on substantive matters during the "cone of silence." CECOS further notes that Respondent did not convene a resolution meeting within the statutorily- established seven-day period after CECOS filed its First Petition, but instead held the meeting over 60 days later, on January 28, 2015, and that even then, Respondent did not engage in good faith negotiation to resolve the challenge. Finally, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions (discussed above) that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. CECOS asserts that it followed the instructions in the RFP in preparing its price proposal, submitted the lowest price proposal, and is ready, willing, and able to perform the Contract at the rates it proposed in its response for Section 6. On that basis, CECOS contends that it is entitled to the award of the Contract. Findings of Ultimate Fact CECOS bears the burden in this proceeding to prove that Respondent's decision to reject all proposals was arbitrary, illegal, dishonest, or fraudulent.22/ Even if CECOS were to meet this burden, in order to prevail it also must demonstrate that Respondent's actions in cancelling the intent to award the Contract and requiring the submittal of new price proposals were clearly erroneous, arbitrary, capricious, or contrary to competition. For the reasons discussed herein, it is determined that CECOS did not meet either of these burdens. The Multiplier Rendered Section 6 Ambiguous, Arbitrary, and Structurally Flawed As discussed in detail above, Respondent decided to cancel the intent to award the Contract to CECOS and to require the submittal of new price proposals by the vendors only after it had conducted an extensive investigation that included a careful review of numerous provisions in the RFP and the instructions to Section 6 and had analyzed the structure of Section 6 in relation to other provisions in the RFP. That investigation showed that nowhere in the RFP was the use of the 2.5 multiplier in Exhibit C, Section 6, discussed or explained. Thus, to the extent the multiplier was to be used in determining reimbursement for overhead costs and compensation, the RFP failed to explain this extremely important point, leaving the multiplier's purpose, use, and significance open to speculation and assumption by the vendors in submitting their price proposals. This rendered the multiplier's use in Section 6 ambiguous. This ambiguity is further evidenced by DB's and CECOS's widely divergent price proposals for Section 6, and the credible testimony of Perretta and Cyriaks regarding their differing views of the purpose of the 2.5 multiplier. The credible, persuasive evidence establishes that the ambiguity in Section 6 caused the vendors to have differing interpretations of the manner in which they were to propose plant unit rates in Section 6; that the vendors submitted plant price proposals predicated on differing assumptions; and that this resulted in Respondent being unable to fairly compare the price proposals for purposes of obtaining the most advantageous proposal for the State. On these bases, Respondent reasonably concluded23/ that the inclusion of the 2.5 multiplier in Section 6, rendered that portion of the RFP ambiguous. As extensively discussed above, the credible, persuasive evidence also establishes that Respondent concluded, based on its investigation and review of Section 6, that inclusion of the 2.5 multiplier rendered Section 6 both arbitrary and structurally flawed.24/ The credible, persuasive evidence further establishes that Rubio investigated Respondent's use of multipliers in commodities procurements and contracts to the extent necessary and appropriate for her to reasonably conclude that the use of the 2.5 multiplier in Section 6 rendered this portion of the RFP ambiguous, arbitrary, and structurally flawed.25/ In sum, the credible, persuasive evidence establishes that Respondent engaged in a thorough and thoughtful investigation before concluding, reasonably, that the inclusion of the 2.5 multiplier in Exhibit C, Section 6 rendered that portion of the RFP ambiguous. Respondent's Actions Were Not Contrary to Competition Although the evidence shows that CECOS may suffer some competitive disadvantage because competing vendors were informed of the lowest "bottom line" price they would have to beat, it does not support a determination that Respondent's decisions to cancel the intent to award the Contract to CECOS and require the vendors to submit new price proposals were contrary to competition. To that point, in Addendum 5, Respondent substantially restructured the Section 6 Bid Sheet and also amended the Bid Sheet comprising the other price proposal sections in Exhibit C, so that CECOS' and the other vendors' price proposals submitted in response to Addendum 5 may have substantially changed from those submitted in response to Addendum 1. In any event, it cannot be concluded that Respondent's decisions to cancel the intent to award the Contract to CECOS and require submittal of new price proposals are contrary to competition such that they should be overturned in this proceeding. Procedural Irregularities CECOS also points to certain procedural irregularities in Respondent's treatment of, and communication with, CECOS once Respondent decided to cancel the notice of intent to award the Contract to CECOS and require submittal of new price proposals. CECOS apparently raises these issues in an effort to show that Respondent's actions were clearly erroneous, contrary to competition, arbitrary, or capricious. The undisputed evidence establishes that Rubio communicated with both DB and CECOS during the "cone of silence" following the posting of its intent to award the Contract to CECOS. The undersigned determines that the "cone of silence" applied to Rubio and her communications with DB and CECOS within the 72-hour period following Respondent's posting of the intent to award the Contract. Specifically, she is an employee of Respondent's District IV Office, so is an employee of the executive branch of the State of Florida. Further, the evidence shows that her communications with both DB and CECOS during the "cone of silence" period dealt specifically with substantive, rather than "administrative" issues regarding the RFP and the vendors' price proposals. Accordingly, it is determined that these communications did, in fact, violate the "cone of silence." However, this does not require that Respondent's decision to cancel the intent to award the Contract to CECOS be overturned. The credible, persuasive evidence shows that while DB's conversation with Rubio may have spurred Rubio to decide she should investigate the Section 6 instructions and use of the 2.5 multiplier, it was not the