Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioner, First Federal Savings and Loan Association of Putnam County (petitioner or First Federal), owns and operates a full service savings and loan institution in the Palatka, Florida area. As a part of its regular business operations, petitioner utilizes the services of Florida Informanagement Services, Inc. (FIS), a data processing servicing firm which provides bookkeeping and data processing services. In performing these services, FIS collects financial data from computer terminals located at petitioner's offices and returns processed data in the form of financial statements, payrolls, tax reports, accounts receivable and payable statements, and related information to petitioner. Respondent, Department of Revenue (DOR), is the state agency charged with the responsibility of enforcing the Florida Revenue Act of 1949, as amended. Among other things, DOR performs audits on taxpayers to insure that all taxes due have been correctly paid. To this end, a routine audit was performed on petitioner covering the audit period from June 1, 1985, through December 31, 1989. After the results of the audit were obtained, and an initial assessment made, on September 13, 1991, DOR issued a notice of decision wherein it proposed to assess petitioner $43,204.91 in unpaid taxes. After a petition for reconsideration was filed, DOR issued its notice of reconsideration reducing the assessment to $37,805.92. The parties later reached an agreement as to all issues except an assessment of $11,476.12 for unpaid sales taxes plus applicable interest and penalties. The taxes relate to a charge on the monthly statement issued to First Federal by FIS and which is identified as "total data communications". The assessment concluded that the data communi-cations charge is a taxable sale of a private communication service or a telecommunication service within the meaning of Subsections 203.012(4)(a) and 203.012(5)(a), Florida Statutes (1989). Contending that the assessment should be withdrawn, petitioner initiated this proceeding. The Services Provided by FIS Established in 1968 by a group of savings and loan institutions, FIS is a data processing service bureau headquartered in Orlando, Florida, and which contracts with approximately one hundred clients, all savings and loan institutions, to provide comprehensive data processing and accounting-type services. Its sole purpose is to provide its clients with state of the art data processing services at an economical shared cost. The services being rendered here are commonly provided to banking institutions throughout the state by FIS and a number of similar data processing companies. FIS utilizes a network of long distance telephone lines leased from various telephone companies located throughout the state to collect financial transaction data from each of its member clients, including petitioner. Keyboards are utilized by bank employees at each office to input financial transaction information (e. g., a deposit to or withdrawal from a checking account) to a "data line" or communication channel, which is a multi-link long distance communication pathway leased by FIS from a telephone company. This information is collected by a front end processor and transmitted through the data line to the computer system (mainframe) located at FIS headquarters in Orlando. The computer acknowledges receipt of the transaction, records and processes the transaction, and sends a response back through the data line to the sending terminal. This process is repeated hundreds of times each day for every terminal located at each bank office. At the end of each business day, FIS processes all of the transaction data collected during the day into comprehensive reports which summarize such activities as loan and account balances, bank department activities, automatic teller transactions, and similar information. These reports are then delivered to the banks by courier the next morning. It is noted that during the first two years of the audit period, First Federal had a single data line with twenty-six terminals. In 1987, a second data line was added due to an increase in terminals. Today, First Federal has four offices with a total of forty-eight terminals on two data lines. FIS and its clients have entered into an information processing agreement which governs the provision of services and their price. This contractual relationship between FIS and First Federal began in 1974. Copies of the 1982, 1985 and 1987 agreements have been received in evidence as respondent's exhibits 6 and 7 and petitioner's exhibit 4, respectively. Paragraph 4.(c) of the first two agreements provides that "(t)elecommunications for on-line services will be provided by FIS as part of this agreement" while the 1985 agreement also provides that "(p)rice increases charged to FIS by telecommunications senders will be passed on to the institution". The copy of the 1987 agreement introduced into evidence is incomplete but the testimony suggests that except for the word "telecommunications" found in paragraph 4.(c) of the earlier agreements, the same provisions appear in the more recent agreements. The Data Communications Charge FIS issues on a monthly basis an itemized statement for its services. Among the charges on the statement is one labeled "total data communications", which is based upon the total number and types of computer terminals which can access the FIS computer. The charge is not based on the actual cost of establishing and maintaining the communication pathway but rather is assessed equally upon all FIS clients as an identical monthly flat fee per terminal charge of $86. The same flat fee per terminal charge is assessed regardless of the number of computer terminals utilized by an institution, the number of transactions per terminal, the amount of telephone time consumed, or the geographic distance between the FIS mainframe computer and the customer's location. Thus, the same fee per terminal would be assessed on a bank in Orlando a few blocks from the mainframe computer as one located in Pensacola or the Florida Keys. The data communications charge represents a number of cost elements including the establishment and maintenance of the FIS mainframe computer system, research and development, technical support, company overhead, and the cost of the leased telephone lines. However, the per terminal charge of $86 is neither a direct nor indirect pass-through by FIS of the actual cost of establishing and maintaining the communications link with any individual customer. Is the Transaction Taxable? DOR acknowledges that the various data processing services that First Federal purchases from FIS, which is acting as a "service bureau" under Rule 12A-1.032(6), Florida Administrative Code, are "professional services" and are exempt from taxation under Subsection 212.08(7)(v)1., Florida Statutes. It also admits that as of the date of hearing, it had no "firm" policy on the issue presented herein and was still in the process of developing one. Even so, DOR contends that the services identified as "total data communications", which include the communication network through which FIS collects the raw financial data from its clients for processing, are taxable since these services constitute a private communication service as that term is defined in Subsection 203.012(4)(a), Florida Statutes (1989). There, the term is defined as a communication service that entitles a subscriber "to exclusive or priority use of a communication channel." DOR first relies upon the fact that during the audit period FIS and First Federal had entered into agreements for FIS to provide First Federal with "telecommunications" for its "on line" services. DOR construes this language in a literal sense to mean that FIS is "selling" a telecommunication service. In addition, the agreements allow FIS to increase the data communication charges based upon potential increased telephone costs to FIS. Again, DOR interprets this language as further evidence that FIS is merely reselling a telephone service to its clients. DOR also points out that First Federal has a reasonable certainty of getting its communication through on the communication channel and that no other communication can take place on the line while First Federal is transmitting or receiving a message. It considers irrelevant the fact that First Federal may not have priority or exclusive rights over any other FIS client having access to the FIS data collection system. Thus, DOR concludes that First Federal has "exclusive or priority use" of a communication channel within the meaning of the law. It further concludes that FIS is engaged in the sale of a private communication service (via the leased telephone lines) which gives First Federal access to FIS's computer. The evidence shows that the computer terminals located at petitioner's offices are commonly referred to as "dumb" terminals whose sole function is data input, that is, to transmit data from the institution to the computer mainframe. They cannot be utilized to access the FIS mainframe to perform any type of individualized date processing or other analysis. Further, they cannot communicate with each other using the data lines nor can they communicate with any other financial institution or other computer system. In addition, the lines cannot be used for regular voice communication, and when the institution is closed, the lines cannot be used for any other purpose. Over ninety percent of FIS member institutions share portions of one or more data lines with other FIS clients. Although during the audit period First Federal did not share its two lines with another institution, if one should open an office in the Palatka area and utilize FIS's services, its terminals would be placed on the unused portion of First Federal's lines, assuming such unused capacity is then available. In addition, all of the data collection and processing services are controlled directly by FIS. Thus, no FIS client has any priority in transmitting transaction information or obtaining data processing services over any other FIS customer, regardless of size or geographic location. Rather, the data is collected by FIS according to a pre- determined polling system controlled by a communication processor. Since a single data line can collect information from as many as thirty individual computer terminals, the polling system must "poll" each of those thirty terminals in numeric sequence to determine if the terminal has any data to transmit. Once the polling system has "polled" a particular terminal, the terminal is unable to transmit data until all other terminals have been polled. Further, while a message is being transmitted to or received from the computer mainframe, no other transmissions can take place on the data line, and there is no provision in the system to interrupt a transmission. Processed data is then returned to the institution according to the same numeric cycle. Therefore, no institution has "use" of a data line other than that which is directed by FIS, and the fact that a client can be reasonably assured that FIS will collect its data transmissions in a timely manner does not equate to a "priority use" of the communication pathway. The overall cost of the telephone line "network" represents a substantial portion of the total data communication charges assessed to each customer. However, the terminal charge made to each FIS customer is not truly representative of the cost to FIS of obtaining and providing the actual communications link between FIS and an individual bank. As noted earlier, and by way of example, the cost of establishing and maintaining a telephone link between FIS and a small bank in the Florida Keys or the Panhandle would substantially exceed the data communications charge assessed to those institutions. FIS receives telephone bills from every local and regional telephone company from which it leases telephone lines. During the audit period, it was not uncommon for FIS to receive between seven hundred and one thousand telephone bills per month for services to approximately eighty-four full service data processing clients. These bills included both sales and gross receipts taxes and were paid by FIS on a monthly basis. The FIS accounting department does not analyze the individual charges on the various statements to determine the monthly cost of a data line to an individual customer, nor are the charges made to FIS by the various telephone companies for each FIS client rebilled to any particular institution, either directly or indirectly. Rather, FIS absorbs the cost of the entire telephone network as a part of its normal business expense. The earlier information processing agreements refer to "telecommunication services" being provided under the agreement. However, the agreements also refer to the existence of one or more third party providers (i.e., regulated telephone companies) of the actual telephone service, and FIS makes no charge for "telephone service". While the agreements allow FIS to increase the data communications charges based upon the potential increased telephone costs to FIS, the charges assessed to FIS customers are unrelated to the actual cost of providing the service between any particular institution and the computer. Indeed, the provision simply allows FIS, when deemed to be necessary, to increase the terminal fee based upon an increase in one of its many cost components. Even if this right is exercised, any increase in that charge would be equally assessed on all clients throughout the state, regardless of their size or location. However, it should be noted that FIS has experienced a substantial increase in costs in providing the telephone service in recent years, but has not raised the data communication charge to any client since 1986. FIS has never charged First Federal for "telephone service". It is irrelevant to the institution how FIS establishes or designates its charges. If the data communication charge was deleted and the costs of the other tax exempt charges increased accordingly, First Federal would still continue to utilize FIS's services. During the audit period, FIS was not registered with DOR as a provider of private communication services. Indeed, its only business is providing data processing and accounting-type services. If it was reselling private communication services, as DOR suggests, it would have to register with DOR and pay a 1.5 percent gross receipts tax on the actual cost of operating the system. DOR recently concluded an eighteen month audit of FIS for the period 1985-1989 and determined that FIS was not liable for gross receipts tax on the sale of any alleged telecommunications services. Finally, testimony by an expert who served as DOR executive director during most of the audit period established that when the law was amended effective July 1, 1984, to impose both sales and gross receipts taxes on the sale of private communication services, DOR interpreted the amendments to apply to those providers who were selling communication services which escaped taxation by bypassing the existing telephone companies or other regulated utilities. This included those who provided communications by microwaves, satellites, privately owned telephone lines and "smart buildings", which utilize a combination of both public and private communication systems. The expert further established that if the issue had been raised during his tenure, DOR would not have construed the activity here to be a taxable sale of a private communications service since neither FIS nor its clients were operating outside the existing telephone company pathways thereby escaping the sales and gross receipts taxes. In summary, the evidence supports a finding that First Federal does not have exclusive or priority use of the data lines and accordingly the challenged service cannot be considered a private communication service. In addition, because FIS could not function as a data processing company without the data collection system, which is an integral part of its comprehensive data processing services, the collection of raw financial data must be construed as a tax exempt service. Therefore, the assessment against First Federal should be withdrawn.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent enter a final order withdrawing (rescinding) the assessment against petitioner. DONE AND ENTERED this 5th day of April, 1993, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2763 Petitioner: Partially accepted in finding of fact 1. Partially accepted in findings of fact 2 and 3. Partially accepted in findings of fact 4 and 6. 4-8. Partially accepted in finding of fact 5. 9. Partially accepted in finding of fact 7. 10-12. Partially accepted in finding of fact 9. Rejected as being unnecessary. Partially accepted in finding of fact 10. 15-16. Partially accepted in findings of fact 7 and 10. 17-18. Partially accepted in finding of fact 8. 19-20. Partially accepted in finding of fact 13. 21-23. Partially accepted in finding of fact 14. 24. Partially accepted in finding of fact 16. 25-27. Partially accepted in finding of fact 15. 28. Partially accepted in findings of fact 11 and 12. 29-30. Partially accepted in finding of fact 11. 31-35. Partially accepted in finding of fact 12. 36. Partially accepted in finding of fact 5. 37-39. Partially accepted in finding of fact 18. Rejected as being unnecessary. Partially accepted in finding of fact 17. Partially accepted in findings of fact 3 and 4. Respondent: 1-2. Partially accepted in finding of fact 1. 3-4. Partially accepted in finding of fact 3. 5. Partially accepted in finding of fact 6. 6. Partially accepted in finding of fact 10. 7. Partially accepted in finding of fact 5. 8. Partially accepted in finding of fact 10. 9. Rejected as being contrary to more credible and persuasive evidence. 10-13. Partially accepted in finding of fact 12. Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, subordinate, not supported by the evidence, or a conclusion of law. COPIES FURNISHED: Mr. Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Patrick J. Phelan, Jr., Esquire P. O. Box 669 Tallahassee, FL 32302 Lealand L. McCharen, Esquire Department of Legal Affairs The Capitol-Tax Section Tallahassee, FL 32399-1050
The Issue Regarding the Department of Heath and Rehabilitative Services' (Department's) award of the contract contemplated by RFP 94-07BB-NTM: whether the Department's evaluation of Item 2.2.G of ComputerLand's Technical Proposal was arbitrary and capricious, whether the Department's evaluation of Item 2.2.K of ComputerLand's Technical Proposal was arbitrary and capricious.
Findings Of Fact On December 27, 1993, the Department published Request for Proposal No. 94-07BB-NTM requesting proposals to provide full hardware maintenance services for its videos, printers, microcomputers and associate components and peripheral devices. (P-Ex. 1 [RFP], Sections 1.2 and 1.2 [Statement of Need, Statement of Purpose], Page 9). The contract(s) to be awarded pursuant to the RFP addressed hardware in five (5) categories, as follows: Unisys Equipment IBM Equipment Zenith Equipment Other Vendors' Equipment Communications Controllers Vendors were invited to submit Proposals in any or all of these categories. It was possible that the procurement may have resulted in as many as five (5) separate contracts, with any number of component categories being awarded to a single contractor. (P- Ex. 1 [RFP], Section 1.1 and 1.2 [Statement of Need and Statement of Purpose], Page 9 described categories 1 - 4. The RFP was later modified to add the Communication Controllers described in category 5. (See, P-Ex. 2) A conference was conducted by HRS to permit perspective vendors an opportunity to discuss the provisions of the RFP, and clarify any of its terms. (T-318,L-22) All prospective vendors received the same information in response to their individual questions about the RFP. ComputerLand asked questions at the conference and later which were answered. Prospective vendors, including ComputerLand, had the opportunity to challenge any specifications or requirements contained in the RFP. ComputerLand did not challenge any provisions of the RFP. The RFP provided for the evaluation of proposals, as follows: The department will conduct a comprehensive, fair and impartial evaluation of all proposals received in response to this RFP in compliance with the due dates specified in the section entitled "Calendar of Events". Evaluation criteria are grouped into six categories, each of which will be discussed further in this section. The following shows the maximum number of points that may be awarded by section: Category 1 Mandatory Requirements 0 points Category 2 Management Summary 0 points Category 3 Corporate Capabilities 100 points Category 4 Project Staff 200 points Category 5 - Technical Approach 300 points Category 6 - Cost 400 points Selection of the successful vendor will be based on the proposal that is determined to be in the best interest of the department, taking into consideration cost and other criteria set forth in the RFP. (P-Ex. 1 [RFP], Section 6.0 [Proposal Evaluation], Page 41). The RFP provided that any proposals not meeting the Mandatory Requirements would be rejected. The RFP provided that an Evaluation Committee would thereafter evaluate the proposals in the technical categories of Corporate Capabilities, Project Staff and Technical Approach, with points awarded for each category. (P-Ex. 1 [RFP], Section 6.1 [Evaluation Procedure], Page 41). The RFP provided that only those proposals receiving at least 450 points on the Technical Evaluation as assessed by the Evaluation Committee would have their Cost Proposals evaluated. (P-Ex. 2 [Amendments to the RFP], Amendment 15, [Amending Section 6.3 relating to the Evaluation of Cost Proposal], Amending RFP Page 44 and adding Page 44A). The members of the Evaluation Committee were provided with a Proposal Evaluation Manual prior to performing the Technical Evaluation. The Manual set forth the guidelines, criteria and scoring parameters to be used by the Evaluation Committee in its evaluation of the proposals. (P-Ex. 3 [Evaluation Manual]; Tr. 35.11). The committee members followed the Manual in making their evaluations. The committee's responsibility was to evaluate the Technical Approach, Corporate Capabilities and Project Staff sections of all responsive proposals. (P-Ex. 1, Page 41). Each vendor was advised that the Technical Approach section would be evaluated based on the vendor's supplied information in response to the section entitled "Tab 4-Technical Approach." The criteria to be used in evaluating responses to Technical Approach were listed in attachment D. (P-Ex. 1, Page 43). Attachment D to the RFP advised each vendor that HRS would evaluate the vendor's Technical Approach based upon completeness, viability, and quality. The evaluation criteria, for this area were listed and included the following: Bidder's Training Program for Service Personnel Proposed Reporting and Statuting System for Matching Performance Proposed Procedures for Responding to Maintenance Calls. Proposed Procedures for Remedial and Preventive Maintenance, Including Escalation Procedures Proposed Contractor Maintenance Structure Proposed Policy and Procedures Dealing with Spare Parts, Inventorying and Replacement Proposed Test Equipment and Related Procedures Proposed Responsibility Limitations Proposed Policy and Procedures for Engineering Changes Proposed Policy and Procedure for Engineering Changes [sic] Proposed Procedures for Diagnostic Updates Proposed Method to Maintain Department's Priority Status with Manufacturers and Continuing Support of System Engineers and Customer Support Centers Proposed Method for Meeting Service Call Time Requirements, and Proposed Method for (1) Minimizing Customer Impact Caused by Intermittent Problems and (2) For Meeting Required Availability Threshold. (P-Ex. 1, p.66). The RFP advised the vendor that the proposals must include the number of experienced, trained staff that will be working on the project. Information provided should have included an explanation as to the experience of a particular staff member in maintaining the specified hardware included in each component category proposed and the experience of the staff member in maintaining hardware similar to that included in each component category proposed. (P-Ex. 1, pp. 36-37). In addition, the proposal must include a complete description of the proposed training plan for all the vendor's service personnel. (P-Ex. 1, p.38). In evaluating specific criteria/questions within each of the categories, evaluators were required to score each response as follows: 0 = No Value: Bidder has no capability or has ignored this area. 1 = Poor: Bidder has little or no direct capability or has not covered this area, but there is some indication of marginal capability. 2 = Acceptable: Bidder has adequate capability 3 = Good: Bidder has a good approach with above capability. 