The Issue Whether the Department of Transportation's (DOT) intended decision to award contract T2442 for the Intelligent Transportation System improvements (Project) and other incidental construction on State Road 9A, in Duval County, to American Lighting & Signalization, Inc. (ALS), is contrary to the agency's governing statutes, the agency's rules or policies, or the bid or proposal specifications.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:1/ The contract being protested is T2442 for the Intelligent Transportation System improvements and other incidental construction for State Road 9A, in Duval County. The Department advertised the bid solicitation notice for the Project on July 27, 2012. The bid solicitation notice included a list of all of the pay items and estimated quantities for the project. DOT also posted all of the pay items online in two formats. One format was a downloadable file that could be used in software, and the other was similar to an Excel spreadsheet file. These formats could be used to formulate a bid. Changes to pay items are issued in an Addendum, and while two addendums were issued for this project, neither affected the pay items for the project. For several years, DOT has mandated that prospective bidders use an automated, online bidding process, by which prospective bidders request bid documents and submit their bids using the DOT's website. The letting date established as the deadline for submission of bids via electronic submission was September 26, 2012, and was set forth in the bid solicitation notice. In order to be considered, all bids were due by 10:30 a.m. on that day. Letting is the term used to indicate the date that the bids are due. The bid solicitation notice included a requirement that bidders for the Project attend a mandatory pre-bid meeting to be held on August 20, 2012. Hinson Electrical is a licensed electrical contracting company based in Jacksonville, Florida. The company has completed "hundreds" of projects for the State of Florida, including DOT, and is pre-qualified to bid on jobs with DOT. The mandatory pre-bid meeting was held on August 20, 2012, as scheduled. G. Christopher Ginn, Project Manager for Hinson Electrical, attended the pre-bid meeting, signed his name, and identified the company he represented (Hinson Electrical) on the sign-in sheet. Section 337.168(2), Florida Statutes, provides: (2) A document revealing the identity of persons who have requested or obtained bid packages, plans, or specifications pertaining to any project to be let by the department is confidential and exempt from the provisions of section 119.07(1) for the period which begins two working days prior to the deadline for obtaining bid packages, plans, or specifications and ends with the letting of the bid. As a business strategy, Hinson Electrical routinely orders bid documents within the two-day blackout period mandated by section 337.168(2), during which time DOT is required to take down its list of contractors who have requested bid documents concerning a particular project. Ordering bid documents within the blackout period prevents competitors from discovering whether Hinson Electrical is bidding for a particular project. The blackout period for the Project began at 5:00 p.m. on Friday, September 21, 2012. The deadline to order the bid documents for the Project was 10:30 a.m. on September 25, 2012. There is no requirement that contractors request bid documents prior to the pre-bid meeting (if one is required for a particular project), or at any time prior to the order deadline, which is 24 hours before the bid deadline. DOT acknowledged at hearing that it is Hinson Electrical's prerogative to order the bid documents within the blackout period during which the identities of bidders are kept confidential. Hinson Electrical ordered the bid documents for the Project at approximately 1:00 p.m. on September 24, 2012. The computerized system immediately provided access for Hinson Electrical to download the plans and specifications for the project at issue. However, four minutes later, at approximately 1:04 p.m., Hinson Electrical simultaneously received an email with a "Prequalification Failure Notice," and a second email stating that the bid document request for the Project was "pending." The Prequalification Failure Notice indicated that the bid document was not provided because Hinson Electrical had not attended the required pre-bid meeting for the Project.2/ Failure to attend the pre-bid meeting was the only basis stated in the Prequalification Failure Notice for DOT refusing to provide the bid document. As noted, Hinson Electrical's representative did in fact attend the pre-bid meeting for the Project, and he signed the sign-in sheet, attesting to his presence at the meeting. The sign-in sheet had been transmitted to DOT on August 21, 2012, the day after the pre-bid meeting was held. Thus, DOT's basis for sending Hinson Electrical a Prequalification Failure Notice was in error. The Prequalification Failure Notice also stated, "[Y]ou will be contacted by email or phone as soon as possible during business hours regarding requirements for obtaining the bid documents." However, DOT did not send an email or call Hinson Electrical after 1:04 p.m. on September 24, 2012, or at any time on September 25, 2012. Phillip Davis, a DOT employee in the Contracts Administration Office, was "blind copied" on the Hinson Electrical Prequalification Failure Notice email, with a "high importance" tag. Mr. Davis' job responsibilities include following up on these types of notices, though he is not supervised to ensure this occurs. Mr. Davis' responsibilities also include checking sign-in sheets from pre-bid meetings to authorize release of bid documents to contractors. DOT admits that Mr. Davis did not read the Hinson Electrical Prequalification Failure Notice; did not check the sign-in sheet from the pre-bid meeting; and made no attempt to contact Hinson Electrical, as promised in the notice. From September 20 through 25, 2012, Daniel Hinson and Chris Ginn obtained quotes from suppliers and subcontractors to prepare a bid for the Project. Hinson Electrical also secured a bid bond for the Project, and had everything necessary to submit a bid, except for the actual bid document. In the afternoon or early evening of September 25, 2012, Daniel Hinson sat down at his computer with the price lists and quotes he had obtained to prepare a bid for the Project. It was then that Mr. Hinson discovered DOT had not granted him access to the bid document for this Project, and that the failure notice he had received pertained to this Project, and was in error. Hinson Electrical was bidding on a total of eight contracts at that time, some of which did not have a mandatory pre-bid meeting. As of the close of business on September 25, 2012, DOT had still not made any effort to contact Hinson Electrical, as promised in the failure notice. At 7:55 p.m. on September 25, 2012, Hinson Electrical sent an email to the Contracts Administration general email address, stating that Hinson Electrical's representative had attended the pre-bid meeting and asking why Hinson Electrical was being excluded from the bidding. Shortly after 7:00 a.m. the following morning (September 26, 2012, the bid deadline), Chris Ginn called the project inspector, Thomas Woods of HNTB Corporation, on Hinson Electrical's behalf, and requested that HNTB confirm that Hinson Electrical's representative had attended the pre-bid meeting. At 7:32 a.m. that same morning, Mr. Woods sent an email to Juanita Moore notifying her of the error and confirming that Hinson Electrical's representative had indeed attended the pre-bid meeting. The Contracts Administration Office opened at 8:00 a.m. on the day of the bidding deadline. Within 36 minutes (by 8:36 a.m.), Ms. Moore reviewed Mr. Woods' email; checked the sign-in sheet; and instructed a subordinate, Colette Jackson, to send the bid document to Hinson Electrical. Ms. Jackson immediately sent the bid document to Hinson Electrical under a cover email. Ms. Moore testified that Phillip Davis could have easily gone through these same steps on September 24, 2012 (two days before the bid deadline), and timely transmitted the bid document to Hinson Electrical, if he had only read the Prequalification Failure Notice on which he was copied. Ms. Moore agreed that 24 hours would have been sufficient time for Mr. Davis to check the sign-in sheet and release the bid document. When DOT finally provided the bid document to Hinson Electrical, it was 1 hour, 54 minutes before the bid submission deadline. At 8:40 a.m. on September 26, 2012, (four minutes after receiving the bid document) Daniel Hinson spoke by telephone with Colette Jackson about needing additional time to complete Hinson Electrical's electronic bid submission. Colette Jackson testified that one of her responsibilities at DOT is to move bid deadlines, and that she can do so quickly upon receiving instructions from Ms. Moore to do so. However, Ms. Jackson did not have authority to provide the requested relief, so she transferred the call to Ms. Moore. Upon being transferred to Ms. Moore, Mr. Hinson asked for additional time to complete the Hinson Electrical bid for the Project. That request was refused by Ms. Moore. In her view, the fact that the pay items and estimated quantities for the project had previously been provided should have enabled Hinson Electrical to submit a bid within the two hours remaining prior to the deadline. In addition, Ms. Moore felt Hinson Electrical should have taken it upon itself to contact DOT immediately upon receiving the disqualification notification if it believed it had complied with all prerequisites. Contrary to Ms. Moore's opinion, Mr. Hinson testified that it would have taken him about four hours to go through the various steps to submit Hinson Electrical's online bid for the Project. DOT's position that Hinson Electrical could have completed and submitted its bid with less than two hours remaining is rejected as not credible. However, even if that were possible, it would have put Hinson Electrical at a disadvantage because every other bidder was able to download the bid document immediately upon request after the pre-bid meeting. Daniel Hinson has submitted bids for hundreds of DOT projects (including "dozens" using the current online system) and he reasonably believed there was insufficient time remaining before the deadline to prepare a competent bid and ensure its accuracy. Mr. Hinson's testimony regarding the amount of time necessary to prepare a complete and competent bid for the Project is more credible than the testimony of Ms. Moore. Considering the potential cost to Hinson Electrical of a mistake made in haste, it was entirely reasonable for Hinson Electrical to decline to submit a bid, and instead request a bid extension. Likewise, it was unreasonable for DOT to decline the extension request, given that it was DOT's mistake that necessitated the extension. DOT extends bid deadlines dozens of times each year, for various reasons, including computer issues, mistakes in the bid documents, or bad weather. Ms. Moore testified about bid deadlines that had been moved, three or four times in some cases, for reasons including computer glitches, website issues, and "technical problems." In one such instance, contractors could not obtain their bid documents on the Monday before a Wednesday letting (which is what happened to Hinson Electrical in this case), and DOT postponed the bid deadline. In another instance, a bid deadline was postponed for a third time "because the vendors couldn't download what they needed to bid." And in another example, the bid deadline was postponed with notice provided just 92 minutes before the deadline due to "server issues at the Department." In this final example, once the malfunction was identified, DOT promptly sent the notice of postponement to the bidders and later completed the other necessary steps to move the bid deadline. A postponement notice can be sent to bidders in less than ten minutes after the decision to postpone a bid is made. All other steps required to move a bid deadline are typically accomplished by DOT personnel in about an hour. DOT knows of no harm that would have come to the other bidders had DOT agreed to move the bid deadline to allow Hinson sufficient time to submit its online bid. At 9:22 a.m. on September 26, 2012, Daniel Hinson sent an email to Colette Jackson in response to her email, stating there was insufficient time for Hinson Electrical to prepare its bid for the Project and that a protest would be filed if DOT posted its intent to award the contract to one of the other bidders. The letting of the project occurred as scheduled at 10:30 a.m. on September 26, 2012. At approximately 4:00 p.m. on October 24, 2012, DOT posted notice of its intent to award the contract to ALS. This was the second posting date for the September 26, 2012 letting date. Thereafter, Hinson Electrical timely served its notice of protest, formal protest pleading, and the required bond. The advertisement for the Project reads, in part, "Bidders are hereby notified that all bids on any of the following projects are likely to be rejected if the lowest responsive bid received exceeds the engineer's estimate by more than ten percent (10%)." DOT does reject all bids for being too high in some cases. The bid submitted by ALS for the Project exceeded the proposal budget estimate of $4,183,958 by 19.9 percent (ALS' winning bid was $5,016,501.73). The Contract Award Committee (Committee) is the DOT body with discretion to reject all bids for a project. However, Ms. Moore never informed the Committee of Hinson Electrical's situation so that it could determine whether the Project should be rebid. Even after posting notice of intent to award the Project to ALS, DOT retained discretion to reject all bids, but Ms. Moore was unaware of that discretion and never discussed the matter with the Committee. Hinson Electrical credibly established that it would have submitted a bid of $4,973,361.99 for the Project had DOT provided the online bid document when Hinson Electrical first requested it. Thus, Hinson Electrical would have been the low bidder, and presumably awarded the contract. DOT had at least three opportunities to correct its mistake and allow Hinson Electrical an opportunity to bid. DOT could have (l) extended the bid deadline, as it has in many other cases; (2) rejected all bids and rebid the Project, before posting notice of intent to award the contract; or (3) rejected all bids even after posting notice of intent. In their Prehearing Stipulation, the parties stipulated to the following: DOT has no policy statements, handbook provisions, internal memoranda, guidelines, or other documents regarding the following subjects: How a failure to timely transmit bid documents in response to a prospective bidder's request, whether due to a transmission error or otherwise, should be handled or what relief may be provided to the bidder; Acceptable grounds for extending a bid submission deadline; How an erroneous determination that a prospective bidder for a project was not qualified to bid should be handled, either before or after the bid deadline has expired; Relief that can or should be provided to a prospective bidder who was denied the opportunity to bid for a project due, at least in part, to some irregularity in the bidding process; Relief that can or should be provided to a prospective bidder who was denied the opportunity to bid for a project due, at least in part, to some error made by FDOT (including its computer system); and How to handle a situation in which all received bids exceed the budget for the project by more than 10%. (Prehearing Stipulation, pgs. 11-12)
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That a final order be entered by the Department of Transportation that rescinds the Notice of Intent to award Contract T2442 to American Lighting & Signalization, Inc. DONE AND ENTERED this 21st day of June, 2013, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 21st day of June, 2013.
The Issue Whether the apparent low bid on contract No. SB 95C-66W should be disqualified on the grounds that the bidder does not meet the experience specifications contained in the Invitation to Bid.
Findings Of Fact On August 16, 1994, the School Board issued Invitation to Bid (ITB) No. SB 95C-66W, which was described as being a "term contract to provide and/or install rubberized coatings for sports surfaces." Among the bidders who responded to the ITB were the Petitioner, Papico Construction, Inc., and AAA Tennis Courts, Inc. On August 31, 1994, bids were tabulated and the School Board posted its intent to award the bid to Papico. Thereafter, the bid process was delayed as a result of a protest filed by another bidder. On December 12, 1994, Petitioner filed the formal bid protest that resulted in this proceeding. The School Board does not challenge the timeliness of Petitioner's protest. Among the special conditions of the ITB is the following pertaining the qualifications of the bidder: E. QUALIFICATIONS: The bidder shall have maintained continual work experience in coatings for running tracks for a period of three years prior to the bid date. Bidder must submit written documentation with bid or within three days upon request, substantiating experience requirement. The bidder shall have a place of business for contact by the owner during normal working days. Petitioner framed its challenge to the bid process by the following portion of its formal bid protest: . . . To award this project to Papico or AAA Tennis Courts is not only directly in contradiction to the 3 years of continuous work experience section of the specifications (Special Conditions - E), but also deprives the school system of our experience. . . . Papico timely submitted to the School Board written documentation that substantiated that it met the experience requirement contained in Special Condition - E. The evidence presented at the formal hearing established that Papico is an experienced contractor for recreational surfaces and has been involved in coatings for running tracks since 1989. Between 1989 and the time of the formal hearing, Papico had been involved as either the contractor or as a subcontractor for the surfacing or resurfacing of running tracks at Indiantown Middle School, Parkland High School, Hidden Oaks Middle School, J.D. Parker Elementary School, Florida Atlantic University, Martin County High School, South Plantation High School, and Deland High School. At the formal hearing, Petitioner asserted that Papico also did not meet the experience criteria contained in Special Condition - M. That provision is as follows: M. QUALIFICATIONS: The contractor will submit a list of five all-weather running tracks the firm has resurfaced during the past three years. The list shall contain: owner name, location, phone number, number of tracks, and year constructed or resurfaced. (The district reserves the right to contract these owners as references.) Notwithstanding the fact that this issue was not properly preserved by Petitioner, the evidence established that Papico provided this list to the School Board, thereby complying with Special Condition - M.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board of Palm Beach County enter a final order that adopts the findings of fact and conclusions of law contained herein, dismisses the bid protest filed by Recreational Surfaces, Inc., and awards the subject contract to Papico Construction, Inc. DONE AND ENTERED this 9th day of February, 1995, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 9th day of February, 1995. COPIES FURNISHED: James Petrucelli Recreational Surfaces, Inc. 2123 Oregon Street Orlando, Florida 32803 Robert A. Rosillo, Esquire Palm Beach County School Board 3318 Forest Hill Boulevard, Suite C-302 West Palm Beach, Florida 33406-5813 Dr. Monica Uhlhorn, Superintendent Palm Beach County School Board 3340 Forest Hill Boulevard West Palm Beach, Florida 33406-5869
The Issue The issue in this case is whether the bid specifications, together with other applicable authority, require that a bid, in order to be responsive, contain any written list of subcontractors.