reason why Respondent ultimately determined that the intent to award the Contract should be cancelled. Rather, Respondent's discovery of the ambiguity and structural flaws in Section 6, through Rubio's investigation, was the reason that Respondent determined that the intent to award the Contract to CECOS should be cancelled. In sum, the credible, persuasive evidence shows that notwithstanding Rubio's communications on substantive matters during the "cone of silence" with both DB and CECOS, the integrity of the procurement process was not undermined such that Respondent's decision to cancel the intent to award the Contract to CECOS was clearly erroneous, contrary to competition, arbitrary, or capricious. CECOS failed to present persuasive evidence establishing that other procedural irregularities rendered Respondent's actions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decisions to Cancel Intent to Award the Contract and Require Submittal of New Price Proposals Based on the foregoing, it is determined that CECOS did not meet its burden to show that Respondent's decisions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decision to Reject All Proposals As noted above, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. However, the credible, persuasive evidence shows that Respondent's ultimate decision to reject all bids was factually supported and was reasonable. As discussed above, Respondent initially decided to cancel the intent to award the Contract to CECOS and to require the vendors to submit new price proposals after it discovered the ambiguity and structural flaws resulting from the use of the 2.5 multiplier in Section 6. At that point, rather than rejecting all proposals, which would require the vendors to go to the time and expense of preparing completely new proposals, it decided to instead only require the vendors to submit new price proposals. Due to the interrelated nature of the six sections of Exhibit C comprising the complete price proposal for the RFP, Respondent determined revision of Section 6 would also require revision of the other five sections of Exhibit C, in order to ensure that they were internally consistent with each other. At the mandatory pre-bid meeting preceding the issuance of Addendum 5, the participating vendors had numerous questions about the sweeping revisions to all six sections of Exhibit C, and they expressed confusion about the revisions and their effect on preparation of new price proposals. Some vendors also expressed concern that they may have to change their personnel in order to be able to accurately prepare new price proposals, raising the question whether the technical proposals needed to be revised. As a result of vendor confusion and concern, and also because Respondent's Environmental Office needed additional time to carefully review and revise the RFP as needed, Respondent decided to reject all proposals and to start the procurement process anew. Respondent's decision to reject all bids was made after fully considering all of the pertinent information regarding the ambiguity and structural flaws in Section 6, vendor confusion and concern caused by Respondent's revisions to Exhibit C needed to address the ambiguity and flaws in Section 6, and Respondent's need for additional time to ensure that its RFP accurately and clearly solicited the needed environmental mitigation support services. Accordingly, Respondent did not act arbitrarily in deciding to reject all bids. Further, no persuasive evidence was presented to show that Respondent's decision to reject all bids was illegal, dishonest, or fraudulent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Transportation: Issue a final order in Case No. 16-0769 finding that the rejection of all proposals in response to Request for Proposal RFP-DOT-15/16-4004PM was not illegal, arbitrary, dishonest, or fraudulent; and Issue a final order in Case No. 16-3530 finding that the decisions to cancel the award of the Contract for Request for Proposal RFP-DOT-15/16-4004PM to CECOS and to require the vendors to submit new price proposals for Request for Proposal RFP-DOT-15/16-4004PM were not clearly erroneous, contrary to competition, arbitrary, or capricious. DONE AND ENTERED this 30th day of December, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 2016.
Findings Of Fact On April 16, 1993, the Department of Management Services (DMS) issued an Invitation to Bid (ITB) No. 158-550-590A seeking to enter into a 12 month contract for the purchase of sign materials, including reflective sheeting and other related materials used in construction of road signs. The ITB projects an anticipated expenditure for the materials of approximately $2.3 million. The DMS issued the ITB on behalf of the Department of Transportation (DOT) and county and municipal governments who purchase materials under the contract. Materials included in a bid are required to be listed on the Florida Department of Transportation (DOT) Qualified Products List (QPL). The QPL is a compilation of vendor products which have been tested and determined acceptable by the DOT pursuant to the requirements of the Florida DOT Standard Specifications for Road and Bridge Construction. On page 24 of the ITB, the DMS sets forth the specifications for commodity number 550-590-350-0100, the material at issue in this proceeding. Vendors were directed to supply a manufacturer or brand name and a product number/series number. The specification for the material is as follows: Sheeting, reflective Type IIIA, or Type IIIC sizes 1" through 48" by 50 yds, with a precoated pressure sensitive adhesive backing (Class I). Primer Not Required. Sheeting (Both Types) shall be available in no less than the following colors: blue, brown, green, orange, yellow, and silver-white. Type III sheeting is a highly reflective sheeting used as a background for road signs, onto which are applied either inked or pre-cut letters and symbols. Type IIIA sheeting is manufactured by 3M. Type IIIC sheeting is manufactured by Stimsonite. In response to the ITB, Stimsonite, 3M, and Vulcan, Inc. timely submitted bids. The bids were opened by the DMS on May 21, 1993. The Vulcan bid was rejected as non-responsive and is not at issue in this proceeding. An apparently cursory review determined that the 3M and Stimsonite bids were responsive. The 3M bid proposal for the Type III sheeting commodity was $3.74 per square foot for 3M Scotchlite Brand Series 3870 roll sheeting. The Stimsonite bid proposal for the Type III sheeting commodity was $3.74002 per square foot for Stimsonite Series 4200 roll sheeting. The DMS ITB required that bidding vendors submit a computer diskette which includes a Manufacturer's or Dealer's Published Price