4 = Superior: Bidder has excellent capability and an outstanding approach. Questions identified in the evaluation manual as best answered by "yes" or "no" should be scored "0" for "no" and "2" for "yes," unless specified otherwise. In considering the evaluation criteria for the Technical Approach section of the technical proposal, each evaluator was given 27 questions to specifically respond to and score by awarding points from 0 to 4. In certain instances the evaluator was to respond "yes" or "no" to the question and award either a 0 or a no answer or a "2" or "4" for a "yes" answer. (P-Ex. 3 pp. 64- 80). Each of the Evaluators was instructed to review and read each Technical Proposal in its entirety in performing their evaluations - "to look everywhere for the information". (Tr. 73.18 and 294.7). On March 1, 1994, ComputerLand submitted its Technical Proposal and its Cost Proposal to the Department on each of the five categories in the RFP. (P-Ex. 14 [Final Report and Recommendation for Award], Page 3). ComputerLand submitted a cost proposal to the Department to perform the following services at the following cost: 5 x 9 6 x 14 Unisys $10,490 $10,490 IBM $93,891 $93,891 Zenith $18,989 $18,989 Other $12,406 $12,406 Controller $ 3,343 N/A (Tr. 193.03)c ComputerLand was found to have satisfied the Mandatory Requirements and its proposal was submitted to the Evaluation Committee for a Technical Evaluation. (P-Ex. 14, Page 5). Facts Relating to Requirement Item 2.2.G The RFP provided that the "Technical Approach" Category of the Proposal was to explicitly address all Department requirements specified in Section D and in the "Services to be Provided" section of the RFP. (P-Ex. 1 [RFP], Section 5.0 (D), Page 38). Section 2.2 of the RFP titled "Services to be Provided" included Requirement Items 2.2.G and 2.2.K. (P-Ex. 1, Section 2.2, Pages 10 - 12). Item 2.2.G of the RFP required a response to the following requirement: G. The cost of maintenance service shall include unlimited replacement parts. (P-Ex. 1, Section 2.2 (G), Page 12). Throughout its proposal, ComputerLand restated each Requirement Item as set forth in the RFP in bold type which was immediately followed by ComputerLand's response to the Requirement Item in standard typeface. This formatting was not required by the RFP, but was done by ComputerLand purely for the convenience of the Department. (P-Ex. 4, Tab 14 [Cross Reference Index], Page 1. Also evident throughout P-Ex 4.) ComputerLand explained in the proposal its method and its intent in restating each Requirement Item in the Cross-Reference Section of its Technical Proposal. Id. (ComputerLand Document Appendix, Tab 5) ComputerLand's Proposal exactly restated each Requirement Item as set forth in the RFP with the exception of Item 2.2.G which did not address unlimited replacement parts, but mistakenly repeated the requirements of another provision relating to service calls. (P-Ex. 4, Section 4 [Technical Approach], Page 94) The reference to "service calls" in ComputerLand's duplication of Item 2.2.G was a scriveners error. (Tr. 218.13 and 220.3). Four (4) of the five (5) HRS evaluators concluded or assumed that ComputerLand's response to 2.2.G was a mistake. Several made comments on their evaluations relating to it. Because of the mistake, ComputerLand did not state that it would furnish unlimited replacements parts in response to 2.2.G in its proposal. In order for the evaluators to have considered ComputerLand's mistake in its response to the replacement parts requirement, the evaluators would have had to disregard the actual wording of the response which addressed service calls, and then substitute nonexistent language addressing replacement parts. The provision of unlimited replacement parts was a material provision. The evaluators correctly identified the response as an erroneous response and properly did not assign points for ComputerLand's response. With respect to the response to Item "G", the Evaluation Manual set forth a grading criteria which provided as follows: Does the vendor state that he will supply unlimited replacement parts? (Section 2.2.G, Page 12). Score: Yes 4 No 0 (P-Ex. 3, Page 84). Each evaluator scored ComputerLand zero (0) in this section, resulting in a weighted score of zero (0) for Item 2.2.G. (P-Ex. 13). In contrast, IBM stated simply at page 4-48: G. IBM accepts these conditions. (P-Ex. 8, Page 4-48)(ComputerLand Document Appendix, Tab 8). The evaluators concluded the response labeled "G" on page 4-48 of IBM's Technical Proposal was a response to Item 2.2.G of the Department's RFP, based upon IBM's format and, even though page 4-48 did not include any direct reference to "replacement parts," awarded IBM four (4) points for this response, resulting in a weighted score of eight (8) points for Item 2.2.G. (P-Ex. 10; Tr. 55.25)(ComputerLand Document Appendix, Tab 8). The IBM response was unambiguous in accepting the requirements of 2.2.G. Facts Relating to Requirement Item 2.2.K The RFP required a prospective vendor to identify staff who would be assigned to service HRS equipment. It further required that resumes of these individuals be provided as part of the proposal. ComputerLand submitted the resumes of its support personnel as required by the terms of the RFP. The resumes addressed in detail the experience and training of personnel on equipment. Item 2.2.K of the RFP required a response to the following requirement: K. All personnel performing maintenance must be trained to service the equipment listed in this RFP. Training shall be completed before the individual is assigned to service the equipment. Training shall be provided at whatever level is deemed necessary to insure the individual has the requisite qualifications to perform satisfactory maintenance service on the equipment. Vendors shall submit with their proposal a summary of their training program and resumes of personnel who will be performing this training. (Emphasis Added). (P-Ex. 1, Section 2.2 (K), Page 12) Other areas of the RFP requested information relating to the personnel who would be servicing the equipment, including inquiries regarding training programs and experience of the technical staff. (P-Ex. 1 pp.37, 38, 66). With regard to Item "K", ComputerLand's response provided as follows: ComputerLand fully agrees to comply with the training requirement for equipment contained in all five (5) categories. To review the current training levels for ComputerLand's Field Engineers and Branch Service Managers, please see the Technical Response, Tab 3, Project Staff and Appendix 3: Support Staff Resumes. For a complete description of ComputerLand's training program, including resumes of training personnel, please see the Technical Response Appendix 4: Charts and Exhibits, Item "G", Engineer Skills Matrix and Training Plan. (P-Ex. 4, Tab 4 [Technical Approach], Page 95-96). With respect to Section "K", numbered Item 23 in the evaluation criteria, the evaluation manual provided as follows: 23. Has the vendor affirmed that all personnel have already been trained to adequately service the equipment covered by the proposal? (Section 2.2.K, Page 12). Score: Yes 4 No 0 (P-Ex. 3, Page 86)(Emphasis Added). Each evaluator applied this standard of evaluation to evaluate ComputerLand's response to Item 2.2.K. Each evaluator scored ComputerLand zero (0) in this section, resulting in a weighted score of zero (0) for Item 2.2.K. (P-Ex. 13). According to Ms. Morris, the project manager, this was because ComputerLand's staff had poor experience; however, the separate evaluation of the staff requirement awarded ComputerLand 151 or 200 points, or fourth of eleven vendors. (P-Ex. 14, p. 12; Tr. 106-130). The evaluators purportedly graded down ComputerLand on "Corporate Capabilities" because all of ComputerLand's existing personnel were not already trained. The area in which ComputerLand was deemed to be specifically lacking, according to HRS, was in personnel to maintain "IBM Communications Controllers" or the equipment which acts as a switchboard/translator for mainframe computers. The ComputerLand staff were not trained on specific IBM equipment, specifically the 3745 communications controller, according to HRS. (Tr. 174.11) The RFP did not include any indication in Section 2.2.K, or anywhere throughout the RFP, that the vendor was to affirm that "all personnel have already been trained to adequately service the equipment covered by the proposal". (P-Ex. 1 and 2). The resume of Edward Wayne Barker specifically indicated under "Educational Background" certification or experience with "IBM Controllers and Term's [Terminals]". (P services equipment, on site. (Tr. 223.9). However, Barker's resume was the only one which revealed experience or certification on IBM controllers. ComputerLand's Technical Proposal included an outline of its training program and a chart which presented its method of establishing training needs and training the necessary personnel. (Appendix 4G [Field Engineer Skills Matrix and Training Plan] including Figures 1 and 2.) (ComputerLand Document Appendix, Tab 7). The reference to IBM equipment in this Training Matrix includes 3745 controllers. (Tr. 181.14 and 397.11). The Evaluators assumed those staff members who were designated were the pool of personnel from which ComputerLand would select the personnel to work on the equipment covered under the proposal, and scored Item 2.2.K accordingly. (Tr. 118, 122 et seq.) In doing this, HRS differentiated between companies which had some trained personnel and companies who had trained completely all their personnel. (Tr. 325, 1-10) HRS also assumed that the companies would not take further steps to acquire personnel trained to maintain equipment by additional hires, transfers of existing personnel, or training existing personnel. Each evaluator scored ComputerLand a "0" in response to this question because ComputerLand had not affirmed that all personnel had already been trained to adequately service the equipment covered by the proposal. The answer to this question was considered by HRS to be a significant factor because if the personnel were not already trained, the vendor would not be able to meet the contract demands for commencing the contract. Question 23 was not the only question by which the evaluators evaluated the training capabilities and programs of the vendor and experience level of the vendor's staff. For example, Question No. 1 in the Technical Approach section of the Evaluation Manual (p. 64) used training and staff as an element of evaluating the extent the vendor's proposal demonstrated an understanding of the scope of the services to be provided. (P-Ex. 3, p.64) Question 13 in the Technical Approach section of the Evaluation Manual specifically requires the evaluation of how adequately the vendor's service personnel have been trained and specifically references 2.2 K, p. 12 of the RFP using the corporate responses as well as the Technical Materials. The evaluators were required to consider the formal training of each proposed service personnel and were also asked to consider whether all required training had been completed on the equipment being proposed. (P-Ex., p.76) In response to the same question, Bull Customer Service answered as follows: Bull Customer Service Engineers are experienced in supporting the equipment and systems utilized in the State of Florida Department of Health and Rehabilitative Services configurations in Table C for the categories being bid. Any additional training required will be completed before the individuals assigned to service the equipment covered by the contract. * * * Supplemental training on either a "stand up" or "infield" basis is provided when any existing products or systems have major modifications implemented or whenever new models with major differences are added to a product line and are shipped to users in the field. We schedule such supplementary training in advance of field shipment such that all appropriate service personnel can handle both installation and maintenance requirements on a totally profes- sional and efficient matter. (P-Ex. 11, Tab 4, Page 4-10)(Emphasis Added). Each evaluator awarded Bull Customer Service four (4) points for this response, resulting in a weighted score of eight (8) points for Item 2.2.K for Bull Customer Service. Facts Relating to Adverse Effect of Agency Action ComputerLand did not score at least 450 weighted points on its technical proposal and its cost proposal was not considered. On May 9, 1994, the Department announced its intent to award the contracts for the "Unisys" and "Other Vendor" categories to vendor AT&T NCR Global Systems and the contracts for the "IBM" and "Zenith" and "Communications Controllers" categories to vendor Bell Atlantic Business Systems Service. (P- Ex. 15 and 16 and Tr. 84.10).
Recommendation Based upon the foregoing findings of fact and conclusions of law set forth herein, it is, RECOMMENDED that the Petitioner's Petition be dismissed. DONE AND ENTERED this 21st day of September, 1994, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of September, 1994. APPENDIX All the parties submitted proposed findings which were read and considered. The following states which findings were adopted, and which were rejected and why. Petitioner's Findings Paragraph 1-2 Paragraph 1-3 Paragraph 3-6 Paragraph 5-8 Paragraph 7-13 Paragraph 14-18 Paragraph 14-21 Paragraph 21-24 Paragraph 22-26 Paragraph 27-30 Paragraph 27 Paragraph 33 Paragraph 28-31 Paragraph 35-38 Paragraph 32-36 Paragraph 40-43 Paragraph 37,38 Paragraph 48,49 Paragraph 39 Paragraph 51 ATT's Findings Paragraph 1 Subsumed in Paragraph 51. Paragraph 2 Irrelevant and subsumed in other findings. Paragraph 3 Irrelevant. Paragraph 4 Paragraph 5 Paragraph 5 Subsumed in Paragraph 6,9,12. Paragraph 6 Paragraph 8,10,19,20,33 Paragraph 7 Subsumed in Paragraph 9. Paragraph 8 Conclusion of Law Paragraph 9 Paragraph 11 Paragraph 10 Paragraph 12,13, Paragraph 11 Rejected because part of the guidelines were arbitrary and capricious. Paragraph 12 Paragraph 19,20 Paragraph 13 Paragraph 27 Paragraph 14 Subsumed in 25-31. Paragraph 15,16 Paragraph 33,34 Paragraph 17 Subsumed in Paragraph 41 et seq. Paragraph 18,19 Paragraph 36,37,46,47 Paragraph 20 Questions 1 & 13 are not challenged, and are irrelevant. HRS's Findings Paragraph 1 Statement of Case Paragraph 2 Subsumed in Paragraph 1,2. Paragraph 3 Subsumed in Paragraph 8. Paragraph 4 Subsumed in Paragraph 5. Paragraph 5 Paragraph 50 Paragraph 6 Statement of Case Paragraph 7 Conclusion of Law Paragraph 8 Statement of Case & Issues Paragraph 9 Subsumed in Issues Paragraph 10 Conclusion of Law Paragraph 11 Irrelevant Paragraph 12-15 Paragraph 4 Paragraph 16 Subsumed in other findings. Paragraph 17,18 Subsumed in Paragraph 32. Paragraph 19,20 Paragraph 44 Paragraph 21 Rejected as being contrary from the stated requirements. Paragraph 22 Unnecessary. Paragraph 23 Argument. Paragraph 24-27 These facts are true; however, IBM equipment and Communications Controllers were separate categories of equipment under the RFP, therefore, there was reason to grade ComputerLand down for lack of trained personnel to maintain these items in considering its proposal on unrelated equipment. Paragraph 28 Relates to HRS's argument on standing, and is irrelevant under the HO's suggested view of this issue. Paragraph 29,30 Subsumed in Paragraph 23,24 Paragraph 31 Paragraph 26. Paragraph 32 Paragraph 25 Paragraph 33-35 True, but addressed by not making affirmative findings on these issues. Paragraph 36 The facts indicate that the evaluation of 2.2.K was arbitrary and capricious. COPIES FURNISHED: Paul L. SanGiovanni, Esquire Pleus, Adams, Davis & Spears, P.A. 940 Highland Avenue Orlando, Florida 32803 William A. Frieder, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory Borgognoni, Esquire Ruden & Barnett 701 Brickell Avenue, Suite 1900 Miami, Florida 33131 J. Riley Davis, Esquire Katz, Kutter, Haigler, Alderman, Marks & Bryant, P.A. 106 East College Avenue Tallahassee, Florida 32301 Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue The issue is whether Respondent's notice of intent to award a contract for a Prescription Drug Monitoring System (PDMS) to Intervenor is, under section 120.57(3)(f), Florida Statutes, contrary to governing statutes, rules, policies, or solicitation specifications due to the nonresponsiveness of Intervenor's proposal or flaws in the scoring.
Findings Of Fact RFP On October 14, 2010, Respondent issued the RFP. RFP Section 3.1 states that the purpose of the RFP is to acquire and implement a customizable, commercial, off-the-shelf PDMS, in accordance with section 893.055, Florida Statutes. RFP Section 3.1 states that this statute provides for the establishment of a comprehensive, electronic database securely to collect and store data of the dispensing of Schedule II-IV controlled substances by prescribers and dispensers. Section 3.3 defines a commercial, off-the-shelf program as "computer software or hardware, technology, or computer products that are ready-made and available [to] the general public, which includes systems that are manufactured commercially, and then tailored for specific uses." RFP Section 3.2 states that the initial term of the PDMS contract is November 30, 2010, through September 30, 2011. The November 30 start date for this ten-month contract anticipated the posting of the intent to award on November 16, 2010 and no challenge to the proposed award. Section 3.2 states that the proposed PDMS should be delivered and accepted by Respondent within 90 days after execution of the contract. RFP Section 4.1 states: To participate in this solicitation the Proposer must provide documentation to answer all the qualification questions listed in Attachment I. Each mandatory question requires a "Yes" or "No" answer. Proposals that have any "No" answer to these mandatory requirements will be deemed non- responsive and will not be given further consideration. Proposers should use care and integrity in preparing their documentation supporting responses to the qualification questions, since these are mandatory requirements. The RFP contains a detailed statement of the scope of services,1 specific tasks,2 projected staffing profiles,3 qualifications,4 technical approach and implementation timelines,5 and other matters.6 Many of these provisions, such as the scope of services and specific tasks, are requirements imposed upon proposals. Among the requirements incorporated into the RFP is PUR 1001, which is the state of Florida "General Instructions to Respondents" to bid solicitation documents. Paragraph 4 of PUR 1001 states: "Failure to comply with terms and conditions, including those specifying information that must be submitted with a response, shall be grounds for rejecting a response." RFP Section 4.21 states that each proposer must submit a cost proposal, using the Cost Proposal Form that is Attachment XI. The cost proposal depicts the costs for the term of the contract plus three, one-year renewals. Of especial significance to this case, RFP Section 4.21 contains four bullet points and two flush paragraphs. Section states: The cost proposal must include the following items: The proposer must submit a cost proposal using the worksheet provided in Attachment XI, covering the entire period of the contract, including potential renewals. The cost proposal must show the cost for implementing the system, the cost for the maintenance of the system, the cost for hosting of the date through September 11, 2011, and the cost for providing operational support to the PDMS. The cost proposal shall include the costs necessary for the proposer to fully comply with the contract terms and conditions, RFP requirements including amendments, and the proposer's proposal. . . . Only costs incurred after the resulting contract's effective date specifically related to the implementation, maintenance, hosting, and operational support of contracted services should be included in the cost proposal. Proposers shall provide a firm fixed price for the tasks and deliverables outlined in this RFP. The fixed price shall take into consideration, including but not limited to, all staff hours, equipment, travel costs, overhead, and any profit or fees required for that deliverable. Immediately following these four bullet points, the first flush paragraph of RFP Section 4.21 provides: The Proposer must submit a narrative itemizing the costs included in the cost proposal. The narrative must specifically address the comprehensiveness of the proposed PDMS and any tasks or services that are excluded and are considered enhancements that may be implemented in the future. Proposed costs for prospective enhancements should be included. RFP Section 4.21 concludes with the second flush paragraph, which describes the scoring of the cost proposals. Section 4.21 provides that 50 points will be awarded to the lowest cost proposal. For higher cost proposals, the proposers will receive a score that results from multiplying 50 points times a fraction whose numerator is the lowest proposed cost and whose denominator is the proposed cost of the proposer under review. RFP Section 4.22 provides: Each qualified proposal will be evaluated and scored based on the criteria defined in Attachment II. Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring. . . . The proposer receiving the highest score will be selected for the award. RFP Section 5.8 provides: [Respondent] reserves the right to accept or reject any and all proposals, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if [Respondent] determines that doing so will serve the State's best interests. [Respondent] may reject any response not submitted in the manner specified by the solicitation documents. Attachment I is "Qualifying Criteria." This attachment states at the top: . . . All proposals will be screened for compliance. Failure to comply shall render a proposal non-responsive and ineligible for further evaluation. . . . The nine qualifying criteria in Attachment I are stated as questions, and the form implies that Respondent will evaluate each proposal by answering "yes" or "no" to each of the questions. The qualifying criteria are: Does the proposal include a fully executed Statement of Financial Capability, including all supporting documentation? Attachment I. Does the proposer certify that they [sic] will comply with the Harold Rogers Grant #2009PM-BX-4004? (See Required DOH Certifications Attachment III) Does the proposal provide documentation that the prospective proposer currently hosts a PDMS as defined in this RFP in at least one other state for at least one year? See Section 3.2 Does the proposal provide documentation that the proposed system is a customizable, commercial-off-the-shelf data base system? See Section 4.6.1 Does the proposal provide documentation that the proposed system is compatible with existing PDMS used nationally? See Section 4.6.1 Does the proposal provide documentation that the proposed system collects electronic data in the format established by the American Society for Automation in Pharmacy (ASAP) 2007, version 4.1, Rules Based Implementation Guide for Prescription Monitoring Programs or its successor? See Section 4.2 Will the proposed system be hosted offsite and operate independently of any other systems or networks of the Department or the State of Florida? Does the proposed system comply with Health Insurance Portability and Accountability (HIPPA) as it pertains to protected health information, electronic protected health information (EPHI), and all other relevant state and federal privacy and security laws/regulations? See Section 4.2 Does the submitted Statement of Financial Capability and supporting documentation demonstrate the Proposer has the financial capability to complete the tasks of this RFP? For the last qualifying criterion, Attachment I adds: The Statement of Financial Capability . . . will be evaluated by an evaluator designated by the Department as having the knowledge and experience to determine if the Proposer is financially capable of completing all the services and tasks contemplated by this RFP. Failure to receive "YES" shall render a proposal non-responsive and ineligible for further evaluation. Attachment II is "Evaluation Criteria." These are the technical scoring items of this RFP. Attachment II states: Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring. The proposer receiving the highest score will be selected for award. Point Value: Unless otherwise indicated, zero is lowest possible and the number indicated in this column is the highest possible. Attachment II lists 19 items to be scored. For each item, Attachment II prescribes what is to be scored, identifies the section of the RFP to which the item relates, and states the maximum available points. The RFP does not contain further guidance for the evaluators in terms of the meaning of the maximum score or a score less than the maximum. The 19 scoring items carry a maximum of 500 points. The scoring dispute in this case focuses largely on one evaluator's scores of Items 15-19, each of which has a maximum score of 20 points.7 The five, 20-point items in dispute are stated below, with the item number on the left. The RFP reference for each items is RFP Section 4.21. The five items are: How well does the cost proposal narrative explain the costs of the customization and the necessity of the costs for delivery of the proposed PDMS? How well does the cost proposal narrative explain the operational support costs and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the system maintenance costs and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the costs for hosting and the necessity of those costs for the proposed PDMS? How well does the cost proposal narrative explain the need for and the cost of prospective enhancements? In contrast to the first 14 items, which require the evaluator to assess "the proposal," Items 15-19 direct the evaluator to assess "the cost proposal narrative." Four of the five challenged items require the proposer to explain the costs for a particular PDMS cost category and the necessity of these costs. The final item requires the proposer to explain the need for, and costs of, enhancements. Attachment XI, which is the Cost Proposal Form, identifies five categories of costs on a single page. The form requires the proposer to state a total cost for the commercial, off-the-shelf product, which is complete on delivery at the start of the contract, and a total cost for the customization required to conform the off-the-shelf product to the technical specifications in RFP Section 4.6. The RFP defines customization to include implementation, hosting, and maintenance through September 30, 2011. Attachment XI calls for a total cost for each of the remaining three categories of costs, which are maintenance support, operations support, and hosting for each of the three one-year anticipated renewal periods ending September 30, 2012, 2013, and 2014. The form requires the itemization of these three categories of costs into monthly amounts, which are merely the total annual costs of each category of cost divided by twelve. Lastly, the form requires the totaling of these five categories of costs, so that the proposer states at the bottom of the completed Attachment XI its "grand total cost proposal." Responses Cost Proposals Petitioner's Attachment XI shows no cost for the commercial, off-the-shelf program. The total cost of customization is $94,380. The annual costs for maintenance, operations, and hosting are, respectively, $40,440, $66,912, and $49,536, and these costs remain unchanged over the three anticipated renewal years. Petitioner's grand total cost proposal is therefore $565,044. Petitioner Response, p. 190. Intervenor's Attachment XI shows the total cost for the commercial, off-the-shelf program is $96,730, and the total cost of customization is $115,068. The annual costs for maintenance, operations, and hosting are, respectively, $50,665, $132,976, and $41,455, and these costs remain unchanged over the three anticipated renewal years. Intervenors grand total cost proposal is therefore $887,059. Intervenor Response, p. 126. Item 15: Customization Costs and Their Necessity Petitioner Response For its narrative of the cost of customization and the necessity of this cost, Petitioner's response explains that the first part of the customization cost is $15,015. Petitioner Response, p. 191. This is the labor cost of customization. Petitioner Response, p. 192. The narrative explains that most of the features described in RFP Section 4.6.1 are already in the commercial, off-the-shelf program. The labor in customizing the off-the-shelf program includes: Time spent in requirement analysis meetings to arrive at the Requirements Definition for customization of the software. We propose to have two sessions. To customize the software such that application security can be configured per user to assign security roles to authorized department staff, dispensers, prescribers, and any other users authorized by law. To make necessary changes and modifications to the application software such that all of the web pages are tuned to comply with the business rules of the State of Florida as agreed upon in the requirements sessions. To include a statement in the software indicating that Florida's PDMS was made available using funds from a federal grant . . .. Provide for a method that allows the department to suspend the 15 day requirement during emergency events (e.g., hurricane) Provide a method that allows registered dispensers to request an extension to the reporting requirement (e.g., per individual or per pharmacy) in accordance with proposed Rule 64K-1, F.A.C. Create a method to coordinate and implement the initial mass registration of dispensers and prescribers. Petitioner Response, pp. 192-93. To customize its off-the-shelf program, Petitioner stated that it must perform requirements analysis; perform analysis, study, and design; perform design documentation and review; make changes to the database; make changes to the user interface; make changes to the business logic; conduct quality assurance and quality control; prepare user documentation; and perform project management. In documenting $15,010 in total labor for customization, Petitioner's response itemizes the labor costs by hourly rate and number of hours for the following positions: systems analyst, database administrator, senior programmer analyst, programmer analyst, quality analyst, technical writer, and project manager. Petitioner Response, p. 193. The second part of Petitioner's customization cost is $14,000. This is for all costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. Petitioner breaks down these costs into skilled labor and travel expenses. The skilled labor covers individual tasks--e.g., hardware and server setup, data collection help desk setup, and implementation of customized PDMS--by position type, hourly rate, and hours. The travel expenses show airfares, food and per diem for particular tasks, such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days. The total is $28,000, but Petitioner discounts this item by half for what it anticipates will be a long-term relationship. Petitioner Response, p. 191. The third part of the customization cost is $65,370. This is for the hosting, maintenance, and operations support from the "go-live" date of April 8, 2011,8 through September 30, 2011, or five months. The monthly cost for each of these components is, respectively, $3370, $5576, and $4128. Petitioner Response, p. 192. 2. Intervenor Response For its narrative of the cost of customization and the necessity of this cost, Intervenor's response states: all associated start-up costs for development, configuration, and integration are part of the total proposed implementation price. [Intervenor] will fully host the RxSentry solution for [Respondent] utilizing our state-of-the-art co-location data center, AtlantaNAP. Hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract. Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements. A one-time licensing fee for RxSentry is included in the implementation pricing. Ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry are included in the total pricing for the initial contract period. [Intervenor] project management, clinical, and technical support staff are provided to ensure a seamless transition from implementation to daily operations. Personnel costs include a primary contact as the PDMP Account Manager Ms. Sheila McCollough, access to clinical expertise from our Training Manager, Mr. Steve Espy, RPh, technical writing expertise for customized user guides and training materials, quality and contractual compliance oversight, and a highly skilled technical and customer service staff to maintain the RxSentry solution and provide customer service and support to both [Respondent] staff and the prescriber/dispenser population. [Intervenor] performs regular monitoring and maintenance for all our clients, including routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections to ensure that RxSentry continues to meet our clients' needs and standards. Expense categories used in pricing the project include all line item costs shown in the following table [no costs are shown]: [Technical Lead] Information Systems Manager . . . Customer Support Manager [Training Coordinator] . . . Technical Support Manager . . . Technical Help Desk Staff Technical Writing Staff Operating Expenses: Travel Training Office Supplies Printing fees Mailings Administrative fees . . . System Expenses: Hardware leasing Software purchase (one time) RxPert License Fee (one time) AtlantaNAP Data Center Fees Communication Fees Software Maintenance Hardware Maintenance Intervenor Response, pp. 123-24. Under the heading, "Customization," Intervenor's response states that Intervenor will work with Respondent during the implementation requirement sessions to document all specifications for collecting and reporting controlled substance data. This includes: dentifying required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens per [Respondent] request. The next section of Intervenor's response is "Assumptions." This section states: No inflationary increase has been added to ongoing operational pricing. Standard technical hours and support for data submitters and requestors will be provided Mon-Fri, EST, from 9:00 AM - 5:00 PM; excluding state and national holidays. Training materials for dispensers and practitioners will be hosted online along with computer-based training as required by [Respondent]. Notification letter mailing costs for uploaders is based upon 8,322 active pharmacies and approximately 7,312 active dispensing healthcare practitioners. All tasks and activities will be performed at the [Intervenor's] Corporate Office in Auburn, AL. Proposed pricing and annual maintenance for PMIX Hub is not included in the cost proposal but is provided in the following narrative section, "System Enhancements." Intervenor Response, p. 125. Item 16: Operational Support Costs and Their Necessity Petitioner Response For its narrative of the cost of operational support and the necessity of this cost, Petitioner's response states that the operational support costs are $5576 per month for each of the three one-year renewal terms. These costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner Response, p. 195. Petitioner breaks down the operational support costs by position, hourly rate, and hours per month. The positions are data collection help desk analyst and data collection senior help desk analyst. Other expenses include infrastructure and office space and telephone. Petitioner's response describes the positions in terms of work experience. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 17: System Maintenance Costs and Their Necessity Petitioner Response For its narrative of the cost of system maintenance and the necessity of this cost, Petitioner's response notes that the system maintenance costs are $3,370 per month for each of the three one-year renewal terms. These services are to respond to all emails from Respondent. For system-down calls, Petitioner will respond within four hours; for severely impaired-impact calls, Petitioner will respond within 24 hours. For the remaining calls, Petitioner will respond within 72 hours. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 18: Hosting Costs and Their Necessity Petitioner Response For its narrative of the cost of hosting and the necessity of this cost, Petitioner's response notes that the hosting costs are $4128 per month for each of the three one-year renewal terms. Hosting is at a secure facility with redundant power and redundant data carriers. Petitioner breaks down the hosting costs by the single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server. 2. Intervenor Response Except for enhancements, Intervenor's entire cost narrative has been described above. Item 19: Need for, and Cost of, Prospective Enhancements Petitioner Response For its narrative of the need for and cost of prospective enhancements, Petitioner's response notes that its software has an available PMIX interface software module. Because PMIX "is beyond the scope of the current proposed project," Petitioner's response proposes the module as a prospective future enhancement. Petitioner breaks down the cost of the PMIX enhancement into a one-time cost of $10,600, which consists of $7800 for customization and implementation, and $2800, which consists of travel costs for training. Monthly costs would increase $1000, which consists of $750 for maintenance and $250 for operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours, and the travel costs for two persons for one day in Tallahassee. Additionally, Petitioner's response offers a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work. 2. Intervenor Response The final section of the cost worksheets in Intervenor's response is "System Enhancements." This section states that Intervenor "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor's response warns: "Pricing for PMIX Hub is not included in the proposed contract pricing but is provided below as a prospective enhancement to the RxSentry solution." The following table lists "PMIX Implementation" at a cost of $40,035 and "PMIX Hub Annual Maintenance" at a cost of $15,000. Assessment and Scoring of Proposals Respondent received only the two proposals of Petitioner and Intervenor. After the submittal deadline had passed, Respondent's Chief of Bureau of Operations, Lola Pouncey, examined each of the two proposals for compliance with the first eight of nine mandatories contained in Attachment I. Respondent hired CPA Richard Long to examine each proposal for compliance with the ninth mandatory, which requires an assessment of demonstrated financial capability. Ms. Pouncey and Mr. Long determined that both proposals met all of the mandatories in Attachment I. These determinations are not at issue. Likewise, one of Respondent's representatives calculated the cost scores for both proposals--50 points for Petitioner and 31.85 points for Intervenor--and these determinations are not at issue. The five evaluators had been trained by Respondent's Administrative Lead Janice Brown. By memorandum dated December 7, 2010, she advised them to "evaluate each proposal individually" and not to meet with other evaluators to discuss a proposal. Providing a little more guidance for scoring than is found in the RFP, the memorandum adds: The maximum possible score for each category should only be awarded if the vendor addressed each element we requested for that section thoroughly. If a vendor does not address elements in that section, their scores should be reduced accordingly. The five evaluators scored all of the Evaluation Criteria of Attachment II. The technical scores for Petitioner averaged 409.2 points--ranging from Ms. Poston's score of 266 to another evaluator's near-perfect score of 496. The technical scores for Intervenor averaged 448.6 points--ranging from scores of 360 to a perfect score of 500. Ms. Poston's total score for Intervenor is 430. Her score for Intervenor is its second lowest. Two of the evaluators scored Petitioner's proposal higher by 21 and 18 points. Two of the evaluators scored Intervenor's proposal higher by 40 and 32 points. Ignoring Ms. Poston's scores, which favored Intervenor by a lusty 164 points, Intervenor would have emerged from the technical scoring with an 8.25-point advantage. Because Petitioner earned a 18.15-point advantage from its superior cost proposal, Ms. Poston's scores, in this sense, dictated the outcome of the procurement. However, if Ms. Poston had assigned Petitioner's technical proposal the average of the scores of the other four evaluators or even the score of Petitioner's second-lowest evaluator, Petitioner would have prevailed on total points. Combining the technical scores with the cost scores, Respondent determined that Intervenor earned 480.45 points, and Petitioner earned 459.20 points. After confirming that Intervenor's references were acceptable, on December 21, 2010, Respondent posted its intent to award the contract to Intervenor. Except for the above-described examination of the proposals for compliance with the nine mandatories of Attachment I, at no time while Respondent processed the proposals did anyone determine whether each proposal was responsive to all of the other requirements of the RFP. On December 23, Petitioner timely filed a notice of intent to protest the intended award to Intervenor. On or before January 3, 2011, Petitioner timely filed the Formal Written Protest with a proper and sufficient bond. Respondent transmitted the file to the Division of Administrative Hearings on January 19, 2011. Determinations Concerning Responsiveness Respondent misreads the RFP in arguing that Attachment I is an exhaustive list of the requirements of the RFP to which a proposal must respond in order to be responsive. Attachment I lists nine requirements that, if unmet, will render a proposal unresponsive.9 But nothing in Attachment I implies that its nine requirements are an exhaustive list of the requirements of the RFP, or an exhaustive list of the RFP requirements that a proposal must satisfy to be responsive. Respondent's strained interpretation of its RFP creates an unnecessary conflict between Attachment I and paragraph 4 of PUR 1001, which warns proposers that Respondent may reject a proposal for a failure to comply with any RFP condition. On the basis of paragraph 4 of PUR 1001, as well as the authority cited in the Conclusions of Law, requirements contained in other RFP provisions, including Section 4.21, if unmet, may result in a determination that the proposal is nonresponsive, regardless of whether a proposal meets all of the mandatories set forth in Attachment I. As quoted above, Section 4.21 requires a "narrative itemizing the costs included in the cost proposal." (Emphasis supplied.) Intervenor's proposal does not itemize the costs of customization, operations, maintenance, and hosting. Intervenor's proposal minimally itemizes the costs of enhancement--$40,035 for PMIX Implementation and $15,000 for PMIX annual maintenance. The unitemized costs in Intervenor's cost proposal are: 1) $96,730 for the off-the-shelf program; 2) $115,068 for customization; 3) $50,655 for maintenance; 4) $132,976 for operations; and 5) $41,455 for hosting. The costs included in Petitioner's cost proposal are: 1) nothing for the off-the-shelf program; 2) $94,380 for customization; 3) $40,440 for maintenance; 4) $66,912 for operations; and 5) $49,536 for hosting. Petitioner's cost narratives itemize these costs in detail. The $94,380 for customization comprises $15,010 for customization labor, $14,000 for implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations through September 30, 2011, which is defined by the RFP as part of customization. Petitioner further itemizes the $15,015 of labor, $14,000 of implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations, which is merely the monthly costs for these items, as shown in Petitioner's Attachment XI, during the three annual renewal periods. Additionally, Petitioner's proposal itemizes the $3,370 per month for maintenance by showing hourly rates and number of hours by four positions; the $4,128 per month for hosting by showing the hourly rate and number of hours for one position plus various other monthly costs; and the $5,576 per month for operations by showing the hourly rate and number of hours for two positions and various other monthly costs. Lastly, for the PMIX enhancement, Petitioner itemizes the one- time customization costs of $7,800, which themselves are broken down; travel costs for training of $2,800, which themselves are broken down; and additional monthly costs of $1,000 for maintenance and operations. However, Intervenor's failure to itemize the costs in the cost proposal gave it no competitive advantage. Despite some unclear comments about a "cost-plus" proposal, Intervenor's proposal contains an unambiguous, enforceable statement of costs, as does Petitioner's. Each proposal locks in its proposer in terms of what it is agreeing to provide and at what cost. Nor did the requirement of itemization likely chill the bidding, so as to discourage potential vendors from competing for the PDMS contract. Attachment XI requires each proposer to identify the costs of customization and ongoing operations, maintenance, and hosting. To arrive at these broader category of costs, a diligent vendor probably would have had to assemble the underlying subcosts, so it would be easy to add them to the proposal. The effort in constructing the itemization appears minimal. The monthly costs of maintenance, operation, and hosting are relatively modest, so they do not have many subcosts, and the process of extending these costs for the term of the contract, plus renewals, is a simple matter of multiplication. In its proposed recommended order, Petitioner argues that Intervenor gained competitive advantage as follows: [Petitioner] recognized that this additional level of detail would enable [Respondent] to understand the level of commitment of resources of each respondent, and to hold the ultimate contract awardee accountable for the provision of the promised level of performance as reflected in the itemized costs. If a competitor fails to provide the detailed, itemized costs required by Section 4.21, it will enjoy a competitive advantage relative to bidders that do comply with that requirement. By failing to commit to any particular itemized cost, a bidder such as [Intervenor] may provide less training, and enjoy less expense, than another provider that itemized its costs. Failing to comply with Section 4.21 allows a bidder the flexibility not only to reduce its costs, but to also reduce the level and quality of services provided, without violating a commitment made to [Respondent.] Petitioner's proposed recommended order, p. 9. These arguments are that cost itemization: 1) enables Respondent to understand the level of commitment of each proposer; 2) enables Respondent to hold the selected proposer accountable for the promised level of performance; and 3) prevents a nonitemizing proposer from providing less services by reducing the level and quality of services provided. The second argument misses the purpose of itemization. Itemization breaks down the overall costs shown in Attachment XI. The accountability function that Petitioner mistakenly assigns to the itemization requirement is actually served by numerous other provisions of the RFP, such as the undertaking of to satisfy the scope of services, including specified data fields, data, and training10; the undertaking to provide the detailed tasks and services11; the specification of proposed staffing levels, which are enforceable conditions12; the detailed description of the design, capacity, and other features of host facility13; the detailed description of the proposer's approach to providing the technical services that demonstrates a thorough understanding of the project and includes a detailed description of the PDMS and how general maintenance and support services will be performed14; and the focus of the other 14 technical scoring items on various features of the PDMS.15 The first and third arguments are also unpersuasive. Respondent rejected the first argument in its preparation of the RFP. Omitting the Section 4.21 requirement of itemization from the five technical scoring items related to cost, Respondent implicitly decided that it did not need the additional insight into a proposer's level of commitment. This is not a complicated procurement. Each proposer has implemented at least one monitoring system of this type in another state. For the same reason that itemization may have been omitted from the scoring items, so it is not especially important in understanding the level of commitment of resources of each proposer. Also, the worries sometimes attendant to the association of underbidding with the failure to include all of the solicited goods and services do not apply here, at least based on the relative cost proposals of both proposers. The third argument implies that the cost narratives will be elevated into the contract itself. But nothing in the RFP compels a proposer to pay a help-desk employee or data programmer the rate of pay specified in any cost itemization. Perhaps, in a deflationary economy, the rate of pay of these employees may decline, as may the office rent and travel costs. The selected vendor may pocket these savings, just as it must absorb the additional expenses, if, in an inflationary economy, these items increase in cost during the term of the initial contract or three annual renewal terms. The floor on services is not provided by a few cost itemizations, but by enforceable contract provisions and the selected vendor's incentive to keep the contract for the three one-year renewal periods, and perhaps beyond. Determinations Concerning Scoring General Petitioner objects to Ms. Poston's scoring--in general, all of it, but, in particular, her scoring of Items 15-19. In its proposed recommended order, Petitioner seems to make two arguments about Ms. Poston's scoring of its proposal. First, Ms. Poston favored Intervenor's proposal by such a wide margin as to call into question all of her scores. Second, Ms. Poston offered startlingly odd reasons, such as noncompliant formatting, for the relatively low scores of Petitioner's proposal. However, as in the Formal Written Protest and the hearing, Petitioner analyzes Ms. Poston's scoring of Items 15-19 only. Preliminarily, Petitioner's approach to the scoring issue raises two problems. First, absent analysis of Ms. Poston's scoring of the other items, Petitioner fails to prove flawed scoring of these items under the Clearly Erroneous Standard, which is explained in the Conclusions of Law. For this reason, this recommended order will not otherwise consider Ms. Poston's scoring of these items. Second, Petitioner's challenge to Ms. Poston's scoring of Items 15-19 suffers from a misreading of what these items require to be evaluated. Specifically, Petitioner misreads Items 15-19 to require the evaluators to evaluate how well the cost narratives itemize costs, among other things. One example of this misreading occurs at the last sentence of paragraph 18 of its proposed recommended order, which states: "In fact, the Section 4.21 requirement that each proposer submit an itemization of its costs . . . received twice as much weight as the cost proposal itself." Itemization of costs actually receives no weight in the five scoring items that pertain to the cost narrative. None of these five scoring items uses the word, "itemize" or "itemization." RFP Section 4.21 requires the itemization of various costs, and this requirement, as discussed in the preceding section, serves as a basis on which to determine the responsiveness of proposals. But Respondent did not include the itemization requirement of Section 4.21 in the scoring items for the cost narrative. In preparing the RFP, Respondent included some, but not all, of the requirements of Section 4.21 in these five scoring items, which are drawn from the first bullet and first flush paragraph of this section. The first flush paragraph requires a narrative that: 1) itemizes the costs in Attachment XI; 2) specifically addresses the comprehensiveness of the proposed PDMS; and 3) specifically addresses any excluded tasks or services that may be enhancements. The first flush paragraph encourages--through the use of the word, "should"--the inclusion within this narrative of a fourth element: proposed costs for prospective enhancements. The first four scoring items focus exclusively on the four cost categories--customization, operation, maintenance, and hosting--identified in the first bullet of Section 4.21. The five scoring items authorize scoring of the narratives only as to how well they explain the costs and their necessity. When compared to RFP Section 4.21, the five scoring items omit the requirements of an itemization of costs, a specific description of the comprehensiveness of the proposed PDMS, and a specific description of excluded tasks that may be enhancements, although this last requirement is covered to some degree by the fifth scoring item. At minimum, then, the narrative's itemization of costs and specific description of the comprehensiveness of the proposed PDMS receive no direct weight in scoring, except, as noted below, for the indirect value of each of these elements when scoring the cost narrative for its explanations of costs and their necessity. Further distinguishing RFP Section 4.21 from the five scoring items covering the cost narrative, the scoring items add two elements not found in RFP Section 4.21: 1) an explanation of the costs and 2) an explanation of the necessity of the costs. These elements are closely related to the provisions of Section 4.21, but are not explicitly required in this section. Petitioner's misreading of Items 15-19 undermines its scoring argument. This misreading attaches great significance to Petitioner's compliance with the itemization requirement of RFP Section 4.21 and Intervenor's noncompliance with this requirement--facts of some importance to the responsiveness issue discussed in the preceding section, but of no direct importance to the scoring issue discussed in this section. Also unhelpful to Petitioner's scoring argument is the fact that Ms. Poston's scores of Items 15-19 do not stand out among the evaluators. She gave each proposal 60 points, although she was the sole evaluator to score Intervenor's proposal higher than Petitioner's proposal on Item 15. One other evaluator scored the two proposals a tie on these five items, although his score was 100 points each. Another evaluator scored the two proposals a near-tie, with Petitioner's proposal earning 100 points and Intervenor's proposal earning 98 points. The remaining two evaluators scored these five items substantially in Petitioner's favor, with advantages of 39 and 20 points. The proper analysis of Ms. Poston's scores is based on the actual language of Items 15-19. The impact of the inclusion or omission of the itemized costs from these cost narratives is more nuanced than Petitioner argues in its scoring argument. A cost narrative may explain the cost of, say, customization and the necessity of this cost without itemizing or identifying the subcosts of customization, although a cost narrative that starts by itemizing these subcosts may facilitate its explanation of the overall cost and its necessity. Understandably, Petitioner stresses Ms. Poston's testimony at the hearing that she reduced Petitioner's scores in general, at least in part, for the failure of its proposal to conform to various stylistic requirements in the RFP. These nonconformities include excessively small font size, inadequate margins, other unidentified formatting errors, numerous typographical errors, poor organization in which information was just "dropped" into various places, and inconsistency in style where sometimes the proposal uses bullet points and sometimes it uses narrative. Ms. Poston's testimony in the preceding paragraph is problematic for two reasons. First, Ms. Poston's testimony attempts to justify, in part, her scoring on grounds that are not authorized by the provisions of Attachment II. Second, this testimony is inapt. As to Petitioner's cost narrative, at least, the Administrative Law Judge did not measure font size, but did not notice any problems with font size, legibility, margins, formatting, typographical errors, or inconsistencies in style. And the organization of Petitioner's cost narrative permitted the Administrative Law Judge to find the relevant information much more readily than he could find it in Intervenor's cost narrative, which, as seen above, combined most of its responses to Items 15-18 in one section. Ms. Poston's typewritten scoring notes offer more support than her testimony, although her notes for Item 15 incorrectly report that Petitioner's response explained only the labor costs of customization. But her notes for Item 17 suggest that she captured more detail from Intervenor's proposal's explanation of system maintenance costs. However, nothing in the record suggests in any way that Ms. Poston was guilty of bias, fraud, or collusion in scoring, nor does Petitioner suggest as much. When asked, Ms. Poston freely explained her scores on items, using her typewritten notes when she could. She testified candidly and matter-of-factly about her scoring. Although not at all apologetic, Ms. Poston never appeared unduly invested in her scores or Respondent's proposed award. While testifying, she never acted adversarially, as an ally of Intervenor or opponent of Petitioner. Nor are Ms. Poston's scores of Items 15-19 arbitrary or capricious. Notwithstanding her comments about formatting, proofreading errors, and organization, Ms. Poston's scoring of these items is neither illogical nor irrational. Her typewritten notes reveal a clear understanding of the RFP and Petitioner's proposal, suggest an organized pattern to her thoughtful approach to scoring the items in question, and dispel any randomness in the scoring. The sole remaining question is whether Ms. Poston's scores of Items 15-19 are within the range of the reasonable. Consideration of the reasonableness of Ms. Poston's scoring must start with the acknowledgement that the phrasing of Items 15-19 invites a wider range of scores than would questions imposing on evaluators a task requiring more precision. These open-ended scoring items ask only "how well" a response "explains" certain costs and their necessity or, in the case of Item 19, "how well" a response explains the necessity and cost of prospective enhancements. Scoring of Item 15: Customization For Item 15, Petitioner first explains the labor in terms of the communications with Respondent's staff to obtain particularized information about what Respondent needs, programming to customize the off-the-shelf program to ensure that it delivers these communicated needs, and specific methods to allow registered dispensers to request extensions for reporting events and the mass registrations of dispensers and prescribers required on the initiation of the PDMS. Detailing this explanation of the labor involved in the customization of the off-the-shelf program, Petitioner's response outlines the tasks, which largely comprise the expected activities of analysis, design, design review, quality assurance and control, user documentation, and project management, but also identify changes to user interface and business logic. Petitioner's response further explains the costs of customization by detailing, by numbers of hours, the work to be done by systems analysts, database administrators, senior programmer analysts, programmer analysts, quality analysts, technical writers, and project managers. Second, Petitioner explains the costs of customization by discussing the costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. This discussion shows individual tasks, such as hardware and server setup, data collection help desk setup, and implementation of customized PDMS, but distinguishes itself by identifying the hours of work by position type. The travel expenses show airfares, food and per diem for particular tasks, such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days. Petitioner's explanation of costs is particularly relevant for this topic because it further explains that it has halved these projected costs. Third, Petitioner explains the costs of customization with respect to the operational support, hosting, and maintenance costs from the "go-live" date through the end of the original term of the contract. Petitioner's explanation of these costs is ample. For Item 15, Intervenor explains that it starts with an off-the-shelf program that necessitates the payment of a one- time license fee. From there, Intervenor's proposal states that it will perform "all associated start-up costs for development, configuration, and integration [that] are part of the total proposed implementation price." "Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements." Intervenor's proposal identifies some "line item costs" by position type, but this table omits hours or total costs and pertains largely, if not entirely, to operational support, hosting, and maintenance. Intervenor's proposal addresses customization costs explicitly in a relatively brief section devoted to this component. Intervenor explains that it will identify required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens, as requested by Respondent. Ms. Poston assigned 15 points to Intervenor's conclusory explanation of customization costs and their necessity and 10 points to Petitioner's detailed explanation of these costs and their necessity. A score that assigns more points to Intervenor than to Petitioner for Item 15 is outside the range of the reasonable by five points. Scoring of Item 16: Operational Support For Item 16, Petitioner explains that operational support costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner identifies two positions--two help desk analysts--and breaks down the operational support costs by hourly rate and hours per month. Petitioner's response describes these positions in terms of work experience. For Item 16, Intervenor explains ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry, all of which are included in the total pricing for the initial contract period. Intervenor explains that project management, clinical, and technical support staff will assist Respondent in the transition from implementation to daily operations. Intervenor identifies available personnel by name and position--although not the expected extent of availability or use. Ms. Poston assigned each proposal 10 points for Item Petitioner's explanation of hours per month is of some utility, but the range of personnel--two help desk analysts-- limits the value of this response when compared, say, to the wider range of labor tasks involved in customization. Although more explanation might have been expected of Intervenor on this item, given the large difference between the two proposals for operations costs, the two explanations of operations costs and their necessity are roughly comparable, and Ms. Poston's scores for Item 16 are within the range of the reasonable. Scoring of Item 17: System Maintenance For Item 17, Petitioner explains that these costs involve email responses to service calls from Respondent, and Petitioner provides call-back deadlines based on the severity of reported problems. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide. For Item 17, Intervenor explains that maintenance is included in hosting and it will undertake all software and hardware maintenance. Additionally, Intervenor explains that it will perform routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections necessary for the PDMS. Ms. Poston gave Intervenor 15 points and Petitioner 10 points for Item 17. She may legitimately have valued Intervenor's emphasis on system solutions over Petitioner's emphasis on customer service, so Ms. Poston's scores for Item 17 are within the range of the reasonable. Scoring of Item 18: Hosting For Item 18, Petitioner explains that the hosting is at a secure facility with redundant power and redundant data carriers. Petitioner breaks down the hosting costs by a single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server. For Item 18, Intervenor explains that the hosting is at its "state-of-the-art" data center. Intervenor explains that hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract. Ms. Poston gave both proposals a 10 for Item 18. She understandably found no difference between a secure facility with redundant power and redundant data carriers and a state-of- the-art data center, so Ms. Poston's scores for Item 18 are within the range of the reasonable. Scoring of Item 19: Prospective Enhancements For Item 19, both parties identified the PMIX hub as a prospective enhancement. For this item, the RFP requires an explanation of the need for, and costs of, any enhancement. Neither party addressed the need for the enhancement in any detail, but perhaps that is because the PMIX hub is in the RFP Scope of Services, at RFP Section 4.2, although it is not in the Tasks and Services, at RFP Section 4.6.1. Petitioner explains that its software has an available PMIX interface software module. Petitioner further explains this cost by breaking the PMIX enhancement into one-time costs of customization and implementation and travel costs for training and monthly costs for maintenance and operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours. Petitioner further explains this cost by describing a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work. Intervenor warns that it "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor identifies the implementation and maintenance costs of a PMIX hub. Ms. Poston assigned Petitioner 20 points and Intervenor 10 points for Item 19. Contrasted to Petitioner's detailed explanation of enhancement costs, Intervenor's proposal acknowledges a present inability to provide this service, which certainly limits its ability to explain the costs that will eventually go with this service, once it is developed. Ms. Poston's scores for Item 19 are within the range of the reasonable. Summary of Scoring Findings Another shortcoming in Petitioner's scoring challenge is its failure to explain why the flaws in Ms. Poston's scoring of Items 15-19 should result in the rejection of all of her scores. To outpoint Intervenor, Petitioner needs over 100 more points from Ms. Poston. Items 15-19 are worth a total of 100 points, and Petitioner already received 60 points from her on these items, so Petitioner's scoring challenge, despite its focus on Items 15-19, necessarily seeks to overturn more than Ms. Poston's scores on these five items in Petitioner's proposal. But Petitioner does not seek more points from Ms. Poston. The gist of Petitioner's complaint with the scoring starts with the fact that it won or lost, by narrow margins, with the other four evaluators, but Ms. Poston's overall scoring margin--430 for Intervenor and 266 for Petitioner--determined the outcome of the scoring. Petitioner argues that Ms. Poston's scoring of Items 15-19 was illogical, irrational, and so outside the range of the reasonable that its effect cascades through all of her scores and, to preserve the integrity of the subject procurement, her scores must be thrown out in their entirety, resulting in a recommendation that Respondent rebid the PDMS contract or award it to Petitioner. Whatever the exact form of this argument, after close analysis of the five scoring items that Petitioner challenged, the Administrative Law Judge has found nothing arbitrary or capricious in Ms. Poston's scoring and only one item that falls outside the range of the reasonable--by only five points. As discussed in more detail in the Conclusions of Law, this finding provides no platform for Petitioner's larger attack on the reliability of Ms. Poston's overall scoring and its role in Respondent's overall evaluation of the two proposals.
Recommendation It is RECOMMENDED that the Department of Health enter a final order dismissing the Formal Written Protest. DONE AND ENTERED this 8th day of March, 2011, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 2011.
Findings Of Fact This case involved an acquisition of data processing equipment by DHSMV. DHSMV is headed by the Governor and Cabinet and includes the Division of Florida Highway Patrol, the Division of Drivers Licenses, the Division of Motor Vehicles, and the Division of Administrative Services. Section 20.24, Florida Statutes. DHSMV is required to maintain records of all applications for drivers licenses, reasons for denial of any license, suspension and revocation information, accident reports, abstracts of court records involving conviction of traffic offenses, and information pertaining to financial responsibility. Sections 322.20 and 324.051, Florida Statutes. DHSMV is also responsible for issuing certificates of title for motor vehicles, and for maintaining registration and licensing records. Sections 319.23, 320, Florida Statutes. These are substantial record keeping requirements. DHSMV data processing responsibilities are handled by the Kirkman Data Center within the Division of Administrative Services. The Kirkman Data Center is one of the larger data processing operations within state government. The tax collectors of Florida's sixty-seven counties act as agents for DHSMV in the registration and licensing of motor vehicles. Under the present system registration and title data is gathered at the tax collectors' offices, and forwarded to DHSMV to be recorded in files at the Kirkman Data Center. This is known as a "batch" system. There are inherent problems in this type of system. In the first place, there is a gap between the time that the data is originally collected, and the time that it is recorded in the DHSMV records. It generally takes forty-five days from the time the data is received before it can be processed by DHSMV, and frequently the data is in excess of ten days old before it is received. At the time of the hearing there were 950,000 registrations which had not yet been finally processed by DHSMV. This is not a backlog of registrations, but is a typical number of registrations that inherently, at any given time, will be awaiting processing under the present system. This is not a result of the capacity of present data processing equipment, but of the system being utilized. A second problem inherent in a batch system is the additional opportunity for errors caused by the necessity of posting information twice, by delays, and by the opportunity for loss of records. Having a large number of unposted records is not a new phenomenon at DHSMV. In fact, the situation is presently much improved over past years, particularly those years prior to the Legislature changing the times for purchasing auto tags to coincide with birth dates. As recently as September, 1978 there was a backlog of unposted records in excess of five million. Since then DHSMV has brought its records as current as the present system will permit. So long as tax collectors are not directly linked to the DHSMV data processing system, there will be a large number of vehicle registrations not posted in the records of DHSMV. In 1977 the Florida Legislature funded computer and communications costs for placing the tax collectors of fourteen counties on an "on-line network". Under this system, the offices of the various tax collectors will be directly linked to the master computer system at the Kirkman Data Center. When a taxpayer renews his or her registration at the local tax collector's office, the information will be simultaneously entered into DHSMV records. DHSMV records will thus be absolutely current, and errors will be reduced significantly. Current and accurate vehicle and driver information is a goal of the State of Florida for a number of reasons, and is of particular importance to law enforcement officials. Even aside from the desire to implement the tax collector on-line network, DHSMV's data processing needs have expanded annually, and it is projected that needs will continue to expand. The Kirkman Data Center presently operates primarily with equipment manufactured by the Burroughs Corporation. The equipment has at various times in the past performed inadequately, and it does not have sufficient capacity for implementation of a tax collector on-line network. In seeking to solve its data processing needs, DHSMV explored numerous alternatives for data processing equipment. Initially, DHSMV considered upgrading the existing Burroughs equipment. On August 18, 1977, Burroughs was given a letter of intent to procure a "B7700" computer system. Efforts to negotiate a contract for upgrading the Burroughs equipment were unsuccessful. On December 21, 1977, DHSMV considered a sole source procurement of an Amdahl Model V6-II, Central Processing Unit, and forwarded an Automatic Data Processing Equipment Request (ADPER) to the EDP Division of DGS. This request was denied by EDP for lack of justification for a sole source procurement. On January 3, 1978, DHSMV transmitted to EDP a proposed request for proposal which required that the internal performance of the central processing unit to be procured must be equal to or greater than the IBM Model 3033, or Amdahl V6-II. The RFP was not approved by EDP. Thereafter, other alternatives were considered such as acquiring equipment from other state agencies, and another attempt was made to reach agreement on a contract with Burroughs. These efforts were unsuccessful. On August 23, 1978, DHSMV transmitted a Sole Source Acquisition Request for an IBM Model 158 Central Processing Unit to the EDP Division as an interim solution. This request was rejected by EDP. Employees of DHSMV and DGS examined data processing systems used by other states. Visits were made to electronic data processing installations utilizing Amdahl, ITEL, IBM, Burroughs and Univac equipment. After reviewing numerous data processing systems, it was concluded that the Wisconsin Data Base System was the most effective approach toward developing an on-line tax collector system in terms of efficiency and cost. The Wisconsin Data Base System is a series of computer programs developed by the State of Wisconsin to provide a data base for vehicle/driver identification. Florida is being provided the system by the State of Wisconsin without charge in exchange for DHSMV providing Wisconsin its drivers license system. This will result in monetary savings of approximately $500,00 and fifteen to twenty-four months of employee time in developing a comparable system. The Wisconsin Data Base System operates on IBM compatible equipment, but it can be used on any vendor's computer should the vendor decide to convert its programs to accept the Wisconsin package. The cost of such a conversion would be significant; however, it could be accomplished. Both Amdahl and ITEL manufacture IBM compatible equipment. ITEL also finances and remarkets IBM and other manufacturers' equipment. In Wisconsin the system is operating on an Amdahl central processing unit. Prior to September, 1978, DHSMV, DGS, and the Department of Administration were working together, at the direction of then Governor Reubin Askew to solve the DHSMV data processing problem. Employees of the three departments frequently disagreed concerning the proper solution. They were ultimately able, however, to develop a plan known as the DHSMV Data Processing Plan, which they all considered satisfactory. On September 6, 1978, the Plan was approved by the Governor and Cabinet. A key aspect of the Plan is adoption of the Wisconsin Data Base System. The Plan specified that any vendor conversion must involve use off the Wisconsin package. The Plan contained the following schedule for implementation: Phase I - September 8 - September 29 EDP Division, DOA and DHSMV, will prepare a Request for Proposal (RFP), with technical specifications to satisfy DHSMV's requirements. Phase II - September 30 - November 12 Vendors prepare proposals and submit their recommendations on November 12. */ DHSMV starts site preparation. Phase III - November 13 - December 8 EDP Division, DOA and DHSMV evaluate vendor proposals. Vendors benchmark Wisconsin System on their proposed equipment. Phase IV - December 19 Recommendation to Governor and Cabinet on December 19. Phase V - December 20 - March 20 DHSMV completes the site. Phase VI - March 21 - May 30 Vendor installs the proposed equipment, and software, operational and ready for DHSMV acceptance test. EDP Division and DOA will participate and assist in the performance evaluation. DHSMV will implement and field test tax collector's system in two counties (Lee and Leon). Immediately following approval of the Plan, an RFP drafting team was formed. It was composed of representatives from DHSMV, DGS, and the Department of Administration. Through an intensive effort between September 6 and September 29, 1978, Team members collectively and individually drafted the RFP. After several drafts, a final version was authored at a meeting on September 28. On September 29, the RFP was released, and distributed to sixty-one vendors from the DGS, Division of Purchasing's Authorized Bidders List. The Authorized Bidders List includes every supplier of computers who has registered with the Division as being interested in receiving bid solicitations for that. type of equipment. On October 2, a legal advertisement was published in the Tallahassee Democrat, and on October 4, a similar advertisement was published in the Orlando Sentinal Star. The legal advertisements requested competitive bids for the equipment. The RFP is thirty-seven pages in length, and consists of the following sections: Section I. Purpose and Scope of this Request for Proposal. Section II. Additional Terms and Conditions. Section III. Bidder Instruction and Submissions. Section IV. Evaluation. Section V. Functional and Technical Specifications. Section VI. Benchmark Information. Appended to the RFP was Attachment "A", fifty-six pages in length, and including the following Riders: Rider A. Terms and conditions applicable to the acquisition of electronic data processing products. Rider B. Maintenance Services. Rider C. Software and Programming Services. The RFP outlines all of the technical requirements and specifications for the data processing system required by DHSMV, and requires prospective bidders to submit bids proposing a data processing system with processing capabilities sufficient to implement and operate the Wisconsin Data Base System. Certain provisions of the RFP are specified as mandatory. Some of the mandatory provisions were technical and others, such as delivery and installation dates, were included because of the time frame established by the procurement plan. Attachment "A" to the RFP is a contract that the successful vendor would be required to execute. The Riders set out terms and conditions of the contract. The RFP included provisions for recommending changes to the RFP and to Attachment "A" in advance of bid submissions. Including the contract as an attachment to the RFP, and requiring that recommended changes be submitted prior to bid proposals is a new procedure in procurement of data processing equipment in Florida. Similar provisions had been employed only once before, specifically in a request for proposal issued on behalf of a data center at Florida State University. The RFP provides that vendors were to submit technical Proposals and cost proposals in two separate packages. Cost proposals would be opened and considered only if technical proposals were found acceptable. Bids would be evaluated under the RFP by an Evaluation Committee. The evaluation would center first upon the technical proposals. Those bidders whose proposals passed technical muster would then have their cost proposals evaluated, and would be required to subject their proposed equipment to a benchmark. A benchmark is a test designed to evaluate the performance of computer systems, programs, and devices. The benchmark evaluates the performance of a computer relative to system specifications. Benchmark tests are typically not run until after a preliminary determination is made that a bid is otherwise responsive. Equipment used for processing the benchmark must be the same as bid. Failure of the proposed system to complete the benchmark in accordance with the RFP benchmark objectives results in the vendor being disqualified. The benchmark objectives in this RFP require the system to operate the Wisconsin Data Base Package, performing a minimum of ten transcriptions per second with a `response time not to exceed five seconds. A benchmark package was included in the RFP. On October 4, 1978, the evaluation committee was formed in accordance with the RFP. There were four subcommittees, each of which included representatives from the three departments involved in the procurement. An executive subcommittee was formed to oversee the bidding process. Although such a function was not specified in the RFP, the executive subcommittee evaluated contractual provisions submitted by bidders to determine whether the proposed provisions were responsive to the RFP, and specifically to Schedule "A". A technical subcommittee was formed to evaluate whether responses to the RFP were technically sufficient. A cost subcommittee was formed to evaluate cost proposals submitted by vendors. A benchmark subcommittee was formed to perform the benchmark. The RFP provides that vendors could pose questions and recommended changes to the RFP prior to the submission of bid proposals. In accordance with the schedule provided in the RFP, bidders', conference was conducted on October 9, 1978. The purpose of the conference was to discuss the contents of the RFP and to permit prospective bidders to pose questions. Such questions were to be submitted and answered in writing. Following the conclusion of the conference, Addendum No. 1 was prepared by the executive subcommittee answering questions raised at the conference. Addendum No. 1 was released on October 11, 1978. The RFP also provides that vendors could propose changes to the terms and conditions contained in Attachment "A". Under the original schedule these proposed changes were to be submitted on October 9. After release of the RFP, however, it was discovered that the desired liquidated damage provisions had been omitted from Attachment "A". These were added and were included in Addendum No. 1. Vendors were permitted until October 23, 1978 to respond to those changed terms, and to propose further changes to Attachment "A". Both IBM and Amdahl submitted recommended changes. On October 24, 1978, the executive subcommittee met and developed responses. On October 26, the executive subcommittee issued Addendum No. 2. Addendum No. 2 consisted of the vendors' proposed changes with the indication "yes" or "no" entered next to the proposal. The "yes" responses indicated contract changes proposed by bidders that were considered minor, were acceptable to the State, and could be utilized by a vendor in its final proposal. "No" responses meant that the proposed change was substantially the same as the language in Attachment "A" and was without consequence, or that the proposed change was not acceptable to the State. Bids were opened on November 9, 1978. Twenty-six companies submitted "no bids". Thirty-two companies did not respond. IBM, Amdahl, and ITEL submitted proposals. Technical proposals were turned over, to the technical subcommittee. Cost proposals remained sealed and in the custody of DHSMV. During the period from November 10 through November 13, the technical subcommittee evaluated the bids. The technical subcommittee utilized a check list which contained twenty-two specific requirements. The technical subcommittee concluded that ITEL's proposals deviated from the provisions of the RFP substantially, and that both IBM and Amdahl deviated from some of the provisions of the RFP, but the deviations were considered minor because operation of the system would not be affected. The technical committee concluded that the equipment bid by IBM and by Amdahl was capable of performing the tasks. On November 14 the technical subcommittee issued its report to the executive subcommittee. The technical subcommittee found that IBM and Amdahl were responsive to the RFP with minor deviations, and that ITEL was not responsive. In its final report, the technical subcommittee stated: "We request that the executive committee review the proposed contracts from IBM and Amdahl to insure that they are acceptable." During the same period the executive subcommittee began evaluation of the contractual changes to Attachment "A" contained in the bids. In their contract proposals, both Amdahl and IBM submitted changes which had not previously been considered by the State and contract terms and conditions which had been marked "no" during the Addenda process. The executive subcommittee considered bid responses without regard to whether proposed changes had been submitted during the Addenda process, and based its evaluation of the proposed contracts upon how proposed changes would impact the operational status of the Kirkman Data Center. On November 16 and 17, clarification conferences were held with representatives of Amdahl for the purpose of discussing Amdahl's proposed changes to the RFP. On November 16, a similar clarification conference was held with representatives of IBM. The executive subcommittee found the Amdahl bid to be not responsive because of certain unacceptable contract changes in Amdahl's bid. Among the Amdahl contract terms and conditions found unacceptable was the provision that limited acceptance testing and warranty coverage to hardware only, excluding the operating system or systems control program. Another major problem with the Amdahl proposal was its failure to provide single vendor responsibility as required under the RFP. By letter dated November 17, 1978, ITEL Corporation was advised that its bid was found to be unresponsive to the RFP, and that its proposals were rejected. ITEL's cost data was returned to ITEL unopened. By letter dated November 17, Amdahl was advised that its proposed contract changes were considered major changes and unacceptable. Amdahl was advised that its proposal was rejected and its cost proposal was returned to it unopened. By letter dated November 20, 1978, Amdahl attempted to resubmit its cost proposal and attempted to withdraw all but one of its recommended changes to the terms and conditions of Attachment "A". Amdahl's attempted resubmission was refused by the purchasing director of DHSMV. The executive subcommittee determined that none of the terms and conditions of the IBM proposal constituted "major" deviations from Attachment "A". It determined that changes proposed by IBM were minor, and found the IBM bid to be responsive. IBM's cost proposal was forwarded to the cost subcommittee for evaluation. The cost subcommittee found the IBM proposal acceptable. On November 30 the benchmark subcommittee performed the benchmark tests on IBM data processing equipment in Gaithersburg, Maryland. IBM successfully passed the benchmark. After he received the final recommendation from the executive subcommittee, the Executive Director of DHSMV, (Mr. Blakemore), by letter dated December 4, 1978, certified that rebidding of the procurement would not be in the best interests of DHSMV "due to the limitation of time as set forth in the data processing plan of the Department of Highway Safety and Motor Vehicles approved by the Governor and Cabinet on September 6, 1978." A recommendation that IBM be awarded the contract was placed on the agenda of the Governor and Cabinet for the December 19 meeting bye DGS. At a meeting of the Cabinet Aides held December 13 and 14, Mr. Blakemore and the Director of the EDP Division of DGS (Mr. Ippolito) recommended that IBM be awarded the contract. Mr. Ippolito thereafter gave further review to IBM's proposed contract changes. He changed his mind and determined that the contract changes were unacceptable and that the matter should be rebid. Mr. Ippolito consulted with Mr. Blakemore. DGS and DHSMV then jointly requested delay of consideration of the agenda item, and the Governor and Cabinet deferred consideration of the procurement until January 9, 1979. Thereafter Mr. Blakemore consulted with counsel, and, based upon legal advice, concluded that IBM was not responsive, and that the matter should be rebid. A recommendation that all bids be rejected and the contract rebid was agendaed for consideration by the Governor and Cabinet for its January 9, 1979 meeting. The instant proceeding ensued. Generally, in the field of government procurement, there are two types of competitive procurement: the Invitation For Bid or Invitation To Bid ("IFB") process and the Request for Proposal ("RFP") process. The difference between the two methods is the extent to which the vendor is given latitude to exercise judgment. An IFB is rigid while an RFP is flexible. Typically, an IFB identifies the solution to a problem while an RFP identifies a problem and requests a proposed solution. If a bid is responsive to an IFB, cost controls the decision; With an RFP technical excellence as well as cost controls the decision. Only minor, clerical sorts of deviations are permitted in response to an IFB. With respect to an RFP however, a major exception would be one that would overturn a statutorily imposed requirement, or a change that would prevent the governmental entity from meeting its procurement needs. The RFP concept is typically used in computer acquisitions because of the dynamics of computer technology. In Florida the RFP process has been utilized in computer acquisitions, and in acquisition of such creative items as movie films. With respect to computer acquisitions, the Florida practice has allowed vendors the same broad range of discretion described above with respect to RFP acquisitions generally. The Request For Proposal involved in the instant procurement has some characteristics of an RFP and some characteristics of an IFB. Bidders are permitted considerable flexibility in proposing central processing units, peripheral equipment, and software. There are, however, provisions in the RFP which limit flexibility. Paragraph 2.0 provides: Attachment A is a contract which sets forth terms and conditions desired by the State. All bidders will be required to execute Attachment A. Bidders may recommend minor changes. All recommended changes must be submitted to the State prior to the submission of the bid proposals. The State reserves the right to accept or reject any changes. The State at its option may accept or reject any or all proposals, or any parts thereof. Any recommended changes which