Findings Of Fact On September 26, 1989, Respondent issued a document entitled, Specifications for Replacement of Air Conditioning, West Orange High School, Winter Garden, Florida, Engineers Project No. 89-016. As amended by three addenda, the above-described specifications shall be referred to as the "ITB." Respondent duly advertised for bids ore September 26, October 3, and October 10, 1989. The advertisement did not state that Respondent reserved the right to waive minor irregularities. In response to the ITB, Florida Mechanical, Inc. ("FMI") and B & I Contractors, Inc. ("B & I") timely submitted bids. For the base work and alternate 1, which Respondent ultimately decided to select, FMI bid $1,439,000, B & I bid $1,438,000, and a third bidder, S. I. Goldman, Company bid $1,621,000. These bids are recorded on a Bid Tabulation Sheet prepared by the engineer retained by Respondent for the project. The Bid Tabulation Sheet contains eight columns. Four columns record bid amounts for the base work and various alternates. The remaining columns are entitled, "Bidder," "Bid Bond," "Addenda," and "Subs." Each of the three bidders were named in one of the rows beneath the "Bidder," column. Each bidder had one "X" in its "Bid Bond" column and three "X"s in its "Addenda" column. However, only FMI and S. I. Goldman Company had "X"'s in their "Subs" columns. By resolution adopted on November 29, 1989, Respondent directed that all bids were rejected and that the Superintendent would correct any ambiguities and uncertainties in the ITB and solicit new bids. The resolution noted that Respondents staff had recommended that, if any bid were accepted, it should be that of B & I. However, [FMI] submitted with its bid a list of Major Sub-contractors of the form displayed in the [ITB], and B & I did not submit wish its aid a list of Major Sub-contractors[.] The resolution concluded that Respondent based on advice of staff and counsel, found that the [ITB is) ambiguous and/or uncertain as to whether or not a bidder must submit along with his bid a list of Major Sub-contractors, (b) that because of such ambiguity and/or uncertainty, it would be unfair and/or improper for [Respondent] to accept either of the bids received by it, and (c) that as a result thereof [Respondent] should reject all bids received by it for ,the Project and should solicit new bids for the Project as soon as is reasonably feasible after correction by [Respondents] staff of any ambiguity and uncertainty as aforesaid in the [ITB]. FMI and B & I each timely filed a notice of intent to protest and formal written protest of Respondent's decision to reject each company's respective bid. S. I. Goldman did not protest the decision and is not a party to the subject case. At a meeting on December 12, 1989, Respondent elected to refer the bid protests to the Division of Administrative Hearings for a formal hearing., At the beginning of the hearing, the parties filed a written stipulation, which stated that the only issue for determination was which Petitioner should be awarded the contract and not whether Respondent should seek further bids or award the contract to another bidder. The stipulation also stated that the Petitioners and Respondent agreed to abide by the recommendation of the hearing officer. At the hearing, the parties further stipulated that the sole issue for determination is whether the ITB, together with other applicable authority, required that the responsive bid contain any written list of subcontractors. In addition, the parties stipulated that both Petitioners had standing and the protests were timely and sufficient. The ITB requires that each bidder familiarize itself with all federal, state, and "Local Laws, ordinances, rules, and regulations that in any manner affect the work." Under the section entitled, "Preparation and Submission of Bids," the ITB states: "Each bidder shall use the Bid Form that is inserted herein, and may copy or reproduce the form on this own letterhead." Among other requirements, the ITB requires two bonds. The first is a "bid guarantee" of at, least five percent of the amount of the bid. The form of this guarantee may be cash or a Bid Bond." The other bond described in the ITB a 100% public construction bond. The surety on this bond must have been admitted to do business in Florida, must have been in business and have a record of successful continuous operation for at least five years, and must have at least a Bests Financial Rating of "Class VI" and a Bests Policyholder Ration of "A." The Bid Form contained in the ITB is two pages. Among other things, the Bid Form requires that the bidder receiving written notice of acceptance of its bid must provide the prescribed payment and performance bond and execute the contract within ten days after notification. The next document in the ITB is a single page entitled, "Form of Bid Bond." The provisions on this page identify the A.I.A. document to use and state that the Bid Bond "shall be submitted with the Bid Proposal Form." The next document in the ITB is a single page entitled, "List of Major Subcontractors." The List of Major Subcontractors states: Bidders shall list all major subcontractors that will be used if a contract is awarded. Additionally, bidders shall identify in the appropriate box whether or not that trade specialty is minority owned. Another paragraph defines minority ownership. The remainder of the form consists of ten rows for the "bidder" and nine major subcontractors, such as concrete, electrical, HVAC, and controls, and blanks where the bidder can indicate which of these entities are minority owned. The next document in the ITB is the Owner-Contractor Agreement, which is followed by tie Form of Construction Bond, General Conditions, and Supplementary General Conditions. Section 7.11 of the Supplementary General Conditions establishes certain requirements to be performed after the submission of bids. This section provides: Pre-Award Submittals: Before the Contract is awarded the apparent low bidder shall provide the following information to the owner. A copy of the Contractors current State of Florida General Contractor's or Mechanical Contractors License. Pre-Construction Meeting. After the Notice to Proceed and within eight (8) business days of the Owner [sic], the Contractor shall meet with the Owner, Engineer and Subcontractors that the Owner may designate... The Contractor shall provide the following to the Owner. * * * 2. A written list of all Subcontractors, material men and suppliers with such information as requested by the Owner or Engineer. * * * The remaining documents in the ITB are the technical specifications for the job. The three addenda supply additional technical information not relevant to this case. Respondent has promulgated rules with respect to the bidding process ("Rules"). The ITB does not refer to the Rules, which define and use many terms that are found in the ITB. For instance, Rule 1.1.25 defines the phrases, "Performance and Payment Bond," which is the same phrase used in the Bid Form in the ITB. The Rules define several other capitalized terms that are also used in the ITB, such as Bid Bond, Bid Guarantee, Bidder, and Contractor. Rule 4.1 similarly states that the bidder is familiar with federal, state, and "Local Laws, Ordinances, Rules and Regulations that in any manner affect the Work." Rule 6.1 describes the process by which a bidder is to prepare and submit bids and the Bid Guarantee in language similar to that contained in the ITB. Rule 6.2 discusses the listing of subcontractors. Rules 6.2.1 and 6.2.2 state: General Contractor shall include as an integral part of his bid a List of Subcontractors he proposes to use. The Bidder shall enclose this list in a 4" x 9" envelope, sealed and marked "List of Subcontractors" and identified ... The Bidder shall enclose said envelope with his bid proposal in the mailing envelope. The List of Subcontractors enclosed with tee Proposal of each Bidder will be examined by the ... Engineer before the Proposal is opened and read. In the event that the form is not properly executed and signed, the Proposal of that Bidder will be returned to him unopened... Rule 6.3 requires a Statement of Surety as another "integral part" of each bid. Rule 6.3.3 states: The Statement of Surety will be opened examined by the ... Engineer prior to the opening of the Proposal.... Although similar to Rule 6.2, Rule 6.3 lacks the warming that if the Statement of Surety is not "properly executed and signed, the Proposal of that Bidder will be returned to him unopened." Rule 19.1 sets forth the requirements, for the surety. These requirements are different than those set forth in the ITB. Rules 19.1.1 and 19.1.2 require, as does the ITB, that the surety be admitted to do business in the State of Florida and shall have been in business and have a record of successful continuous operations for at least five years. However, Rule 19.1.1 requires that the surety be represented by a reputable and responsible surety bond agency licensed to do, business in the State of Florida and have a local representative in the Orlando area. Rule 19.1.3 requires minimum Bests ratings of "A" in "management," and, as to "strength and surplus," "AAA+" in financial rating and $12,500,000 minimum surplus. Rule 19.1.3.3 also requires that the surety be listed on the U.S. Treasury Departments Circular 570. The bids of FMI and S. I. Goldman Company contained a completed List of Major Subcontractors. The bid of B & I did not. No bidder included a Statement of Surety with its bid.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the School Board of Orange County enter a Final Order awarding the subject contract to Florida Mechanical, Inc. ENTERED this 15th day of February, 1990, in Tallahassee, Florida. ROBERT E. MEALE 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 15th day of February, 1990. APPENDIX Treatment Accorded Proposed Findings of FMI All of FMI's proposed findings have been adopted or adopted in substance. Treatment Accorded Proposed Findings of B & I 1-4: adopted or adopted in substance. 5: adopted, except that the staff recommended that, if the bid was to be awarded, that it be awarded to B & I. 6: adopted in substance. 7: rejected as conclusion of law and, to the extent fact, subordinate. 8-12: rejected as subordinate. 13-16: adopted or adopted in substance. 17: rejected as subordinate. 18: rejected as unsupported by the greater height of the evidence. 19-21: rejected as subordinate. 22: rejected as beyond the scope of the issues and irrelevant in view of the stipulation. In the stipulation, the parties agreed that the issue to be addressed would not be whether the intended agency action of Respondent was lawful (i.e., not arbitrary, fraudulent, dishonest, or otherwise improper), but rather whether the ITB, together with other applicable authority, required that the responsive bid contain any written list of subcontractors. COPIES FURNISHED: James L. Schott, Superintendent The School Board of Orange County, Florida P.O. Box 271 Orlando, FL 32802 Charles Robinson Fawsett, P. A. Shutts & Bowen 20 North Orange Avenue Suite 1000 Orlando, FL 32801 James F. Butler, III Smith, Currie & Hancock 2600 Peachtree Center Harris Tower 233 Peachtree Street, N.E. Atlanta, GA 30043-6601 William M. Rowland, Jr., Esq. Rowland, Thomas & Jacobs, P.A. 1786 North Mills Avenue P.O. Box 305 Orlando, FL 32803
Findings Of Fact During the month of March 1996, the Pinellas County School Board, pursuant to an advertised invitation for bids, (IFB), solicited bids for the construction of a new facility for John H. Sexton Elementary School (Sexton school). Each party submitting a bid was required to do so on a bid proposal form which was contained in the bid documents prepared by the project architect, Mr. Hoffman, and furnished to each prospective bidder who requested the bid package. One section of the bid proposal form related to "dewatering" potentially required at the construction site, and consistent with that potential two sentences were contained on the bid proposal form relating to dewatering of footings and of utilities, both of which provided for election by checking of an affirmative or a negative, and both of which had been pre-checked in the affirmative by the Board. It was the position of the Board that the pre- checked sentences as to dewatering on the bid proposal form constituted an acknowledgment by each bidder that that bidder's submittal included dewatering in the base bid. In addition to the check, the dewatering section also included blanks for the insertion by the bidder of figures representing lineal feet of header pipe and unit price per foot which figure would constitute a credit given by the bidder to the Board against the total bid price if dewatering were found not to be necessary, both as to footings and to utilities. Even further, the form also contained blanks to be filled in by the bidder for unit prices to be charged the Board in the event additional dewatering was required by virtue of the Board's later inclusion in the project of additional footings or utilities. Prior to the time for bid submittal, the Board conducted a meeting of all prospective bidders at which the project was explained and bidders given an opportunity to ask questions raised by the bid package. Johnson did not ask any questions regarding dewatering or that portion of the package relating thereto. Numerous bids were submitted in response to the proposal, including those from Johnson and Ellis. By stipulation at the hearing, the parties agreed that in all ways other than in that section of the bid proposal form for this project relating to dewatering, Johnson was and is a responsive and responsible bidder, as is Ellis. The bid proposals were opened by the Board at 2:00 PM on April 11, 1996 and the base bid prices on each proposal were read aloud to all in attendance by a Board representative. The project architect was present at the opening and tabulated and reviewed the bid proposals as opened. Johnson submitted the lowest base bid with a price of $7,965,000. The next lowest bid was that of Ellis, whose base bid price was $7,945,200. At the time of opening, no Board representative indicated anything was wrong with Johnson's bid Mr. Hoffman, the project architect, immediately noticed that Johnson had altered the Board's pre-checked bid proposal form by striking out the pre- checked "is" space regarding inclusion of dewatering in the base price of the two dewaterings, and making an X in each of the "is not" spaces. Mr. Hoffman considered that alteration by Johnson as a material alteration of the Board's solicitation which rendered Johnson's bid non-responsive. It must be noted that each change bears the initials, R. Y. Reza Yazdani is Johnson's president who initialed the changes and signed the bid proposal form for the company. In addition, Johnson also inserted a "0" in those spaces which dealt with amount of credit and cost of additional dewatering in the event additional work is required by the Board. In that regard, Hoffman opined that had Johnson not changed the check marks, but inserted the "0" figures as it did, the bid would have been responsive and Johnson would still have been lowest responsive bidder. The reason for this is that the bid form specifically notes that "the unit costs described in A & B above shall in no manner influence the School Board's selection of a firm to whom to award the Contract." The Board now recognizes that there is no part "B", as referenced in the proposal form. Since the "0's" would not influence the selection, use of an unmodified Board form, along with the lowest submitted base price would, in Hoffman's opinion, probably have meant that Johnson would have been awarded the contract. Johnson's representative, Mr. Mohme, who drafted the company proposal, specifically indicated he did not believe dewatering was a potential in this project. He recognized that such dewatering as was necessary was required by other provisions in the project specifications and he could not figure any way to recognize this and yet accurately reflect his belief that dewatering would not be necessary, other than to strike the pre-checked block and insert the check in the alternative block. He felt that by doing so, he was more accurately reflecting Johnson's bid. This reasoning is rather obscure. By letter dated April 12, 1996, written to the Board after the bids were opened, Mr. Mohme reiterated Johnson's position that dewatering is not necessary on this project, but further stated that if dewatering were to be necessary, Johnson would do so solely at its own risk and without any risk of additional cost to the Board. Bids may be clarified by a bidder, but such clarification must take place before the bids are opened. Bids may not be modified after bid opening. Before that letter was written, however, when the bids were opened and Mr. Hoffman observed what he considered was Johnson's alteration of the bid form, Hoffman consulted with a representative of the Board's purchasing department, Ms. Maas, who also reviewed Johnson's bid. Ms. Mass was of the opinion that Johnson may have attempted to qualify its bid, and she and Mr. Hoffman thereafter met with Mr. Rivas, the Board's director of facilities design and construction, to explain the problem. Mr. Rivas took the problem to two other Board personnel to see if there were some way Johnson's bid could be deemed responsive so that the Board could benefit by Johnson's low bid price. Within the context of those aforementioned discussions, Hoffman took the position that the alteration might leave the Board open to a possible change order and additional liability if dewatering were to be required and the Board had accepted Johnson's bid indicating that process was not included in the base price. Mr. Rivas, after consulting with the Board's attorney, also concluded that Johnson's alteration expressly excluded dewatering as an included factor and its exclusion constituted a serious and material deviation from the Board's solicitation. It was deemed material in that the deviation apparently gave Johnson a competitive advantage over other bidders who did not amend the form. This appears to be a valid conclusion and is adopted herein. The decision to recommend rejection of Johnson's bid and acceptance of Ellis's as the lowest responsive bid was ultimately reached by the Board's administrative staff. The Ellis bid was responsive to the solicitation whereas the determination was made that Johnson's was not responsive because of the alteration. It was not the actual act of alteration that caused that determination but rather the potential effect of the alteration. This was consistent with long standing Board policy not to accept a bid which does not conform to a bid solicitation and not to accept bids from bidders who alter the Board's bid proposal form or otherwise attempt to qualify their bids. It is the opinion of the Board personnel that such consistency in bidding procedure has resulted over time in more qualified bidders submitting bids for Board work which, in turn, has resulted in more competitive prices for the work let for bid. This is a reasonable policy. Mr. Gottschalk, Johnson's expert architect, who has designed schools for the Board, offered an alternative disposition to this dilemma. While admitting that Johnson's shifting of the risk of loss as a result of possible dewatering was a material matter, he suggested the Board could have disregarded the dewatering clause on every submittal and thereafter awarded the contract to Johnson, the lowest bidder, whose bid was responsive to the solicitation except for the dewatering provision. Recognizing this solution would have placed each bidder on an equal footing and allowed award to the lowest bidder at a substantial savings to the Board, he nonetheless also understood the decision made by Mr. Hoffman and the Board staff here and could not fault it. He agreed that reasonable men could differ on the issue of responsiveness here and how to deal with it. It is so found. After a review of the evidence submitted, including the testimony indicating the remoteness of the likelihood that extensive dewatering would be required, there appears to be no evidence that the Board, or its staff, acted dishonestly, fraudulently, illegally or arbitrarily in rejecting Johnson's bid on this project and recommending award to Ellis.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Pinellas County School Board enter a final order denying and dismissing G. H. Johnson Construction Company's protest and awarding a contract for the construction of Sexton Elementary School to Ellis Construction Company, Inc. DONE and ENTERED this 8th day of May, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 8th day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-1942BID To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: Johnson's Proposed Findings of Fact. 1.-5. Accepted and incorporated herein. Accepted. Accepted but not a proper Finding of Fact. More a restatement of and comment on testimony. Rejected. Accepted but not a proper Findings of Fact. More a restatement of and comment on testimony. &11. Accepted. Accepted and incorporated herein. First sentence accepted as a literal statement of what appears in the specifications. Second and third sentences accepted but not probative of any material issue of fact. Accepted and incorporated herein. First sentence accepted. Balance not Finding of fact but argument. Ellis' Proposed Findings of Fact. 1.&2. Accepted and incorporated herein. 3.-6. Accepted. 7.-10. Accepted and incorporated herein. 11.-15. Accepted and incorporated herein. 16. Accepted but word "certain" is changed to read "likely." 17.-21. Accepted and incorporated herein. 22. Accepted and incorporated herein. 23.&24. Accepted. 25.&26. Accepted and incorporated herein. 27.-29. Accepted. Accepted and incorporated herein. Not relevant to any material issue of fact. COPIES FURNISHED: Jawdet I. Rubaii, Esquire Clearwater Executive Suites, No. 213 1345 South Missouri Avenue Clearwater, Florida 34616 John W. Bowen, Esquire Pinellas County School Board 301 4th Street S.W. Largo, Florida 34649-2942 E. A. Mills, Jr. Esquire Dale W. Vash, Esquire Fowler, White, Gillen, Boggs, Villareal and Banker, P.A. 501 East Kennedy Boulevard Post Office Box 1438 Tampa, Florida 33601 Pinellas County School Board 301 4th Avenue, S.W. Largo, Florida 34649-2942
The Issue The issue in this proceeding is whether the award of a bid for the sale of scrap metal to Cumbaa Enterprises, Inc. was arbitrary, capricious, clearly erroneous, or contrary to competition or the bid specifications.