Lists, Authorized Dealer's List, and Authorized Service Center Locations for specified items, including the reflective sheeting at issue in this proceeding. The DMS instituted the diskette requirement to avoid reliance on printed catalog materials submitted by vendors which were apparently often confusing. On June 14, 1993, the DMS posted a bid tabulation indicating that the 3M bid was rejected as non-responsive. Based on obsolete information, the DOT initially determined that the 3M product bid was cutout lettering rather than reflective sheeting. On June 22, 1993, 3M filed a formal written protest challenging the DMS determination that the bid was non-responsive. Neither the DMS nor the DOT reviewed the 3M computer diskette material prior to determining that the 3M material bid was not responsive. The DOT determination was erroneous. The DMS review of the computer diskette material submitted by 3M revealed that the material bid was indeed roll sheeting and was included on the DOT QPL. On June 29, 1993, the DMS posted a revised bid tabulation identifying 3M as the low responsive bidder. Stimsonite timely protested the DMS revised posting. At an informal meeting held in an attempt to resolve the protest, DMS first became aware that the DOT was in need of two forms of reflective sheeting. Reflective sheeting is produced and sold in rolls known as roll sheeting. Reflective sheeting is also produced with perforations punched along the outside edges of the material. This material is known as perforated sheeting and is used by DOT in sign machines to produce cutout letters and symbols which are applied to the reflective sheeting. There is no difference between roll sheeting and perforated sheeting but for the holes punched along the outside edge of the perforated form. The DOT needs to be able to purchase perforated sheeting under the state contract. On July 26, 1993 Stimsonite filed an amended protest challenging the re-posting of the bids and the DMS intent to award the contract to 3M as lowest responsive bidder. On July 27, 1993, the Stimsonite protest was referred by the DMS to the Division of Administrative Hearings. On July 27, 1993, the DMS filed an answer to the Stimsonite protest wherein the DMS stated that the 3M bid was not responsive because the 3M bid was limited to non-perforated reflective sheeting. Apparently, at or around the time of the informal bid protest resolution meeting, the DMS became convinced that the language in the ITB required that perforated sheeting be available with no price differential from roll sheeting. The DMS position is based on the fact that the ITB makes no distinction between perforated sheeting and non-perforated sheeting. Otherwise stated, "sheeting is sheeting." Prior ITBs and state contracts fail to support the DMS position. The ITB language at issue in this proceeding is identical to that set forth in the previous ITB. Under the existing state contract between the state and 3M, perforated sheeting is not sold to the state at the roll sheeting contract price. Perforated sheeting is sold as an accessory commodity at a higher price. Nothing in the ITB at issue in this proceeding indicates that the DMS will alter its previous interpretation of ITB requirements. The ITB does not require perforated sheeting to be bid at the roll sheeting contract price. The ITB does not address the issue of perforation at all. At the time of the bid, 3M produced and routinely sold a perforated Type III reflective sheeting (Scotchlite Series 3860), however, the product bid (Scotchlite Series 3870) is non-perforated roll sheeting. There is no bid for perforated sheeting set forth in the 3M proposal. At the time of the bid, Stimsonite did not routinely sell a perforated Type III reflective sheeting material. The Stimsonite bid does not indicate that Series 4200 includes perforated sheeting. After the bids were opened and the matter of perforated sheeting became relevant, a DMS official orally inquired as to whether Stimsonite Series 4200 included perforated sheeting. A Stimsonite official stated that it did. However, Stimsonite has not commonly sold perforated sheeting under the Series 4200 moniker. The greater weight of the evidence establishes that, at least at the time the bid was submitted, Series 4200 was non-perforated roll sheeting. There is no bid for perforated sheeting set forth in the Stimsonite proposal. Because the ITB fails to require that vendors supply bids on both roll sheeting and perforated sheeting, and because the DOT sign shop and potentially other buyers have need for perforated sheeting material, the ITB fails to address the actual needs of the DOT and other purchasers. In relevant part, ITB General Condition Paragraph 9 provides as follows: As the best interest of the State may require, the right is reserved to make award(s) by individual item, group of items, all or none, or a combination thereof; on a geographical district basis and/or on a statewide basis with one or more suppliers; to reject any and all bids or waive any minor irregularity or technicality in bids received. 3M Series 3870 is the material currently being purchased as roll reflective sheeting under the existing state contract. The DMS reviewed the 3M bid to determine whether it included a bid for perforated reflective sheeting in its proposal. 3M did not include a specific perforated sheeting bid in its proposal, however, as previously set forth, the ITB failed to require that vendors submit a bid for perforated sheeting. The 3M bid proposal met the requirements of the ITB. There has been no review of the Stimsonite bid to determine responsiveness. The DMS asserted that because the DOT did not object to the Stimsonite bid, any irregularities were considered minor. The evidence fails to establish that either the DOT or DMS reviewed the Stimsonite bid for responsiveness. Stimsonite's bid proposal lacks sufficient detail to permit a determination that the complete range of products required by the ITB are available. On page 24 of the ITB, the DMS sets forth the specifications for commodity number 550-590-370-0000, accessory items for use with commodity number 550-590-350-0100 (the Type III reflective sheeting at issue in this proceeding.) The specification for the material is as follows: Accessories for use with the above commodity number 550-590-350-0100 (reflective sheeting Type IIIA, or Type IIIC colors, inks, clears, thinners, cut-out letters, numbers, symbols, radius corners, non-reflective films, and other miscellaneous items shall be available from the sheeting contractor and shall be compatible with the sheeting bid. (Materials List Shall Be Furnished With the Bid With Net Delivered Prices). 