the State accepts, notification will be forthcoming to all bidders. The proposal submitted by the successful bidder will become a part of the contract. This provision is clear and unambiguous. Only "minor changes" to Attachment "A" could be submitted, and even these would need to be submitted prior to submission of bids. Section III of the RFP established a means (the Addenda process) for proposing recommended changes to Attachment "A". Despite these clear, unequivocal provisions, all three bidders proposed changes to Attachment "A" in their bid proposals, and the executive subcommittee considered them from the perspective of operational impact. Whatever the reason for the parties' actions, their actions cannot serve to vary the terms of the RFP. In competitive procurements, including IFB type procurements, deviations in a bid response which have no adverse effect upon the State's interest, and would not affect the amount of the bid by giving the bidder an advantage or benefit not enjoyed by other bidders are not material and do not serve to disqualify a bidder. In view of the provisions of Paragraph 2.0 of the RFP, IBM's proposed changes to Attachment "A" must be measured against this standard. Several of the changes set out in IBM's response to the RFP do have an adverse impact upon DHSMV in that DHSMV would receive less than is provided in the RFP. Furthermore, several changes proposed by IBM would affect the amount of the bid, and give IBM a competitive advantage over other bidders. The RFP provides that an acceptance test will be performed on all equipment initially provided by the successful bidder. The acceptance test would include a rerun of the benchmark, and a run of typical transactions to establish that the equipment performs up to the bidder's specifications, and up to the specifications provided in the RFP. In Paragraph 5c of Rider "A", Attachment "A" of the RFP, it is provided that in the event the system is deemed not to complete any phase of acceptance testing within ninety days after installation, the State, in its sole discretion, may elect one of four options: (1) to terminate the contract; (2) to demand that the contractor install a replacement of the system which, in turn, would be subject to acceptance testing; (3) to permit acceptance testing to continue; or (4) to pursue any other available legal remedy. In its response, IBM proposed: The State shall, within ninety (90) days after installation of the equipment, either accept or reject the equipment. The IBM proposal eliminates the State's remedy to demand installation of new equipment, or to continue acceptance testing. Elimination of the option to require a contractor to install new equipment would leave the State in a position, after it had expended considerable money implementing a system, to abandon it despite the fact that failure to implement the system was a result of faulty equipment, Elimination of the option to continue on with acceptance testing could force the State to accept machinery that had failed to pass tests because of economic hardship that would result from rejecting it. IBM's response to paragraph 5 provides DHSMV with significantly less than is provided in the RFP. It constitutes a material change from the RFP. Paragraph 6 of Rider "A", Attachment "A" of the RFP contains the same provisions respecting acceptance tests for additional equipment provided under the contract as Paragraph 5 provides for equipment initially provided. Paragraph 6g would permit the State the same four options available under Paragraph 5c. IBM responded to Paragraph 6g in the same manner that it responded to Paragraph 5c. Its response offers DHSMV significantly less protection than provided in the RFP, and constitutes a material deviation from the terms of the RFP. Paragraph 3c of Rider "B", Attachment "A" of the RFP provides: The contractor shall respond to the State's request for remedial maintenance within one (1) hour of such notification. In Paragraph 7f(3) of its contract, IBM proposed: Remedial maintenance will be performed promptly after the State notifies the contractor that the equipment is inoperative. IBM offered evidence which tended to show that it has provided remedial maintenance with respect to other contracts in less than one hour, despite the lack of any contractual obligation to do so. While this experience is an indication that IBM attempts to provide excellent service to its customers, it does not supplant contractual language. The word "prompt" is defined in Webster's New World Dictionary (Second Edition) as follows: "quick to act or to do what is required; ready; punctual; done at once or without delay." A contractual requirement that responses to calls for remedial maintenance be given in one hour cannot be misunderstood. A contractual requirement that the response be "prompt" requires different things under different circumstances. It is not difficult to envision circumstances where a "prompt response" would be more than one hour. The State expressed a desire to eliminate any ambiguity with respect to response time. IBM's effort to insert ambiguity materially alters the terms 6f the RFP. Section 3.12.8 a (3) of the RFP, and Paragraph 4b of Rider "A", Attachment "A" to the RFP provides that the State has the right to defer installation of equipment upon thirty days notice to the contractor. In its response to Paragraph 4b, IBM required that the State give it ninety days notice for delay in an installation date. This is a material deviation from the provisions of the RFP. Unforeseen circumstances could place the State in the position of having to defer installation of equipment. Increasing the Notice requirement from thirty days to ninety days increases the potential exposure of the State to paying charges for equipment that it cannot use. Paragraph 7a of Rider "A", Attachment "A" to the RFP provides for credits to be paid the State in the event of equipment failure. The credits would apply when equipment is inoperative for either a continuous period of twelve hours, or for a period of fourteen or more non-continuous hours in a twenty-four hour period. In its response IBM provided such credits for either a continuous twelve-hour period, or for a period of fourteen or more non- continuous hours within "one calendar day" instead of one twenty-four hour period. There are many possible circumstances wherein the State would be entitled to no credit under the IBM proposal, while it would be entitled to considerable credits under the provisions of the RFP. The IBM response constitutes a material, deviation from the provisions of the RFP. Paragraph 3.12.7 of the RFP provides: The State desires the equipment delivered, installed, and ready for use not earlier than March 1, 1979, and not later than April 1, 1979. Delivery dates beyond April 1, 1979 are not acceptable. Under Paragraph 3.12.8a of the RFP the contractor is required to install equipment in accordance with the provisions of Section 3.0 of the RFP. Section 3.0 of the RFP provides that installation of equipment must be complete on April 1, 1979. IBM's bid proposes to ultimately install an IBM Model 3033 Central Processing Unit. It is this central processing unit that passed the benchmark test, and meets the technical requirements of the RFP, and of Attachment "A". IBM does not propose to install the Model 3033, however, until June, 1979. An interim test machine would be provided and delivered by the April 1, 1979 deadline. This is an IBM Model 158-3 Central Processing Unit. The unit would not meet all of the technical requirements of the benchmark; however, it would be adequate for the purpose of implementing the Wisconsin Data Base System, and to perform functions required of the central processing unit prior to June, 1979. IBM has offered the Model 158-3 unit under terms that would comport with the provisions of Attachment "A" other than provisions respecting capacity, and under other terms that would not comport with the provisions of Attachment "A", but which would save the State substantial money. The proposal to use an interim test machine is the sort of proposal that would be an acceptable change under general principles governing RFP acquisitions. The interim test machine meets the State's needs and saves the State money. With respect to the instant RFP, however, which required that changes to Attachment "A" be submitted in advance of bid submissions, the interim test machines cannot pass muster. It provides IBM a substantial competitive advantage over other potential bidders. The interim test machine, albeit developed conceptually in part as a result of IBM's inability to deliver a Model 3033 Central Processing Unit by April 1, is a creative and beneficial proposal. While the proposal would benefit the State, it affects the amount of the bid and gives IBM a competitive advantage over other bidders. DGS, DHSMV, Amdahl and ITEL contended that many of IBM's proposals, other than those specified above, constituted material, major, or substantial deviations from the terms of the RFP. These contentions are not meritorious. Other changes proposed by IBM have not been shown to materially alter the terms of the RFP, nor to provide any competitive advantage to IBM. Implementation of the tax collector on-line network will be a significant improvement in the State's motor vehicle license, title, and registration record keeping function. Citizens will no longer be required to wait as long as sixty days to receive title to automobiles that they have purchased. Data respecting a citizen's drivers license, motor vehicle registration and motor vehicle titles will all be quickly available and current. Law enforcement agencies will be able to receive current information rapidly. Local tax collectors will no longer be required to batch reams of data and forward it to Tallahassee, and the services tax collectors provide their constituents will be greatly enhanced. The fact that implementation of the Wisconsin Data Base System will significantly improve services rendered by DHSMV, does not, however, render implementation of the system an emergency matter. While the present system is outdated, it is, within its limitations, remaining current. Backlogs of data are not increasing, but rather are as current as the system permits. The DHSMV record keeping system is presently better than it has ever been. A rebid will require a substantial effort on the part of State employees. In terms of the value of the work of these State employees, the expense of rebiding would be considerable. In terms of actual cost to the State, the employees are already on the payroll, and the cost is not substantial. Rebidding the instant procurement could result in the State saving considerable money while not inordinately delaying implementation of the tax collector on-line network. DHSMV is presently negotiating a service contract with a private concern that would allow development of the system, and would provide training to DHSMV personnel before equipment is acquired. IBM originally contended that neither Amdahl nor ITEL are capable of being responsive to the instant RFP. The evidence does not support this contention. It is apparent from the evidence that both Amdahl and ITEL are capable of providing equipment that would fully comport with the requirements of the RFP. Amdahl originally contended that this matter should be rebid on account of misconduct on the part of IBM in connection with this procurement. The evidence would not support any conclusion that IBM, or any vendor, or any State personnel engaged in any improper conduct during the course of this procurement. In its response to the RFP IBM stated that its bid would be valid for 120 days, expiring on March 9, 1979. DHSMV has contended that since it did not authorize any extension of the bid beyond March 9, 1979, the IBM bid has expired by its own terms. This contention is without merit. If the position of DHSMV were accepted, pursuit of the administrative remedy would have been futile, and would have frustrated the intent of the legislature in providing an administrative remedy.
The Issue Whether the Department of Corrections? action to withdraw its Intent to Award and to reject all replies to ITN 12-DC-8396 is illegal, arbitrary, dishonest, or fraudulent, and if so, whether its Intent to Award is contrary to governing statutes, rules, policies, or the solicitation specifications.
Findings Of Fact The DOC is an agency of the State of Florida that is responsible for the supervisory and protective care, custody, and control of Florida?s inmate population. In carrying out this statutory responsibility, the Department provides access to inmate telephone services. On April 15, 2013, the DOC issued the ITN, entitled “Statewide Inmate Telephone Services, ITN 12-DC-8396,” seeking vendors to provide managed-access inmate telephone service to the DOC. Responses to the ITN were due to be opened on May 21, 2013. The DOC issued Addendum #1 to the ITN on April 23, 2013, revising one page of the ITN. The DOC issued Addendum #2 to the ITN on May 14, 2013, revising a number of pages of the ITN, and including answers to a number of vendor questions. EPSI, GTL, and Securus are providers of inmate telephone systems and services. Securus is the incumbent contractor, and has been providing the Department with services substantially similar to those solicited for over five years. No party filed a notice of protest to the terms, conditions, or specifications contained in the ITN or the Addenda within 72 hours of their posting or a formal written protest within 10 days thereafter. Replies to the ITN were received from EPSI, GTL, Securus, and Telmate, LLC. Telmate?s reply was determined to be not responsive to the ITN. Two-Part ITN As amended by Addendum #2, section 2.4 of the ITN, entitled “ITN Process,” provided that the Invitation to Negotiate process to select qualified vendors would consist of two distinct parts. In Part 1, an interested vendor was to submit a response that described certain Mandatory Responsiveness Requirement elements, as well as a Statement of Qualifications, Technical Response, and Financial Documentation. These responses would then be scored using established evaluation criteria and the scores would be combined with cost points assigned from submitted Cost Proposals. In Part 2, the Department was to select one or more qualified vendors for negotiations. After negotiations, the Department would request a Best and Final Offer from each vendor for final consideration prior to final award decision. The ITN provided that the Department could reject any and all responses at any time. High Commissions and Low Rates Section 2.5 of the ITN, entitled “Initial Cost Response,” provided in part: It is the Department?s intention, through the ITN process, to generate the highest percentage of revenue for the State, while ensuring a quality telephone service with reasonable and justifiable telephone call rate charges for inmate?s family and friends similar to those available to the public-at- large. Section 2.6 of the ITN, entitled “Revenue to be Paid to the Department,” provided in part that the Department intended to enter into a contract to provide inmate telephone service at no cost to the Department. It provided that, “[t]he successful Contractor shall pay to the Department a commission calculated as a percentage of gross revenues.”1/ The commission paid by a vendor is the single largest expense in the industry and is an important aspect of any bid. Contract Term Section 2.8 of the ITN was entitled “Contract Term” and provided: It is anticipated that the initial term of any Contract resulting from this ITN shall be for a five (5) year period. At its sole discretion, the Department may renew the Contract in accordance with Form PUR 1000 #26. The renewal shall be contingent, at a minimum, on satisfactory performance of the Contract by the Contractor as determined by the Department, and subject to the availability of funds. If the Department desires to renew the Contracts resulting from this ITN, it will provide written notice to the Contractor no later than thirty days prior to the Contract expiration date. Own Technology System Section 3.4 of the ITN provided in part: The successful Contractor is required to implement its own technology system to facilitate inmate telephone service. Due to the size and complexity of the anticipated system, the successful Contractor will be allowed a period of transition beginning on the date the contract is executed in which to install and implement the utilization of its own technology system. Transition, implementation and installation are limited to eighty (80) days. The Department realizes that some "down time" will occur during this transition, and Respondents shall propose an implementation plan that reduces this "down time" and allows for a smooth progression to the proposed ITS. GTL emphasizes the language stating that the successful contractor must implement “its own” technology system, and asserts that the technology system which EPSI offers to install is not owned by it, but by Inmate Calling Solutions, LLC (ICS), its subcontractor. However, EPSI demonstrated that while the inmate telephone platform, dubbed the “Enforcer System,” is owned by ICS now, that EPSI has a Master User Agreement with ICS and that an agreement has already been reached that before the contract would be entered into, a Statement of Work would be executed to create actual ownership in EPSI for purposes of the Florida contract. GTL alleges that in EPSI?s reply, EPSI relied upon the experience, qualifications, and resources of its affiliated entities in other areas as well. For example, GTL asserts that EPSI?s claim that it would be providing 83 percent of the manpower is false, since EPSI has acknowledged that EPSI is only a contracting subsidiary of CenturyLink, Inc., and that EPSI has no employees of its own. While it is clear that EPSI?s reply to the ITN relies upon the resources of its parent to carry out the terms of the contract with respect to experience, presence in the state, and personnel, EPSI demonstrated that this arrangement was common, and well understood by the Department. EPSI demonstrated that all required capabilities would be available to it through the resources of its parent and subcontractors at the time the contract was entered into, and that its reply was in conformance with the provisions of the ITN in all material respects. EPSI has the integrity and reliability to assure good faith performance of the contract. Call Recording Section 3.6 of the ITN, entitled “Inmate Telephone System Functionality (General),” provided in part: The system shall provide the capability to flag any individual telephone number in the inmate?s „Approved Number List? as „Do Not Record.? The default setting for each telephone number will be to record until flagged by Department personnel to the contrary. Securus alleges that section 3.6 of the ITN implements Department regulations2/ and that EPSI?s reply was non-responsive because it stated that recording of calls to specific telephone numbers would be deactivated regardless of who called that number. Securus alleges that this creates a security risk because other inmates calling the same number should still have their calls recorded. EPSI indicated in its reply to the ITN that it read, agreed, and would comply with section 3.6. While EPSI went on to say that this capability was not connected to an inmate?s PIN, the language of section 3.6 does not mention an inmate?s PIN either. Read literally, this section requires only the ability to “flag” any individual telephone number that appears in an inmate?s number list as “do not record” and requires that, by default, calls to a telephone number will be recorded until it is flagged. EPSI?s reply indicated it could meet this requirement. This provision says nothing about continuing to record calls to that same number from other inmates. Whether or not this creates a security risk or is what the Department actually desired are issues which might well be discussed as part of the negotiations, but this does not affect the responsiveness of EPSI?s reply to section 3.6. Furthermore, Mr. Cooper testified at hearing that EPSI does have the capability to mark a number as “do not record” only with respect to an individual inmate, at the option of the Department. EPSI?s reply conformed to the call-recording provisions of section 3.6 of the ITN in all material respects. Call Forwarding Section 3.6.8 of the ITN, entitled “System Restriction, Fraud Control and Notification Requirements,” provided that the provided inmate telephone services have the following security capability: Ability to immediately terminate a call if it detects that a called party?s telephone number is call forwarded to another telephone number. The system shall make a “notation” in the database on the inmate?s call. The system shall make this information available, in a report format, to designated department personnel. In response to an inquiry noting that, as worded, the ITN did not technically require a vendor to have the capability to detect call-forwarded calls in the first place, the Department responded that this functionality was required. Securus alleges that EPSI is unable to comply with this requirement, citing as evidence EPSI?s admission, made some months before in connection with an RFP being conducted by the Kansas Department of Corrections, that it did not yet have this capability. EPSI indicated in its reply to the ITN that it read, agreed, and would comply with this requirement. As for the Kansas solicitation, EPSI showed that it now possesses this capability, and has in fact installed it before. EPSI?s reply conformed to the call-forwarding provisions of section 3.6.8 of the ITN in all material respects. Keefe Commissary Network Section 5.2.1 of the ITN, entitled “Respondents? Business/Corporate Experience,” at paragraph e. directed each vendor to: [P]rovide and identify all entities of or related to the Respondent (including parent company and subsidiaries of the parent company; divisions or subdivisions of parent company or of Respondent), that have ever been convicted of fraud or of deceit or unlawful business dealings whether related to the services contemplated by this ITN or not, or entered into any type of settlement agreement concerning a business practice, including services contemplated by this ITN, in response to a civil or criminal action, or have been the subject of any complaint, action, investigation or suit involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. The Respondent shall identify the amount of any payments made as part of any settlement agreement, consent order or conviction. Attachment 6 to the ITN, setting forth Evaluation Criteria, similarly provided guidance regarding the assessment of points for Business/Corporate Experience. Paragraph 1.(f) provided: “If any entities of, or related to, the Respondent were convicted of fraud or of deceit or unlawful business dealings, what were the circumstances that led to the conviction and how was it resolved by the Respondent?” Addendum #2. to the ITN, which included questions and answers, also contained the following: Question 57: In Attachment 6, Article 1.f. regarding respondents “convicted of fraud, deceit, or unlawful business dealing . . .” does this include associated subcontractors proposed in this ITN? Answer 57: Yes, any subcontractors you intend to utilize on this project, would be considered an entity of and related to your firm. As a proposed subcontractor, ICS is an entity of, or related to, EPSI. There is no evidence to indicate that ICS has ever been convicted of fraud or of deceit or unlawful business dealings. There is no evidence to indicate that ICS has entered into any type of settlement agreement concerning a business practice in response to a civil or criminal action. There is no evidence to indicate that ICS has been the subject of any complaint, action, investigation, or suit involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. The only evidence at hearing as to convictions involved “two individuals from the Florida DOC” and “two individuals from a company called AIS, I think that?s American Institutional Services.” No evidence was presented that AIS was “an entity of or related to” EPSI. Conversely, there was no evidence that Keefe Commissary Network (KCN) or anyone employed by it was ever convicted of any crime. There was similarly no evidence that KCN entered into any type of settlement agreement concerning a business practice in response to civil or criminal action. It was shown that KCN “cooperated with the federal government in an investigation” that resulted in criminal convictions, and it is concluded that KCN was therefore itself a subject of an investigation involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. However, KCN is not an entity of, or related to, EPSI. KCN is not a parent company of EPSI, it is not a division, subdivision, or subsidiary of EPSI, and it is not a division, subdivision, or subsidiary of EPSI?s parent company, CenturyLink, Inc. EPSI?s reply conformed to the disclosure requirements of section 5.2.1, Attachment 6, and Addendum #2 of the ITN in all material respects. Phases of the ITN Section 6 describes nine phases of the ITN: Phase 1 – Public Opening and Review of Mandatory Responsiveness Requirements Phase 2 – Review of References and Other Bid Requirements Phase 3 – Evaluations of Statement of Qualifications, Technical Responses, and Managed Access Solutions3/ Phase 4 – CPA Review of Financial Documentation Phase 5 – Review of Initial Cost Sheets Phase 6 – Determination of Final Scores Phase 7 – Negotiations Phase 8 – Best and Final Offers from Respondents Phase 9 – Notice of Intended Decision Evaluation Criteria in the ITN As amended by Addendum #2, the ITN established scoring criteria to evaluate replies in three main categories: Statement of Qualifications (500 points); Technical Response (400 points); and Initial Cost Sheets (100 points). It also provided specific guidance for consideration of the commissions and rates shown on the Initial Cost Sheet that made up the pricing category. Section 6.1.5 of the ITN, entitled “Phase 5 – Review of Initial Cost Sheet,” provided in part: The Initial Cost Proposal with the highest commission (percentage of gross revenue) to be paid to the Department will be awarded 50 points. The price submitted in Table 1 for the Original Contract Term, and the subsequent renewal price pages for Table 1 will be averaged to determine the highest commission submitted. All other commission percentages will receive points according to the following formula: (X/N) x 50 = Z Where: X = Respondents proposed Commission Percentage to be Paid. N = highest Commission Percentage to be Paid of all responses submitted. Z = points awarded. * * * The Initial Cost Proposal with the lowest telephone rate charge will be awarded 50 points. The price submitted in Table 1 for the Original Contract Term, and the subsequent renewal price pages for Table 1 will be averaged to determine the highest commission submitted. All other cost responses will receive points according to the following formula: (N/X) x 50 = Z Where: N = lowest verified telephone rate charge of all responses submitted. X = Respondent?s proposed lowest telephone rate charge. Z = points awarded. The ITN as amended by Addendum #2 provided instructions that initial costs should be submitted with the most favorable terms the Respondent could offer and that final percentages and rates would be determined through the negotiation process. It included the following chart:4/ COST PROPOSAL INITIAL Contract Term 5 years ONE Year Renewal TWO Year Renewal THREE Year Renewal FOUR Year Renewal FIVE Year Renewal Initial Department Commission % Rate Proposed Initial Blended Telephone Rate for All Calls* (inclusive of surcharges) The ITN, including its Addenda, did not specify selection criteria upon which the determination of best value to the state would be based. Allegation that EPSI Reply was Misleading On the Certification/Attestation Page, each vendor was required to certify that the information contained in its reply was true and sufficiently complete so as not to be misleading. While portions of its reply might have provided more detail, EPSI did not mislead the Department regarding its legal structure, affiliations, and subcontractors, or misrepresent what entity would be providing technology or services if EPSI was awarded the contract. EPSI?s reply explained that EPSI was a wholly owned corporate subsidiary of CenturyLink, Inc., and described many aspects of the contract that would be performed using resources of its parent, as well as aspects that would be performed through ICS as its subcontractor. Department Evaluation of Initial Replies The information on the Cost Proposal table was reviewed and scored by Ms. Hussey, who had been appointed as the procurement manager for the ITN. Attempting to follow the instructions provided