Findings Of Fact On January 19, 2011, the Department issued Invitation to Bid (ITB) #10-Apalachee-8252. The ITB was a revenue- generating contract for the sale of scrap metal at Apalachee Correctional Institution in Sneads, Florida. Since the contract would generate revenue to the State, the Department’s purpose was to award the contract to the highest responsive bid and developed bid specifications and criteria to accomplish that goal. The specifications for the ITB stated in relevant part: Material Deviations: The Department has established certain requirements with respect to bids to be submitted by bidders. The use of shall, must or will (except to indicate simple futurity) in this ITB indicates a requirement or condition which may not be waived by the Department except where the deviation therefrom is not material.[emphasis added]. A deviation is material if, in the Department’s sole discretion, the deficient response is not in substantial accord with this ITB’s requirements, provides an advantage to one bidder over other bidders, has a potentially significant effect on the quantity or quality of items bid, or on the cost to the Department. Material deviations cannot be waived and shall be the basis for rejection of a bid. Minor Irregularity: A variation from the ITB terms and conditions which does not affect the price of the bid or give the bidder an advantage or benefit not enjoyed by other bidders or does not adversely impact the interests of the Department. 1.10 Responsive Bid: A bid submitted by a responsive and responsible vendor that conforms in all material respects to the solicitation. * * * 4.3.1 Submission of Bids Each bid shall be prepared simply and economically, providing a straightforward, concise delineation of the bidder’s capabilities to satisfy the requirements of this ITB, fancy bindings, colored displays, and promotional material are not desired. Emphasis in each bid must be on completeness and clarity of content. In order to expedite the review of bids, it is essential that bidders follow the format and instructions contained in the Bid Submission Requirements (Section 5), with particular emphasis on the Mandatory Responsiveness Requirements. Rejection of Bids The Department shall reject any and all bids containing material deviations. The following definitions are to be utilized in making these determinations. Material Deviations The Department has established certain requirements with respect to bids to be submitted by bidders. The use of shall, must or will (except to indicate simple futurity) in this ITB indicates a requirement or condition which may not be waived by the Department except where the deviation therefrom is not material. A deviation is material if, in the Department’s sole discretion, the deficient response is not in substantial accord with the ITB’s requirements, provides an advantage to one bidder over other bidders, has a potentially significant effect on the quantity or quality of items bid, or on the cost to the Department. Material deviations cannot be waived and shall be the basis for rejection of a bid. Minor Irregularities A variation from the ITB terms and conditions which does not affect the price of the bid or give the bidder an advantage or benefit not enjoyed by other bidders or does not adversely impact the interests of the Department. As indicated, Section 5 of the specifications outlined the contents of the bid. Section 5 stated in relevant part: SECTION 5 - CONTENTS OF BID This section contains instructions that describe the required format for the submitted bid. Bids shall be submitted in a sealed envelope, clearly marked “Bid - ITB#- Apalachee-8252”. . . . . [T]he following paragraphs contain instructions that describe the required format for bid responses. Responsiveness Requirements The following terms, conditions, or requirements must be met by the bidder to be considered responsive to this ITB. Failure to meet these responsiveness requirements may cause rejection of a bid. [emphasis added]. Bidder shall complete, sign and return the ITB Bidder Acknowledgement Form (page 1 & 2). The bidder must return either the original or a copy of both pages with an original signature on page one (1). The bidder shall complete, sign, date, and return (all) pricing pages, entitled Cost Information Sheet, which consists of page 28. By submitting a bid or bids under this ITB, each bidder warrants its agreement to the prices submitted. The Department objects to and shall not consider any additional terms or conditions submitted by a bidder, including any appearing in documents attached as part of a bidder’s response. In submitting its bid, a bidder agrees that any additional terms or conditions, whether submitted intentionally or inadvertently, shall have no force or effect. Any qualifications, counter-offers, deviations, or challenges may render the bid un-responsive . . . . * * * 5.3 Certificate of Insurance Bidders shall return a fully executed Certificate of Insurance . . . . In this case, Section 5.1 contains two bid specifications essential to a bid's responsiveness. Those two requirements were submission of a signed and completed, original or copy, of the bidder acknowledgement form and submission of a completed Cost Information Sheet. The Cost Information Sheet is not at issue here. The bidder acknowledgement form is a double-sided Department of Management Services form containing general boilerplate contractual language. The back of the form is a continuation of standard contractual terms from the front. Oddly, signatures acknowledging these terms and the terms of the ITB are on the front page (page 1) of the form. By signing the front page of the bidder acknowledgement form the bidder agrees to abide by all conditions of the bid. The remainder of Section 5 of the ITB contains bid specifications that are not considered essential to determine the initial responsiveness of the bid at the bid opening, but are to be returned at some later point in time after the bid's are opened. However, the language of Section 5 effecting that intent is unclear. In particular, the bid specification contained in Section 5.3 requires the bidder to "return" an "executed" Certificate of Insurance. The Certificate of Insurance provides the Department with proof of a variety of required insurance coverage of the vendor. However, later in the ITB Section 7.14 clarifies that the Certificate of Insurance need only be supplied with the later-signed contract documents. Section 7.14 states, in relevant part: 7.14 Contractor's Insurance The contractor shall not commence any work in connection with this ITB . . . until he has obtained all of the . . . types of insurance and such insurance has been approved by the Department. The Department shall be furnished proof of coverage of insurance by Certificates of Insurance . . . accompanying the contract documents and shall name the Department as an additional named insured [emphasis added]. Indeed, the evidence demonstrated that the Department has long interpreted these provisions to require a winning bidder to provide Certificates of Insurance at the time a contract is entered into and not as part of the essential requirements of the bid due at bid opening. While the Department could (and probably should) clarify this provision, its interpretation of its bid specifications is not unreasonable under these facts. In this case, five bids were timely submitted in response to the ITB, including those of K & M and Cumbaa. On March 8, 2011, the Department opened bids for the ITB. Cumbaa submitted the highest bid for the contract, at $22,197.48. K & M submitted the next highest bid at $20,001.00. At the bid opening, Cumbaa's bid included a Cost Information Sheet, a copy of the signed front page of the bidder acknowledgement form, and the Contact for Contract Administration form known as Attachment 1. However, the bid did not contain the second side of the bidder acknowledgement form or a Certificate of Insurance form at the time the bid was opened. K & M's bid contained the same documents as Cumbaa's bid, as well as the second side of the bidder acknowledgement form and a number of certificates of insurance for K & M. The evidence showed that Cumbaa did not include the Certificate of Insurance form in its sealed bid upon the advice of the Department that the form was not required at bid opening. However, Cumbaa had insurance coverage in place at the time of the bid opening and faxed its certificates of insurance to the Department on March 10, 2011. Given these facts and the Department's reasonable interpretation of its ITB, the omission of Cumbaa's certificate of insurance was neither required at the time of the bid opening, nor material to the award of the bid. The omission of the second page of the bidder's acknowledgement form was not noticed by anyone reviewing the bids until its omission was pointed out by K and M in this bid protest. Cumbaa faxed a copy of the back side of the document to the Department on April 11, 2011. Clearly, this lack of notice demonstrates the immateriality of the back side of the bidder's acknowledgement form. Additionally, since the signatures of both bidders were on the front page of the form submitted by them and those signatures bound the bidders to the terms of the ITB, there was no evidence that demonstrated why submission of a copy of the back side of the form was material to the award of this bid. Ultimately, the Department reviewed the bids for responsiveness and determined that Cumbaa was the highest responsive bid. On March 11, 2011, the Department posted its intent to award the bid to Cumbaa Enterprises, Inc. As indicated, there was no evidence that the omission of these two documents from the Cumbaa bid were material deviations from the bid specifications since neither omission impacted the ultimate contract requirements and did not materially impact the integrity of the bid process. Indeed, the insurance certification was not required for responsiveness under Section 5.1 of the bid under a long-standing and reasonable interpretation of that requirement by the Department. For these reasons, this bid protest should be dismissed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Department of Corrections, enter a final order dismissing the Protest of K & M Pine Straw. DONE AND ENTERED this 1st day of July, 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 1st day of July, 2011. COPIES FURNISHED: Kurt Eldridge K and M Pine Straw 20583 John G Bryant Road Blountstown, Florida 32424 Edith McKay, Esquire Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Edwin G. Buss, Secretary Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Jennifer Parker, General Counsel Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500
The Issue On May 12, 2004, did Respondent, Department of Transportation (DOT), act illegally, arbitrarily, dishonestly, or fraudulently when it cancelled the posting and noticed its intent to reject the bid of Rosiek Construction Co., Inc. (Rosiek), in relation to financial project Nos. 256903-1-52-01 and 256903-1-56-01, Pinellas Bayway Bridge Replacement, SR 682 (the Project)? § 120.57(3)(f), Fla. Stat. (2004).
Findings Of Fact The subject of this protest is financial project Nos. 256903-1-52-01 and 256903-1-56-01, Pinellas Bayway Bridge Replacement. Respondent and 12 other pre-qualified bidders received copies of the bid solicitation notice, plans and specifications for the Project at issue. Rosiek submitted a responsive bid for the Pinellas Bayway Bridge Replacement on April 28, 2004. There were no other bidders. Rosiek is pre-qualified to bid and receive the contract for the Project and therefore is a responsible bidder. On May 12, 2004, DOT posted its notice of intent to reject all bids. Rosiek timely filed this bid protest on May 14, 2004, with DOT, along with the statutorily required bid protest bond. DOT's 2004 Standard Specifications for Road and Bridge Construction is applicable to this project. FACTS BASED UPON ROSIEK'S ADMISSIONS DOT had advertised its bid solicitation notice for Financial Project Nos. 256903-1-52-01 and 256903-1-56-01, Pinellas Bayway Bridge Replacement on or about March 4, 2004. Rosiek received the copy of the Bid Solicitation Notice for the Project. Rosiek did not file a specifications challenge with respect to the referenced Project. DOT advertised the amount of $37,087,000.00 as its budgeted amount for the Project. Rosiek submitted a total bid of $50,470,378.12 for the Project (total bid A+B). ADDITIONAL FACTS Juanita Moore is a manager of the DOT Contracts Administration Office. She served as a member of the Technical Review Committee and the Awards Committee in relation to the Project. When the Technical Review Committee is confronted with a bid, such as the Rosiek bid, which is from a single bidder, something is missing from the bid or for certain differentials in price between the bid received and the official cost estimate, the Technical Review Committee considers these to be "problem jobs." In connection with terminology, Ms. Moore explained that the budget figure, referred to in the Bid Solicitation Notice for the Project as a Proposal Budget Estimate, is derived from an earlier estimate in the process and in turn an official cost estimate was established for the Project. The official cost estimate is also referred to simply as the estimate. The official cost estimate has not been disclosed as has been explained in the Preliminary Statement to the Recommended Order. The official cost estimate here is broken down into component items within the Project pertaining to cost for Mobilization, Concrete Class IV, Concrete Class V, etc. After the Technical Review Committee considered the Rosiek bid, the bid was passed on to the Awards Committee where it was decided to reject the bid. According to Ms. Moore the bid was rejected as too high when compared to the official cost estimate. The reference to a bid being too high relates to a bid which is more than 10 percent in excess of the official cost estimate. The budget figure and the official cost estimate are not necessarily the same in a given instance. The fact that it was the only bid was also a factor considered in the rejection. As Ms. Moore explained, at the time the Rosiek bid was rejected, it was principally because it was too high in relation to the official cost estimate. Given the posture in this case, the rejection as the only bid will form the basis for resolving this dispute, absent DOT's willingness to divulge the amount of the official cost estimate or how it was established. DOT does not have an established policy for rejecting bids based upon the fact that only a single bidder responded to the solicitation. In her experience, Ms. Moore does not remember DOT rejecting a bid solely on the ground that there was only one bidder. The minutes of the Awards Committee meeting held on May 12, 2004, detail the response by that committee to the Rosiek bid. In the copy of that document provided for this proceeding, DOT's official cost estimate is redacted. The percentage differential between the official cost estimate and the Rosiek bid is likewise redacted. The item number 0101-1 for Mobilization reflects Rosiek's bid of $4,900,000.00 compared to the official cost estimate which is redacted. Similarly, Item No. 0400-4-4, Concrete Class IV refers to the contractor bid price of $800.00 per cubic yard compared with the official cost estimate which is redacted. There are other comparisons between several additional categories or items in which the contractors bid price is reflected but the official cost estimate in comparison is redacted. The minutes go on to describe how the review being made by the Awards Committee led to the conclusion that the official cost estimate could be adjusted, placing the bid received by Rosiek a certain percentage above the estimate on a 10 percent criteria job but the differential between the adjusted official cost estimate and the Rosiek bid is not revealed as a percentage because of redaction. The DOT district where the project would be located is District 7, the Tampa office. The minutes of the Awards Committee meeting indicate that the district and the Technical Review Committee recommended to the Awards Committee that it reject the Rosiek bid and re-advertise. That was the decision made by the Awards Committee on May 12, 2004, to re-let in June. Nothing in the minutes prepared by the Awards Committee refers to the significance of Rosiek as the only bidder and any concern which the Awards Committee had about that fact. On May 12, 2004, when DOT provided a Cancellation of Posting and a Notice of Intent to Reject to Rosiek, it did not state the rationale for that decision. It merely indicated to Rosiek that it was DOT's intent to reject all bids on the project and advised Rosiek of its opportunity to contest that decision. On May 5, 2004, Kenneth A. Hartmann, P.E., the District 7 Secretary, prepared the District Response to Post- Bid Evaluation of Bids in Excess of Approved Award Criteria. The document is presented in question-and-answer form. In response to the question numbered 4 within the document, related to the prospect of critical safety deficiencies in the existing system being corrected by the construction of a new bridge, Mr. Hartmann responded with the answer "No." In relation to question numbered 2, excluding normal inflation, the question was asked whether re-advertising the project would likely result in a higher bid. Mr. Hartman answered "No." In response to question numbered 16, related to his recommendation as the district secretary, for action that should be taken by the Awards Committee he stated "This project should be rejected and re-advertised for a June 2004 1st [sic]. Considering that the project is medium to large and was competing against two other large bridge projects on the same day it is understandable that the contractor's bid was higher than our estimate." In response to question numbered 15 concerning the work load level of the contracting industry in the locality where the project would be constructed, Mr. Hartmann referred to "a high level of work load." At hearing Donald Skelton, P.E., the District 7 Secretary testified in support of the rejection of the Rosiek bid. In the past he had served as Director of Transportation Development with DOT, a position that made him responsible for preparation of the design plans and contract packages that are bid. He had involvement with this Project pertaining to the preparation of design plans and getting the Project to contract letting. He reviewed the Rosiek bid. In discussions related to the Rosiek bid during the post-bid evaluation period, there was a concern over a lack of competition and the differential between, what Mr. Skelton refers to, as the budget amount and the bid amount by Rosiek. Mr. Skelton was mindful of potential safety issues that might warrant the prospect of trying to find additional money to fund the Project, if it was necessary to replace the existing bridge for safety reasons. If the bridge were structurally deficient or in bad shape, that would need to be addressed, versus the additional time necessary to potentially rebid the project. No safety issues of that sort were found by Mr. Skelton. Mr. Skelton explained that the fact that there was single bidder made it difficult, if not impossible, to make a comparison between that bid and what the true market value of the bridge construction would be. Mr. Skelton expressed the hope by the DOT, that there would be more than one bidder in the future to truly get an impression of the degree of competition and whether the competition would result in a realistic price for the public. He recognized that there is no guarantee that DOT is going to get a lower bid if the project is re-bid. Mr. Skelton indicated that when you have multiple bids you can compare what the economic system would support in relation to the affordability of the project. That comparison is of similarity in prices among the competitors trying to win the job, with the belief that bidders put their best effort forward to prevail in the competition. A single bid does not give any indication of market factors, in his view. Michael Rosiek is the vice-president for Rosiek. In his testimony, he expressed a concern that if the project was re-let for bid, Rosiek's competitive position would not be good, in that the other contractors would have read the Rosiek bid that was made in the first letting, informing the competitors of the Rosiek price to its detriment. Further, Mr. Rosiek expressed a concern that in a re-letting the company would be bidding "against ourselves." Louis Wenick, P.E., has a business consulting service. The nature of the business is consulting work relating to the construction industry. A considerable part of the business involves DOT projects. In his work Mr. Wenick is involved with scheduling, cost analysis, and entitlement analysis in DOT projects. He is familiar with DOT's specifications, policies, and procedures. Mr. Wenick is a registered engineer in Florida and a certified general contractor in Florida. Mr. Wenick obtained information from DOT concerning its history in receiving sole bids for a project and the instances in which the sole bidder was awarded the contract. Mr. Wenick looked at procedures followed by DOT in awarding contracts. Mr. Wenick looked at the DOT experience in re- letting bids to determine if a company was a low bidder in the first letting when bids were rejected, and what percentage of the time that low bidder would succeed in being awarded the contract upon a re-letting. Mr. Wenick prepared certain charts intended to depict the DOT response in the areas examined by the witness. Rosiek's Exhibit numbered 3 is referred to as Problem Jobs for the April 28, 2004, letting, with two posting dates of May 20, 2004, and June 7, 2004, respectively. The chart depicts the proposal I.D. number (bid), the project number and the type of problem identified in reviewing bid responses and a brief statement of the Technical Committee's comments and the Awards Committee's disposition in those projects depicted. Nothing more is described in the chart. In no case set forth in the chart was the type of problem described in any detail or, limited to an experience with a single bidder, as opposed to perceived problems in relation to the bid that was too high, as well as having a single bidder or to the problem of having a bid that was too high alone. Seven projects were awarded. Two were not. The rejections were based upon the bids being too high. One of the projects initially awarded was later rejected due to the unavailability of local funding to support the project. Mr. Wenick prepared a chart, Rosiek's Exhibit numbered 4. This reflects the DOT award results for sole or single bidders from the period July 1999 through April 2005. The columns in the chart show the numeric count of sole bids, at certain letting dates, with the contracts numbers, the name of the low bidder, and the disposition of the bids. The numeric count of sole bids is a running tally over the period. This reflects 52 sole bids of which eight were rejected, making the percentage accepted 84.62 percent. Again the nature of the projects is not shown in the chart, and this chart does not indicate the basis for rejection. Rosiek's Exhibit numbered 5 is another chart prepared by Mr. Wenick. It reflects instances in which projects were re-let for bid in the period July 1999 to April 2005. The letting dates are reflected. The project numbers, the low bidders names, if known, and the amount quoted is set out. The re-let date if the project was re-let is reflected. The low quote on re-bid and the low bidder's name on re-bid are reflected, as is the percentage difference between the low quote in the first letting and the low quote in the re- letting. Where data is established in all columns in the chart, 18 of the projects are shown to have been re-bid out of 24 projects that were bid initially. Within that group, five bidders who bid in the initial letting were awarded the contract in the re-letting, while 13 low bidders in the first letting were disappointed in the re-letting. This equates to 27.78 percent success rate by the low bidder in the initial letting when re-bidding in the re-letting. Having considered the exhibits prepared by Mr. Wenick, the information is insufficient to discern the reason for DOT's past policies and practices and to compare them to the present case for consistencies in the application of those policies and practices when rejecting bids. Additionally, the reason for the choices in any single project described in the charts cannot be appropriately understood from the charts and compared to the experience here. On the topic of the success rate for contractors who provided the low bid in the original letting and the low bid in the re-letting, it is so general an analysis, that it cannot be relied upon to determine the real significance for contractors who provided the low bid in the original letting, only to be disappointed in the re-letting when the contractor did not receive the contract.