550-590-370-0550 Sign Letters 550-590-370-0560 Sign Numbers 550-590-370-0590 Inks, Colors, Clears 550-590-370-0604 Thinners 550-590-370-0950 Non-Reflective Film Stimsonite does not manufacture non-reflective film and did not include a non-reflective film. The paragraph clearly states that non-reflective film is one of the items which "shall be available from the sheeting contractor and shall be compatible with the sheeting bid." The word "shall" means that the vendor must make such items available. The DOT sign shop routinely uses non-reflective film in sign production.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Management Services enter a Final Order REJECTING all bids. DONE and RECOMMENDED this 13th day of October, 1993, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4191BID The following constitute rulings on proposed findings of facts submitted by the parties. Petitioner The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 6. Rejected, not supported by the greater weight of credible evidence. 8-9. Rejected, unnecessary. Rejected, not supported by the greater weight of credible evidence. The responsiveness of one vendors bid is not based on the availability of materials from a second vendor. Rejected, not supported by the greater weight of credible evidence. There is no language in item 7 which indicates that only accessories offered by bidders be listed on the diskette. Interpretation to the contrary is unsupported by the ITB. 14. Rejected, unnecessary. Statement "...it came to light that sheeting called for by the specification included both perforated and nonperforated..." is rejected as not supported by the greater weight of evidence. Accepted, however contrary to the implication, it should be noted that the 3M perforated sheeting is currently billed to and paid for by the state as an accessory, not at the roll sheeting price. Rejected, unnecessary. Specification does not require provision of perforated sheeting at roll sheeting price. Rejected, subordinate. 26. Rejected, unnecessary. Respondent The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 5-6. Rejected, not supported by the greater weight of the evidence, which establishes that computer diskette data was required, not for all commodities in the ITB, but only for items 1, 2, 7, and 8. 7, 10-14. Rejected, subordinate. 15-16. Rejected, contrary to greater weight of the evidence which establishes that DMS was unaware of distinction between roll sheeting and perforated sheeting prior to this meeting. Stimsonite "confirmation" that it "shared DMS conception of roll sheeting" is not credible. Rejected, unnecessary. Rejected, subordinate. Rejected, unnecessary. 20-22. Rejected, unnecessary. A review of the diskette data required by the DMS apparently would have resolved the confusion. Rejected, not supported by the greater weight of the evidence. Given that computer diskette data was required, not for all commodities in the ITB, but only for items 1, 2, 7, and 8, it is incorrect to state that the failure to include an item on the diskette would preclude a buyer from ordering it. Rejected, unnecessary. Rejected, contrary to greater weight of the evidence which fails to establish that Stimsonite Series 4200 includes perforated roll sheeting. 28-29. Rejected, unnecessary. Intervenor The Intervenor's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 18. Rejected, unnecessary. 19-20. Rejected, cumulative. 26-27. Rejected, subordinate. The hearing is de novo. Rejected, unnecessary. Rejected in part as recitation of testimony. 31-33. Rejected, unnecessary. The offers to supply materials after bids are opened is likely an impermissible amendment of a bid document. The fact that such discussion was necessary is indicative of the lack of clarity on the part of DMS as to what the agency's needs were when letting the ITB. 38-39. Rejected, unnecessary. 40, 42-46. Rejected in part as recitation of testimony, unnecessary. 47-48. Rejected, argumentative. Rejected, cumulative. Rejected, contrary to the greater weight of the evidence which establishes that the 3M bid did not include perforated Type III sheeting. 52-58. Rejected, cumulative. 59-64. Rejected in part as recitation of testimony, cumulative, unnecessary. 65-70. Rejected, cumulative, unnecessary. 71. Rejected, contrary to greater weight of the credible evidence which establishes that in the previous year, 3M bid a series of Scotchlite Type III sheeting which included both perforated and nonperforated product, contrary to the bid in the instant case which was only nonperforated Type III sheeting. 73-77. Rejected, cumulative. 78-80. Rejected, argumentative. 81-82. Rejected, not supported by the greater weight of credible evidence. The agency is not required to waive defects. The requirement to provide the information on the computer diskette was not optional. Failure to comply mandates disqualification of a bid proposal. 83. Rejected, argumentative. 87. Rejected, argumentative. 88-95. Rejected, in part as recitation of testimony, cumulative, unnecessary. 96-97, 99. Rejected, cumulative, unnecessary. 103, 105-106. Rejected, conclusion of law. 107-111. Rejected, argumentative. Goes to credibility of agency determination as addressed herein. 112-116. Rejected, cumulative, unnecessary. 118. Rejected, conclusion of law. COPIES FURNISHED: William H. Lindner, Secretary Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 General Counsel Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 W. Robert Vezina, Esquire Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589 Tallahassee, Florida 32302-0589 Cindy Horne, Esquire Sylvan Strickland, Esquire Department of Management Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950 Geoffrey D. Smith, Esquire Jay O. Barber, Esquire Blank, Rigsby & Meenan, P.A. 204-B South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068
The Issue The following issues were raised in the challenge of the award of the bid: Did Harris/3M fail to comply with Special Condition 28 of the Invitation to Bid, which required each bidder to provide references from two customers having similar equipment? Did the Department request a demonstration of the bid equipment under Special Condition 15? If such a demonstration was requested, did Harris/3M comply with the request? Were the machines bid by Harris/3M available under terms of General Condition 4(d)? Did the machines bid by Harris/3M comply with General Condition 4(f) requiring that the equipment bid carry the Underwriter's Laboratory listing? In response to Harris/3M's Motion for Directed Verdict on issue number 5, the Hearing Officer granted the motion on a finding that no evidence had been presented on this issue by the Petitioner. The Petitioner's compliance with the specifications was not at issue.