in section 6.1.5, she added together the six numbers found in the boxes indicating commission percentages on the Cost Proposal sheets. One of these boxes contained the commission percentage for the original five-year contract term and each of the other five boxes contained the commission percentage for one of the five renewal years. She then divided this sum by six, the number of boxes in the computation chart (“divide by six”). In other words, she calculated the arithmetic mean of the six numbers provided in each proposal. The Department had not intended for the commission percentages to be averaged in this manner. Instead, they had intended that a weighted mean would be calculated. That is, they intended that five times the commission percentage shown for the initial contract term would be added to the commission percentages for the five renewal years, with that sum then being divided by ten, the total number of years (“divide by ten”). The Department did not clearly express this intent in section 6.1.5. Mr. Viefhaus testified that based upon the language, Securus believed that in Phase 5 the Department would compute the average commission rate the way that Ms. Hussey actually did it, taking the arithmetic mean of the six commission percentages provided by each vendor, and that therefore Securus prepared its submission with that calculation in mind.5/ Mr. Montanaro testified that based upon the language, GTL believed that in Phase 5 the Department would “divide by ten,” that is, compute the weighted mean covering the ten-year period of the contract, and that GTL filled out its Cost Proposal table based upon that understanding. The DOC posted a notice of its intent to negotiate with GTL, Securus, and EPSI on June 3, 2013. Telmate, LLC, was not chosen for negotiations.6/ Following the Notice of Intent to Negotiate was this statement in bold print: Failure to file a protest within the time prescribed in Section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. On June 14, 2013, the DOC issued a Request for Best and Final Offers (RBAFO), directing that Best and Final Offers (BAFO) be provided to the DOC by June 18, 2013. Location-Based Services The RBAFO included location-based services of called cell phones as an additional negotiated service, requesting a narrative description of the service that could be provided. The capability to provide location-based services had not been part of the original ITN, but discussions took place as part of the negotiations. Securus contends that EPSI was not a responsible vendor because it misrepresented its ability to provide such location-based services through 3Cinteractive, Inc. (3Ci). EPSI demonstrated that it had indicated to the Department during negotiations that it did not have the capability at that time, but that the capability could easily be added. EPSI showed that due to an earlier call it received from 3Ci, it believed that 3Ci would be able to provide location- based services to it. EPSI was also talking at this time to another company, CTI, which could also provide it that capability. In its BAFO, EPSI indicated it could provide these services, explained that they would require payments to a third- party provider, and showed a corresponding financial change to their offer. No competent evidence showed whether or not 3Ci was actually able to provide that service on behalf of EPSI, either at the time the BAFO was submitted, or earlier. EPSI showed that it believed 3Ci was available to provide that service, however, and there is no basis to conclude that EPSI in any way misrepresented its ability to provide location-based services during negotiations or in its BAFO. Language of the RBAFO The RBAFO provided in part: This RBAFO contains Pricing, Additional Negotiated Services, and Value Added Services as discussed during negotiation and outlined below. The other specifications of the original ITN, unless modified in the RBAFO, remain in effect. Respondents are cautioned to clearly read the entire RBAFO for all revisions and changes to the original ITN and any addenda to specifications, which are incorporated herein and made a part of this RBAFO document. Unless otherwise modified in this Request for Best and Final Offer, the initial requirements as set forth in the Department?s Invitation to Negotiate document and any addenda issued thereto have not been revised and remain as previously indicated. Additionally, to the extent that portions of the ITN have not been revised or changed, the previous reply/initial reply provided to the Department will remain in effect. These two introductory paragraphs of the RBAFO were confusing. It was not clear on the face of the RBAFO whether “other specifications” excluded only the pricing information to be supplied or also the specifications indicating how that pricing information would be calculated or evaluated. It was not clear whether “other specifications” were the same thing as “initial requirements” which had not been revised. It was not clear whether scoring procedures constituted “specifications.” While it was clear that, to the extent not revised or changed by the RBAFO, initial replies that had been submitted -- including Statements of Qualifications, Technical Response, Financial Documentation, and Cost Proposals -- would “remain in effect,” it was not clear how, if at all, these would be considered in determining the best value to the State. In the RBAFO under the heading “PRICING,” vendors were instructed to provide their BAFO for rates on a provided Cost Proposal table which was virtually identical to the table that had been provided earlier in the ITN for the evaluation stage, including a single square within which to indicate a commission rate for the initial five-year contract term, and five squares within which to indicate commission rates for each of five renewal years. The RBAFO stated that the Department was seeking pricing that would provide the “best value to the state.” It included a list of 11 additional services that had been addressed in negotiations and stated that, “in order to provide the best value to the state,” the Department reserved the right to accept or reject any or all of these additional services. It provided that after BAFOs were received, the Negotiation Team would prepare a summary of the negotiations and make a recommendation as to which vendor would provide the “best value to the state.” The RBAFO did not specify selection criteria upon which the determination of best value to the State would be based. In considering commission percentages as part of their determination as to which vendor would receive the contract, the Negotiation Team decided not to consider commissions that had been listed by vendors for the renewal years, concluding that the original five-year contract term was all that was assured, since renewals might or might not occur. On June 25, 2013, the DOC posted its Notice of Agency Decision stating its intent to award a contract to EPSI. Protests and the Decision to Reject All Replies Subsequent to timely filing notices of intent to protest the intended award, Securus and GTL filed Formal Written Protests with the DOC on July 5 and 8, 2013, respectively. The Department considered and compared the protests. It determined that language in the ITN directing that in Phase 5 the highest commission would be determined by averaging the price for the original contract term with the prices for the renewal years was ambiguous and flawed. It determined that use of a table with six squares as the initial cost sheet was a mistake. The Department determined that the language and structure of the RBAFO could be read one way to say that the Department would use the same methodology to evaluate the pricing in the negotiation stage as had been used to evaluate the Initial Cost sheets in Phase 5, or could be read another way to mean that BAFO pricing would not be evaluated that way. It determined that the inclusion in the RBAFO of a table virtually identical to the one used as the initial cost sheet was a mistake. The Department determined that the language and the structure of the RBAFO could be read one way to require further consideration of such factors as the Statement of Qualifications and Technical Response in determining best value to the State, or could be read another way to require no further consideration of these factors. The Department prepared some spreadsheets demonstrating the varying results that would be obtained using “divide by six” and “divide by ten” and also considered a spreadsheet that had been prepared by Securus. The Department considered that its own Contract Manager had interpreted the Phase 5 instructions to mean “divide by six,” while the Department had actually intended the instructions to mean “divide by ten.” The Department had intended that the Negotiation Team give some weight to the renewal-year pricing, and had included the pricing table in the RBAFO for that reason, not simply to comply with statutory requirements regarding renewal pricing. The Department determined that the way the RBAFO was written and the inclusion of the chart required at least some consideration of ten-year pricing, and that vendors had therefore been misled when the Negotiation Team gave no consideration to the commission percentages for the renewal years. Specifically, based upon the Securus protest, the Department determined that the RBAFO language had been interpreted by Securus to require that the Phase 5 calculation of average commission percentage be carried over to evaluation of the pricing in the BAFOs, which Securus had concluded meant “divide by six.” The Department further determined that based upon the GTL protest, the RBAFO language had been interpreted by GTL to require the Department to consider the renewal years in pricing, as well as such things as the Statement of Qualifications and Technical Response in the BAFO stage. The Department determined that had “divide by six” been used in evaluating the BAFOs, Securus would have a computed percentage of 70 percent, higher than any other vendor. The Department concluded that the wording and structure of the ITN and RBAFO did not create a level playing field to evaluate replies because they were confusing and ambiguous and were not understood by everyone in the same way. Vendors naturally had structured their replies to maximize their chances of being awarded the contract based upon their understanding of how the replies would be evaluated. The Department concluded that vendor pricing might have been different but for the misleading language and structure of the ITN and RBAFO. The Department did not compute what the final award would have been had it applied the scoring procedures for the initial cost sheets set forth in section 6.1.5 to the cost elements of the BAFOs. The Department did not compute what the final award would have been had it applied the scoring procedures for the Statement of Qualifications and Technical Response set forth in section 6.1.3 to the BAFOs. Ms. Bailey testified that while she had originally approved the ITN, she was unaware of any problems, and that it was only later, after the protests to the Notice of Intended Award had been filed and she had reviewed the specifications again, that she had come to the conclusion that the ITN and RBAFO were flawed. Following the protests of the intended award by GTL and Securus, on July 23, 2013, the DOC posted to the Vendor Bid System a Notice of Revised Agency Decision stating the DOC?s intent to reject all replies and reissue the ITN. On August 5, 2013, EPSI, GTL, and Securus filed formal written protests challenging DOC?s intended decision to reject all replies. Securus subsequently withdrew its protest to DOC?s rejection of all replies. As the vendor initially notified that it would receive the contract, EPSI?s substantial interests were affected by the Department's subsequent decision to reject all replies. GTL alleged the contract had wrongly been awarded to EPSI and that it should have received the award, and its substantial interests were affected by the Department's subsequent decision to reject all replies. The Department did not act arbitrarily in its decision to reject all replies. The Department did not act illegally, dishonestly, or fraudulently in its decision to reject all replies. EPSI would likely be harmed in any re-solicitation of bids relative to its position in the first ITN, because potential competitors would have detailed information about EPSI?s earlier reply that was unavailable to them during the first ITN. An ITN requires a great deal of work by the Department and creates a big demand on Department resources. The decision to reject all replies was not undertaken lightly. The State of Florida would likely benefit in any new competitive solicitation7/ because all vendors would be aware of the replies that had been submitted earlier in response to the ITN, and bidders would likely try to improve upon those proposals to improve their chances of being awarded the contract.
Recommendation Upon consideration of the above findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Corrections issue a final order finding that the rejection of all replies submitted in response to ITN 12-DC-8396 was not illegal, arbitrary, dishonest, or fraudulent, and dismissing all four protests. DONE AND ENTERED this 1st day of November, 2013, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD 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 1st day of November, 2013.
The Issue The issue in the case is whether the Petitioner received appropriate compensation for telephone service interruptions and whether the Respondent and the Intervenor have acted appropriately under applicable statutes and administrative rules in resolving the Petitioner’s complaint.
Findings Of Fact Calvin "Bill" Wood resides on Schaefer Lane in Lake Wales, Florida, and receives local telephone service from GTE. GTE is a telecommunications service provider doing business in Florida and regulated by the PSC under the authority of Chapter 364, Florida Statutes, and Chapter 25, Florida Administrative Code. In May 1997, the Petitioner began to experience telephone service problems, including line static and service outages. According to GTE records reviewed by PSC personnel, GTE responded to the Petitioner’s reports of telephone service problems. GTE attempted to identify and repair the causes of the problems over an extended period of time. The GTE records, as reviewed by the PSC personnel, indicate that the Petitioner’s problems continued and that he frequently reported the trouble to GTE. GTE’s "trouble reports" and summaries characterize the Petitioner’s service problems as "miscellaneous" and "non-service affecting" at times when the Petitioner’s complaint was a lack of dial tone. The inability to obtain a dial tone is a service- affecting problem. A GTE installation and repair manager testified that technicians will identify a problem as "miscellaneous" and "non- service affecting" when they are unable to identify the cause of a problem, or when the problem is intermittent and is not active at the time the technician tests the line. Notations on records suggest that frequently the problems were not apparent at the time of testing. In any event, the Petitioner’s telephone service problems continued through the summer and fall of 1997. By the end of 1997, the Petitioner complained that one of his neighbors was often unable to call him. On December 30, 1997, the Petitioner filed a complaint with the PSC Consumer Affairs Division, alleging that his telephone service was inadequate, specifically that the neighbor could not call him, and that his phone did not ring. The Petitioner’s complaint was tracked in the PSC Consumer Affairs Division computer system. At the time the complaint was filed, the PSC complaint tracking systems were not integrated between PSC divisions, resulting in individual consumer complaints being routed to various PSC personnel who were unaware that the consumers problems were already being investigated by other PSC personnel. PSC consumer complaints are now handled by an integrated docketing system. Beginning after the filing of the complaint of December 30, 1997, the PSC began to inquire into the Petitioner’s telephone problems. In response to contact from the PSC, GTE acknowledged that service problems existed and indicated that lightning possibly damaged the Petitioner’s telephone service. GTE stated that the main cable providing service to the Petitioner would be replaced. By letter dated February 3, 1998, the Petitioner advised GTE and the PSC that he would withhold payment of his telephone bill until such time as his phone service was functioning and the neighbor could call him without problem. On February 11, 1998, GTE made repairs to the Petitioner’s "drop wire" and connection. GTE also examined the Petitioner’s owner-supplied telephone equipment and determined that it was defective. The Petitioner agreed to acquire another telephone. On February 12, 1998, GTE personnel visited the Petitioner’s home to determine whether the service had been restored. At that time, the Petitioner asked them to check with the neighbor whose calls were not being received by the Petitioner. On February 12, 1998, GTE personnel visited the neighbor and determined by observation that the neighbor’s calls to the Petitioner were being misdialed. On February 26, 1998, GTE installed new cable to serve the Petitioner but were unable to connect his telephone to the new cable because GTE’s "serving cable pairs" were defective. Weather-related problems prevented the company from correcting the defective "serving cable pair" problem on February 27, and apparently on any subsequent day prior to March 9, 1998. GTE provided a credit of $1.78 on the Petitioner’s February 1998 telephone bill for the time the phone was out of service. GTE also provided a $25 credit as part of GTE’s "Service Performance Guarantee." The "Service Performance Guarantee" provides a $25 credit to a GTE customer when the customer-reported service issue is not resolved within 24 hours. On March 9, 1998, GTE personnel visited the Petitioner and found that earlier in the day, the Petitioner’s home had been destroyed by a tornado. The GTE personnel testified that they advised the Petitioner to contact them when his electrical service was restored and the telephone would be reconnected. The Petitioner testified that he told the GTE personnel he intended to live in a camper trailer he would place next to his house and testified that the GTE personnel told him they would return to connect his phone service. The GTE personnel did not hear from the Petitioner and did not immediately return to connect phone service. The Petitioner did not contact GTE to advise that his electrical service had been restored. The next day, March 10, 1998, GTE notified the Petitioner that his telephone service would be disconnected for nonpayment of an outstanding balance in excess of $600. The GTE notice established a deadline of March 19, 1998, for payment. On March 11, 1998, the Petitioner requested that his calls be forwarded to his neighbor’s home. GTE complied with the request and began forwarding the Petitioner’s calls on March 13, 1998. On March 23, 1998, GTE personnel attempted to visit the Petitioner and ascertain the situation, but the Petitioner’s private drive was barricaded. The GTE representative assumed that the condition of the property was not suitable for reconnection of telephone service. By letter to the PSC dated March 25, 1998, the Petitioner complained that the phone service to his property had not been restored. On March 25, 1998, the Petitioner’s telephone service was disconnected for nonpayment of the outstanding balance on his account. On March 27, 1998, GTE advised the Petitioner that his telephone service would be "permanently" disconnected if the outstanding balance of $664.02 were not paid. GTE provided another $25 SPG credit on the Petitioner’s March 1998 bill. On April 2, 1998, the Petitioner informed the PSC that he had no telephone service and requested an informal conference to resolve the matter. The Petitioner offered to escrow his telephone payments until his service was repaired to his satisfaction. On the same day, GTE notified the PSC that the Petitioner had the outstanding unpaid balance. Because the Petitioner’s complaint was still pending and the PSC had not proposed a resolution, the Petitioner’s request for an informal conference was premature. In subsequent letters, the Petitioner continued to seek an informal conference prior to completion of the investigation. The PSC did not act on the requests. There is no evidence that the Petitioner disputed the amount due on his telephone bill. The Petitioner’s decision to withhold payment of the bill was service-related. The PSC does not have authority to prevent a service provider from disconnecting service for nonpayment of undisputed telephone service charges. On April 4, 1998, GTE "permanently" disconnected the Petitioner’s telephone service for nonpayment. By letter to the PSC dated April 6, 1998, the Petitioner requested assistance in obtaining telephone service, asserting that a heart condition required access to a telephone. There is no evidence that prior to April 6, 1998, the Petitioner had advised either GTE or the PSC of any existing heart condition. By rule, GTE is required to maintain customer access to an emergency 911 communications system except where telephone service is "permanently" disconnected. Other than after the "permanent" disconnection of his telephone service, there is no evidence that the Petitioner lacked access to the emergency 911 system. By letter to the PSC dated April 8, 1998, the Petitioner alleged to the PSC that several of his neighbors were having telephone problems and were, for a variety of reasons, unable to contact the PSC to complain. The Petitioner attempted to involve a number of his neighbors in his complaint, but none of the neighbors filed a complaint with the PSC, and there is no evidence that the neighbors complained to GTE about any service problems. There is no evidence that any resident of Schaefer Lane filed a telephone service complaint with the PSC. There is no evidence that the Petitioner is authorized to represent his neighbors or neighborhood in this matter. On April 17, 1998, GTE offered to reconnect the Petitioner’s local telephone service and block all toll calls if he would agree to arrange payment of the outstanding balance. The Petitioner apparently refused the offer, but on April 20, 1998, GTE reconnected the local service and activated the toll block. GTE waived the $55 reconnection charge and suspended collection procedures pending resolution of the complaint the Petitioner filed with the PSC. On May 9, 1998, the Petitioner made payment of the outstanding balance of his telephone bill. The toll block should have been removed from the Petitioner’s telephone service at that time, but it was not. On May 13, 1998, the Petitioner notified the PSC that the toll block remained on his phone. The PSC notified GTE that the toll block was still active. GTE apparently did not act on the information. On May 29, 1998, the PSC tested telephone lines at the Petitioner’s home and at the home of the calling neighbor. The technicians detected no telephone line problem in any location. The PSC technician attempted to complete numerous calls from the neighbor’s home to the Petitioner. The technician’s calls were completed without incident. The neighbor was asked to dial the Petitioner’s number. The PSC technician observed that the neighbor misdialed the Petitioner’s telephone number on each of three attempts. GTE eventually provided and installed a "big button" telephone for the neighbor. GTE also provided speed-dialing service at no charge to the neighbor and instructed him on use of the service. The Petitioner asserts that the PSC technician violated PSC administrative rules by traveling with GTE personnel to the Petitioner’s and neighbor’s homes on May 29. The evidence fails to establish that the transportation constituted a violation of any administrative rule. By June 1, 1998, with the toll block still activated, the Petitioner filed a complaint with the PSC concerning the service disconnection and the toll block. The June 1, 1998, complaint was assigned to the Telecommunications Division and the PSC again relayed the complaint to GTE. GTE removed the toll block on June 4, 1998. At this point, the PSC realized that the Petitioner had filed two separate complaints and the agency combined the investigations. It is unclear as to the reason GTE did not remove the toll block after the PSC relayed the matter to them on May 13, 1998; but there is no evidence that it was done to retaliate against the Petitioner. Despite the toll call block, the Petitioner was able to make long distance calls by using a calling card. After GTE removed the block, GTE credited the Petitioner with the difference between the cost of the calls made using his calling card and the cost of the calls that would have been made using the regular long distance carrier had the toll block not been in place. GTE issued service credits of $2.14 and $1.65 on the Petitioner’s June bill for out-of-service claims. The Petitioner asserted that there were times when callers were unable to reach him, but the evidence fails to establish that failed calls were the result of service problems. The Petitioner had numerous telecommunications and computer devices attached to the line. Use of devices, including computers and fax machines, can result in an incoming call not being completed. The Petitioner also acknowledges that he sometimes does not answer the telephone. The PSC technician testified that as of May 29, 1998, he considered the service problem resolved. Tests on the Petitioner’s telephone lines revealed the lines to be in working order. Numerous calls placed to the Petitioner from the neighbor’s house and other locations were completed without incident. In mid-June 1998, the technician recommended that the case be closed. By letter dated June 17, 1998, the PSC advised the Petitioner of the informal resolution of the case and advised him of his right to request an informal conference. On August 18, 1998, the Petitioner informed the PSC that the neighbor was able to complete calls to him and considered that matter resolved, but asked for an informal conference. The PSC staff, attempting to negotiate a settlement of the dispute, did not convene an informal conference until May 12, 1999. The matter was not resolved at the May 12, 1999, conference. On July 15, 1999, the PSC staff filed its recommendation for action at the PSC’s Agenda Conference on July 27, 1999, at which time the PSC referred the dispute to the Division of Administrative Hearings. The Petitioner has previously asserted that he is entitled the $25 SPG credit for each time he called GTE to complain about his telephone service. There is no evidence that the Petitioner is entitled to any SPG credits beyond those he has already received. The evidence establishes that the Petitioner’s service- related problems were intermittent, required extensive "troubleshooting" to locate, and were repaired as soon as was practicable. The Petitioner’s monthly local telephone service charge is $10.86, or approximately 36 cents per day. The PSC staff calculates that the Petitioner is due a maximum "out-of-service" credit of $16.46 allowing for a period of approximately 46 days of credit. GTE has issued total credits in the amount of $110.57, including two $25 SPG credits and waiver of the $55 reconnect fee. Subtracting the $105 attributable to the two SPG’s and the reconnect fee credit from the total of $110.57 leaves the remainder of $5.57, which is the total of the three "out-of-service" credits ($1.78, $1.65 and $2.14) the Petitioner has received. Based on the PSC staff determination that the Petitioner was due a maximum of $16.46 in "out-of-service" credit, it appears that the Petitioner should receive an additional credit of $10.89.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Public Service Commission enter a final order requiring GTE to provide a credit of $10.89 to the Petitioner. DONE AND ENTERED this 10th day of May, 2000, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of May, 2000. COPIES FURNISHED: Calvin "Bill" Wood 10577 Schaefer Lane Lake Wales, Florida 33853 Kimberly Caswell, Esquire Post Office Box 110, MC FLTC0007 Tampa, Florida 33601-0110 Donna Clemons, Esquire Florida Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 William D. Talbott, Executive Director Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 Rob Vandiver, General Counsel Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 Blanca Bayo Director of Records and Reporting Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850
The Issue Whether Petitioner was retaliated against due to testifying by deposition in another employee’s employment discrimination lawsuit.