Recommendation Upon consideration, it is RECOMMENDED: That a final order be entered dismissing the Rosiek Amended Formal Written Protest challenging the DOT decision to reject its bid. DONE AND ENTERED this 17th day of August, 2005, in Tallahassee, Leon County, Florida. S ___________________________________ CHARLES C. ADAMS 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 17th day of August, 2005.
Findings Of Fact Respondent solicited contractors to replace a chiller in Building #45 at its Sunland facility located in Marianna, Florida. The project number for the replacement was HRS-95203000. The vendors were allowed until 10:00 a.m., Central Daylight Time, August 24, 1995, to submit responses to the request for bids. On August 24, 1995, Respondent received four responses. The responses were from Petitioner, Neel, JLS International and Smiths, Inc. On August 24, 1995, when the bids were opened JLS International and Smiths, Inc. were disqualified as nonresponsive bidders. On August 24, 1995, Respondent determined that Petitioner had submitted a base bid in the amount of $141,185.00 and as described on the tabulation form, an alternate bid in the amount of $14,750.00 for confined space compliance. The Neel bid as reflected on the tabulation was a base bid for $142,000.00. The forms upon which Petitioner and Neel had submitted their bid prices were forms identical in their format. The format was required by the Respondent. The Petitioner's bid stated: Base Bid: $141,185.00 With foregoing as a Base Bid the following costs of alternate proposals are submitted in accordance with the drawings and specifi- cations. Alternate No. 1 Add or Deduct $ N/A Alternate No. 2 Add of Deduct $ Alternate No. 3 Add or Deduct $ If more or less work is required than that qualified by the specifications and drawings the following unit prices shall be applicable. *If Required (not included in base bid) ITEM UNIT PRICE Compliance for confined space for refrigerants & equipment *Note: Base bid price is compiled costs for construction duration & equipment delivery of 18 weeks. When Petitioner submitted its response to the request for bids, it offered no further explanation concerning the $14,750.00 price for "compliance for confined space for refrigerants and equipment" than has already been described. The Neel bid stated: Base Bid: $142,000.00 With foregoing as a Base Bid the following costs of alternate proposals are submitted in accordance with the drawings and specifications. Alternate No. 1 Add or Deduct $ Alternate No. 2 Add of Deduct $ Alternate No. 3 Add or Deduct $ If more or less work is required than that qualified by the specifications and drawings the following unit prices shall be applicable. ITEM UNIT PRICE Respondent had provided written instructions to the bidders concerning execution of the bid proposal form to the effect: Omit mention of alternates entirely, if there are none. Unit prices are to be used only if unit prices are applicable and approved by the Project Director. This project did not call for alternate bids or unit prices. The request for bids did not contemplate a quotation other than the base bid for all items, to include any costs associated with implementation of a design that complies with all applicable codes associated with the installation and with any laws pertaining to refrigerant handling. Posting of the bid evaluation/tabulation and notice of contract award recommendation was given on September 8, 1995, indicating Respondent's intent to award to Petitioner in the amount of $141,185.00 as the base bid for the project. Prior to the posting of the bids on September 8, 1995, as was customary, Thomas McAuley, an account representative for Petitioner, who had submitted Petitioner's bid response had met with Respondent's project manager Glen Jenkins, a Professional Engineer III. The meeting was held to discuss Petitioner's bid response as the apparent responsive lowest and best bidder. In the conversation held between Messrs. McAuley and Jenkins, they did not discuss the $14,750.00 separate price quotation in the Petitioner's bid. They did discuss compliance with the codes that were going to be applicable to the project and whether the base price quotation took into account the code requirements. McAuley indicated his opinion that the base price quotation did account for compliance with code requirements contemplated by the terms in the request for bids. McAuley was specifically asked whether Petitioner was complete and thorough in its compliance with the bid specifications and in its prices, inclusive of all the items that were going to be mandated by the State of Florida, Department of Management Services. McAuley answered that question in the affirmative. In the specifications, under Article 7, Miscellaneous Provisions, within the request for bids is set forth Sections 7.2, 7.3 and 7.4 related to permit and code compliance issues, which state as follows: State Building Permit. Current DMS requirements for state building permit applications and for permit inspections are attached. It shall be the Contractor's responsibility to apply for and pay all costs associated with the state building permit (including the cost of preparing any permit documents on which the state building official may require the seal of a registered engineer). It shall further be the Contractor's responsi- bility to comply fully with all permit inspection requirements. Code Compliance. It is the Contractor's responsibility to implement a design complying with all codes applicable to this installation, and with all laws pertaining to refrigerant handling. Neither the Owner nor the Project Manager shall be held responsible for stating or setting forth (in this or any other document, or verbally) any code requirement which may be applicable to this project. By disseminating this "Statement of Work Scope and Contractual Conditions", the Owner merely sets forth minimum acceptance criteria for materials and workmanship, and neither the Owner nor the Project Manager shall thereby be held liable, in full or in part, for the Contractor's adherence or non-adherence to any governing code and/or legal requirement. Special Terms and Conditions for Cont- racts Under the National Energy Conservation Policy Act. Due to partial project funding under a federal NECPA grant, Contractor compliance with federal laws and regulations are a special requirement of this project. Special terms and conditions pertaining to wages and payrolls, records retention and access, apprenticeship and training, equal opportunity access, are set forth in the attached "Special Terms and Conditions for Contracts Under the National Energy Conserva- tion Policy Act". The contractor shall responsible for full compliance with the attached special terms and conditions. In the meeting between McAuley and Jenkins discussion was made concerning compliance with pertinent electrical codes. One question was asked about pipes in the system being installed in a manner to allow variable speed drives to be placed above the pipes. Jenkins considered that speed drive placement underneath the pipes would be contrary to code requirements. Related to the mechanical features in the project there was discussion about the provision of refrigerants in compliance with the mechanical code that pertained. In the meeting there was little discussion about code compliance within confined spaces, because the two individuals did not perceive that there would likely be a code requirement concerning confined spaces. Mention was made that some code inspector or code official who came to the job site might require attention to the confined spaces, even though that requirement was not found in the code. According to Jenkins, in his recount of the meeting with McAuley, if a code official required compliance for an item in the confined spaces that was not set forth in the code, that would constitute an item about which the Respondent had not requested information to be included in the base price quotation offered by the Petitioner. Further, Jenkins stated there would not be a problem for failing to offer a quotation for the features required by the inspector, because it was not sought by the Respondent in designing the bid requirements. As Jenkins describes, Petitioner's unit price for that work had been made known. This is taken to refer to the $14,750.00 quote for compliance for confined space for refrigerants and equipment. In that circumstance, Mr. Jenkins told Mr. McAuley that if a code official required something that was not contemplated by the code and the Respondent did not consider it worth fighting over, then Respondent would have to process a change order to install that equipment. This is taken to mean that Petitioner would be paid additional money under a change order for installing the equipment in the event that the Respondent did not choose to contest the decision of the code official. At the time that McAuley and Jenkins had the meeting, counsel for Neel had contacted Jenkins about protesting the decision to award the contract to Petitioner. That individual had stated the opinion to Respondent that Petitioner's discussion of confined space for refrigerants and the equipment at the additional cost of $14,750.00 might be perceived as potentially a code exclusion in violation of the requirements of Section 7.3 to the request for bids. Neel's counsel stated his belief that the vendors were expected to be in compliance with all codes and laws, even if it was not known to be a code requirement at the time the bid was submitted. He was concerned that someone might try and make it a requirement in the future. The Neel attorney explained that the reference to compliance for confined space for refrigerants and equipment set forth in Petitioner's bid response might be construed as a comment on code requirements through the contingency of someone's interpretation of the code. He believed that the responses to the request for bids needed to address that contingency as part of the basic quotation, not as a separate quotation. At the time McAuley and Jenkins had their meeting, Jenkins did not know of any requirement for compliance for confined space for refrigerants and equipment based upon his experience, but he had not researched the issue. Through information which Neel imparted to Mr. Jenkins before the meeting was held between Jenkins and McAuley, the Neel attorney expressed the opinion that there was not a present code requirement for compliance for confined space for refrigerants and equipment, a view held by McAuley and Jenkins. At the time the meeting was held between McAuley and Jenkins, Jenkins was of the opinion that the requirement for compliance for confined space for refrigerants and equipment was not foreseen to be a likely code requirement. As contrasted with Neel's view, as explained to Jenkins, that its base bid was intended to cover the eventuality that there might become a requirement for compliance for confined space for refrigerants and equipment, Neel's representative stated that Petitioner's bid had segregated that contingency for consideration by quoting the price of $14,750.00 separately. Neel did not appear at the hearing and there was no direct proof that the $142,000.00 base bid by Neel addressed the contingency that a future requirement might be imposed for compliance for confined space for refrigerants and equipment. However, it may properly be assumed the Neel bid met the requirement for a base bid quotation to cover all costs to Respondent absent proof to the contrary. Later, when Respondent decided to award the contract to Neel, Respondent implied that the $142,000.00 base bid would meet code requirements contemplated by Section 7.3. Concerning the responsibility to determine which code requirements pertained and when, Respondent expected the vendors to derive that answer. This case was unlike most projects by the Respondent in which design professionals, engineers or architects create design documents that are completed in view of code requirements and the vendors assume that the bid documents prepared would be in conformance with code requirements. At hearing Mr. Jenkins, as project manager, opined that Section 7.3 obligated the contractor to meet existing requirements of the permitting authorities, and if during the pendency of the contract there was some change to the codes or code requirements set forth by code inspectors, then the contractor must assume the risk. Moreover, when the bids were opened and tabulated initially and the preliminary decision was made to award the contract to Petitioner, Mr. Jenkins perceived the quotation of $14,750.00 set forth in the Petitioner's bid to be a unit price for a scope of work that was not expected to be required at any point and was not been asked for by Respondent. Jenkins considered this quote as an alternate that was being proffered, something that Respondent might opt for in the future. Although not set forth in exact terms, Mr. Jenkins perceived this information in the Petitioner's bid response to be related to an alarm system and breathing apparatuses. He held this belief based upon his experience in association with compliance for confined spaces. Mr. Jenkins surmised that what was being described by the Petitioner was the type of installation that you would put into a closed mechanical room where a refrigeration machine was located that contained toxic refrigerant, which if released might kill a serviceman. In that connection when discussing refrigerant compliance with Mr. McAuley in their meeting, Mr. Jenkins indicated that the discussion had been limited because the type of machine proposed by the Petitioner was a 134A machine which is "ozone friendly" and not restricted by clean air amendment regulations. Following the posting on September 8, 1995, which recommended that the contract be awarded to Petitioner, Neel had 72 hours to file a protest. That protest was filed. Having considered the remarks by Neel's attorney in support of that protest, Mr. Jenkins became persuaded that Petitioner might not have intended to describe an alternate (unsolicited) purchase when discussing the compliance for confined space for refrigerants and equipment for a price of $14,750.00; instead, Petitioner may have been describing how to comply with future code requirements. Consequently, Mr. Jenkins attempted to settle the issue by presenting the opportunity for the Petitioner to obtain a letter from the Department of Management Services permitting office establishing that the equipment described in the bid by Petitioner for compliance for confined space refrigerants and equipment was not then a code requirement. Mr. Jenkins wanted that information to be in writing. This opportunity to submit information was imparted to Stuart Zaritsky, Branch Manager for Petitioner in its Tallahassee office. Petitioner did not take the opportunity to send written information concerning the compliance for confined space for refrigerants and equipment as not being required by applicable codes. Instead, Mr. Zaritsky called Mr. Jenkins and told him that Petitioner had placed calls to the Department of Management Services permitting office and was unable to get a definitive response at that time. On September 26, 1995, Mr. Zaritsky wrote to Mr. Jenkins and stated: The confined space for refrigerants and equipment compliance is based on ASHRAE recommendations only. If any of these items are required by code, then we will install it at no cost. Our base bid of $141,185 is based on the specifications, including paragraph 7.3 on page 13 and all other portions of the contract documents without any qualifications. If it is determined by the owner, that they wish to upgrade the machine room to ASHRAE 15 standards, and it is not required by code, the $14,750 would be the price to add refrigerant monitors, refrigerant purge fans and self-contained breathing apparatus. Should the jurisdictional authority of code compliance determine that these items are required by code, they will be installed as part of our base bid of $141,185. On September 29, 1995, Respondent gave notice of an amended bid tabulation finding Neel to be the responsive lowest and best bidder for the project in its quotation of $142,000.00. The September 29, 1995 correspondence notified the Petitioner that: After further review of issues raised by responsive bidders on the above project, the Department has determined that the bid sub- mitted by Natkin Service Co. on the above referenced project either: is nonresponsive, because the bid was not in compliance with Section 7.3 of the Statement of Work Scope and Contractual Conditions, since it exempted its bid from certain refrigerant handling requirements; or if responsive, is in the amount of $155,935.00. In either case, the bid submitted by Neel Mechanical Contractors, Inc. in the amount of $142,000.00 is the lowest responsive bid. The September 29, 1995 determination that Petitioner was not responsive led to Petitioner's present protest. Sometime shortly before the amended posting of the bid tabulation on September 29, 1995, Mr. Jenkins spoke to Mr. McAuley concerning the opportunity to present information to address the question concerning whether compliance for confined spaces for refrigerants and equipment was a code requirement. To assist the Petitioner Mr. Jenkins provided information which had been received from the Department of Community Affairs related to code provisions under enforcement by the Department of Management Services. This information was not provided by Mr. Jenkins as a determination of code requirements; it was provided to inform Petitioner concerning what Mr. Jenkins understood to be the latest code requirements. The expectation was still held that Petitioner would submit separate information from the Department of Management Services that would settle the issue concerning the possible need to comply with code requirements for confined spaces for refrigerants and equipment. As Mr. Jenkins described at hearing, the basis for finding the Petitioner's bid unresponsive was alternatively stated. First, the Respondent believes that Petitioner tried to avoid the responsibility for complying with code requirements, whatever they may be during the contract pendency; or second, Petitioner split its bid into two parts. One in the amount of $141,185.00 for matters unrelated to code compliance for confined space for refrigerants and equipment and the second in an amount of $14,750.00 for such compliance. If the former view is taken, Petitioner's bid is unresponsive. If the latter view is taken Petitioner's bid is responsive but exceeds the quotation by the responsive bidder Neel. At hearing it was not proven by competent evidence whether there was any necessity to meet code requirements for compliance for confined space for refrigerants and equipment as described in Petitioner's bid response at any point in time. Other provisions within the request for bids that pertain to the manner in which the vender would address its price quotation are as follows: 1.5 The Contract Sum shall initially be that lump-sum amount which the Contractor shall have enclosed in his sealed bid proposal. Subject to additions and deduc- tions by Change Order, the Contract Sum shall be the amount which the Owner shall pay the Contractor for the performance of the work, subject to the terms and conditions as provided in the Contract Documents. 2.6 The Contractor shall apply for, and pay all costs associated with, any permit which may be required by the Department of Management Services. Such permitting costs for which the Contractor shall be responsible shall include the preparation of any permit documents on which the building official may require the seal of a registered engineer. B-9 Instruction for bidders; They (the bidders) are also required to examine carefully any drawings, specifications and other bidding documents to inform themselves thoroughly regarding any and all conditions and requirements that may in any manner effect the work.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED: That the final order be entered which dismisses Petitioner's protest based upon the unresponsive of its bid and awards the contract for Project No. HRS- 95203000 to Neel. DONE and ENTERED this 20th day of December, 1995, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of December, 1995. APPENDIX The following discussion is given concerning the proposed fact finding by the parties: Petitioner's Facts: Paragraph B1 is contrary to facts found. Paragraph B2 is rejected in the suggestion that Respondent should be bound by resort to extrinsic evidence to determine Petitioner responsive to the bid invitation. Paragraph B3 is contrary to facts found. Paragraph B4 is rejected in the suggestion that it was inappropriate to defer to the Neel protest as a means for Respondent to reconsider its position. Paragraph B5 is rejected in the suggestion that Neel has controlled the outcome in this case. Paragraph B6 is rejected in the suggestion that Petitioner has complied with the bid invitation requirements. Paragraph B7 is rejected in the suggestion that the contrary position stated by the Respondent in the informal review wherein Petitioner had been preliminarily determined to be the responsive bidder and the point of view at hearing would preclude a decision favoring the Respondent. Respondent's Facts: Paragraphs 1 through 9 are subordinate to facts found. COPIES FURNISHED: Tommy McAuley, Account Manager Natkin Service Company 3428 A. Garber Drive Tallahassee, FL 32303 Sam Chavers, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building 1, Suite 200 Tallahassee, FL 32399-0700 Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Kim Tucker, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Informational Copies: JLS International, Inc. P. O. Box 490 Foley, AL 36536 Neel Mechanical Contractors, Inc. P. O. Box 1916 Thomasville, GA 31799 Smith's, Inc. of Dothan P. O. Box 1207 Dothan, AL 36302