Findings Of Fact On or about December 15, 1986, the Department issued and advertised its Invitation to Bid 3162-86 related to the acquisition of 15 microfilm reader/printers for use in searching, reading and printing motor vehicle documents which had been microfilmed by the Department of Highway Safety. Microfilm reader/printers are essentially units of hardware into which cartridges of microfilm are inserted and the microfilm is passed through a camera which reflects the images of the microfilm onto a screen from which information can be read and copies printed. The Invitation to Bid required that the equipment must have a "controller," a device for automatically locating specific microfilm documents by the use of coded information or "blips" on the film. On or about January 5, 1987, responses to the Department's bid were submitted by Petitioner OSC and Intervenor, Harris/3M, together with bids from other bidders whose bids are not an issue in these proceedings. All bids were opened on January 5, 1987. The equipment bid by Harris/3M was the Model MFB1100 Reader/Printer with a "page search" kit or controller. Special Condition 28 of the Invitation to Bid states: "28. REFERENCES The bidder shall supply with his bid the names, addresses and telephone numbers of two references for whom the bidder has previously provided similar equipment being bid. If the bidder is unable to provide satisfactory references to the Department, the Department may, at its discretion, reject the bidder's bid if it determines that a responsive offer in full compliance with the bid speci- fications and conditions was not submitted. Failure to supply the references as required may result in rejection of the bid." (e.s.) Harris/3M provided two references in satisfaction of Special Condition Both of the references had versions of the Model MFB1100; however, neither of the references had the "controller" or page search kit, which was called for in the Invitation to Bid. Special Condition 28 was drafted by Merelyn Grubbs. According to Ms. Grubbs, the purpose of this requirement was to assure the Department that the bidder was responsible. "Similar" equipment is sufficient to assess the bidder's responsibility based upon machines made by the same manufacturer which performed essentially the same function. The MFB1100 without a page search kit is a "similar" machine. The two references provided were sufficient. Special Condition 15 states: DEMONSTRATIONS After opening of bid and prior to award of bid, the apparent low responsive bidder may be required to demonstrate to the Division of Administrative Services the equipment he proposes to furnish. If requested, a "working model" of the equipment bid and to be supplied in compliance with these specifications must be demonstrated in Tallahassee, Florida, within seven (7) calendar days from receipt of notification. If apparent low responsive bidder cannot successfully execute the demonstration, the Department shall revert to the next low responsive bidder and request demon- stration, continuing through the list of responsive bidders until a successful demonstration is achieved, the list of responsive bidders is exhausted or it is in the State's best interest to terminate the bid process. Demonstrations to be furnished at no expense to the Department." On January 7, 1987, Mr. Ray Boetch, the supervisor of the division within the Department of Highway Safety where the reader/printers would ultimately be used, wrote a memorandum to Merelyn Grubbs requesting that a demonstration be made on the Harris/3M Model MFB1100 Reader/Printer prior to the awarding of the bid. Mr. Boetch also discussed the matter with Ms. Grubbs indicating his primary concern was verifying the quality of the prints produced by the machine and whether it could print half pages. Ms. Grubbs spoke with Nick Vuillemot of Harris/3M about a demonstration of the equipment in Tallahassee. In these discussions, Harris/3M offered to fly representatives of the Department to St. Paul, Minnesota, the home office of the manufacturer, for a demonstration of the equipment. This was because Harris/3M had only two prototypes of the equipment and it was more economical for Harris/3M to fly Department personnel to Minnesota for purposes of the demonstration than to disassemble, ship to Tallahassee and reassemble the prototype for a demonstration. The Department declined to accept Harris/3M's offer. The Department accepted instead a demonstration of a Model MFB1100 without the controller or page search kit at the Division of Elections in Tallahassee, Florida. The MFB1100 without controller does not meet the specifications in the Invitation to Bid. The "controller" or page search kit is of modular construction in the MFB1100, which can be ordered with or without the controller or page search kit. However, the bid specifically calls for a reader/printer with a page search device. Following the demonstration of the MFB1100 without page search capability, the Department officially posted its bid tabulations on January 12, 1987, designating Harris/3M as the low and responsive bidder and OSC was the next low and responsive bidder. Item 4 (d). Conditions and Packaging of the General Conditions of the Invitation to Bid provides as follows: It is understood and agreed that any item offered or shipped as a result of this bid shall be new, current standard production model available at the time of bid. (e.s.) Item 18. Delivery Schedule of the special conditions required delivery of the items bid within 30 days of the bid award or, in the alternative, a substitute item acceptable to the Department at no cost to the Department. The bid submitted by Harris/3M certified that delivery of all 15 units would be delivered within 30 days after receipt of a purchase order. Although the Harris/3M Model MFB1100 Reader/ Printer without page search had been on the market for a number of months prior to the issuance of the Invitation to Bid, the Model MFB1100 with page search had not been authorized for sale by the manufacturer until late November 1986. At the time demonstration was requested, only two prototypes existed of the MFB1100 with page search capability. As of the date of the hearing on February 11, 1987, no Model MFB1100 Reader/Printers with page search capability had been installed in any customer location within the United States. The Petitioner did not present any evidence to support its claim that the MFB1100 Reader/Printer with page search did not have a UL listing.
The Issue The issue for consideration in this case is whether Petitioner, E. L. Cole Photography, Inc., was properly denied award of Bid Number 97-DC-7059, to provide photographic film to the Department.