Findings Of Fact Amie Remington, Esquire, an attorney in private practice, was hired as a contract attorney by the State of Florida to represent the Department in an employment discrimination lawsuit brought by Linwood Scott involving computer security violations and lax enforcement of the Department’s computer security policy that resulted in loss of State funds due to employee fraud. As part of the discovery in the Scott case, Ms. Remington deposed Petitioner on January 11, 2005. Prior to the deposition, Ms. Remington spoke with Katie George, Chief Legal Counsel for the Department, and obtained information as to all proposed witnesses, including Petitioner. At this time, Ms. Remington received information that Petitioner was identified for layoff. Mamum Rashied, the Department’s former District Operations Administrator, who retired on February 2, 2006, managed the Department’s operations for the four counties in District One; Escambia, Santa Rosa, Okaloosa, and Walton. As District Operations Administrator, Mr. Rashied was the second person in charge of the district with purview over the Economic Self Sufficiency (ESS) Program. The ESS program was the program in which Petitioner was employed at a salary of $1215.00 bi- weekly. During calendar year 2005, the ESS program underwent a statewide reorganization resulting in the elimination of approximately 42 percent to 43 percent of ESS positions through layoffs in District One. Petitioner, then an Economic Self-Sufficiency Specialist II (ESSSII), was on the list for layoff. Placement on the layoff list was made based on a top-to-bottom ranking of employees. Each employee was to be rated by the unit supervisors and placed on the list in terms of their retainability. The rating list was forwarded to the Operations Manager for the Service Center. Each Service Center compiled a ratings list which was then forwarded to the District Program Office to be combined into one district list. Mr. Rashied received a copy of the district list which contained the Petitioner’s name sometime in December 2004. The layoff listing process took approximately two months and was in existence prior to the Petitioner giving her deposition in the Linwood Scott case on January 11, 2005. Prior to the layoffs, Department personnel conducted general sessions at the Service Center for all interested employees to gain information as to the potential layoff situation. However, Petitioner was unaware of these meetings and apparently did not participate in them. During her deposition in the Scott case, Petitioner testified that she had logged into her computer using her password and P number and then allowed another employee to use her computer to help her with a problem case. Petitioner had permitted the use of her computer in an effort to help the employee process the information her center was required to handle. Such aid and supervision was part of her duties as an ESSSII. Petitioner did not believe that her actions violated the security policy of the Department. However, such action was a violation of the Department’s computer security policy. Petitioner’s testimony related to the fact that such activity occurred often in her Department. After her testimony, Petitioner was terminated on January 27, 2005, effective February 7, 2005, prior to her being laid off. The termination was the result of the Petitioner’s violation of the Department’s computer security policy. Petitioner was subsequently reinstated on April 5, 2005, following a ruling by the Public Employee Relations Commission (PERC) in favor of Petitioner, including payment of back pay and benefits. The ruling did not find that Petitioner had been retaliated against. Immediately following reinstatement, Petitioner was laid off effective April 5, 2005, pursuant to the prior layoff list which was still on-going. Importantly, if Petitioner had not been terminated she would have been laid off. Petitioner was subsequently rehired by the Department as an Economic Self-Sufficiency Specialist I (ESS-I) on September 2, 2005. The Petitioner’s personnel file indicated that she had been laid off and was subject to rehire. Based on a position opening and Petitioner’s qualifications, Petitioner was rehired and continues in the ESS-I position to date. Petitioner testified in her own behalf at the hearing. She asserted that she thought she was retaliated against because of her testimony in the Linwood Scott case. However, she offered no other evidence to show such retaliation and such supposition is insufficient to support a claim of retaliation. Likewise, Petitioner did not offer any evidence that Petitioner’s reasons for her initial termination and later layoff were pretexts to cover unlawful retaliation. Since there was insufficient evidence to support Petitioner’s claim of retaliation, her Petition for Relief should be dismissed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Florida Commission on Human Relations enter a final order dismissing the Petition for Relief. DONE AND ENTERED this 16th day of May, 2006, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of May, 2006. COPIES FURNISHED: Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Brittie Powers 106 Lakewood Road Pensacola, Florida 32507 Eric D. Schurger, Esquire Department of Children and Family Services 160 Governmental Center, Suite 601 Pensacola, Florida 32501-5734
The Issue The issue in this case is whether Petitioner was the subject of an unlawful employment practice by Respondent.
Findings Of Fact Respondent is an express package delivery and courier service. It operates both nationally and internationally. Important to its service is the ability of the company and its customers to accurately track packages throughout Respondent's delivery system and to maintain timely delivery of those packages. Petitioner is an African-American male. As an African- American, Petitioner is a protected person under chapter 760, Florida Statutes. Petitioner also served in the military and testified that he has been diagnosed with post-traumatic stress disorder (PTSD). However, while Petitioner was employed by Respondent, his supervisors had no knowledge of Petitioner's PTSD diagnosis or alleged disability. Similarly, they did not consider him to be disabled. Other than his testimony of having a diagnosis of PTSD, Petitioner offered no evidence of his condition and no evidence that Petitioner?s PTSD is a disability or handicap as defined under the ADA or chapter 760. Given this lack of evidence, Petitioner failed to demonstrate that he is a protected person for purposes of handicap and the allegations of the Petition for Relief related thereto should be dismissed. In 1996, Petitioner was employed by Respondent as a courier in Respondent?s Pensacola station. In 2008 and 2009, Petitioner was supervised by Pat Gaal, an Operations Manager at the Pensacola station. Mr. Gaal was supervised by Senior Manager Doug Nash who was stationed in Mobile, Alabama. Mr. Nash, in turn, was supervised by Randy King, Managing Director of Respondent?s River District. Mr. King's office was located in New Orleans, Louisiana. As a courier, returning on time to the station is important so that the trucks, which move packages on the next leg of their journey, can leave the station on time. Any delays in loading these trucks and leaving on time can have a domino effect down Respondent's delivery system. For that reason, the courier is required to notify dispatch or call the station regarding an anticipated late return. Additionally, a very important part of Petitioner?s job was to “scan[] packages according to prescribed procedures. . . .” “Scanning packages” refers to the practice of couriers scanning bar codes on packages assigned by Respondent?s system with a device called a “Power Pad.” The bar code allows Respondent to collect and process data regarding the location and status of those packages for use by Respondent and its customers. This tracking information and its accuracy is a very important component of Respondent's service to its customers and can become vital if mailing or delivery of a package is at issue when legal rights are in dispute. Because of this importance, Respondent has established a strict policy with severe penalties for employees who falsify data they put into the company's package tracking and processing system. Such falsification includes picking up packages and scanning them at a later time so that the pick-up time is inaccurate. Policy 2-5 of Respondent?s Acceptable Conduct Policy states that “an employee normally will be dismissed upon completion of an investigation confirming violations related to . . . [d]eliberate falsification of Company documents including but not limited to . . . delivery records. . . .” Additionally, the Employee Handbook lists “[d]eliberate falsification of company documents including but not limited to . . . delivery records . . .” as a discharge offense. As part of his employment with Respondent, Petitioner received an employee handbook. Petitioner also was trained by Respondent with regard to the Respondent?s falsification policy and with regard to the fact that falsification was a terminable offense. As recently as February 8, 2008, Petitioner signed a memorandum from Respondent?s Vice President, Ted Merida, explaining that falsification would result in termination. The memo stated, in part, that the “consequence of falsifying a document is termination, your management team has NO discretion or ability to deviate from the action required by policy, regardless of your tenure, . . . or whether your intentions were to serve the customer.” Additionally, on November 3, 2008, Petitioner signed a memorandum from Respondent?s vice president, Dave Leech, which reemphasized the Respondent's policy that falsification violations would result in termination. Couriers are generally assigned routes. Some routes are delivery or pick up routes only. Some routes combine these functions. On combined routes, the same driver delivers and picks up packages at the same location. In combined routing, deliveries and pickups are scheduled separately with deliveries generally occurring in the morning and pickups in the afternoon. Occasionally, a package might be available for pick up early when the courier is at a location making a delivery. Likewise, a package that was not scheduled for pick up might be available for pick up when the courier is at a location making a delivery. When packages are available early, the courier has the option to pick up the package when the courier is at the package location rather than returning later to the same location to pick up the package. However, these early pickups are required to be scanned when they are picked up so that the information on Respondent's tracking system is accurate. In the months preceding January 2009, Petitioner was assigned the downtown Pensacola route, denoted as the “528” Route. He typically worked four ten-hour shifts per week. On the days when Petitioner was not working, “swing drivers” would cover the 528 route. The 528 route was a “higher density” route compared to other routes because it was in a downtown area where deliveries and pick-ups at various locations are very close together. Because of the combined route and density, the 528 route often had packages that could be picked up earlier than their scheduled pick up time. Additionally, a package that was not scheduled to be picked up might be available for the driver to take when they were delivering packages to a given location. Petitioner was trained on the 528 route by Derrick McCrary, an African-American courier. When Mr. McCrary trained Petitioner, he instructed him that packages were required to be scanned immediately upon pick-up or within a few minutes of package pickup. Indeed, during this time, neither individual employed a practice of picking up packages in the morning and scanning them at a significantly later time. Once Petitioner became the regular driver on the 528 route, performance goals were established according to Petitioner?s performance on that route. Courier performance goals are tracked and reported package by package and stop by stop on FAMIS 129 reports. These reports include individual courier summary reports and "Planet Station" reports that chronologically track delivery and pick up information for a specific route. In December 2008, Petitioner returned late to the station on multiple occasions. The courier who had Petitioner?s route prior to Petitioner and swing couriers who covered Petitioner?s route on Petitioner?s days off did not have the same problem returning late to the station. Additionally, for the month of December 2008, Petitioner had the lowest on-road productivity numbers of any courier in the Pensacola station at 88.21 percent. Swing couriers, including Mr. McCrary, who covered Petitioner?s route on Petitioner?s days off did not have the same low productivity numbers as Petitioner. Petitioner called Synethia Bell and Adrian Simmons as witnesses. Both Ms. Bell and Mr. Simmons are African-American individuals who currently work as couriers in Respondent?s Pensacola station. Both Ms. Bell and Mr. Simmons testified that they are not aware of management at Respondent?s Pensacola station showing favoritism based on race, that they have not experienced any racially-discriminatory treatment by management, and that they did not witness Petitioner receiving any racially- discriminatory treatment by management. Petitioner's other witnesses were long-time past employees whose testimony was not relevant as to the facts or the time period of this case. Petitioner received a non-disciplinary online counseling from Pat Gaal stating that Petitioner?s on-road performance was “unacceptable” and “the lowest in the station.” Mr. Gaal also expressed concern regarding Petitioner?s repeated late returns to the station without notifying the proper person, as he was required to do. There was no evidence that Respondent's online counseling was not based in fact or was based on Petitioner's race. In January 2009, Pat Gaal was on vacation. Operation Managers Kurt Martin and Eric Perdue noticed during their routine review of the daily productivity reports that Petitioner had abnormally high and unachievable productivity numbers during the afternoon portion of his route. Additionally, they noted that pick-ups at different addresses were being shown as being only a minute apart. Such rapidity in pickups was also an impossible achievement given the locations for those pickups. When Pat Gaal returned from vacation, Mr. Martin and Mr. Perdue brought these daily productivity reports to Mr. Gaal's attention. Mr. Gaal analyzed FAMIS 129 reports and noted that Petitioner on sixty-one occasions between January 6, 2009 and January 14, 2009, had scanned packages in the afternoon that he had picked up in the morning. The reports did not show that any other courier was scanning packages in the afternoon that had been picked up in the morning. Indeed, contrary to Petitioner's assertion that late scanning was routinely practiced by other couriers, the testimony from all of Respondent's current employees was that they did not scan packages late and such practice was prohibited. In this case, the evidence was clear that Petitioner's action was a serious violation of Respondent's package processing policy and constituted falsification of records under that policy. Indeed, the amount of falsification by Respondent was the worst violation of the policy that Respondent had seen. Mr. Gaal asked Petitioner if he was scanning packages late. To his credit, Petitioner admitted to Mr. Gaal that he was picking up packages early in the day but not scanning them until hours later in the day. Petitioner also confirmed his admission in a written statement on the matter. On January 19, 2009, Petitioner was placed on investigative suspension. He was terminated by Mr. Gaal on January 21, 2009, for regular falsification of records in violation of Respondent?s Acceptable Conduct Policy. There was no substantive evidence that Petitioner?s race played a part in Pat Gaal?s treatment of Petitioner while he was employed by Respondent. Respondent?s employee policy provides a multi-step procedure for employees to challenge disciplinary actions with which they disagree. This policy is known as the Guaranteed Fair Treatment Procedure (GFT). Respondent's policy also provides a process to handle complaints of discriminatory treatment known as the Internal Equal Employment Procedure (IEEP). Both of these policies are posted at the Pensacola station, along with a poster entitled “Equal Employment Opportunity is the Law.” Petitioner was familiar with both of these processes. However, Petitioner never submitted an IEEP complaint to Respondent. Instead, Petitioner filed a GFT complaint in January 2009, to challenge his termination. Petitioner's GFT complaint did not include any allegations of discrimination. The GFT process provides an employee with three levels of review. Step 1 of the GFT process involves the decision of a Managing Director after consultation with the managers involved in the discipline, the complainant and applicable witnesses. In this case, Managing Director Randy King conducted a telephonic hearing with Petitioner and other witnesses. Again, Petitioner admitted to Mr. King that he employed a practice of making pickups early in the day but not scanning the packages until later in the day to help boost his productivity. Petitioner did not make any allegations of discrimination during the Step 1 review. After the Step 1 hearing, Mr. King reviewed a summary of a review of daily reports for every courier in Respondent?s Pensacola station. He did not find any other couriers employing Petitioner?s falsification practices. Mr. King upheld Petitioner's termination at Step 1 of the GFT process. There was no evidence that race played any part in Mr. King?s decision to uphold Petitioner?s termination at Step 1 of the GFT process. Petitioner elected to have his termination reviewed in Step 2 of the GFT process. Step 2 of the GFT process involves the review and decision by a Vice President or Senior Vice President of the company. Petitioner?s termination was upheld at Step 2 of the GFT process by Vice President David Leech. Again, there was no evidence that race played any part in Mr. Leech?s decision to uphold Petitioner?s termination at Step 2 of the GFT process. Petitioner then elected to have his termination reviewed in Step 3 of the GFT process. Step 3 of the GFT process, involves a review by the Appeals Board. The Appeals Board consists of a rotating group of Respondent?s senior officers who review the case based on the documents provided to them by Respondent?s Human Relations Compliance department. With regard to Petitioner?s Step 3 GFT appeal, the Appeals Board was not provided with any information regarding Petitioner?s race or disability status. Petitioner?s termination was upheld by the Appeals Board at Step 3. As with the other steps in the GFT process, there was no evidence that race played any part in the Appeal Board?s decision to uphold Petitioner?s termination at Step 3 of the GFT process. Petitioner contends that Ron Reaves, a white male formerly employed as a courier for Respondent, is a comparator for purposes of proving his discrimination claim. However, the evidence did not demonstrate that Reaves is a similarly-situated employee to Petitioner and the facts of this case. The evidence showed that Reaves had an exceptional "nearly spotless" employment record with Respondent and committed a single act of falsification on January 7, 2008, when he manually entered a tracking number into his Power Pad for a delivered package. Reaves? act bypassed the requirement that the recipient sign for the package. Pat Gaal terminated Reaves for this single instance of falsification and Reaves filed a GFT complaint opposing his termination. Reaves? termination was upheld by Managing Director Randy King at Step 1 of the GFT process. Mr. King saw Reaves? termination for falsification as being a “one-time event,” yet he upheld Reaves? termination. Likewise, Reaves? termination was upheld at Step 2 by Vice President David Leech. However, Reaves appealed the Step 2 GFT decision to Step 3, and the Appeals Board reinstated Reaves. The Appeals Board was not provided any information as to Reaves? race or disability status. Upon reinstatement, Reaves was issued a Warning Letter dated March 17, 2008, for the instance of falsification, stating that he had “improperly applied a Dex 2 residential release to a package requiring direct signature.” In January of 2006, Petitioner committed a falsification violation, almost identical to that committed by Reaves, when he manually entered a residential release, releasing the package without a signature when a direct signature was required. However, Petitioner was not terminated but received a Performance Reminder, which is comparable to a Warning Letter, from Manager Charles Marshall, dated January 25, 2006, stating that he had “used the approved FedEx Resi Release number” on a customer package when the package was clearly marked “Direct Signature Only.” Importantly, Respondent received more favorable treatment than Reaves since he was not terminated in 2006. On the other hand, the quantity and pattern of falsification for which Petitioner was terminated in 2009 was a more blatant violation of Respondent?s falsification policy than the instance of falsification for which Reaves was terminated and later reinstated by the Appeals Board. In fact, Petitioner's 2009 violation was not sufficiently similar in scope as to be comparable to Reaves? violation. No other comparative evidence was offered by Petitioner. Given these facts, the evidence does not demonstrate that Petitioner was the subject of an unlawful employment practice based on his race when he was terminated by Respondent, and the Petition for relief should be dismissed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Florida Commission on Human Relations dismiss the Petition for Relief with prejudice. DONE AND ENTERED this 2nd day of February, 2011, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 2nd day of February, 2011. COPIES FURNISHED: Patricia Batts Federal Express Corporation 3660 Hacks Cross Road Memphis, Tennessee 38125 Floyd Middleton, Jr. 820 Maplewoods Drive Pensacola, Florida 32534 R. Clinton Saxton, Esquire Federal Express Corporation 3620 Hacks Cross Road Building B, Third Floor Memphis, Tennessee 38125 Ben J. Scott, Esquire Staff Attorney, Legal/Litigation 3620 Hacks Cross Road Building B, Third Floor Memphis, Tennessee 38125 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Larry Kranert, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue The issue is whether respondent acted fraudulently, arbitrarily, illegally, or dishonestly in proposing to award a contract for DASD drives and controllers to EMC Corporation.