Findings Of Fact The College realized that it needed a new telecommunication system about three years ago, when it began to renovate some of its buildings. On June 8, 1992, the College issued an Invitation To Bid, No. 3656, to eight vendors to replace its fifteen-year-old AT&T Dimension Private Branch Exchange (PBX) System and install a voice and data communications network among the College's four campuses. The bids were to be opened at 2:30 p.m. on July 29, 1992. The College believed replacement of the existing PBX system would result in lower operating costs, permit the system to serve more functions and permit the system to expand as the College's needs grew. Two vendors, NEC and AT & T, submitted bids. The College already has gone through two prior bids for the new PBX system, which did not result in contracts with any of the bidders. AT&T had submitted a bid in response to each of those attempts to let a contract for replacement of the College's communications system. The process of developing the bid specifications was initiated by the College's Vice President for Business Affairs, Dr. Clinton Hamilton, who asked those who would be using the communications system (the Registrar, the Learning Resources Department, the Provost, and others) to explain their needs so they could be incorporated in the new system. He also asked College employees familiar with information systems and telecommunication systems to help draft the bid documents to incorporate the functions the users desired. The College received assistance from a committee made up of representatives of the State's Department of General Services, Division of Communications; the State Department of Education; Miami Dade Community College; Nova University; and the School Board of Broward County. These groups reviewed the proposed bid specifications before each of the College's three attempts to let a contract and advised the College on them. The College made a careful effort to craft its specifications to ensure it would purchase the most appropriate communications system for its needs. The College currently has separate and independent voice and data communications systems. For data, each of the College's locations (South campus, Central campus, North campus and the College's administrative center in Fort Lauderdale) use more than one data circuit (AT&T Exhibit 5; Bid page D-1). For example, the eight controllers at the South campus are connected to the Fort Lauderdale Center by a pair of data circuits. The 15 controllers at the Central campus are linked to the Fort Lauderdale Center by four data circuits. If the controllers associated with one data circuit should go down for some reason, those connected to the other data circuits at campus will continue to operate, and the campus will only suffer "partial paralysis." The bid at issue seeks a single "voice and data T-1 network" to link each of the campuses to Fort Lauderdale Center in a unified system, which eliminates the need for separate voice and data systems. The new system is designed so that controllers at each campus will communicate with the mainframe computer at Fort Lauderdale Center through T-1 trunk lines, the same lines connecting the voice telephone system at each campus. Each campus will have its own PBX system, and the T-1 lines will allow users at each campus to place telephone calls to extensions at all campuses internally, i.e., without leaving the College's own network. They can also use the local Southern Bell network to place calls if all internal lines are in use, just as the Southern Bell network is used to place calls to numbers outside the College's campuses. Connection of the voice system (the PBX equipment) and data terminals at each of the College's three campuses to the Fort Lauderdale Center requires the use of multiplexors, devices which improve efficiency in networks by concentrating and combining signals and switching them over connecting links (i.e., the T-1 circuits) to other locations or devices. The bid solicitation document requires a multiplexor known as a "40- Series" multiplexor at each campus to perform the concentrating and combining role. The bid solicitation document also specifies a single multiplexor of a more complex type, a "45-Series" multiplexor, at the Fort Lauderdale Center. This multiplexor performs the switching function to redirect signals from one location to another. The bid solicitation document instructs bidders to supply a Comsphere 6800 Network Management System, which is a type of software to operate the hardware components. Comsphere is manufactured by a wholly owned subsidiary of AT & T, known as "AT&T Paradyne." This software manages the entire network, and allows remote troubleshooting of any problems on the network, Comsphere's system can automatically dial out to the AT&T Paradyne Center in Largo, Florida, so that a technician can investigate and often solve problems without the need to send anyone to a campus to perform maintenance. On July 7, 1992, the College held a bidders conference to explain the bid documents and their requirements, in order to insure that the bids the College received would be accurate and complete. During that conference, the vendors were told: (1) any price corrections must be initialed or the bid would be disqualified; (2) all pages of the bid documents which contain signature lines had to be signed; (3) bidders could not modify the general conditions or special conditions of the bid documents; and (4) any questions about the specifications would be answered only by written addendum. The same instructions can be found in text of the bid solicitation document (AT&T Exhibit 4). The College issued Addendum One to its bid documents on July 9, 1992, Addendum Two on July 14, 1992, and Addendum Three July 22, 1992. Addendum Two is the source of the dispute here. As is the College's practice, all bids were opened publicly after the hour for the receipt of bids had passed on July 29, 1992. Each bid submission had two parts. The first was a bid summary sheet containing a required format for the vendor's price. The second part of the submissions were bound volumes explaining how the vendor would satisfy each of the specific requirements in the bid specifications. During the bid opening, a College employee opened the sealed envelopes containing the vendor's bid summary sheet, and read aloud the prices found on each bidder's summary sheet. Page 13, paragraph 19.6 of the Bid Specifications told bidders that the bid summary sheets must recite the total bid price for the entire system, which had to include any upgrades to the standard features of the vendor's equipment so that the equipment provided would meet the College's specifications. When the bids were opened, representatives of AT & T, AT&T Paradyne, and NEC were present. As the bid summary sheets were opened and the prices announced, no one from AT&T objected to the prices read out or contended there was an error in AT&T'S pricing. The College's Director of Purchasing, Janet Rickenbacker, and the senior buyer handling the acquisition, Susan Kuzenka, then reviewed the extensive responses to the specifications submitted by the two bidders. They determined that NEC was the low responsive bidder. The amount AT&T bid based on the bid summary sheet found in its sealed bid was $1,558,836.57, NEC's bid was $1,549,895.15. 1/ After the bid opening, Mr. Zinn of AT&T had two conversations with Ms. Kuzenka about the AT&T bid. These conversations focused on the conflict in the entry for system maintenance on the bid summary sheet for AT&T which had been opened and read aloud on July 22, 1992, and the backup data for the system maintenance figure found in a section of AT&T'S bid response documents. On the bid summary page, AT&T had listed its "four-year maintenance totals M[onday] through F[riday] 8 a.m. through 5 p.m." as $755,536.16. But on page 53 of its bound bid response, AT&T listed the "total maintenance" cost as $530,204.00. This lesser figure is consistent with other maintenance price information found on page 61 of the AT&T bound bid documents, which set out total monthly maintenance costs for Monday through Friday maintenance from 8:00 a.m. to 5:00 p.m. for all four college locations as $11,045.92 per month. If this monthly figure is multiplied by the maintenance term (48 months) the sum is the $530,204.00 shown on page 53. During his first conversation, however, Mr. Zinn told Ms. Kuzenka that the higher figure of $755,536.16 was correct, because AT&T had neglected to add in the maintenance for the AT&T Paradyne multiplexor in the entries in the bound bid documents at pages 53 and 61. During a second conversation, Mr. Zinn reversed his position and indicated that he had added the maintenance for the multiplexor twice, which resulted in an erroneously high figure of $755,536.16 on the bid summary sheet, and that the $530,204 figure on page 53 was correct. One week after the bid opening, on August 5, 1992, AT&T sent a fax letter to Ms. Kuzenka, which confirmed Mr. Zinn's second conversation, and stated that the correct maintenance price was the $530,204.00 found on page 53 of the AT&T bid, rather than the $755,536.16 figure found on its bid summary sheet. Ms. Kuzenka had not asked anyone from AT&T to submit this price change to its bid, and it was not accepted by the College, under its standard policy that price changes will not be accepted once a sealed bid has been received and opened. The College has consistently adhered to this practice through the entire term of Ms. Kuzenka's employment. While a lower maintenance price can be found in one portion of the voluminous response of AT&T to the Bid Specifications, the figure on the bid summary sheet controls. See the "Special Instructions" found at page 5 of the bid solicitation documents (AT&T Exhibit 4). A bidder should not be permitted to look for ambiguities in the supporting documentation to contradict clear entries of price components found on its bid summary sheet. Use of the bid summary sheet permits the College to rely on a specific portion of the bid submission, which will be comparable from bidder to bidder, and to avoid wading through voluminous and perhaps internally inconsistent submissions to try to determine exactly what the bidder's price is. The "Special Instructions" state: "Bidder must use bid pages provided by the College and submit bid in the order issued; failure to do so will result in rejection of your bid" (AT&T'S Exhibit 4). Over and above the maintenance price differential, the College staff found the submission by AT&T to be materially non-responsive to the Invitation to Bid. Ms. Kuzenka found five problems with the AT&T submission, which led her to conclude that the response submitted by AT&T failed to meet the bid specifications: (1) AT&T qualified or modified the terms and conditions of the specifications; (2) price corrections were not initialed by AT & T; (3) the maintenance contract was partially assigned to another vendor; (4) the bid was not signed by AT&T on all pages which have required signature lines; and (5) AT&T failed to provide a qualification statement. Modification of terms and conditions The College's bid document stated in paragraph 54.1 that the terms and conditions of the bid and purchase order constitute the contract and "no other terms and conditions apply" (Tr. 157). The maintenance agreement, titled "Product Agreement," which is appended to the AT&T Service Offerings and Support Plan is a standard AT&T form (College Exhibit 6). It contains a provision in paragraph 20G., which states "THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LOCAL LAWS OF THE STATE OF NEW JERSEY" (emphasis in original). The general conditions of the bid required that the contract be governed by Florida law (Tr. 152). AT&T argues that the standard product agreement it attached to its bid response had not been signed by a representative of AT & T, and that the College had the right to accept or reject the terms of the Service Offerings and Support Plans and the attachments to it. This is true, but the inclusion in its bid response of the New Jersey choice of law provision certainly creates an ambiguity over the applicable law, if AT&T'S bid were accepted. This ambiguity would be completely avoided had it not been proposed by AT & T, in contravention of the bid's general conditions. Paragraph 2 of the Product Agreement states "Terms and conditions on any non-AT&T order form shall not apply." Fairly read, AT&T was attempting to have its duties under its standard Product Agreement governed by the laws of New Jersey, not the laws of Florida. As a matter of sovereignty, Florida agencies do not subject themselves to foreign law. The College acted within its legitimate range of discretion when it rejected the choice of law provision as inconsistent with its bid documents. The same problem is caused by similar language in paragraph 12F of the AT&T Service Agreement (College Exhibit 5). The AT&T Product Agreement also has an integration clause, Paragraph 20H, stating that it constitutes the entire agreement of the parties, and supersedes any other oral or written agreements. This provision also attempts to modify the terms and conditions of the bid specifications to give the terms of AT &T's Service Offerings and Support Plan priority over the specifications. The College was entitled to reject this as inconsistent with the bid specifications. The same problem is presented by similar language in paragraph 12G of the AT&T Service Agreement (College Exhibit 5). The Service Offerings and Support Plan also contained a provision allowing AT&T to assign the agreement, which violates the anti-assignment provisions of paragraph 56.1 of the bid specifications. AT&T'S bid response stated that the College would be required to pay the cost for installing any additional cable. The bid specifications required vendors to inspect existing facilities at the College during a pre-bid walk- through, so that bidders could determine whatever cabling would be needed, and incorporate all necessary cable in their bid price. AT&T'S attempt to make the College liable for any cabling over and above that estimated by AT&T when submitting its bid is inconsistent with the bid specifications. The AT&T submission includeds a statement that the College was obligated to pay for the cost of a site survey to be performed by the project manager before the execution of the contract. Yet a site survey had already been performed, and the bidder's price was to have been inclusive of a total system, with no additional cost to the College for items such as surveys. Finally, the AT&T Service Offerings and Support Plan required the College to provide, at the College's expense, a secured and protected area for storage of tools and equipment near the equipment room, which was not part of the bid specifications. At the walk-through, AT&T should have determined whatever its security needs were and included those costs in its bid price. In essence, AT&T submitted preprinted forms without tailoring them to the carefully crafted requirements of the College's bid specifications. It cannot now disavow the contents of its forms which violate or fail to conform to these specifications. The time to review the company's standard forms was before they were submitted in its bid response, not afterward. Price correction There is a price correction on page 48 of the AT&T bid which is not initialed. The bid specifications require that "all corrections, manual or written or white-out must be initialed by the person signing the bid" (Bid Specifications, page 63, paragraph C). This was not done. The specifications stated "Failure to initial price corrections will result in the rejection of your bid" (AT&T Exhibit 4, page 5, numbered paragraph 2). Assignment provisions There was also confusion in the AT&T bid arising from the attachment of two proposed maintenance agreements, one from AT&T itself, another from AT&T Paradyne. The two maintenance contracts are not identical. 2/ College personnel believed that one contract was for part of the equipment, while the other contract was for another block of equipment. The College had been concerned about the difficulty in having to deal with different companies; it had drawn its specifications so that the bidder would be the single entity responsible to the College for maintenance. The submission of a proposed maintenance contract from an entity other than the bidder was inconsistent with the bid specifications. Signature Not all pages with signature lines had been signed by AT&T'S representative. These included page D1, which had a bearing on the equipment allowance being provided for the existing system traded in by the College. While AT&T regards these failures as trivial, the College went to pains to require bidders to sign pages with signature lines. Page 5 of the Bid Specifications stated: "Failure to sign all pages with a signature line will result in the rejection of your bid" (AT&T Exhibit 4, page 5, numbered paragraph 3). It is not arbitrary for the College to insist that these requirements be followed or to enforce the penalty stated in the specifications. Qualifications statement The special conditions for the bid required that vendors submit a qualifications statement listing similar work done for others (Tr. 168; Bid Specifications Section 25.1 at page 25). The College intended to consult those listed to determine whether they were satisfied with the equipment the vendor installed and the service it provided. AT&T did not provide that list, but rather provided an annual report which contains no customer references. This was not responsive to the bid. The College had experience with AT&T'S fifteen- year-old Dimension system, but not with the new equipment AT&T bid. The failure to submit the qualifications statement deprived the College of the opportunity to check with entities which had purchased the equipment AT&T had bid, something it had been careful to require of bidders. Deciding how to treat these inadequacies is a matter of discretion. Staff recommended rejection of the AT&T bid for genuine instances of noncompliance with specific requirements of the bid specifications the College had carefully crafted. This action cannot be characterized as arbitrary. The College's decision The College's purchasing department recommended to Dr. Hamilton that the bid be awarded to NEC as the low responsive bidder. A bid tabulation was posted on August 7, 1992, awarding the contract to NEC and rejecting AT&T'S bid. The protest AT&T filed a Notice of Protest, and later a Formal Written Protest on August 18, 1992, which dealt with a number of technical aspects, but did not claim that NEC's rival submission failed to conform to the bid specifications. Dr. Hamilton advised the College's president that, to be fair to both bidders, an outside consultant should be retained to evaluate the issues raised by AT&T in its Formal Written Protest. This was done, and the College retained Technology Associates for $8,600 to report to the College on the issues raised by AT & T. Technology Associates found that AT&T did not meet the emergency 911 requirements outlined in the College's bid documents. Southern Bell requires that when 911 calls are made from the College, the telephone system be capable of identifying to the police dispatcher which campus, which room and which extension number originated the emergency 911 call. The consultant also found that NEC's system met this requirement. AT&T did not attempt to refute this determination at the final hearing. The consultant found that AT&T'S proposed system was "over designed," in that it included elements not required by the bid documents. AT&T argues that Addendum Two, issued on July 14, 1992, 14 days before the bid opening, was so ambiguous with respect to necessary redundancy that the two bidders were bidding on fundamentally different systems, so that the matter should be bid for a fourth time. The portion of the addendum at issue states: The College requires two additional T-1 lines; not one as previously stated, to be added to diagram D-2 to ensure redundancy. A T-1 line is to connect North Campus with Central Campus and an additional T-1 line is to connect Central Campus with South Campus. (Tr. 85) Addendum Two explains that these lines are required to "ensure the ability to redirect calls if required, enabling the system to be fully redundant" (Tr. 86- 87, emphasis added). The addendum directed only the addition of two T-1 lines. This can be done, as NEC proposed, by connecting additional T-1 lines, one from the PBX at the North Campus to the PBX at the Central Campus and the other from the PBX at the Central Campus to the PBX at the South Campus. AT&T chose to feed each of the PBX installations at the North Campus, Central Campus and South Campus first into its own additional 45-Series multiplexor (the complex multiplexor, see Finding 10 above) so that a 45-Series multiplexor will handle T-1 connections from North Campus to a 45-Series multiplexor at Fort Lauderdale center, and to a 45-Series multiplexor at Central Campus. The PBX at Central Campus, because it has its own 45-Series multiplexor, then can be connected by T-1 lines to the 45- Series multiplexors at North Campus, South Campus and Fort Lauderdale Center. The PBX at South Campus, through its 45-Series multiplexor, then can connect to the 45-Series multiplexors at Central Campus and Fort Lauderdale Center (this configuration is shown on the final page of AT&T Exhibit 5). This is a more complex way to provide the T-1 connections between North and Central Campus and Central and South Campus than the addendum required, and uses four 45-Series multiplexors rather then one. AT&T argues its more complex solution was necessary so that both voice and data systems would be redundant, thus meeting the requirement in the addendum that the system be "fully redundant." The problem with the approach taken by AT&T is that it fails to follow the language of Addendum Two. There is no reference to alternative routing or redundancy for data, the redundancy is required to redirect calls, i.e., PBX or voice components. See the final quotation in Finding 40, above. Redundancy for data transmissions, something the AT&T solution provides, was not required. AT&T'S solution is overdesigned. This is not a pivotal issue, however, because for the reasons stated in the foregoing findings, the submission by AT&T was properly rejected by College staff as non-responsive to the terms of the Invitation to Bid. NEC is the low responsive bidder. Software certification AT&T argues in pages 16 through 20 of its proposed recommended order that the bid of NEC fails to conform to the requirements of the Invitation to Bid. AT&T had not raised the issue of whether the bid of NEC was responsive in its Formal Written Protest, and the attempt to do so at the beginning of the final hearing was rejected. As a result, this is not an issue which should have been addressed in the proposed recommended order. Nonetheless, it may be easily disposed of. The bid documents require that each bidder provide the College with a certification that the bidder: [O]wns, leases or controls the software it offers in response to this bid. If the bidder does not own the software, their certificate must include the source from which the software shall be obtained, and that the bidder has a right to sell or lease this software (Bid Specifications at 26, AT&T Exhibit 4.) The bidder also must certify that it is "eligible to maintain and support the software." (Id.) In its certification, NEC stated: NEC is the manufacturer of the NEAX2400 IMS that has been proposed to Broward Community College. As the manufacturer, we developed all software utilized on the NEAX2400. NEC owns all the rights to the software and has over 600 software engineers in Dallas dedicated to maintain and support the software. (AT&T Exhibit 4, final page) AT&T objects that this certification goes only to NEC's hardware, and does not constitute a certification that NEC has the rights to convey to the College the software necessary to operate the Comsphere 6800 Network Management System, which is a product of AT&T Paradyne. When reviewing the submissions of both bidders, the College staff found that their software certifications were equivalent. Both companies certified that they had the right to sell the software to operate the system each offered to the College. The College is entitled to rely on the certification given to it by NEC. If NEC is wrong, and does not have the right to provide the necessary software because AT&T or AT&T Paradyne will refuse to permit it to use that software, NEC may be liable in damages for failure to meet its contractual obligations to the College. NEC did not offer at the hearing evidence on why it believes it is entitled to use the software for the Comsphere 6800 Network Management System, because AT&T's attempt to raise this issue had been rejected when AT&T's motion to amend its Formal Written Protest of August 18, 1992 was denied.