Findings Of Fact At all times pertinent to the issues herein, Respondent, Department of Corrections, was an agency of the State of Florida, with authority to procure goods, supplies, and services from vendors through the process of competitive bidding. Sometime prior to February 14, 1997, the Department sent out Invitations to Bid soliciting bids for the providing of photographic film. Both Kodak 135 mm color-and black-and-white film and five different types of Polaroid instant camera film were needed for use by the agency, state-wide. Bids were to be submitted in time for the scheduled bid opening on February 25, 1997. This was a procurement reserved for minority bidders. The bids were opened, as scheduled, on February 25, 1997. Petitioner was one of seven bidders. The low bidder, Laube Photo, was disqualified because it was not a certified minority business. Of the remaining six bidders, Ace Office Supply submitted a bid of $3,151.00 on Item 1, the Kodak film; and a bid of $175,250 on Item 2, the Polaroid film. Ace’s total bid was $178,601.00. Petitioner’s bid was $3,793.20 on the Kodak film; and $181,425.00 on the Polaroid film, for a total of $185,218.20. All the bids from the other bidders were higher than that of Petitioner. Based on the figures submitted, Ace Office Supply was the low responsive bidder. It’s certification as a minority bidder was confirmed by the agency’s minority office. In its protest submitted on March 6, 1997, Petitioner addressed the warranty which pertains to the film to be supplied. Petitioner questioned whether that warranty would cover film proposed to be furnished by Ace, which Petitioner contends would be gray market product. Special Condition 16 of the Invitation to Bid provides in pertinent part: A warranty is required on all items purchased against defective materials, workmanship and failure to perform in accordance with required industry performance criteria, for a period of not less than ninety (90) days from date of acceptance by the purchaser. Any deviation from this criteria must be documented in the vendor's bid response or the above statement shall prevail. Neither Ace nor the Petitioner indicated any deviation from the warranty requirements. Therefore, the warranty stated applies to product supplied by either bidder. Petitioner also challenged the difference between the bids as relates to the description of the commodity to be provided. Though not required to do so by the Invitation to Bid, Petitioner listed the catalogue number of each item and enclosed with the bid pertinent pages from the manufacturers' catalogues reflecting the commodity and the catalogue number. Ace listed only the commodity and the product number as opposed to the catalogue number. Both methods are acceptable, however. The use of the product description by Ace was no more than a minor irregularity which did not affect the price, nor did its use give Ace an unfair advantage. By the same token, Petitioner's use of the incorrect catalogue number in one instance was also an irregularity, but it, too, was considered minor. From both submittals, it was clear that the product offered was the product sought, and the price for each item was clearly stated. The specifications contained in the bid solicitation in issue were not prioritized in importance. Price, quality, and warranty were all important. The warranty requirement was inserted to ensure against the provision of substandard product. Both Ace and Petitioner provided the requisite warranty, and Ms. Holcomb presumed both bidders would have honored it. The only area of difference between the bids was in price. Both Petitioner and Ace have provided products to the Department in the past. There have been no complaints regarding either the product provided or the service provided by either supplier. "Gray market” products are those made outside the United States by or under license of a manufacturer, which bear the brand name of the manufacturer, but which are not intended for sale in this country through the manufacturer's authorized distributors. They may or may not carry a full manufacturer's warranty. There is no reference to gray market goods in the Invitation to Bid, and Ms. Holcomb did not consider the possibility of gray market goods being furnished until Petitioner raised the issue in its letter of March 6, 1997. When Ms. Holcomb received this letter, she checked with the minority certification office which indicated it would not certify anyone who supplied gray market goods. Thereafter, Ms. Holcomb referred the matter to the Department's legal staff, and she is not aware of what that office did regarding the gray market issue. The evidence regarding the position of the minority certification office regarding gray market goods is hearsay evidence and may not be dispositive of that issue. Mr. Cole, Petitioner's owner and a long-time photographer, raised the issue of gray market product because it has been his experience that when vendors bid inside of their commodities specialty field, a gray market product can be sold at a lower price resulting in a competitive disadvantage to other responsive bidders. Though cheaper in price, a gray market product may not carry the same manufacturer's warranty as does product sold on the authorized market. In addition, many gray market products do not meet the same quality standards of manufacture as authorized products. Mr. Cole claims Ace would provide a gray market product based on the fact that the prices quoted by Ace are below the prices quoted by Petitioner. Cole submitted the manufacturers' price lists with his bid in the hope that all vendors would be bidding on the same product. Referencing the prices submitted by Ace in its bid, Mr. Cole concludes that the film to be supplied by Ace is not an authorized product. His experience indicates that gray market dealers' prices are similar to those quoted by Ace. Mr. Cole admits there is nothing in Ace's bid to indicate it would not honor the ninety-day warranty called for in the Invitation for Bid. He also admits that gray market products could meet the warranty requirement, and there is nothing in the IFB which prohibits gray market film, notwithstanding the other evidence of record that the minority certification office would not certify providers who offered gray market goods. It also must be noted that on at least two items called for in the IFB, Petitioner underbid Ace. This happened because Petitioner elected to take a loss on those items, but, Cole contends, Ace's use of gray market prices allowed it to underbid him overall. There is no independent evidence that the product to be submitted by Ace would be gray market product. In any case, the evidence shows that Petitioner substantially underbid four other responsive bidders in this procurement. Mr. Cole does not see that as a problem, since the price differential between Petitioner's bid and the next lowest bidder is not, in his opinion, disqualifying. This argument is not persuasive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Corrections enter a Final Order in this case awarding procurement 97-DC-7059, to provide photographic film to the Department, to Ace Office Supply. DONE AND ENTERED this 29th day of August, 1997, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6947 Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 1977. COPIES FURNISHED: Matthew M. Carter, II, Esquire 610 North Duval Street Tallahassee, Florida 32301 Scott E. Clodfelter, Esquire Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500 Harry K. Singletary, Jr. Secretary Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500 Louis A. Vargas General Counsel Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500
The Issue Whether Respondent’s intended action to award Contract No. E3Q37 to VacVision Environmental, LLC, for “Milton Operations Routine Maintenance,” is contrary to Respondent’s solicitation specifications.