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Respondent, Department of Health and Rehabilitative Services (HRS), operates a computer system known as the Florida System (system). That system is used to store and process large quantities of client benefit information. Because of various deficiencies in the system, the 1993 legislature authorized HRS to make an expenditure from other appropriated moneys to enhance the performance of the system and to meet federal certification requirements. HRS was required, however, to execute a contract and encumber the moneys for the new services no later than June 30, 1994, or forfeit the appropriation. This controversy involves a dispute between HRS, intervenor, EMC Corporation (EMC), the vendor ranked first by HRS and selected as the winner of the contract, and petitioner, International Business Machines Corporation (IBM), the second ranked vendor. Because of the above time constraints and threatened loss of moneys, HRS has requested that this matter be resolved on an expedited basis so that a final order can be entered and a contract signed by June 30, 1994, the end of the current fiscal year. By way of background, on January 14, 1994, HRS issued a request for proposal (RFP) inviting various vendors to submit proposals for providing direct access storage devices (DASD) and controllers for the system. The RFP is more specifically identified as RFP 94-10BB-DSD. HRS structured its request for services as an RFP rather than an invitation to bid because it knew there was more than one product on the market that could meet its requirements, the RFP process gives it more flexibility and would result in a better price, and the RFP process allows vendors more options in providing a solution to a problem. As amended, the RFP called for a bidder's conference to be held on February 2, 1994, written proposals to be filed with HRS by 2:00 p.m. on March 14, 1994, and all proposals to be opened the same day. Thereafter, the offers were to be evaluated by a team of HRS employees whose role was to evaluate the various proposals and assign each proposal a score. A selection committee then had the responsibility of preparing a final report and recommendation for the HRS deputy secretary for administration. The authority to make a final decision rested with that individual. HRS originally anticipated a contract start date of April 1, 1994, but later changed this to May 1, 1994. That date is now in suspense pending the outcome of this case. Three vendors submitted a total of five proposals in response to the RFP. They included IBM and EMC, both of whom submitted two offers, identified as the IBM-1, IBM-2, EMC-1 and EMC-2 proposals, respectively, and Hitachi Data Systems, who is not a party in this case. After an evaluation of all proposals was conducted by the evaluation team, it recommended that the EMC-2 proposal be selected. This recommendation was accepted by the selection committee, which then submitted a final report and recommendation to the HRS deputy secretary for administration, Lowell Clary. After reviewing the report and recommendation, Clary issued a notice of intent to award the contract to EMC on April 19, 1994. Upon receipt of this advice, IBM timely filed its protest, as amended, alleging that EMC's proposal was deficient in four respects and that its IBM-2 proposal should have been ranked first. Subsequent efforts to informally conciliate the dispute have obviously been unsuccessful. The Specifications HRS currently uses 3390 DASD disc drives on its IBM 9021-900 mainframe computer. By its RFP, HRS seeks to purchase additional disc drives and associated controllers to enhance the system's storage capacity and ability to process the data from storage to the processor. Once installed, these enhancements should significantly improve the response time of the system and complete the financial management section of the child support system. The DASD is a device that stores data or information. The DASD is controlled by a controller, a box containing electrical circuitry that manages the movement of data stored in the DASD between that device and the mainframe computer (CPU) which processes the data. The controllers are attached to the CPU by channels, which are the paths between the storage system and the CPU. Data can be moved through copper or fiberoptic cables (channels), with fiberoptic providing much faster transfer than copper. Finally, the word "cache" is used in computer jargon to describe the storage of data in the controller as opposed to the storage of data in the DASD unit. Data is moved to and from cache through sophisticated algorhythms. Because data in cache is stored on computer memory chips, the retrieval of data from cache is substantially faster than the retrieval of data from DASD. The specifications for the equipment to be supplied by the vendor are found in paragraphs 1.1 and 1.2 on page 9 of the RFP, as amended. Those paragraphs read in pertinent part as follows: Statement of Need The Department currently uses 3390 DASD drives on its IBM 9021-900 mainframe computer. The department wishes to purchase two to four 3390-A28 DASD or equivalent and four (4) to eight (8) 3390-B2C DASD or equivalent. In order to support these devices two (2) to three (3) additional 3990-006 controllers or equivalent will also be purchased. This bid is for new DASD and Controller devices or equivalent hardware. If equivalent hardware is proposed the DASD and Controllers must be capable of being managed by IBM's software, and the SMS software support capabilities must be at the latest release level. Also, the maintenance vendor and the cost of maintenance for a period not less than three years after the warranty must be identified. The DASD Controllers must be capable of containing at least one gigabyte of CACHE memory (a minimum of 256 MB of CACHE is required in this proposal). Any Controller/DASD Configuration proposed for these bid requirements must be capable of functioning in ESCON mode. Statement of purpose The department will purchase the proposed equipment in increments as funds become available. The initial purchase will consist of at least two (2) 3390-A28 DASD or equivalent, at least four (4) 3390-B2C DASD or equivalent and at least two 3390-006 controllers or equivalent. The remaining devices will be purchased as funds become available. * * * Equivalent is defined in paragraph JJ. of the definitions section of the RFP as "(c)apable of providing equal or superior performance and having equal or greater capacity." In wording the definition in this manner, HRS intended to give a very broad interpretation to the word "equivalent," and to allow vendors maximum flexibility in providing a solution to HRS's equipment needs. Importantly, HRS did not intend to make IBM the sole source for supplying the equipment. Thus, if a vendor could provide equivalency with a single controller and all other specified functionality, that was permissible under the RFP. Also, paragraph 4.1 of the RFP provides in part that a material deviation may not be waived by the department. A deviation is material if, in the department's sole discretion, the deficient response is not in substantial accord with this Request for Proposal's requirements, provides an advantage to one proposer over other proposers, has a potentially significant effect on the quantity or quality of items proposed, or on the cost to the department. Material deviations cannot be waived. (Emphasis in original) This provision is consistent with the requirements of HRS Rule 10-13.012, Florida Administrative Code, which provides that the "Department shall reserve the right to waive minor irregularities in an otherwise valid bid or proposal." The statement of need in paragraph 1.1 used IBM nomenclature because that is a common language that HRS personnel use, and it is one that is commonly understood in the computer industry. As noted earlier, however, HRS was simply looking for a solution to its need for more data storage and data transfer capacity, and it was not dictating that the equipment proposed be identical to that described using IBM nomenclature. Several other RFP requirements are pertinent to this dispute. First, the RFP required that "(e)ach controller shall support eight (8) channels," or a total of sixteen. This meant that each control unit should have eight-channel capability, or a total of sixteen channel connections. The controller technology also had to be ESCON (enterprise systems connection) capable, that is, capable of using fiberoptic technology (rather than copper cables) in the event HRS later decided to upgrade its equipment. Contrary to IBM's assertion, there was no requirement in the RFP concerning "concurrent I/O's," an acronym for input/output operations. Thus, in order to satisfy the RFP, the unit did not have to have a specified number of channel directors with the ability to make simultaneous data transfers between the storage device and the CPU. In terms of cache capacity, HRS required a storage subsystem having at least 120 gigabytes, with the ability to later upgrade to a maximum capacity of 240 gigabytes. Finally, the successful vendor was required to post a performance bond, and it would not receive any payments under the contract until the equipment was functioning at 99 percent availability for thirty consecutive days within a ninety day period. Otherwise, the equipment would be removed at the firm's expense and the contract terminated. The EMC-2 and IBM-2 Proposals In its EMC-2 proposal, EMC proposed to furnish one Symmetrix 9100-9016 unit at a unit price of $561,000 for a total price of $561,000. This unit combines the DASD and the controller in a single box. It can be configured to function as up to four controllers. The unit proposed by EMC provides 136 gigabytes of capacity and can be expanded to provide 272 gigabytes. The unit uses a different architecture than that used by IBM and takes approximately one-sixth of the floor space of the proposed IBM units. Thus, it requires less electrical power and produces less heat, thereby reducing the cost of electricity and air-conditioning by 80 percent to 87 percent. IBM took a very literal approach to the RFP's Statement of Need and concluded that any equipment proposed as equivalent must be identical to the IBM equipment described in the Statement of Need. Under IBM's construction of the RFP, since the Statement of Need described two IBM 3390-006 controllers, two controllers must be supplied in order to be equivalent. Similarly, since one IBM 3390-006 has capacity for eight concurrent I/Os, IBM erroneously concluded that the RFP required eight concurrent I/Os. While one IBM 3390-006 controller configured with Model 3 DASD as proposed in the IBM-2 proposal can handle 180 gigabytes of capacity and can satisfy the minimum capacity requirements, two IBM 3390-006 controllers were necessary in order to handle the RFP's maximum capacity requirements of 240 gigabytes. Thus, IBM offered equipment with the following characteristics: 8 concurrent I/Os, 16 ESCON channels, and the capacity to handle up to 360 gigabytes. The Evaluation Process In conjunction with this project, HRS established an HRS DASD and Controller Project Team which consisted of an evaluation team and a selection committee. The evaluation team was divided into two segments, a technical evaluation team with five members and a business evaluation team with two members. The selection committee consisted of two members. All team and committee members were HRS employees. Prior to the opening of the proposals, all members of the evaluation team were given an evaluation manual to be used in evaluating the responses to the RFP. In addition, on February 21, 1994, all team members were required to attend an "in-depth" training session. Ten days after the RFP was released, a bidder's conference was held in Tallahassee. The purpose of the conference was to discuss the contents of the RFP and firms' inquiries and recommended changes. Among other vendors, representatives of IBM and EMC were in attendance. It should be noted that no vendor had previously challenged any part of the specifications within the statutory three day time period for doing so. Firms were also afforded the opportunity to submit written inquiries to HRS to which HRS replied in writing. Three questions were submitted by IBM, all designed to elict an admission from HRS that IBM was the sole source of the equipment. HRS declined to agree with this premise. On March 14, 1994, the technical proposals were opened. A determination was first made as to each vendor's compliance with mandatory requirements. In this case, all proposals were found to comply with the mandatory requirements. The proposals were then evaluated on both a technical and business basis. Under the technical evaluation, which consisted of two sections, corporate capabilities and technical approach, each team member scored the proposal using pre-established criteria on eighteen technical criteria and eight corporate criteria. Points ranging from 0 to 4 were assigned for each criterion in descending value based on whether the proposal received a superior, good, acceptable, poor, or no value rating. A maximum of 400 points could be achieved on this part of the evaluation, with 300 available for the technical approach and 100 points available for the corporate capabilities. Each proposal was then assigned final weighted points according to the formulas presented in the RFP. As it turned out, the IBM-1, IBM-2, EMC-1, EMC-2 and Hitachi proposals received 395, 396, 356, 338 and 283 points, respectively. It should be noted that during the technical scoring process, each proposal was scored on its own merits and not by comparing one proposal with another, and all technical scoring was completed before the cost proposals were opened. Under the business evaluation, the proposals were evaluated on the basis of equipment and maintenance costs. Because cost was a very important factor to HRS, it was allocated 60 percent of the total points. According to the RFP, the vendor submitting the lowest priced proposal would receive 540 points while 60 points would be awarded the vendor proposing the lowest maintenance costs for the first three years of the contract. The higher costing proposals were awarded points pro rata based on an RFP formula. In this case, the EMC-2 proposal carried a price of $561,000, with no maintenance costs for the first three years, as compared to the cost on the IBM-2 proposal of $1,148,216, the second ranked offer. Therefore, the EMC-2 proposal received the full 600 points while the IBM-2 offer received only 293 points. Based on the above evaluation, which was done in a fair and consistent manner in accordance with the HRS evaluation manual, the final scores were allocated as follows: Proposer Technical Points Cost Points Total Points IBM-1 395 242 637 IBM-2 396 293 689 EMC-1 356 246 602 EMC-2 338 600 938 Hitachi 283 368 651 Given these rankings, the selection team issued its final report and recommendation on April 13, 1994, recommending that the EMC-2 proposal be ranked first and that EMC be awarded the contract. Was EMC's proposal nonresponsive? Initially, because no proof was submitted at hearing as to IBM's claim that EMC did not submit three corporate references who used EMC equipment similar in magnitude and scope to that requested in the RFP, that allegation has been deemed to have been abandoned. Remaining at issue are contentions that EMC-2's proposal was nonresponsive in two respects and deficient in one other respect. As to the alleged nonresponsive features of the proposal, IBM claims that (a) EMC-2's proposal contains technology which is not yet available on the market in the time required under the terms of the RFP, and (b) the 9100 model proposed by EMC is not of equal or superior performance or of equal or greater capacity to two IBM 3990-006 controllers. As to the other alleged deficiency, IBM contends that the specifications of the 9100 model vary from the specifications described in the EMC-2 proposal and thus EMC will have an advantage over other proposers if it is allowed to substitute equipment or not meet specifications. IBM first contends that the EMC-2 proposal contains technology which is not yet available on the market in the time required under the terms of the RFP. In this regard, the evidence shows that EMC introduced a 5500 model in November 1992. That unit uses a large amount of cache and a five and one- quarter inch disk technology. Sometime later, EMC began to develop a new unit with "somewhat less" capacity than the 5500 unit but using a much newer and higher density disc drive in the five and one-quarter inch format with the capability of storing nine gigabytes of capacity. During the preliminary stages of the development of the model, EMC referred to it as the "Jaguar," because of its high performance technology. Before publicly marketing the unit, EMC briefly identified the model as the 9100 unit because it had nine gigabyte capacity. Later on, however, EMC elected to place the device within its 5000 series in part to reflect to the industry that the device uses the same technology as EMC's existing 5500 series and in part to avoid confusion with a competitor's recent introduction of a 9000 series machine. Accordingly, the model number was changed to 5200-9 because it had smaller capacity than the existing 5500 model, but used nine gigabyte disc drives. The first 9100/5200 technology was delivered to Delta Airlines on January 10, 1994, and the second and third units were delivered to The Home Depot, Inc. and General Accident Insurance Company of America within the next few months. In April 1994, or after the model was already in use, EMC published a marketing brochure and on May 12, 1994, it offically announced the introduction of the new unit. When the RFP package was prepared, EMC had not yet made a decision to rename the 9100 unit a 5200-9 model, and thus it used the 9100 nomenclature throughout its proposal. Even so, Karin Morris, the HRS systems programmer administrator, established that this type of error (i. e., changes in model numbers) occurs "regularly" on RFP submissions by data processing vendors, and it is of no concern to the agency. Because model 5200 (previously known as 9100) was current technology at the time the EMC-2 proposal was submitted, IBM's contention to the contrary is rejected. It is further found that, for all practical purposes, models 5200 and 9100 are one and the same in that they have the same cache and amount of disc drives, and when EMC referred in its proposal to model 9100, it was referring to what is now known as the model 5200-9. Thus, EMC did not substitute technology after its proposal was opened, nor did it obtain an unfair advantage over the other vendors by making this change. The change in model number was a minor irregularity, and one that could be waived by HRS. IBM next contends that the EMC-2 proposal contains a material error and that the unit described therein does not meet the RFP specifications. More specifically, in paragraph 4 of Tab 3 of the proposal, EMC gave the following description of the proposed hardware: Within the Symmetrix unit, up to eight (8) control units may be defined to the operations system. In addition, the unit allows up to eight concurrent I/O's. The maximum number of parallel channels is sixteen, or will allow up to thirty two ESCON channels for the unit. In drafting the RFP, an EMC account executive inadvertently described the characteristics of the EMC 5500 model rather than the new 5200 model. At the outset of hearing EMC conceded that the above descriptive language was in error, and that it did not discover the error until it was pointed out by IBM during a deposition taken on May 25, 1994, or just two days prior to hearing. The language should have read as follows: Within the Symmetrix unit, up to four (4) control units may be defined to the operations system. In addition, the unit allows up to four (4) concurrent I/O's. The maximum number of parallel channels is sixteen, or will allow up to sixteen ESCON channels for the unit. Like EMC, HRS became aware of the error at the deposition taken on May 25, 1994. It views the error as immaterial because none of the eighteen technical criteria in the manual considered by the evaluation committee addressed the number of concurrent I/Os the equipment must be able to accomplish. This is confirmed by the fact that none of the evaluator's scoresheets gave material consideration to that matter. Indeed, with the possible exception of subpart C on question 8, no evaluation criterion specifically related to the above language. Even if the EMC-2 proposal was reevaluated and a zero given for question 8, it would not result in a change in the rankings. At the same time, by amending its proposal in this respect, EMC did not obtain an advantage over other vendors since factors not relevant to the technical scoring criteria can not afford a competitive advantage. Given these considerations, it is found that the error in paragraph 4 of Tab 3 is immaterial, and HRS could properly waive this minor irregularity. Finally, IBM contends that the single EMC model 9100 (5200) was not of equal or superior performance or of equal or greater capacity to two IBM 3990- 006 controllers. The more credible and persuasive evidence supports a finding, however, that the 5200-9 model has eight actual channel capability, it has ESCON channel capability, it has a total potential cache of 272 gigabytes, it is the equivalent of two 3390-A28 DASDs, four 3390-B2C DASDs and two 3390-006 Mod 6s in that it provides the same capabilities and functionalities and the same result to customers as IBM equipment, and thus it satisfies the equivalency requirements of the RFP. Therefore, it is found that the EMC-2 proposal is responsive in all respects to the RFP and that HRS properly ranked that proposal first.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by respondent awarding the contract for RFP 94-10BB-DSD to EMC Corporation and dismissing with prejudice the protest of International Business Machines Corporation, Inc. DONE AND ENTERED this 16th day of June, 1994, in Tallahassee, Florida. DONALD R. ALEXANDER 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 16th day of June, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-2588BID Petitioner: Partially accepted in findings of fact 2 and 4. Partially accepted in finding of fact 2. Partially accepted in finding of fact 6. Rejected as being contrary to the more credible and persuasive evidence. Partially accepted in finding of fact 13. Partially accepted in finding of fact 16. Partially accepted in finding of fact 18. Partially accepted in finding of fact 17. Partially accepted in finding of fact 4. Partially accepted in finding of fact 10. Partially accepted in findings of fact 5, 9 and 21. 12-13. Partially accepted in finding of fact 21. Partially accepted in finding of fact 6. Partially accepted in finding of fact 13. Rejected. See findings 22 and 23. Rejected. See findings 9 and 22. Rejected. See findings 22 and 23. Rejected. See findings 6, 8 and 9. Rejected as being irrelevant. See finding 9. Rejected as being contrary to the more credible and persuasive evidence. Partially accepted in finding of fact 13. Rejected as being contrary to the more credible and persuasive evidence. Respondent: 1. Partially accepted in finding of fact 2. 2. Partially accepted in finding of fact 3. 3. Partially accepted in finding of fact 5. 4. Partially accepted in finding of fact 14. 5-6. Partially accepted in finding of fact 18. 7. Partially accepted in finding of fact 19. 8-9. Covered in preliminary statement. 10. Partially accepted in finding of fact 6. 11. Partially accepted in finding of fact 8. 12-13. Partially accepted in finding of fact 6. 14. Partially accepted in finding of fact 15. 15. Partially accepted in finding of fact 10. 16. Rejected as being unnecessary. 17. Partially accepted in finding of fact 8. 18. Partially accepted in finding of fact 23. 19. Rejected as being unnecessary. 20-24. Partially accepted in finding of fact 20. 25. Rejected as being unnecessary. 26. Partially accepted in finding of fact 20. 27. Partially accepted in finding of fact 19. 28. Rejected as being unnecessary. 29. Partially accepted in finding of fact 20. 30. Partially accepted in finding of fact 16. 31. Partially accepted in finding of fact 23. 32-33. Partially accepted in finding of fact 21. 34-36. Partially accepted in finding of fact 22. Intervenor: Partially accepted in finding of fact 2. Partially accepted in finding of fact 5. Partially accepted in finding of fact 2. 4-5. Partially accepted in finding of fact 15. Rejected as being unnecessary. Partially accepted in finding of fact 14. Partially accepted in finding of fact 3. 9-13. Partially accepted in finding of fact 16. 14-15. Partially accepted in finding of fact 17. 16. Partially accepted in finding of fact 4. 17-19. Partially accepted in finding of fact 18. Partially accepted in finding of fact 4. Partially accepted in findings of fact 6 and 15. 22-24. Partially accepted in finding of fact 6. 25. Partially accepted in finding of fact 5. 26-27. Partially accepted in finding of fact 8. 28. Partially accepted in finding of fact 15. 29-33. Partially accepted in finding of fact 9. 34. Partially accepted in finding of fact 10. 35-39. Partially accepted in finding of fact 20. 40. Partially accepted in finding of fact 12. 41. Rejected as being unnecessary. 42. Partially accepted in finding of fact 6. 43-44. Partially accepted in finding of fact 10. 45. Partially accepted in finding of fact 11. 46. Partially accepted in finding of fact 12. 47-48. Partially accepted in finding of fact 21. 49. Partially accepted in finding of fact 23. 50. Partially accepted in finding of fact 22. 51. Partially accepted in finding of fact 20. 52. Partially accepted in finding of fact 11. 53. Partially accepted in finding of fact 23. Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, not supported by the evidence, subordinate, or a conclusion of law. COPIES FURNISHED: Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services Building One, Room 407 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Kimberly J. Tucker, Esquire Building One, Room 407 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Hume F. Coleman, Esquire Post Office Drawer 810 Tallahassee, Florida 32302-0800 Daniel W. Schenck, Esquire 4111 Northside Parkway HO7K2 Atlanta, Georgia 30327 William A. Freider, Esquire Building E, Suite 200 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Terrence J. Russell, Esquire P. O. Box 1900 Fort Lauderdale, Florida 33302-1900 Margaret-Ray T. Kemper, Esquire 215 South Monroe Street Suite 815 Tallahassee, Florida 32301