Recommendation It is RECOMMENDED that a final order be entered by the Board of Trustees of Broward Community College awarding Bid No. 3656, the rebid of the College-wide PBX system, to NEC for a bid price of $1,549,895.15. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of March 1993. WILLIAM R. DORSEY, JR. 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 9th day of March 1993.
Findings Of Fact On March 16, 1989, Respondent sent invitations to bid to actuaries who had been listed by the State of Florida, Department of General Services and with whom Respondent had some familiarity. These invitations pertained to two projects. The first project was one in which Respondent sought the services of qualified actuaries for the rendering of expert services in the area of rating requirements and procedures and the review of rate filings for health maintenance organizations and long term care insurance, Bid 119. The second invitation to bid was associated with the attempt to gain services from qualified actuaries pertaining to the review of health insurance filings, Bid 120. Respondent also gave public notice of the invitations to bid in the two projects that have been described. This notice was given in the Florida Administrative Weekly in its publication of March 17, 1989. On March 17, 1989, Petitioner obtained a copy of the bid materials in Bid 119. On March 20, 1989, he obtained a copy of the bid materials associated with Bid 120. In both Bid 119 and Bid 120 there are set out general conditions which are the same for both invitations. Within the general conditions is found paragraph 5 which states: INTERPRETATIONS/DISPUTES: Any questions concerning conditions and specifications shall be directed in writing to this office for receipt no later than ten (10) days prior to the bid opening. Inquiries must reference the date of bid opening and bid number. No interpretation shall be considered binding unless provided in writing by the State of Florida in response to requests in full compliance with this provision. Any actual or prospective bidder who disputes the reasonableness, necessity or competitiveness of the terms and conditions of the Invitation to Bid, bid selection or contract award recommendation shall file such protest in form of a petition in compliance with Rule 13A-1.006, Florida Administrative Code. Failure to file a protest within the time prescribed in Section 120.53(5), Florida Statutes shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. In furtherance of the opportunity to ask questions concerning the conditions and specifications set forth in the two bid instruments Petitioner, by correspondence received by Respondent on March 20, 1989, submitted a separate list of questions for the two projects, Bid 119 and Bid 120. On March 21, 1989, Respondent offered its answers to the Petitioner. Copies of these questions and answers may be found as Petitioner's composite Exhibit No. 5, pertaining to Bid 120 and Petitioner's composite Exhibit No. 6, pertaining to Bid 119, admitted into evidence. No one took advantage of the opportunity set out in paragraph 5 to the general conditions in each invitation to bid, to dispute the reasonableness, necessity or competitiveness of the terms and conditions of the invitations to bid within the prescribed time frame which is set out in Section 120.53(5), Florida Statutes. That time requirement is to make known objections within 72 hours of becoming apprised of the terms and conditions in the invitation to bid. It was only at the point in time at which Petitioner had been found unresponsive in the two bid circumstances and offered his formal written protest on April 11, 1989, that he attempted to advance claims associated with the reasonableness, necessity or competitiveness of the terms and conditions of the invitation to bid. He made further attempts to criticize those terms within the invitation to bid through presentation at hearing and in the course of the proposed recommended orders. All these efforts were untimely. The significance of Petitioner's failure to timely challenge the terms within the invitations to bid, that is the conditions and specifications, means that the facts in dispute are considered on the basis of whether the Petitioner and others who offered their responses to the invitations to bid have complied with those conditions and specifications as written, not as Petitioner would have them be. Bid 119 was responded to by the Petitioner and Touche Ross & Company. Petitioner's response was timely. By committee review of the responses to the invitation to bid performed by the Respondent and approved by the Assistant Director of Administration, Department of Insurance and Treasurer, one Bruce Brown, a decision was reached to reject all bids. Petitioner and Touche Ross were made aware of this rejection. Petitioner made a timely challenge to the rejection of his bid in accordance with Section 120.53(5), Florida Statutes, leading to the present hearing. Touche Ross did not challenge that decision and did not seek to participate in this hearing, although it was noticed of the pendency of these proceedings. Petitioner and Wakely timely responded to the invitation in Bid 120. The review committee with the concurrence of Mr. Brown found Wakely to be responsive and Petitioner to be unresponsive to the terms of the invitation. Petitioner made a timely request to be heard on this decision by the agency leading to the present hearing. Wakely was noticed of the pendency of this hearing as well as the agency's choice to change from a position of accepting the Wakely bid to one of rejecting all bids and has not participated in the process. The reason why the Respondent has chosen to reject the Wakely bid is based upon its belief that to do so would expedite the process of gaining the actuarial services which it seeks under Bid 120 and based upon some concern that if it sought to contract with Wakely, whom it believes to be the only responsive bidder in Bid 120, it would be met with disapproval by the State of Florida, Department of General Services. This resistance by the sister agency is premised upon the opinion that to contract with Wakely would constitute the use of a sole source contract in a setting in which there are numerous choices of actuaries who might be able to perform the work, and General Services who controls sole source purchases would not allow this. Within Bid 119 are various special conditions. Among those is the stated purpose found in paragraph 1.0 and it says: The Division of Insurance Rating (hereinafter "Division") within the State of Florida's Department of Insurance (hereinafter "Department") is seeking one qualified actuary for the rendering of expert services in the area of rating requirements and procedures and review of the rate filings for Health Maintenance Organizations (hereinafter "HMO") and Long Term Care Insurance (hereinafter "LTC"). It is anticipated that the contract will be effective from April 1, 1989 to September 30, 1989, although the precise dates will be dependent upon the date the contract is signed and the schedules of department personnel. By this Invitation to Bid (hereinafter "ITB"), the Division is requesting interested actuaries (hereinafter "respondent") to review the general and specific criteria outlined in this ITB and to present a bid. Other instructions in Bid 119 at paragraph 3.0 state: Emphasis on each bid must be completeness and clarity of content. In order to expedite the evaluation of proposals, it is essential that bidders follow the instructions contained herein. * * * Bidder shall complete the attached Bid Sheet in its entirety. By affixing manual signature on this bid sheet the bidder states that he/she read all bid specifications and conditions and agree to all terms, conditions, provisions, and specifications. Respondent's Credentials and Capabilities Proposals must include substantial evidence of the ability of the respondent to undertake the work required within the parameters and time frames referenced in this ITB. The respondent must be a member of both the American Academy of Actuaries and the Society of Actuaries. Furthermore, the respondent must convincingly demonstrate his or her expertise in both the HMO and LTC areas. Such demonstration must include at least the following: HMO Significant consulting assignment or other work responsibility involving HMO ratemaking in 1988 or 1989. Particulars must be provided, including the specific work product requested, hours spent on the job, the results of the job, and the respondent's precise role. Convincing evidence of familiarity with the Health Maintenance Organization Amendments of 1988 to the Federal Health Maintenance Organization Act. Such evidence might include a completed or ongoing consulting assignment in which knowledge of the new legislation was critical, an article published on the new legislation, or a speech to a professional organization. Public demonstrations of the respondent's expertise in the HMO area, such as speeches, published articles, positions held in HMO professional organizations, or prior full-time employment by an HMO. Assistance in the preparation of HMO rate filings for review by the Department. Assistance in the preparation of rates for federally qualified HMOs. LTC Significant consulting assignments or other work responsibility involving LTC ratemaking in 1988 or 1989. Particulars must be provided, including the specific work product requested, hours spent on the job, the results of the job, and the respondent's precise role. Public demonstrations of the respondent's expertise, such as speeches, published articles, or positions held in professional organizations relative to LTC (i.e., committee assignments) OTHER The respondent should also include a description of prior work assignments involving consulting or other services to state insurance departments. This prior work need not be restricted to HMO or LTC. Note: Evidence of the respondent's expertise must be verifiable. Referenced consulting assignments must include the name, address, and telephone number of an employee of the client who can verify the nature of the assignment. Copies of published articles must be provided, along with the name and date of the periodical in which it was published. Also, copies of speeches must be provided, along with the name of the organization to which the speech was given, a contract person, and the date of the speech. * * * (f) Respondent's Bid In preparing a bid, the respondent should make sure that he or she has submitted at least the following information: A demonstration that all requirements in the "Respondent's Credentials and Capabilities" section are met; An explicit statement as to the proposed hourly rate; A clear statement that the respondent is able to perform the required tasks in the prescribed time frames, as described in "Specific Work Product Required". Such information must be provided together with the bid sheet provided in Section 11. A suggested format is shown in Section 10. In both bid invitations, at paragraph 4.0 of the special conditions, bidders are reminded that bids which do not meet the mandatory technical requirements set out in 3.0 and its sub-parts will not be considered for selection and that the bids that are deemed responsive will be evaluated on the basis of cost and the award made to the lowest responsive bidder at an hourly rate of charges. Both invitations at Paragraph 4.1 indicate that the state has reserved its opportunities to reject all bids if that is felt to be in its best interest. Paragraph 5.2 of the invitation is a further reminder to bidders that any bidder desiring to file a protest arising out of the invitation to bid shall do so in a setting in which Section 120.53(5), Florida Statutes controls. Another specification found in both invitations at paragraph 10.0 entitled, "Respondent's (referring to the bid respondents) Credentials and Capabilities." Under that category it is stated that it is recommended that the format found on that page in the bid specifications be used in supplying the information needed to respond to paragraph 3.0 of the bid specifications for both invitations. Under that paragraph 10.0 there is a place for the respondent's name, the name of his employer, membership year in the AAA, membership designation in the 50A: FSA and ASA and year the 50A designation was awarded. In Bid 119, beyond paragraph 10.0 are found paragraphs 10.1, 10.2 and 10.3, these paragraphs recapitulate those items and the various sub-parts to paragraph 3.0 and provide space for answers to be given to those inquires concerning the Petitioner's credentials and capabilities. There is a paragraph 11.0 in both invitations entitled "Bid Sheet." It has lines related to the hourly rate, vendor name, name of actuary to render services, mailing address, city, state and zip code, authorized signature both manual and typed, telephone number, and the date of submission. This particular paragraph reminds the bidder that by affixing the signature, this is a verification that all bid specifications and conditions have been read and that the terms and conditions, provisions and specifications are agreed to and that certification is made that the services will be provided at the hourly rates stated. Otherwise the basic format for Bid 120 in terms of special conditions is the same as described for the pertinent paragraphs in Bid 119 that have been set out before with the exception of Paragraphs 1.0, and 3.0 (c). They state the following: 1.0 PURPOSE: The Division of Insurance Rating (hereinafter "Division") within the State of Florida's Department of Insurance (hereinafter "Department") is seeking one qualified actuary for the rendering of expert services pertaining to review of Health Insurance rate filings. It is anticipated that the contract will be effective from April 1, 1989 to September 30, 1989, although the precise dates will be dependent upon the date the contract is signed and the schedules of department personnel. * * * 3.0 (c) RESPONDENTS CREDENTIALS AND CAPABILITIES. Proposals must include substantial evidence of the ability of the respondent to undertake the work required within the parameters and time frames referenced in this ITB. The respondent must be a member of both the American Academy of Actuaries and the Society of Actuaries. Furthermore, the respondent must convincingly demonstrate his or her expertise in rating the filing with the Department the following products: Individual Major Medical Medicare Supplement Long Term care Other types of coverage depending upon the needs of the Department and skills of the respondent. Such demonstration must include at least the following: A high degree of familiarity with Chapter 4-58 of the Regulations of the Florida Department of Insurance. Such familiarity should be demonstrated by the respondent providing evidence that he or she submitted at least twenty- five Health Insurance rate filings to the Department which were approved between January 1, 1988 and February 28, 1989. The consultant should demonstrate familiarity with Individual Major Medical, Medicare Supplement, and Long Term Care policies. Such familiarity should be demonstrated by the consultant providing evidence that he or she submitted at least three filings to the Department in each of those areas which were approved between January 1, 1988 and February 28, 1989. NOTE: Only those filings actually certified by the actuary, as provided in 4-58, may be counted in meeting the above requirements. Bid 120 has paragraph 10.1 that refers back to sub-parts within paragraph 3.0(c) and provides space for answering the request for information concerning credentials and capabilities. In both bids Respondent is critical of the Petitioner for not using the format suggested in the various portions of paragraph 10, in essence filling out the specification sheet in the space provided for the answers which the petitioner would give. Having reviewed these materials associated with each bid invitation, the format idea is not a mandatory requirement, it is a suggested requirement. What is incumbent upon the Petitioner is to comply in substance with the requirements set out in the invitations to bid. In that respect the Petitioner is deficient in a material manner. A copy of the requirements Bid 119 may be found in Respondent's exhibit No. 1 admitted into evidence. Petitioner's response to the invitation to bid in Bid 119 is found within Respondent's No. 4 admitted into evidence. In his statement of credentials and capabilities, Petitioner has not utilized the spaces provided in paragraphs 10.1 through 10.3. Instead he has enclosed a letter that includes a statement of work history and professional experience. Under the category of health maintenance organization, the special conditions of paragraph 3.0(c), there is no statement of a consulting assignment or other work responsibility that would involve HMO rate making in the years 1988 or 1989. Furthermore, there is no convincing evidence of familiarity with the health maintenance organization amendments of 1988 to the Federal Health Maintenance Organization Act. There is no reference to public demonstrations of the Petitioner's expertise in the HMO area to include speeches, published articles, positions held in an HMO professional organization or prior full-time employment by an HMO. While there is an indication of experience in rate review from the regulatory point of view in Florida and Massachusetts, there is no indication as required by the specifications and conditions of the preparation of rate filings to be reviewed by a regulator. Finally, under the category of HMO there is no indication of assistance in the preparation of rates for federally qualified HMOs. In the long term care component of the credentials and capabilities portion of Bid 119, Petitioner has offered no explanation of his background. Under the category "other" Respondent has included a description of prior work assignments involving consulting or other services to state insurance departments. On the other hand he has failed to evidence in more specific terms as the note to paragraph 3.0(c) requires, names, addresses and telephone numbers. A copy of the requirements of Bid 120 may be found in Respondent's Exhibit No. 2 admitted into evidence. A copy of Respondent's reply to the invitation to bid may be found in Respondent's Exhibit No. 5 admitted into evidence. As with the previous Bid 119, in Bid 120 Petitioner did not utilize the space available in writing his answers in paragraph 10.1 which relates back to the requirements for credentials and capabilities as announced in paragraph 3.0(c). Instead Petitioner attached a letter in which he attempts to state his compliance with the requirements of the bid. He sets out comments about his work history and professional experience which do not pertain to rating and filing with the Respondent the products of individual major medical, Medicare Supplement, long term care and other types of coverage depending upon needs of the Respondent and skills of the Petitioner. Within Bid 120 in the requirement for familiarity with Chapter 4-58 Florida Administrative Code Petitioner has indicated some involvement with that regulation. However, he has not shown where he had submitted at least twenty- five health insurance rate filings to the Respondent which were approved between the January 1, 1988 and February 28, 1989. In Bid 120 on the topic of demonstration of familiarity with individual major medical, Medicare Supplement and long-term care policies, Petitioner did not demonstrate that he had submitted at least three filings with the Department in each of those areas which were approved between January 1, 1988, and February 28, 1989. By contrast the Wakely response to the invitation to bid, a copy of which is found in Respondent's Exhibit No. 9 admitted into evidence, has adequately responded to the requirements of the Bid 120 in the areas where the Petitioner has been deficient, as well as other areas. As alluded to before Petitioner has failed to make timely challenge to the conditions and specifications associated with the two invitations to bid. Moreover, while allegations in the formal written protest of April 11, 1989 and further remarks of April 20, 1989 addressed to the Insurance Commissioner, together with the proposed recommended order suggest problems with the conditions and specifications associated with the two invitations to bid, proof at hearing submitted by Petitioner did not confirm these allegations. Except in those areas preferred to in the factual discussion above Petitioner's bid responses are adequate to meet the terms of the invitations to bid.