Findings Of Fact The Department is an agency of the State of Florida tasked with procuring the construction of all roads designated as part of the State Highway System or the State Park Road System, or of any roads placed under the Department’s supervision by law. See § 334.044, Fla. Stat. (2016).1/ Further, the Department has the duty to ensure that maintenance of sewers within the right-of-way of the roadways within its jurisdiction does not degrade the integrity of its facilities. See § 337.401, Fla. Stat. Petitioner, National Water Main Cleaning Co., is a full- service maintenance and rehabilitation pipe contracting business based in New Jersey. The company has been in business since 1949 and primarily contracts with government entities to perform storm and sanitary sewer inspection, cleaning, and repair. On October 11, 2016, the Department published a bid solicitation notice for the Contract, seeking contractors to desilt, remove blockages from, and install liners in existing underground sewer pipe on a specified state road in Santa Rosa County. The ITB included specifications, plans, and a proposal form with specific work items. The ITB contained the following relevant language requiring a bid bond for proposals over $150,000: For bids over $150,000.00, the standard proposal guaranty of 5% of the bid will be required. A Proposal Guaranty of not less than five percent (5%) of the total actual bid in the form of either a certified check, cashier’s check, trust company treasurer’s check, bank draft of any National or state bank, or a Surety Bid Bond made payable to the Florida Department of Transportation must accompany each bid in excess of $150,000.00. * * * Bid Bonds shall substantially conform to DOT Form 375-020-09 furnished with the Proposal. Surety2000 or SurePath electronic Bid Bond submittal may be used in conjunction with Bid Express internet bid submittal. For more information please visit https://www.surety2000.com [f]or Surety2000 or https://www.insurevision.com for SurePath. Paper Bid Bonds will also be accepted for bids submitted through Bid Express provided they are received prior to the deadline for receiving bids, by the locations(s) identified in the Bid Solicitation Notice for receiving bids for the advertised project(s). If an electronic bid bond is not being submitted, the bidder must submit an original bid bond. (A fax or copy sent as an attachment will not be accepted.) (emphasis added). The deadline for submission of bids was Thursday, November 10, 2016, at 2:00 p.m. On November 10, 2016, the Department received and opened bids from both Petitioner and Intervenor, as well as two other vendors. Petitioner’s bid for the project was the lowest at $504,380.70. Intervenor’s bid was the next lowest at $899,842. Petitioner submitted its bid for the project through Bid Express, the Department’s electronic bid submission website. Along with its bid, Petitioner submitted several attachments in a .zip file, including a .pdf copy of a bid bond from Traveler’s Casualty and Surety Company in the amount of 5 percent of the total amount of the bid. Petitioner did not submit an electronic bid bond through either Surety2000 or SurePath, nor did it submit the original paper bid bond prior to the deadline for submission of bids. The original paper bid bond remained in the possession of Petitioner’s President, Salvatore Perri, on the date of the final hearing. Petitioner’s bid was reviewed by employees of the Department’s District 3 Contracts Administration Office and deemed “non-responsive” because the bid bond submission did not comply with the bid specifications. On December 7, 2016, the Department posted its notice of intent to award the Contract to Intervenor. The .pdf copy of the bid bond Petitioner attached to its bid for the project was on Department form 375-020-09, Bid or Proposal Bond. Form 375-020-09 contains the following note: “Power of Attorney showing authority of Florida Licensed Insurance Agent to sign on behalf of, and bind, surety must be furnished with this form. Affix Corporate Seal of Surety.” The Power of Attorney accompanying Petitioner’s bid bond contains the following language: “Warning: THIS POWER OF ATTORNEY IS INVALID WITHOUT THE RED BORDER.” The attached Power of Attorney is a copy in black-and- white, rather than an original with the red border. Waiver Pursuant to the ITB, and by operation of section 120.57, Florida Statutes, the deadline to file a protest to the bid specifications was October 14, 2016, 72 hours after posting of the ITB. Petitioner did not file a protest to the specifications of the ITB.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Respondent, Department of Transportation, enter a final order adopting the Findings of Fact and Conclusions of Law set forth herein, and award Contract E3Q37 for Milton Operations Routine Maintenance, to Intervenor, VacVision Environmental, LLC. DONE AND ENTERED this 19th day of April, 2017, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of April, 2017.
The Issue Whether Saxon Business Products, Inc.'s ("Saxon") response to the Department of General Services' invitation to bid for walk-up convenience copiers should be disqualified on grounds that: Saxon's omission of a supply price list was a material deviation from the bid specifications and conditions; and Saxon's walk-up convenience copier, model "Saxon 300," failed to prove two-sided copy capability.
Findings Of Fact I. Invitation to Bid On June 10, 1981, DGS issued invitation to Bid No. 544-600-38-B ("ITB") entitled, "Walk-Up Convenience Copiers; Bond Paper and Magazine Finish Bond Paper." The ITB proposes an annual contract under which state agencies and institutions can purchase copying machines. It contains general and special conditions and specifications, and warns vendors that bids that do not comply with such conditions "are subject to rejection." (Testimony of Celnik) The ITB specifications divide copiers into two groups: Group I, plain bond copiers, Group II, magazine finish copiers. The copiers are further categorized by type: Type I indicates minimum features; Type II indicates two- sided copying capability; Type III indicates one reduction capability; and Type IV indicates two or more reduction capabilities. These types are further separated into 12 classes on the basis of speed and volume (P-1.) The ITB special conditions instruct bidders to submit bid sheets 2/ breaking down all copying costs to a per-copy basis. Bids are to be evaluated and contracts awarded to bidders submitting the, lowest cost per copy in each category of copier. Cost per copy is calculated by using a specific cost formula. (P-1.) The ITB cost formula contains three components: machine cost, labor cost, and supply cost. DGS proposes to disqualify Saxon's bid in several categories of copiers for failure to supply a supply price list required by the supply cost component. This component provides, in relevant part: C) SUPPLY COST - The bidder shall compute supply costs on the Manufacturer's Brand. If there is an existing state con- tract for supplies for the manufacturer's brand equipment, the state contract price may be substituted. Supply costs will be rounded to six (6) decimal points. All other costs will also be rounded off to six (6) decimal points. The volume price used by the vendor to compute supply cost shall be based on the monthly median vol- ume of the type and class being bid. Supply cost submitted shall be firm for the contract period, except for paper, and all supply costs shall be current market price, verifiable. Vendor must submit supply price lists with his bid to substantiate that correct price vol- umes were used, unless state contract prices were used. A contract award may include supplies if deemed in the best interest of the State. By electing to substitute state contract supplies, the vendor is certifying that his equipment, using said supplies, will meet all per- formance requirements of this bid and of the equipment manufacturer. NOTE - All cost formulas will be verified by the Division of Purchasing and errors in extension will be corrected. In the event incorrect supply cost volumes are used by a bidder, the Division of Purchas- ing will adjust these costs to the median volume range. (e.s.)(P-1.) The purpose of the supply price list requirement, included in DGS's 1980 and 1981 ITB for convenience copiers, is to enable DGS to verify the supply cost figures shown on a vendor's bid sheets; in this way, DGS can insure that all vendors are using correct quantity pricing on their bid sheets. 3/ (In the past, some bidders had used lower supply prices, which were tied to high volume purchases; but those volumes frequently exceeded the state's needs and the median volumes specified by the ITB for each category of copier.) The verification procedure followed by DGS in both 1980 and 1981 involves checking the vendor's bid sheets against the prices shown on the supply price list. 4/ If DGS finds an inconsistency between the two, it "corrects" the bid sheet supply cost upward or downward to reflect the price shown on the supply price list. 5/ Such a bid sheet correction would also change the total median cost per copy, the factor used to evaluate competing bids. DGS also checks the supply list to determine whether it contains current market prices. (Testimony of Hittinger, Eberhard.) If a vendor fails to submit a supply price list, DGS cannot verify that the supply prices used on the bid sheet (to compute total median cost per copy) accurately reflect the median volumes specified in the ITB. Neither can DGS determine whether the supply prices used on the bid sheet are set prices, which do not vary with volume, or volume prices, which do; the bid sheets, on their face, do not reveal which type of pricing is being used. (Testimony of Eberhard; P-1.) After sealed bids are publicly opened, DGS has an established practice of not allowing any bidder to submit additional material which could alter price or other information previously submitted on bid sheets. DGS does, however, accept late information if it can be corroborated by an independent source. For example, a bidder might -- after bid opening -- supply its corporate charter number, which can be easily verified by contacting the Department of State. (Testimony of Hittinger, Eberhard.) The ITB special conditions also require DGS to test and approve copiers prior to bid opening. Copiers which are not tested and accepted by DGS are ineligible for a contract award: EQUIPMENT APPROVAL - Each item of equipment bid shall have been tested by the Division of Purchasing prior to the bid opening time and date for performance and reliability under normal working con- ditions. Any bidder whose equipment has not been tested shall provide a model of the equipment on which he intends to bid to a specified testing station, complete with all supplies, at no expense to the State. Testing will extend for a period of twenty (20) working days. In the event evaluation and acceptance of untested ma- chines has not been accomplished prior to the bid opening date and time, such machine shall not be eligible for an award. (P-1.) II. Bid Opening: Saxon's Failure to Submit Supply Price List Prior to the 1981 bid opening, Saxon failed to submit a supply price list in connection with its bid. This was apparently an oversight on its part; a year earlier, it had furnished a supply price list in response to a similar ITB for convenience copiers. Because of Saxon's omission, DGS was unable to verify the supply prices used by Saxon on its bid sheets or determine whether Saxon was utilizing set or volume prices. (Testimony of Eberhard, Celnik, Hittinger.) After bid opening, Saxon notified DGS that the supply prices shown on its bid sheets were set supply prices -- unit prices which do not vary with volume -- and confirmed that they are the supply prices which it now offers to the state. (Testimony of Celnik.) In its evaluation of the bids, DGS applied the requirement of a supply price list equally to all bidders. All bidders who omitted a supply price list were informed that they were disqualified. Saxon's bid was disqualified in five copier categories: Group I, Type I, Class I; Group I, Type I, Class II; Group I, Type I, Class IV; Group I, Type II, Class I; and Group I, Type II, Class II. At least 11 vendors, however, did submit supply price lists with their bid sheets; approximately one-third were set price lists, the remaining were volume price lists. (Testimony of Eberhard; P-3.) If a vendor could submit a supply price list after the bid opening, it could effectively decrease or increase its bid. (This is so because, in case of a conflict between the bid sheet supply price and the supply price list, the price list value will prevail. A change in the bid sheet supply price will change the cost per copy figure the determining factor in awarding contracts.) A vendor submitting a late supply price list would have an unfair advantage since it could change its bid after bid opening while its competitors could not. The competitive nature of the bidding process would be impaired. (Testimony of Hittinger, Eberhard.) Furthermore, if late submittal of a supply price list was allowed, a bidder could disqualify itself by refusing to provide it; the bidder would then have the advantage of revisiting its bid and -- if it chose -- withdrawing it after bid opening. The opportunity to withdraw a bid -- after bid opening -- would be an advantage not enjoyed by those who timely submitted supply price lists with their bids. (Testimony of Hittinger, Eberhard.) In some copier categories, the vendors who omitted supply price lists were the low bidders. If DGS disqualifies them for their omission, it must award the contract to the next highest bidder. The difference between those low bids and the next higher bid is substantial -- in some cases exceeding 23 percent. 6/ (Testimony of Celnik, Eberhard, Nee, Reinhart.) III. Failure of "Saxon 300" to Demonstrate Two-Sided Copying Capability In accordance with the ITB, Saxon submitted its "Saxon 300" copier to DGS for evaluation and testing. Prior to bid opening, DGS conducted a 20-day test of the machine. The "Saxon 300" machine which DGS tested lacked two-sided copying capability. It could reproduce clearly on one side, but not on the other. The "Saxon 300" sales literature and instruction manual submitted with the machine did not represent that the machine had two-sided copying capability. (Testimony of Nee; 1-5, 1-6, 1-7, R-2.) The "Saxon 300" may have two-sided copying capability, but only after special modifications are made to the copier. These modifications include removal of a roller device, replacement of the heating element, and replacement of the blower system. Saxon did not indicate at the time of testing, or in its bid, that the "Saxon 300" required such modification for two-sided copying capability. Neither did it indicate what, if any, additional costs would be charged for such modifications. (Testimony of Nee, Wallace; R-3.) After DGS tested the "Saxon 300," it sent Saxon a form letter indicating that the copier met minimum operating requirements. The letter did not inform Saxon that the machine lacked two-sided copying capability because DGS did not consider the lack of such capability a major malfunction in the equipment. (Testimony of Nee.) If a machine malfunctions, DGS has -- in the past -- allowed vendors to correct the deficiency or substitute another machine. (Testimony of Nee.) The Group I, Type II, Class I category of copiers, requires two-sided copying capability. Saxon bid its "Saxon 300" as a copier which meets this requirement. (Testimony of Celnik, Nee; P-1.)
Recommendation Based on the foregoing, it is RECOMMENDED: That Saxon's bids in Group I, Type I, Class I; Group I, Type I, Class II; Group I, Type I, Class IV; Group I, Type II, Class I; and Group I, Type II, Class II be disqualified; and That Saxon's bid in Group I, Type II, Class I be disqualified. DONE AND RECOMMENDED this 26th day of February, 1982, in Tallahassee, Florida. R. L. CALEEN, JR. 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 26th day of February, 1982.