The Issue Whether Respondent acted contrary to the agency's governing statutes, rules or policies, or the bid specifications in its proposed decision to award a contract to Intervenor Xerox Corporation pursuant to Request for Proposal ("RFP") No. 07-015- 040-RFP.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of the proceeding, the following findings of fact are made: On December 15, 2006, PCS issued the 2007 RFP, entitled "Copier Program--Request for Proposals." The 2007 RFP was intended to provide a comprehensive copier program for the entire Pinellas County School District from the award date of the bid, then anticipated to be February 20, 2007, through June 30, 2012. The purpose of the 2007 RFP was stated as follows in Section 3.1 of the General Information section: [PCS] requests proposals from experienced and qualified vendors to provide a comprehensive copier program countywide which fulfills the priorities and needs expressed by district focus groups. PCS wishes to partner with a qualified vendor who will continue to improve information sharing, right size number of assets, and reduce the number of device types while lowering the district's cost. Vendors may propose whatever program they feel best meets the district's needs and are not restricted in any way other than to meet the basic equipment specifications, terms and conditions outlined in this bid. . . . (Emphasis added) A statement of the 2007 RFP's "scope" set forth in the Special Conditions similarly provided: [PCS] requests proposals from experienced and qualified vendors to provide a comprehensive copier program countywide which fulfills the priorities and needs expressed by district focus groups. Vendors may propose whatever program they feel best meets these needs and a district evaluation committee made up of participants from the focus groups will evaluate proposals and make the selection it feels best meets these needs based upon a set of criteria published in this document. . . . [Emphasis added] The 2007 RFP provided for proposals to be received no later than January 18, 2007, at 3:00 p.m. The 2007 RFP contained General Terms and Conditions, setting forth the standard boilerplate terms common to all PCS procurements, and Section 1 of "Special Conditions" particular to this contract.1 These were followed by: Section 2, "Personnel Matrix"; Section 3, "General Information"; Section 4, "Program Specifications"; Section 5, "Equipment Specifications"; Section 6, "Cost Proposal"; and Section 7, "Contractor Response." PCS has adopted the General Terms and Conditions as rules, codified in Part A of the PCS Purchasing Handbook. Paragraph 1(g) of the General Terms and Conditions, "Freight Terms," provided: All items are to be bid FOB destination with all transportation charges prepaid and included in the bid prices and title transferring to the district at the time of delivery, unless otherwise stated in bid invitation. Any exceptions to these freight terms taken by the bidder must be clearly stated in the bidder's proposal. The purchasing department will evaluate any such exceptions and determine if the exception constitutes grounds for rejection of the bidder's proposal. [Emphasis added] Paragraph 3 of the General Terms and Conditions, "Acceptance and Withdrawal of Bids," provided: A bid (or amendment thereto) will not be accepted by the purchasing department after the time and date specified for the bid opening, nor may a bid (or amendment thereto) which has already been opened in public be withdrawn by the bidder for a period of sixty (60) calendar days after the bid opening date and time, unless authorized by the purchasing department. By written request to the purchasing department, the bidder may withdraw from the bid process and ask to have their sealed bid proposal returned at any time prior to the closing date and time for the receipt of bid proposals. Paragraph 14 of the General Terms and Conditions, "Variance to Bid Documents," provided: For the purpose of bid evaluation, bidders must clearly stipulate any or all variances to the bid documents or specifications, no matter how slight. If variations are not stated in the bidder's proposal, it shall be construed that the bid proposal submitted fully complies in every respect with our bid documents. Paragraph 30 of the General Terms and Conditions, "Errors and Omissions," provided: In the event an error or obvious omission is discovered in a bidder's proposal, either by the purchasing department or the bidder, the bidder may have the opportunity of withdrawing their bid, provided they can produce sufficient evidence to document that the error or omission was clerical in nature and unintentional . . . This privilege shall not extend to allowing a bidder to change any information contained in their bid proposal; however, in the event of a minor omission or oversight on the part of the bidder, the purchasing department (or designee) may request written clarification from a bidder in order to confirm the evaluator's interpretation of the bidder's response and to preclude the rejection of their bid, either in part or in whole. The purchasing department will have the authority to weigh the severity of the infraction and determine its acceptability. Paragraph 31 of the General Terms and Conditions, "Basis of Award of Bids," provides: "A Bidder who substitutes its standard terms and conditions for the district's, or who qualifies its bid in such a manner as to nullify or limit its liability to the district will be considered nonresponsive." The standard form cover sheet to both the 2006 and 2007 RFPs contained a "Note to Bidder" that stated: "A signed bid submitted to the School Board obligates the bidder to all terms, conditions and specifications stated in this bid document, unless exceptions are taken and clearly stated in the bidder's proposal." (Emphasis added) The Special Conditions of the 2007 RFP included a provision titled "Acceptance of Vendor Responses," which stated: "The purchasing department reserves the right to accept proposals from multiple vendors, and to accept or reject portions of a proposal based upon the information requested. Vendors may be excluded from further consideration for failure to fully comply with the requirements of this RFP solely at the purchasing department's discretion." (Emphasis added) The Special Conditions of the 2007 RFP also included a provision entitled "Integrity of Bid Documents," which stated: Bidders shall use the original Bid Proposal Forms provided by the Purchasing Department and enter information only in the spaces where a response is requested. Bidders may use an attachment as an addendum to the Bid Proposal form if sufficient space is not available on the original form for the bidder to enter a complete response. Any modifications or alterations to the original bid documents by the bidder, whether intentional or otherwise, will constitute grounds for rejection of a bid. Any such modifications or alterations that a bidder wishes to propose must be clearly stated in the bidder's proposal response and presented in the form of an addendum to the original bid documents. Both Xerox and IKON timely submitted proposals in response to the 2007 RFP. Evaluations of the responses to the RFP were based on a two-step procedure. First, a focus group of individuals from the Pinellas County School District would analyze the bids and award points based on the specifications and the Proposal Evaluation Form set forth in the RFP. The maximum award was 100 points, with 80 points constituting the threshold for further consideration. Second, those vendors which met the 80-point threshold would compete solely on price. Those bidders who did not score 80 points in the first stage would not have their price bids opened. By January 24, 2007, the focus group had finalized its evaluations, and the cost proposals were to be opened on January 26, 2007. Both IKON and Xerox scored above the 80 point level. IKON received a score of 87 points from the focus group and Xerox received a score of 81 points. Xerox's proposal included, among 15 unnumbered appendices, an appendix titled "Xerox Clarification Addendum to the RFP." This Addendum contained four "clarifications" of portions of the General Terms and Conditions, seven "clarifications" regarding the Program Specifications portion of the Special Conditions, and 12 items under the heading "Other Xerox Service Terms" that purported to set forth contractual provisions regarding service, personnel, risk of loss, limitations on liability, payment schedules, and other standard contract terms. PCS's purchasing department conducted a responsiveness review of the proposals prior to sending them to the focus group for substantive evaluation, but did not notice the Xerox Addendum. Mark Lindemann, the director of purchasing for PCS, testified that it is not customary for bidders to submit such an addendum, and, therefore, his staff was not looking for it when conducting their responsiveness review. On January 30, 2007, after the focus group had performed its evaluation of all the bids, and the cost proposals had been opened and the bid tabulations had been posted on the PCS website, Colin Castle of IKON brought to the attention of the PCS purchasing department the presence of the Xerox Addendum. Geri Pomerantz is the Xerox employee responsible for public sector solicitations in the Southeast United States. She is responsible for understanding the terms and conditions of a solicitation, for pricing the solution based on the customer's requirements, and for ensuring that Xerox submits a responsive proposal. Ms. Pomerantz signed and submitted Xerox's proposal in response to the 2007 RFP. Ms. Pomerantz believed that the Xerox Addendum complied with the "Integrity of Bid Documents" provision of the Special Conditions, quoted above. By submitting the Addendum, Xerox sought to clarify areas of the RFP, to explain how Xerox was meeting the requirements of the RFP, and to propose new items where Ms. Pomerantz believed the RFP was silent on important terms. Ms. Pomerantz testified that, to comply with the "Integrity of Bid Documents" provision, Xerox included the proposed clarifications in the body of its proposal, where that was possible, then further called them to the attention of PCS by placing them in the Addendum. Though unnumbered, the Xerox Addendum is clearly identified in the Table of Contents at the front of the Xerox proposal and on a separate tab on the side of the proposal. Xerox incorporated its clarifications in the body of its proposal in those places where the 2007 RFP requested a response from the vendor, i.e., Section 4, the Program Specifications portion and Section 5, the Equipment Specifications portion. Xerox incorporated clarifications to the following Program and Equipment Specifications: Section 4.3.1-–Equipment Build Status; Sections 4.3.4, 5.3.2 and 5.3.13 –-Price Offering; Sections 4.7.4 and 4.7.5-–Inspection and Acceptance; Section 4.10.2-–Response Time; Section 4.10.3-– Uptime; Section 4.10.4--Electronic Meter Reads; and Section 4.17–-Insurance Specifications for Contractors. The General Terms and Conditions did not call for a vendor response, and Xerox's clarifications or proposed modifications to those were made only in the Addendum. The introduction to the Xerox Addendum provides as follows: We have reviewed your Invitation to Bid ("Bid")[2] for a Copier Program, and have prepared a proposal that we believe addresses your requirements. However, some of the Board's requirements require that we make some limited clarifications to the terms and conditions included in your Bid. These clarifications are set forth below and are part of our Proposal. In addition, we have included some additional terms and conditions, which are also included as part of our Proposal. Should there be a conflict between the terms and conditions of the various documents the order of precedence will be this Addendum, followed by your Bid. Please note that if any of the terms or clarifications are inconsistent with Florida law or otherwise unacceptable to you, Xerox agrees to negotiate a reasonable alternative that is acceptable to both parties. Our team is also prepared to discuss the Xerox Proposal in greater detail and, if required, adjust our offering based on your final requirements, which may include a modification to our proposed equipment, support services, terms and conditions, and/or price offering. The Xerox Addendum expressly proposed clarifications or modifications to four provisions of the General Terms and Conditions. Paragraph 1(g), set forth in full above, contains PCS's standard freight terms and describes the process by which a vendor may take exception to those terms: exceptions must be clearly stated in the proposal, and the purchasing department will determine whether the exceptions constitute grounds for rejecting the vendor's proposal. The Xerox Addendum proposed to transfer to PCS the cost of any "non-standard delivery or removal expenses, such as additional costs where additional time or resources are required to disassemble equipment due to lack of adequate facility access, or the need to use stair creepers or cranes to deliver equipment to upper floors of buildings.3 Ms. Pomerantz justified this variance by asserting that the 2007 RFP was silent regarding the issue of "non- standard delivery", and that Xerox was merely offering a clarifying solution to this problem. Mr. Lindemann believed this clarification to be salutary, based on disputes PCS has had with its current vendor, IKON, regarding unusual delivery issues. Paragraph 1(g) of the General Terms and Conditions specifically allowed the vendor to propose exceptions to the standard freight terms, provided those exceptions were clearly stated and the vendor understood that its exceptions could be grounds for rejection of its proposal. Thus, it is found that the Xerox Addendum did not materially deviate from the provisions of the RFP as to this variance. The Xerox Addendum also proposed modification of paragraph 11 of the General Terms and Conditions, which states that PCS has "sole and exclusive property" rights to any discovery, invention or work product produced under the contract. Xerox proposed that any work developed under this contract would be of a generic nature and would remain the sole property of Xerox. Mr. Lindemann reasonably opined that this was not a material deviation because there was no intellectual property involved in this RFP. The Xerox Addendum did not materially deviate from the provisions of the RFP as to this variance. The Xerox Addendum proposed modification of paragraph 41 of the General Terms and Conditions. Paragraph 41 provided that unless otherwise specified in the Special Conditions, all items requested "must be new, the latest model manufactured, first quality, carry the manufacturer's standard warranty and be equal to or exceed the specifications" listed in the RFP. In this instance, the Special Conditions did provide otherwise. Section 4.3.1 of the Program Specifications provided, in relevant part, that vendors "may propose all used, all new or a combination of new and used equipment, but all equipment must meet the minimum standards outlined later in this section. To assure ease of operation for end users, if used equipment is proposed it should all be of the same brand and model within any given Group of copiers, within any given facility." The Xerox Addendum simply provided clarification regarding the company's terminology for its equipment. The equipment provided by Xerox would be either "Newly Manufactured," "Factory Produced New Models," or "Remanufactured," internal Xerox distinctions regarding the use of new, reconditioned or recycled components, and Xerox disclaimed any intent to use reconditioned, recycled, refurbished or used equipment as defined by industry standard. In this instance, Xerox submitted a clarification that did not deviate from or attempt to modify the Program Specifications. The Xerox Addendum proposed modification of paragraph 44 of the General Terms and Conditions, the limitation of liability provision, which provided: The bidder guarantees to save [PCS], its agents and employees, harmless from liability of any nature or kind for use of any copyrighted or non-copyrighted materials, secret process, patented or unpatented inventions, articles or appliances, furnished or used in performance of the contract for which the contractor is not the patentee, assignee or licensee. The Xerox Addendum to paragraph 44 provided as follows: Xerox agrees that it will indemnify the Board from all copyright and patent information that is included in Xerox- branded equipment/software. However, Xerox will not indemnify the Board, its directors, officers, employees, volunteers, and agent [sic] for any patent infringement caused by complying with the Board's requirement to use, or the Board's use of, the Xerox- branded/supplied equipment with equipment or software not provided by Xerox. Mr. Lindemann testified that this modification of the limitation of liability provision would most likely require PCS to purchase additional contingent liability insurance, which would be a cost essentially passed on from Xerox to PCS. It is found that the Xerox Addendum materially deviated from the provisions of the RFP as to this variance. The Xerox Addendum proposed a second limitation of liability provision in the section titled "Other Xerox Service Terms," which was essentially a list of standard terms and conditions that Xerox proposed to take precedence over similar provisions in the 2007 RFP. This second limitation of liability proposal provided as follows: Excluding personal injury (including death), property damage, and intellectual property indemnification on Xerox branded equipment, Xerox will not be liable to you for any direct damages in excess of $100,000 or the amounts you've paid to Xerox, whichever is greater. Neither party shall be liable to the other for any special, indirect, incidental, consequential or punitive damages arising out of or relating to this Agreement, whether the claim alleges tortious conduct (including negligence) or any other legal theory. Any action you take against Xerox must be commenced within two (2) years after the event that caused it. Ms. Pomerantz testified that when she read the RFP she focused on the indemnification language in paragraph 44 of the General Terms and Conditions regarding copyright and patent issues. She thought the RFP was silent on broader indemnification issues, and she sought to clarify it with this proposed language. Mr. Lindemann testified that the $100,000 limitation of liability could result in costs to PCS in the event of a judgment against PCS and might require the purchase of additional liability insurance. Mr. Lindemann believed this proposed limitation on liability was a material deviation and formed the basis for his request to Xerox to withdraw the Addendum. Paragraph 31 of the Standard Terms and Conditions states: "A Bidder who substitutes its standard terms and conditions for the district's, or who qualifies its bid in such a manner as to nullify or limit its liability to the district will be considered nonresponsive." (Emphasis added) It is found that the Xerox Addendum materially deviated from the provisions of the RFP as to this variance. 34. Sections 4.3.4, 5.3.2, and 5.3.13 of the Program/Equipment Specifications related to the vendors' cost proposals provide: 4.3.4 Whatever type of pricing methodology is proposed, it shall include all costs associated with the administration of the service, including, but not limited to: all imaging devices, any peripheral equipment (file servers, etc.), delivery, removal, installation, training, dedicated technician(s), all supplies needed to operate the imaging devices except paper, delivery of supplies and removal of the equipment upon termination of this contract. * * * 5.3.2 Pricing should include all costs associated with the administration of the service, including, but not limited to all imaging devices, delivery, removal, installation, training, certified technicians and all supplies except paper needed to operate the imaging devices. * * * 5.3.13 Pricing must include all costs associated with the administration of the service, including, but not limited to all copier devices, delivery, removal, installation, training, certified technician(s), all supplies except paper, end-user training and semi-annual customer satisfaction surveys. The three quoted provisions state that price proposals must include all costs associated with the administration of the service in question, except for paper, delivery of supplies, removal of equipment upon contract termination, end user training, and customer satisfaction surveys. The Xerox Addendum sets forth a monthly minimum and cost-per-copy charge that would cover standard equipment, supplies, maintenance, delivery and removal, installation and user training, but would require PCS to pay for "optional accessories," "non-standard operating supplies," "excess rigging" needed due to inadequate site access or the need to use stair creepers or cranes to install or remove equipment,4 overtime service coverage, and expenses associated with site preparation. The Xerox Addendum attempted to vary the quoted Special Conditions that require the vendor's price to include all costs associated with delivery, removal, and installation and, thus, materially deviated from the provisions of the RFP. Sections 4.7.4 and 4.7.5 of the Program Specifications required the vendor to "provide and pay for all material, labor, tools, transportation and handling, and other facilities necessary for the furnishing, delivery, assembly plus inspection before, during and after installation of all items specified herein." The Xerox Addendum to Sections 4.7.4 and 4.7.5 attempted to limit Xerox's obligation to inspect the devices by stating that they are "deemed accepted" upon installation unless PCS specifically requires an inspection. It is found that the Xerox Addendum materially deviated from the provisions of the RFP as to this variance. Section 4.17.1 of the Program Specifications required acceptance testing for each imaging device and accessory, including a period of four consecutive business days, each containing seven hours of operational use time, in which the equipment maintains a 95 percent level of performance. The Xerox Addendum to Section 4.17.1 attempted to limit Xerox's obligation to inspect the devices by stating that they are "deemed accepted" upon installation unless PCS specifically requires an inspection. It is found that the Xerox Addendum materially deviated from the provisions of the RFP as to this variance. Section 4.10.2 of the Program Specifications provided requirements regarding service calls and response times. This condition defines "response time" as the interim between the user's call to the repair office and the appearance of a certified technician on-site who is prepared to effect repairs. Section 4.10.2 provides that the response time cannot exceed four hours. PCS would have the option of charging the contractor $50.00 per failure to meet this four-hour response time requirement. The Xerox Addendum proposed that service response times be averaged quarterly according to a formula by which "target response time" would be divided by "average service response time," which is measured by dividing the sum of all service call response times during the quarter by the total number of service calls. Xerox proposed that the $50.00 charge be imposed based upon Xerox's failure to meet "the 90-day 4 hour average unit response time commitment." IKON also proposed to calculate the response time using a quarterly average, providing for an average response time "of 2 to 6 hours for all customer service calls located within 30 miles of an IKON service center, and 4 to 8 hours for all customer service calls located 30 miles or more from an IKON service center." IKON's proposal did not clearly state how far IKON's nearest service center is located from any Pinellas County school site. Another section of IKON's proposal discusses the company's recent consolidation of its "customer care centers," which "provide direct customer support" and house "the field service call center and inside sales function for a geographical region," into four central locations, the closest to Pinellas County being in Atlanta, Georgia. In this instance, both Xerox and IKON have proposed material deviations from the RFP requirement. Section 4.10.2 of the Special Conditions set forth a simple response time requirement that PCS itself could monitor and enforce without input from the vendor. Both Xerox and IKON attempted to substitute complex formulas arriving at quarterly averages for response time. IKON's proposal further attempted to make its compliance with the four hour response time requirement contingent upon the location of IKON's service centers. Section 4.10.3 of the Special Conditions requires a guaranteed uptime of 95 percent per machine for any 90-day period, and further requires that machines failing to maintain 95 percent uptime must be removed and replaced with an identical or comparable model at no cost to PCS. The Xerox Addendum announced an uptime objective of maintaining an average 95 percent equipment uptime performance based on a three-month rolling average, a variation in the wording of Section 4.10.3 that does not materially change the RFP requirement. Xerox also offered slight variations in the definition of "downtime" that are in the nature of clarifications rather than amendments to Section 4.10.3. The Xerox Addendum also contained 12 "Other Xerox Service Terms," essentially Xerox's standard terms and conditions dealing with service guarantees, personnel, substitution of equipment or software, risk of loss for equipment, treatment of confidential information, compliance with laws, vendor liability for customer-supplied items, the limitation of liability provision discussed above, force majeure, payment upon 45 days of invoice, breach of contract and remedies thereto, and a procedure for amendment of the contract. The 2007 RFP's General Terms and Conditions contain requirements for breach of contract, limitation of liability, standards of conduct for vendor personnel, and equipment substitution. Thus, the Xerox Addendum violated the following language in paragraph 31 of the Standard Terms and Conditions: "A Bidder who substitutes its standard terms and conditions for the district's, or who qualifies its bid in such a manner as to nullify or limit its liability to the district will be considered nonresponsive." In summary, the Xerox Addendum materially deviated from the requirements of the 2007 RFP in the following ways: it varied from the limitation of liability requirements of paragraph 44 of the General Terms and Conditions; it offered a cost proposal that was not all-inclusive, in contravention of Sections 4.3.4, 5.3.2, and 5.3.13 of the Program Specifications; it attempted to limit inspections after installation and acceptance testing, in contravention of Sections 4.7.4, 4.7.5, and 4.17.1 of the Special Conditions; it varied from the response time requirements of Section 4.10.2 of the Special Conditions; and it attempted to substitute several of Xerox's standard terms and conditions for those of PCS, in violation of paragraph 31 of the General Terms and Conditions. After learning of the Xerox Addendum from Mr. Castle on January 30, 2007, PCS reviewed the Addendum and concluded that it included material deviations to the terms and conditions of the RFP solicitation and that either the Addendum or Xerox's bid must be withdrawn. Negotiations commenced between PCS and Xerox. On February 2, 2007, Xerox offered PCS a revised Addendum. PCS rejected the revised Addendum and informed Xerox that the Addendum must be withdrawn in its entirety. On February 5, 2007, Xerox notified PCS by letter that it was withdrawing the Addendum from its proposal. Also on February 5, 2007, PCS posted its notice of intent to award the contract to Xerox. IKON's protest complained that Xerox's letter did not accomplish a complete withdrawal of the deviations included in the Xerox Addendum, because many of those deviations remained in the main body of the Xerox proposal. As noted above, Xerox incorporated its clarifications in the main body of its proposal in those places where the 2007 RFP requested a response from the vendor. These clarifications were included in Section 7.1.4 of the Xerox proposal, "Proposed Work Plan, Transition Plan." When Xerox withdrew its Addendum, it did not also submit a revised proposal that deleted the Addendum provisions from those places where they had been incorporated into the main body of the proposal. Nevertheless, both Xerox and PCS understood that withdrawal of the Addendum accomplished the complete withdrawal of the materials included in the Addendum, including where they were incorporated into the main body of the Xerox proposal. This understanding was reasonable under the circumstances. However, IKON raises a related objection that is more pertinent. Xerox was allowed to withdraw its Addendum, and then was awarded the contract. Thus, the winning proposal is different than the proposal that was reviewed and scored by the PCS focus group. IKON argues that it is very likely that Xerox would not have passed the 80-point threshold without the Addendum provisions that were incorporated into the main body of the proposal. Mr. Lindemann of PCS believed that Xerox's score would probably have been higher without the Addendum provisions. The salient point is that both sides are free to speculate about what the score of the winning bid might have been, because PCS proposes to award a contract on a proposal that was never reviewed or scored in the manner prescribed by the 2007 RFP. PCS argues that the withdrawal of the Xerox Addendum was entirely in keeping with the RFP, citing paragraph 3 of the General Terms and Conditions, quoted in full above and relevant portion of which provides: A bid (or amendment thereto) will not be accepted by the purchasing department after the time and date specified for the bid opening, nor may a bid (or amendment thereto) which has already been opened in public be withdrawn by the bidder for a period of sixty (60) calendar days after the bid opening date and time, unless authorized by the purchasing department. [Emphasis added] PCS contends that the emphasized language grants the purchasing department authority to allow a bidder to withdraw a portion of its bid after the bids have been opened. This is correct, if the portion in question is a timely submitted amendment to the original bid.5 In their arguments, both PCS and Xerox equate the terms "amendment" and "addendum," and assume that the Xerox Addendum could be withdrawn as an "amendment" to the Xerox proposal. However, the Xerox Addendum was not an amendment to the Xerox proposal; it was an integral part of that proposal. The Addendum did not amend anything contained in the Xerox proposal; rather, it attempted to "amend" the terms of the RFP. The underscored portion of paragraph 3 anticipates the late withdrawal of an entire bid or an amendment to a bid, not a wholesale grant of authority to the purchasing department to allow a bidder to save a nonresponsive proposal by withdrawing the objectionable provisions. PCS argues that Xerox was given no economic or competitive advantage in being allowed to submit and then withdraw its Addendum. Ms. Pomerantz testified that none of the items in the Addendum would have affected the price bid by Xerox, because they were essentially items of overhead that Xerox cannot "cost out" to include in a price proposal. However, the testimony by Mr. Lindemann convincingly made the point that some of the variations from RFP terms offered by Xerox would affect PCS's costs regardless of their impact on Xerox's price proposal. Passing on costs to the agency that have been absorbed by IKON and the other vendors in their proposals works to Xerox's economic advantage and to the detriment of PCS. Xerox had an obvious competitive advantage in being granted the opportunity to amend its proposal after the substantive proposals were opened and evaluated and the price proposals had been opened and posted. Xerox was also granted the option, afforded to no other bidder, of simply declining to withdraw its Addendum and thereby walking away from the procurement after submitting a proposal that, under the terms of the RFP, is supposed to bind the vendor for a period of 90 days. Subsection 120.57(3)(f), Florida Statutes, provides, in relevant part: In a protest to an invitation to bid or request for proposals procurement, no submissions made after the bid or proposal opening which amend or supplement the bid or proposal shall be considered. . . . The PCS rules and RFP provisions, correctly understood, do not contravene this statutory requirement. They grant the purchasing department the flexibility to allow a bidder, under special circumstances, to withdraw from a given procurement after submitting a bid, and they allow PCS to waive slight variations or minor irregularities in a bid. To the extent that PCS interprets its rules and RFP to allow Xerox to substantially amend its proposal after the opening,6 as occurred in this procurement, then PCS has violated its governing statutes in a fashion that is clearly erroneous, contrary to competition, arbitrary, or capricious. PCS argues that even if the Xerox Addendum contained material deviations, the RFP and PCS's rule permitted bidders to submit addenda with material deviations. PCS based this argument on that portion of Section 3.1 of the Special Conditions stating that bidders "may propose whatever program they feel best meets the district's needs and are not restricted in any way other than to meet the basic equipment specifications, terms and conditions outlined in this bid." When read within the context of the Special Conditions in their entirety, this language clearly contemplates allowing the vendors to offer creative solutions within their field of substantive expertise, i.e., the establishment of a comprehensive copier program countywide. It was rational for the drafters of the RFP to assume that a company such as Xerox enters the process in possession of more knowledge and experience in the field of copier installation, service, and repair than the school district possesses. PCS conducted focus groups to determine the top priorities of the school personnel who use the copiers and presented the bidders with specifications broad enough to allow maximum flexibility in crafting proposals responsive to the listed priorities. However, there are rarely "creative solutions" to boilerplate RFP terms such as shipping, limitation of liability, the requirement that cost proposals be all-inclusive, inspection of equipment prior to acceptance, and response time for repairs. These are areas in which the purchasing department of PCS may be presumed to have at least as much expertise as Xerox or IKON. Variations from the RFP's requirements proposed by a bidder regarding these items are likely to be self-serving efforts to protect the bidder's interests or pass on costs to the agency. Paragraph 31 of the General Terms and Conditions recognizes this reality by stating that a bidder that substitutes its standard terms and conditions for those of PCS will be considered nonresponsive.7 PCS is correct that the "Integrity of Bid Documents" paragraph of Section 1 of the Special Conditions of the 2007 RFP allows bidders to submit addenda that clearly state "modifications or alterations that a bidder wishes to propose." However, contrary to PCS's treatment of Xerox in this procurement, the RFP does not state that the bidder may propose modifications of the RFP terms without risk.8 The cited paragraph clearly warns bidders that proposed modifications or alterations constitute grounds for rejection of a bid. The paragraph does not, and under Subsection 120.57(3)(f), Florida Statutes (2006), could not, state that bidders will be given the opportunity to withdraw those portions of their proposals deemed nonresponsive after bid opening. PCS also emphasizes the first sentence of the "Acceptance of Vendor Responses" paragraph of the Special Conditions: "The purchasing department reserves the right to accept proposals from multiple vendors, and to accept or reject portions of a proposal based upon the information requested." However, the next sentence of that paragraph states that the remedy is not after-the-fact withdrawal of the rejected portion of the proposal, but rejection of the proposal: "Vendors may be excluded from further consideration for failure to fully comply with the requirements of this RFP solely at the purchasing department's discretion." Both PCS and Xerox raised the issue of the 2006 RFP in an effort to show that IKON was now attacking a process from which it earlier benefited. In the 2006 procurement, IKON was allowed to withdraw portions of an addendum after a competitor filed a protest. PCS ultimately rejected all of the 2006 Proposals because of confusion on the part of the bidders, partly related to the fact that IKON was allowed to withdraw its addendum but a competitor was not given the same opportunity. PCS then issued the 2007 RFP in December 2006 to procure the same copy services sought by the 2006 RFP. The 2006 RFP is relevant only to show that PCS has allowed the withdrawal of amendments in at least one previous procurement, a moot point because PCS has freely stated its position that it has the authority to reject an addendum without rejecting the entire proposal. Xerox's original proposal, including the Addendum, was nonresponsive for the reasons set forth above. PCS's effort to save Xerox's low bid by allowing it to withdraw the Addendum violated Subsection 120.57(3)(f), Florida Statutes (2006), as well as the terms of the RFP. The remaining question is whether IKON's proposal was responsive and may therefore be awarded the contract. As already found above, IKON's proposal materially deviated from Section 4.10.2 of the Special Conditions by substituting a complex formula for the simple response time requirement of the RFP and by making compliance with the four- hour response time requirement contingent upon the location of IKON's service centers.9 Section 7.1.3 of the Contractor Response portion of the 2007 RFP, "Proposed Models and Equipment Configurations," provides the following: The respondent must provide a comprehensive description of its proposed standard models and equipment configurations for each of the various grade levels (elementary, middle, high school). Consideration should be given to the stated needs of the focus groups (Section 3), particularly "ease of operation", "accessibility" to machines and "reliability". Vendors should provide detailed, technical product literature for each piece of equipment proposed including all options. The respondent should also describe what flexibility will be allowed for adding or deleting equipment as program needs change and how that will effect the amount billed according to the cost proposal plan proposed. [Emphasis added] Section 7.1.7 of the Special Conditions, "Cost Proposal," provides the following: Respondent must include a complete, detailed cost proposal which encompasses all costs associated with the proposed program. The cost proposal must allow for flexibility to add or delete equipment as program needs change. The district will not entertain any proposals to purchase or lease any equipment. [Emphasis added] IKON's proposal contained the following paragraph within its response to Section 7.1.3 of the Special Conditions: As requested by PCS in Section 7.1.7 of the Invitation to Bid, IKON's cost proposal allows for flexibility. IKON will permit PCS to add or delete equipment as PCS' needs change by permitting PCS to upgrade or downgrade equipment at the beginning or at the end of its fiscal year. Under this program, PCS may replace upgraded or downgraded equipment with additional equipment that addresses PCS' needs. Specifically, IKON will permit PCS to identify up to [three] percent of the overall equipment fleet value procured by PCS from IKON, including models and specifications that are representative of the entire fleet population, as flexible equipment that may be upgraded or downgraded at the beginning or at the end of the fiscal year, while all other equipment may be canceled only in the event of a non- appropriation or termination for cause. The flexible equipment may also be relocated or otherwise used to facilitate a rightsizing program, as directed by PCS. PCS may utilize this flexibility program in its own discretion. In no event shall either party be liable to the other party for any indirect, special or consequential damages. Xerox contends that by limiting PCS to a three percent change in the overall equipment fleet value, IKON's proposal materially deviates from Sections 7.1.3 and 7.1.7 of the Special Conditions, which required that PCS have the flexibility to increase or decrease the size of the copier fleet to meet its needs. However, Section 7.1.3 did not prescribe the amount of "flexibility" required in the vendors' bids; rather, it expressly requested the vendors to "describe what flexibility will be allowed for adding or deleting equipment." IKON's bid described the allowed flexibility as three percent of the overall equipment fleet value and was thus responsive on its face. The evidence presented at hearing was insufficient to determine whether a three percent limit would be so restrictive of PCS's needs to add or delete equipment as to render IKON's proposal nonresponsive. More problematic is the last sentence of the quoted paragraph: "In no event shall either party be liable to the other party for any indirect, special or consequential damages." Xerox cogently argues that if its own proposed limitation of liability is a material deviation, then this similar limitation of liability included in the IKON bid must also be found a material deviation. IKON responds that it is clear from the context that this limitation of liability provision, unlike that in Xerox's proposal, applies only to Section 7.1.3. For this reason, IKON contends, PCS determined that IKON's bid was responsive. IKON argues that its own limitation of liability provision is implicated only in the event that PCS requires additional equipment and that it does not limit any direct liability of IKON to PCS and concerns only a distinct class of damages: indirect, special or consequential damages. The position of the quoted sentence, at the end of the final paragraph of IKON's response to Section 7.1.3 of the Special Conditions, supports IKON's contention that the limitation of liability applies only to that section. However, the wording of the sentence ("In no event . . .") indicates a broader intended application. IKON also failed to explain why the requirement of additional equipment, and only the requirement of additional equipment, raised concerns within IKON that indirect, special or consequential damages might be claimed by either party to the contract. At best, this provision is ambiguous in the scope of its application and, in any event, seeks to limit the liability of IKON beyond the limits provided by the RFP. If Xerox's limitations of liability constitute material deviations, then so must IKON's. IKON's proposal thus contains two material deviations from the RFP, one regarding response time and one regarding limitations of liability. IKON's proposal is nonresponsive.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that PCS enter a final order that (a) declares Xerox's bid to be materially nonresponsive and, accordingly, rescinds the proposed award to Xerox; and (b) declares IKON's bid to be materially nonresponsive and, accordingly, rejects the same. Because the choice of remedies for invalid procurement actions is ultimately within the agency's discretion, the undersigned declines to make a recommendation as to whether PCS should award the contract to the next-lowest responsive bidder or reject all bids and start over. DONE AND ORDERED this 10th day of May, 2007, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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, 2007.
